File No. 33-10238
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 21 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [X]
(Check appropriate box or boxes.)
PREMIER STATE 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)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on August 14, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for the fiscal year ended April 30, 1995 was filed on June 26, 1995.
PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 8
4 General Description of Registrant 23
5 Management of the Fund 38
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 61
7 Purchase of Securities Being Offered 40
8 Redemption or Repurchase 48
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-1, B-37
13 Investment Objectives and Policies B-2
14 Management of the Fund B-11
15 Control Persons and Principal B-15
Holders of Securities
16 Investment Advisory and Other B-15
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-31
18 Capital Stock and Other Securities B-31
19 Purchase, Redemption and Pricing B-18, B-24
of Securities Being Offered B-28
20 Tax Status *
21 Underwriters B-18
22 Calculations of Performance Data B-31
23 Financial Statements B-122
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-4
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- ----------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND
(LION LOGO)
PROSPECTUS AUGUST 14, 1995
- ----------------------------------------------------------------------------
Premier State Municipal Bond Fund (the "Fund") is an open-end,
non-diversified, management investment company, known as a
mutual fund. Its goal is to maximize current income exempt from Federal and,
where applicable, from State income taxes, without undue risk.
The Fund permits you to invest in any of fifteen separate portfolios
(each, a "Series"): the Arizona Series, the Colorado Series, the Connecticut
Series, the Florida Series, the Georgia Series, the Maryland Series, the
Massachusetts Series, the Michigan Series, the Minnesota Series, the North
Carolina Series, the Ohio Series, the Oregon Series, the Pennsylvania
Series, the Texas Series and the Virginia Series. Each Series seeks to
achieve the Fund's investment objective by investing in Municipal Obligations
primarily issued by issuers in the State after which it is named and believed
to be exempt from Federal and, where applicable, from that State's income
tax. It is anticipated that substantially all dividends paid by each Series
will be exempt from Federal income tax and also, where applicable, will be
exempt from the personal income tax of the State after which the Series is
named.
By this Prospectus, Class A, Class B and Class C shares of each
Series are being offered. 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 imposed on redemptions made within five years of
purchase; and Class C shares are subject to a contingent deferred sales
charge imposed on redemptions made within one year of purchase. Other
differences among the three Classes include the services offered to and the
expenses borne by each Class and certain voting rights, as described herein.
The Fund offers these alternatives to permit an investor to choose the method
of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares and
other circumstances.
The Fund provides free redemption checks with respect to Class A
shares, which you can use in amounts of $500 or more for cash or to pay
bills. You can purchase or redeem shares by telephone using the TELETRANSFER
Privilege.
The Dreyfus Corporation serves as the Fund's investment adviser and,
in that capacity, is responsible for determining whether investing in
particular securities is consistent with the Fund's investment objective,
including whether the securities subject the Fund to undue risk.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information dated August 14, 1995, which
may be revised from time to time, provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. For a free copy, write to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-554-4611. When telephoning, ask for Operator 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- ----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
FEE TABLE.......................................... 3
CONDENSED FINANCIAL INFORMATION.................... 8
ALTERNATIVE PURCHASE METHODS....................... 22
DESCRIPTION OF THE FUND............................ 23
MANAGEMENT OF THE FUND............................. 38
HOW TO BUY FUND SHARES............................. 40
SHAREHOLDER SERVICES............................... 45
HOW TO REDEEM FUND SHARES.......................... 48
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN.... 52
DIVIDENDS, DISTRIBUTIONS AND TAXES................. 53
PERFORMANCE INFORMATION............................ 60
GENERAL INFORMATION................................ 61
APPENDIX........................................... 63
Page 2
<TABLE>
<CAPTION>
FEE TABLE
ARIZONA SERIES COLORADO SERIES
------------------------------ ------------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
--------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge).... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.................... .55% .55% .55% .55% .55% .55%
12b-1 Fees......................... None .50% .75% None .50% .75%
Other Expenses..................... .52% .55% .52% 1.44% 1.42% 1.44%
Total Fund Operating Expenses...... 1.07% 1.60% 1.82% 1.99% 2.47% 2.74%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- ------- --------- ------- ------- ------
1 YEAR........................... $ 55 $46/16** $28/18** $ 65 $55/25** $38/28**
3 YEARS.......................... $ 78 $70/50** $57 $105 $97/77** $ 85
5 YEARS.......................... $101 $97/87** $99 $147 $142/132** $145
10 YEARS......................... $170 $163*** $214 $266 $258*** $307
CONNECTICUT SERIES FLORIDA SERIES
---------------------------- -------------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
--------- ------- -------- -------- -------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....... 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge).. None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.................... .55% .55% .55% .55% .55% .55%
12b-1 Fees......................... None .50% .75% None .50% .75%
Other Expenses..................... .35% .37% .35% .36% .37% .36%
Total Fund Operating Expenses...... .90% 1.42% 1.65% .91% 1.42% 1.66%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- ------- --------- ------- ------- ------
1 YEAR........................... $ 54 $44/14** $27/17** $ 54 $44/14** $27/17**
3 YEARS.......................... $ 72 $65/45** $52 $ 73 $65/45** $52
5 YEARS.......................... $ 93 $88/78** $90 $ 93 $88/78** $90
10 YEARS......................... $151 $143*** $195 $152 $144*** $197
- -------------------
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
Page 3
FEE TABLE
GEORGIA SERIES MARYLAND SERIES
------------------------------ --------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- ------- ------- ------- -------- ------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .48% .50% .48% .36% .40% .36%
Total Fund Operating Expenses.. 1.03% 1.55% 1.78% .91% 1.45% 1.66%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
---- ---- ------ ------ ------ ------
1 YEAR........................ $ 55 $46/16** $28/18** $ 54 $45/15** $27/17**
3 YEARS....................... $ 76 $69/49** $56 $ 73 $64/46** $52
5 YEARS....................... $ 99 $94/84** $96 $ 93 $89/79** $90
10 YEARS...................... $165 $158*** $209 $152 $145*** $197
MASSACHUSETTS SERIES MICHIGAN SERIES
------------------------------ --------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- ------- ------- ------- -------- ------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................ 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .40% .41% .40% .38% .40% .38%
Total Fund Operating Expenses.. .95% 1.46% 1.70% .93% 1.45% 1.68%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- ------- ------- ------- -------- ------
1 YEAR........................ $ 54 $45/15** $27/17** $ 54 $45/15** $27/17**
3 YEARS....................... $ 74 $66/46** $54 $ 73 $66/46** $53
5 YEARS....................... $ 95 $90/80** $92 $ 94 $89/79** $91
10 YEARS...................... $156 $148*** $201 $154 $147*** $199
- ------------------
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
Page 4
FEE TABLE
MINNESOTA SERIES NORTH CAROLINA SERIES
----------------------------- ------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- -------- ---- ------- ------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................ 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .36% .40% .36% .41% .43% .41%
Total Fund Operating Expenses.. .91% 1.45% 1.66% .96% 1.48% 1.71%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
---------- -------- ------- -------- ------- ------
1 Year........................ $ 54 $45/15** $27/17** $ 54 $45/15** $27/17**
3 Years....................... $ 73 $66/46** $52 $ 74 $67/47** $54
5 Years....................... $ 93 $89/79** $90 $ 96 $91/81** $93
10 Years...................... $152 $145*** $197 $158 $150*** $202
OHIO SERIES OREGON SERIES
----------------------------- ------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- -------- ---- ------- ------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge).... None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................. .55% .55% .55% .55% .55% .55%
12b-1 Fees...................... None .50% .75% None .50% .75%
Other Expenses.................. .38% .40% .38% 1.05% 1.08% 1.05%
Total Fund Operating Expenses... .93% 1.45% 1.68% 1.60% 2.13% 2.35%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
---------- -------- ------- -------- ------- ------
1 Year........................ $ 54 $45/15** $27/17** $ 61 $52/22** $34/24**
3 Years....................... $ 73 $66/46** $53 $ 93 $87/67** $73
5 Years....................... $ 94 $89/79** $91 $128 $124/114** $126
10 Years...................... $154 $147*** $199 $226 $220*** $269
- ---------------
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
Page 5
FEE TABLE
PENNSYLVANIA SERIES TEXAS SERIES
-------------------------------- ------------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
---- ---- ---- ---- ---- ----
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............ 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge).. None* 3.00% 1.00% None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .38% .40% .38% .37% .39% .37%
Total Fund Operating Expenses.. .93% 1.45% 1.68% .92% 1.44% 1.67%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
---- ---- ----- ---- ---- ----
1 Year........................ $ 54 $45/15** $27/17** $ 54 $45/15** $27/17**
3 Years....................... $ 73 $66/46** $53 $ 73 $66/46** $53
5 Years....................... $ 94 $89/79** $91 $ 94 $89/79** $91
10 Years...................... $154 $147*** $199 $153 $145*** $198
- -------------------
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
Page 6
FEE TABLE
VIRGINIA SERIES
------------------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C
------- -------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)...... None* 3.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................... .55% .55% .55%
12b-1 Fees........................ None .50% .75%
Other Expenses.................... .39% .40% .39%
Total Fund Operating Expenses..... .94% 1.45% 1.69%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C
------ ------- -------
1 Year........................... $ 54 $45/15** $27/17**
3 Years.......................... $ 74 $66/46** $53
5 Years.......................... $ 95 $89/79** $92
10 Years......................... $155 $147*** $200
</TABLE>
- -----------------
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.
- -------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED AS REPRESENTATIVE
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH
SERIES' ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- -------------------------------------------------------------------------
The purpose of the foregoing tables is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Other Expenses for Class C are based on amounts for Class A for the
Fund's last fiscal year. Long-term investors in Class B or Class C could pay
more in 12b-1 fees than the economic equivalent of paying a front-end sales
charge. The information in the foregoing tables does not reflect any fee
waivers or expense reimbursement arrangements that may be in effect. Certain
Service Agents (as defined below) may charge their clients direct fees for
effecting transactions in the relevant Series' shares; such fees are not
reflected in the foregoing tables. See "Management of the Fund," "How to Buy
Fund Shares" and "Distribution Plan and Shareholder Services Plan."
PAGE 7
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes for Class A and Class B are included in the
Statement of Additional Information, available upon request. No financial
information is available for Class C shares, which had not been offered
as of the date of this Prospectus.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for
Class A and Class B shares of beneficial interest outstanding, total
investment return, ratios to average net assets and other supplemental
data for each Series for each year indicated. This information has been
derived from the Series' financial statements.
<TABLE>
<CAPTION>
ARIZONA SERIES
-----------------------------------------------------
CLASS A SHARES CLASS B SHARES
----------------------- ---------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------- ------------------------
PER SHARE DATA: 1993(1) 1994 1995 1993(2) 1994 1995
------- ------ ------- -------- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $12.50 $13.12 $12.60 $12.65 $13.12 $12.61
------ ------ ----- ------ ------ -----
INVESTMENT OPERATIONS:
Investment income-net........... .51 .75 .75 .21 .68 .69
Net realized and unrealized gain (loss)
on investments.................. .62 (.51) .14 .47 (.50) .14
------ ------ ----- ------ ------ -----
TOTAL FROM INVESTMENT OPERATIONS 1.13 .24 .89 .68 .18 .83
------ ------ ----- ------ ------ -----
DISTRIBUTIONS:
Dividends from investment income-net...... (.51) (.75) (.75) (.21) (.68) (.69)
Dividends from net realized
gain on investments...................... - (.01) - - (.01) -
------ ------ ----- ------ ------ -----
TOTAL DISTRIBUTIONS............. (.51) (.76) (.75) (.21) (.69) (.69)
------ ------ ----- ------ ------ -----
Net asset value, end of year.... $13.12 $12.60 $12.74 $13.12 $12.61 $12.75
====== ====== ====== ====== ====== =======
TOTAL INVESTMENT RETURN(3)........ 14.01%(4) 1.61% 7.41% 18.49%(4) 1.16% 6.88%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets... -_ -_ -_ .50%(4) .50% .50%
Ratio of net investment income to
average net assets............... 5.71%(4) 5.51% 6.04% 4.61%(4) 4.95% 5.54%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation... 1.87%(4) 1.26% 1.07% 1.68%(4) 1.27% 1.10%
Portfolio Turnover Rate......... 5.94%(5) 3.65% 21.96% 5.94%(5) 3.65% 21.96%
Net Assets, end of year (000's omitted)..... $5,671 $12,506 $12,972 $1,745 $6,569 $8,256
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
PAGE 8
<TABLE>
<CAPTION>
COLORADO SERIES
-------------------------------------
CLASS A SHARES CLASS B SHARES
---------------- ---------------
YEAR ENDED APRIL 30, 1995(1)
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period....................... $12.50 $12.50
------ ------
INVESTMENT OPERATIONS:
Investment income-net...................................... .76 .69
Net realized and unrealized (loss) on investments.......... (.07) (.07)
------ ------
TOTAL FROM INVESTMENT OPERATIONS........................... .69 .62
------ ------
DISTRIBUTIONS:
Dividends from investment income-net....................... (.76) (.69)
------ ------
Net asset value, end of period............................. $12.43 $12.43
======= =======
TOTAL INVESTMENT RETURN(2)................................... 5.83%(3) 5.26%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... - .50%(3)
Ratio of net investment income to average net assets....... 6.20%(3) 5.58%(3)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.................... 1.99%(3) 1.97%(3)
Portfolio Turnover Rate.................................... 21.81%(4) 21.81%(4)
Net Assets, end of period (000's omitted).................. $1,003 $3,199
(1) From May 6, 1994 (commencement of operations) to April 30, 1995.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 9
<TABLE>
<CAPTION>
CONNECTICUT SERIES
--------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
------------------------------------------------ ------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------------------------ ------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $11.00 $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.89 $12.26 $11.80
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income_net........... .76 .81 .80 .77 .72 .71 .68 .67 .18 .61 .61
Net realized and unrealized
gain (loss) on investments..... (.28) .38 (.15) .40 .17 .81 (.42) (.05) .37 (.43) (.04)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS... .48 1.19 .65 1.17 .89 1.52 .26 .62 .55 .18 .57
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income_net... (.76) (.81) (.80) (.77) (.72) (.71) (.68) (.67) (.18) (.61) (.61)
Dividends from net realized
gain on investments..... - (.05) (.02) - - - (.03) - - (.03) -
Dividends in excess of net realized
gain on investments........ - - - - - - - - - - -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS................ (.76) (.86) (.82) (.77) (.72) (.71) (.71) (.67) (.18) (.64) (.61)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year....... $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76 $12.26 $11.80 $11.76
====== ====== ====== ======= ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)...... 5.00%(4) 11.54% 5.93% 11.10% 8.14% 13.62% 1.92% 5.47% 16.08%(4) 1.26% 4.99%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets...................... -_ -_ -_ .21% .52% .69% .80% .89% 1.12%(4) 1.36% 1.41%
Ratio of net investment income
to average net assets..... 7.31%(4) 7.24% 7.05% 6.81% 6.30% 5.93% 5.44% 5.77% 4.57%(4) 4.78% 5.21%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation
(limited to the expense limitation provision
of the Management Agreement).... 1.50%(4) 1.42% 1.10% .75% .41% .21% .09% .01% .12%(4) .08% .01%
Portfolio Turnover Rate........ 91.09%(5) 72.52% 12.62% 6.30% 8.53% 24.22% 10.83% 10.48% 24.22% 10.83% 10.48%
Net Assets, end of year
(000's omitted)..... $11,641 $31,056 $83,206 $183,788 $280,305 $360,020 $364,182 $335,964 $9,492 $32,246 $35,425
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 10
<TABLE>
<CAPTION>
FLORIDA SERIES
---------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
--------------------------------------------------------------- -------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
--------------------------------------------------------------- -------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year. $12.00 $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.59 $15.01 $14.42
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.......... .92 1.02 1.02 .99 .95 .92 .85 .81 .24 .77 .73
Net realized and unrealized
gain (loss) on investments .85 .63 (.11) .61 .41 .86 (.51) .12 .42 (.51) .13
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS..... 1.77 1.65 .91 1.60 1.36 1.78 .34 .93 .66 .26 .86
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.92) (1.02) (1.02) (.99) (.95) (.92) (.85) (.81) (.24) (.77) (.73)
Dividends from net realized
gain on investments........ - - (.03) (.02) (.01) (.17) (.04) (.04) - (.04) (.04)
Dividends in excess of net
realized gain on investments..... - - - - - - (.04) - - (.04) -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS........... (.92) (1.02) (1.05) (1.01) (.96) (1.09) (.93) (.85) (.24) (.85) (.77)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year....... $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51 $15.01 $14.42 $14.51
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)......... 16.24%(4) 13.32% 6.83% 12.40% 10.09% 12.84% 2.14% 6.71% 15.60%(4) 1.54% 6.21%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... -_ -_ -_ .21% .52% .69% .80% .90% 1.12%(4) 1.34% 1.41%
Ratio of net investment income
to average net assets...... 7.76%(4) 7.26% 7.24% 7.11% 6.65% 6.21% 5.61% 5.67% 4.87%(4) 4.91% 5.13%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited to
the expense limitation provision
of the Management Agreement)... 1.50%(4) 1.50% 1.08% .74% .41% .21% .10% .01% .12%(4) .09% .01%
Portfolio Turnover Rate......... 31.25%(5) 17.16% 27.69% .28%20 .99% 33.18% 20.84% 50.62% 33.18% 20.84% 50.62%
Net Assets, end of year
(000's omitted)... $1,493 $15,061 $67,416 $177,927 $245,474 $299,775 $289,791 $252,406 $5,916 $22,476 $25,282
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 11
<TABLE>
<CAPTION>
GEORGIA SERIES
----------------------------------------
CLASS A SHARES CLASS B SHARES
------------ ---------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------- -------------------
PER SHARE DATA: 1993(1) 1994 1995 1993(2) 1994 1995
----- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $12.50 $13.27 $12.69 $12.71 $13.27 $12.69
------ ------ ----- ----- ------ ------
INVESTMENT OPERATIONS:
Investment income-net............ .51 .73 .73 .20 .67 .66
Net realized and unrealized
gain (loss) on investments........ .77 (.58) .11 .56 (.58) .11
------ ------ ----- ----- ------ ------
TOTAL FROM INVESTMENT OPERATIONS....... 1.28 .15 .84 .76 .09 .77
------ ------ ----- ----- ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.... (.51) (.73) (.73) (.20) (.67) (.66)
------ ------ ----- ----- ------ ------
Net asset value, end of year.... $13.27 $12.69 $12.80 $13.27 $12.69 $12.80
====== ====== ====== ===== ====== =====
TOTAL INVESTMENT RETURN(3)........ 15.91%(4) .97% 6.87% 20.66%(4) .46% 6.33%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets..... -_ .07% .25% .50%(4) .58% .75%
Ratio of net investment income to
average net assets......... 5.55%(4) 5.41% 5.80% 4.60%(4) 4.85% 5.27%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation...... 1.46%(4) 1.02% .78% 1.37%(4) 1.02% .80%
Portfolio Turnover Rate......... 37.79%(5) 6.76% 34.04% 37.79%(5) 6.76% 34.04%
Net Assets, end of year (000's omitted).... $7,304 $10,058 $8,985 $6,319 $16,243 $19,429
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 12
<TABLE>
<CAPTION>
MARYLAND SERIES
-----------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
------------------------------------------------ -------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------------------------- --------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.50 $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.64 $13.02 $12.46
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net............ .80 .87 .86 .85 .79 .76 .73 .70 .20 .65 .63
Net realized and unrealized gain
(loss) on investments........... (1.12) .34 (.09) .53 .35 .68 (.53) .08 .38 (.53) .08
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... (.32) 1.21 .77 1.38 1.14 1.44 .20 .78 .58 .12 .71
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.80) (.87) (.86) (.85) (.79) (.76) (.73) (.70) (.20) (.65) (.63)
Dividends from net realized
gain on investments........ - - (.02) (.01) (.05) (.09) (.03) - - (.03) -
Dividends in excess of net realized
gain on investments........... - - - - - - - - - - -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS............ (.80) (.87) (.88) (.86) (.84) (.85) (.76) (.70) (.20) (.68) (.63)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year........ $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54 $13.02 $12.46 $12.54
===== ====== ====== ====== ====== ====== ====== ===== ====== ====== ======
TOTAL INVESTMENT RETURN(3)......... (2.50%)(4) 11.05% 6.69% 12.24% 9.68% 11.93% 1.33% 6.52% 15.74%(4) .75% 5.94%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets.......... -_ -_ -_ .21% .53% .69% .80% .90% 1.09%(4) 1.37% 1.44%
Ratio of net investment income to
average net assets.......... 7.44%(4) 7.26% 7.12% 6.98% 6.40% 5.93% 5.51% 5.69% 4.55%(4) 4.82% 5.13%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation provision of
the Management Agreement)....... 1.50%(4) 1.50% 1.11% .75% .41% .22% .10% .01% .12%(4) .08% .01%
Portfolio Turnover Rate......... 75.21%(5) 8.67% 30.03% 1.45% 16.21% 17.92% 10.27% 35.39% 17.92% 10.27% 35.39%
Net Assets, end of year
(000's omitted)......... $4,353 $24,383 $85,794 $179,959 $254,240 $337,307 $335,518 $301,834 $5,931 $30,527 $35,090
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 13
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
-----------------------------------------------------------
CLASS A SHARES CLASS B SHARES
------------------------------------------------------------ ------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------------------------------------ -------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $11.50 $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.79 $12.13 $11.63
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net............ .76 .83 .82 .79 .75 .73 .71 .69 .19 .64 .63
Net realized and unrealized gain
(loss) on investments........... (.96) .38 (.23) .37 .36 .73 (.44) (.06) .34 (.45) (.06)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS...... (.20) 1.21 .59 1.16 1.11 1.46 .27 .63 .53 .19 .57
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.76) (.83) (.82) (.79) (.75) (.73) (.71) (.69) (.19) (.64) (.63)
Dividends from net realized
gain on investments...... - - - (.01) - (.01) (.05) - - (.05) -
Dividends in excess of net realized
gain on investments....... - - - - - - - (.05) - - (.05)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS........ (.76) (.83) (.82) (.80) (.75) (.74) (.76) (.74) (.19) (.69) (.68)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year....... $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53 $12.13 $11.63 $11.52
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)........... (1.67%)(4) 11.91% 5.49% 11.23% 10.32% 13.14% 2.08% 5.72% 15.56%(4) 1.44% 5.15%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets....... _ _ _ .19% .55% .69% .82% .94% 1.15%(4) 1.36% 1.45%
Ratio of net investment income
to average net assets...... 7.63%(4) 7.58% 7.40% 7.21% 6.65% 6.16% 5.80% 6.04% 4.92%(4) 5.18% 5.47%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation provision of
the Management Agreement)....... 1.50%(4) 1.48% 1.11% .78% .41% .24% .11% .01% .13%(4) .10% .01%
Portfolio Turnover Rate......... 36.11%(5) 17.76% 28.44% 47.07% 24.75% 11.36% 12.04% 13.62% 11.36% 12.04% 13.62%
Net Assets, end of year
(000's omitted)...... $5,174 $21,578 $43,375 $57,328 $66,873 $79,701 $76,865 $72,731 $1,066 $3,702 $4,220
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 14
<TABLE>
<CAPTION>
MICHIGAN SERIES
--------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
--------------------------------------------------------------- --------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
--------------------------------------------------------------- --------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $13.00 $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.20 $15.64 $15.27
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net............. 1.00 1.07 1.05 1.01 .95 .92 .89 .85 .24 .80 .77
Net realized and unrealized
gain (loss) on investments....... .45 .65 (.27) .54 .46 .98 (.30) .11 .44 (.29) .10
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS... 1.45 1.72 .78 1.55 1.41 1.90 .59 .96 .68 .51 .87
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (1.00) (1.07) (1.05) (1.01) (.95) (.92) (.89) (.85) (.24) (.80) (.77)
Dividends from net realized
gain on investments.............. - - (.03) - - (.13) (.08) (.24) - (.08) (.24)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS........... (1.00) (1.07) (1.08) (1.01) (.95) (1.05) (.97) (1.09) (.24) (.88) (1.01)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year........ $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14 $15.64 $15.27 $15.13
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3).......... 12.32%(4) 13.25% 5.59% 11.61% 10.12% 13.25% 3.65% 6.65% 15.50%(4) 3.11% 6.01%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets........ - - - .20% .53% .69% .81% .92% 1.18%(4) 1.38% 1.44%
Ratio of net investment income
to average net assets....... 7.97%(4) 7.49% 7.23% 7.07% 6.47% 6.01 5.56% 5.66% 4.85%(4) 4.88% 5.10%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement)....... 1.50%(4) 1.50% 1.16% .79% .42% .25% .11% .01% .14%(4) .09% .01%
Portfolio Turnover Rate........... 48.80%(5) 32.72% 20.23% 27.31% 21.42% 14.99% 19.96% 48.30% 14.99% 19.96% 48.30%
Net Assets, end of year
(000's omitted)....... $1,671 $8,548 $56,699 $111,696 $145,159 $184,138 $187,405 $176,604 $3,581 $13,861 $16,471
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 15
<TABLE>
<CAPTION>
MINNESOTA SERIES
------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
------------------------------------------------------------ ----------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------------------------------------ ----------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $13.50 $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.86 $15.32 $14.74
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net............. .97 1.07 1.04 1.02 .96 .92 .87 .83 .24 .78 .75
Net realized and unrealized gain
(loss) on investments......... (.13) .55 (.13) .56 .36 .77 (.53) .18 .46 (.52) .18
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS...... .84 1.62 .91 1.58 1.32 1.69 .34 1.01 .70 .26 .93
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.97) (1.07) (1.04) (1.02) (.96) (.92) (.87) (.83) (.24) (.78) (.75)
Dividends from net realized
gain on investments.......... - - (.05) (.02) (.01) (.09) (.06) - - (.06) -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Total Distributions............. (.97) (1.07) (1.09) (1.04) (.97) (1.01) (.93) (.83) (.24) (.84) (.75)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year....... $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90 $15.32 $14.74 $14.92
====== ====== ====== ====== ====== ====== ====== ====== ====== ===== ======
TOTAL INVESTMENT RETURN(3)......... 7.01%(4) 12.57% 6.67% 11.89% 9.45% 11.96% 2.08% 7.14% 16.32%(4) 1.55% 6.57%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... -_ -_ -_ .20% .53% .69% .80% .90% 1.16%(4) 1.38% 1.44%
Ratio of net investment income to
average net assets....... 7.79%(4) 7.66% 7.25% 7.19% 6.53% 6.13% 5.61% 5.68% 4.83%(4) 4.91% 5.13%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement)....... 1.50%(4) 1.50% 1.16% .79% .41% .24% .11% .01% .14%(4) .09% .01%
Portfolio Turnover Rate.......... 70.26%(5) 31.64% 23.48% 14.04% 12.32% 23.42% 12.21% 51.95% 23.42% 12.21% 51.95%
Net Assets, end of year
(000's omitted)... $4,331 $13,019 $46,428 $85,066 $122,782 $148,765 $155,657 $145,444 $4,633 $21,004 $23,217
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 16
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES
---------------------------------------------------
CLASS A SHARES CLASS B SHARES
----------------------- --------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
----------------------- --------------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1993(2) 1994 1995
-------- ---- ---- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $12.00 $12.39 $13.40 $12.73 $12.90 $13.39 $12.72
------ ------ ------ ------- ------ ------- ------
INVESTMENT OPERATIONS:
Investment income-net............. .62 .78 .74 .70 .20 .66 .64
Net realized and unrealized gain
(loss) on investments........ .39 1.02 (.67) (.01) .49 (.67) (.01)
------ ------ ------ ------- ------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS.... 1.01 1.80 .07 .69 .69 (.01) .63
------ ------ ------ ------- ------ ------- ------
DISTRIBUTIONS:
Dividends from investment income-net....... (.62) (.78) (.74) (.70) (.20) (.66) (.64)
Dividends from net realized
gain on investments.......... - (.01) - - - - -
------ ------ ------ ------- ------ ------- ------
TOTAL DISTRIBUTIONS............... (.62) (.79) (.74) (.70) (.20) (.66) (.64)
------ ------ ------ ------- ------ ------- ------
Net asset value, end of year...... $12.39 $13.40 $12.73 $12.72 $13.39 $12.72 $12.71
====== ======= ====== ======= ======= ====== ======
TOTAL INVESTMENT RETURN(3).......... 11.36%(4) 14.97% .29% 5.70% 18.53%(4) (.27%) 5.12%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....... - .29% .44% .65% .79%(4) 1.00% 1.18%
Ratio of net investment income to
average net assets....... 6.35%(4) 5.94% 5.38% 5.63% 4.47%(4) 4.78% 5.08%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation 1.14%(4) .76% .50% .31% .56%(4) .48% .30%
Portfolio Turnover Rate........... 15.01%(5) 5.76% 11.62% 12.02% 5.76% 11.62% 12.02%
Net Assets, end of year (000's omitted)..... $26,387 $56,284 $68,074 $50,205 $13,145 $38,968 $42,310
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 17
<TABLE>
<CAPTION>
OHIO SERIES
-------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $14.50 $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.69 $13.09 $12.71
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.............. .80 .89 .88 .86 .80 .77 .74 .73 .20 .66 .66
Net realized and unrealized
gain (loss) on investments..... (3.32) .48 (.08) .46 .36 .81 (.36) (.05) .40 (.35) (.05)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... (2.52) 1.37 .80 1.32 1.16 1.58 .38 .68 .60 .31 .61
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.80) (.89) (.88) (.86) (.80) (.77) (.74) (.73) (.20) (.66) (.66)
Dividends from net realized
gain on investments....... - - (.04) - (.01) (.07) (.03) (.03) - (.03) (.03)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS................. (.80) (.89) (.92) (.86) (.81) (.84) (.77) (.76) (.20) (.69) (.69)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year...... $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62 $13.09 $12.71 $12.63
====== ====== ====== ====== ======= ====== ====== ====== ====== ====== =====
TOTAL INVESTMENT RETURN(3)........... (18.49%)(4) 12.72% 6.95% 11.84% 9.97% 13.24% 2.78% 5.63% 16.36%(4) 2.24% 5.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets..... - - - .21% .52% .70% .81% .92% 1.17%(4) 1.38% 1.44%
Ratio of net investment income
to average net assets........ 7.79%(4) 7.57% 7.30% 7.20% 6.53% 6.03% 5.57% 5.84% 4.62%(4) 4.89% 5.29%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement)...... 1.50%(4) 1.50% 1.12% .78% .41% .23% .12% .01% .13%(4) .10% .01%
Portfolio Turnover Rate......... 11.10%(5) 14.49% 14.58% 3.00% 13.68% 6.08% 7.73% 39.53% 6.08% 7.73% 39.53%
Net Assets, end of year
(000's omitted)...... $8,043 $31,420 $92,864 $176,223 $243,074 $295,564 $293,706 $273,225 $8,482 $27,657 $32,797
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 18
<TABLE>
<CAPTION>
OREGON SERIES
-----------------------------------
CLASS A SHARES CLASS B SHARES
--------------- ----------------
YEAR ENDED APRIL 30, 1995 (1)
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period....................... $12.50 $12.50
------- ------
INVESTMENT OPERATIONS:
Investment income-net...................................... .76 .69
Net unrealized gain on investments......................... .45 .45
------- ------
TOTAL FROM INVESTMENT OPERATIONS........................... 1.21 1.14
------- ------
DISTRIBUTIONS:
Dividends from investment income-net....................... (.76) (.69)
------- ------
Net asset value, end of period............................. $12.95 $12.95
====== =======
TOTAL INVESTMENT RETURN(2)................................... 10.12%(3) 9.57%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... .01%(3) .51%(3)
Ratio of net investment income to average net assets....... 5.95%(3) 5.47%(3)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.................... 1.59%(3) 1.62%(3)
Portfolio Turnover Rate.................................... - -
Net Assets, end of period (000's omitted).................. $2,852 $1,483
(1) From May 6, 1994 (commencement of operations) to April 30, 1995.
(2) Exclusive of sales load.
(3) Annualized.
</TABLE>
Page 19
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES
----------------------------------------------------------
CLASS A SHARES CLASS B SHARES
----------------------------------------------------------- ------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
----------------------------------------------------------- ------------
PPER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $15.00 $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.10 $16.60 $16.01
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net........... .85 1.13 1.13 1.12 1.06 1.02 .95 .91 .26 .85 .83
Net realized and unrealized
gain (loss) on investments....... (.77) .55 (.08) .55 .56 .99 (.57) .11 .50 (.56) .10
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS...... .08 1.68 1.05 1.67 1.62 2.01 .38 1.02 .76 .29 .93
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net.. (.85) (1.13) (1.13) (1.12) (1.06) (1.02) (.95) (.91) (.26) (.85) (.83)
Dividends from net realized
gain on investments...... - - (.02) (.02) (.04) (.11) (.03) - - (.03) -
Dividends in excess of net
realized gain on investments... - - - - - - - - - - -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS............. (.85) (1.13) (1.15) (1.14) (1.10) (1.13) (.98) (.91) (.26) (.88) (.83)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year.......... $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12 $16.60 $16.01 $16.11
====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
TOTAL INVESTMENT RETURN(3)........ .87%(4) 12.21% 7.20% 11.74% 10.97% 13.19% 2.17% 6.65%1 6.39%(4) 1.65% 6.02%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... -_ -_ -_ .22% .56% .69% .81% .92% 1.14%(4) 1.38% 1.44%
Ratio of net investment income
to average net assets...... 7.08%(4) 7.46% 7.38% 7.32% 6.75% 6.24% 5.61% 5.77% 4.90%(4) 4.95% 5.22%
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation
(limited to the expense limitation provision
of the Management Agreement)...... 1.50%(4) 1.50% 1.24% .79% .41% .25% .12% .01% .15%(4) .10% .01%
Portfolio Turnover Rate........ 67.48%(5) 25.10% 59.15% 25.74% 38.97% 8.64% 7.21% 55.19% 8.64% 7.21% 55.19%
Net Assets, end of year
(000's omitted)... $2,870 $12,083 $51,418 $113,439 $158,437 $220,920 $235,619 $219,949 $14,631 $59,057 $70,062
(1) From July 30, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 20
<TABLE>
<CAPTION>
TEXAS SERIES
--------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
-------------------------------------------------------------- -------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------------------------------------- --------------------
PPER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1993(2) 1994 1995
------ ---- ---- ---- ---- ----- ----- ----- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $15.50 $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.52 $21.23 $20.41
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net........ 1.33 1.45 1.44 1.40 1.36 1.29 1.25 1.22 .33 1.13 1.10
Net realized and unrealized
gain (loss) on investments 2.39 .75 (.05) .67 .69 1.37 (.66) .28 .71 (.66) .28
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS..... 3.72 2.20 1.39 2.07 2.05 2.66 .59 1.50 1.04 .47 1.38
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (1.33) (1.45) (1.44) (1.40) (1.36) (1.29) (1.25) (1.22) (.33) (1.13) (1.10)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Dividends from net realized
gain on investments........ - - (.01) - (.05) (.03) (.13) - - (.13) -
Dividends in excess of net
realized gain on investments.... - -- - - - - (.03) - - (.03) -
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS............. (1.33) (1.45) (1.45) (1.40) (1.41) (1.32) (1.41) (1.22) (.33) (1.29) (1.10)
------ ------ ----- ----- ------ ------ ------ ----- ------ ------ ------
Net asset value, end of year...... $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69 $21.23 $20.41 $20.69
====== ===== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)...... 26.23%(4) 12.79% 7.55% 11.54% 10.97% 13.80% 2.62% 7.63% 17.60%(4) 2.05% 7.05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... - - - - .15% .36% .39% .37% .82%(4) .94% .89%
Ratio of net investment
income to average net assets..... 7.94%(4) 7.90% 7.50% 7.29% 6.78% 6.18% 5.78% 6.01% 4.81%(4) 5.15% 5.46%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement).... 1.50%(4) 1.50% 1.50% 1.27% .88% .62% .55% .55% .49%(4) .54% .55%
Portfolio Turnover Rate...... 47.85%(5) 6.84% 2.62% 1.95% 7.49% 14.94% 9.68% 38.68% 14.94% 9.68% 38.68%
Net Assets, end of year
(000's omitted).... $1,553 $2,902 $5,642 $15,139 $37,208 $72,037 $76,277 $68,103 $6,373 $15,878 $16,818
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 21
<TABLE>
<CAPTION>
VIRGINIA SERIES
--------------------------------------------------
CLASS A SHARES CLASS B SHARES
-------------------- -------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------- --------------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1993(2) 1994 1995
------ ----- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $15.00 $15.50 $16.80 $16.02 $16.25 $16.80 $16.02
------ ------ ----- ------ ------ ----- -----
INVESTMENT OPERATIONS:
Investment income-net............. .78 1.00 .97 .94 .26 .88 .85
Net realized and unrealized
gain (loss) on investments....... .50 1.31 (.75) .04 .55 (.75) .04
------ ------ ----- ------ ------ ----- -----
TOTAL FROM INVESTMENT OPERATIONS.. 1.28 2.3 1.22 .98 .81 .13 .89
------ ------ ----- ------ ------ ----- -----
DISTRIBUTIONS:
Dividends from investment income-net.... (.78) (1.00) (.97) (.94) (.26) (.88) (.85)
Dividends from net realized
gain on investments....... - (.01) (.01) (.03) - (.01) -
Dividends in excess of net
realized gain on investments...... - - (.02) - - (.02) (.03)
------ ------ ----- ------ ------ ----- -----
TOTAL DISTRIBUTIONS............... (.78) (1.01) (1.00) (.97) (.26) (.91) (.88)
------ ------ ----- ------ ------ ----- -----
Net asset value, end of year...... $15.50 $16.80 $16.02 $16.03 $16.80 $16.02 $16.03
====== ====== ====== ======= ====== ====== ======
TOTAL INVESTMENT RETURN(3).......... 11.54%(4) 15.32% 1.10% 6.39% 17.22%(4) .54% 5.83%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets... - .27% .46% .39% .83%(4) 1.01% .90%
Ratio of net investment income
to average net assets....... 6.42%(4) 6.02% 5.64% 5.93% 4.62%(4) 5.02% 5.40%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation... 1.22%(4) .76% .55% .55% .54%(4) .54% .55%
Portfolio Turnover Rate........... 5.96%(5) 9.32% 30.69% 21.60% 9.32% 30.69% 21.60%
Net Assets, end of year (000's omitted).. $23,096 $55,627 $65,279 $62,428 $8,402 $25,254 $28,813
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Further information about each Series' performance is contained in its
annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this
Prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you three methods of purchasing each Series'
shares; you may choose the Class of shares that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your shares and any other relevant circumstances. Each Series' share
represents an identical pro rata interest in the Series' investment
portfolio.
As to each Series, Class A shares are sold at net asset value
per share plus a maximum initial sales charge of 4.50% of the public
offering price imposed at the time of purchase. The initial sales charge
may be reduced or waived for certain purchases. See "How to Buy Fund
Shares _ Class A Shares." These shares are subject to an annual service
fee at the rate of .25 of 1% of the value of the average daily net assets
of Class A. See "Distribution Plan and Shareholder Services Plan _
Shareholder Services Plan."
As to each Series, Class B shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Fund.
Class B shares are subject to a maximum 3% contingent deferred sales
charge ("CDSC"), which is assessed only if you redeem Class B shares
within the first five years of their purchase. See "How to Buy Fund
Shares _ Class B Shares" and "How to Redeem Fund Shares _ Contingent
Deferred Sales Charge _ Class B Shares." These shares also are subject to
an annual service fee at the rate of .25 of 1% of the value of the
average daily net assets of Class B. In addition, Class B shares are
subject to an annual distribution fee at the rate of .50 of 1% of the
value of the average daily net assets of Class B. See "Distribution Plan
and
Page 22
Shareholder Services Plan." The distribution fee paid by Class B will
cause such Class to have a higher expense ratio and to pay lower
dividends than Class A. Approximately six years after the date of
purchase, Class B shares of a Series automatically will convert to Class
A shares of such Series, based on the relative net asset values for
shares of each Class, and will no longer be subject to the distribution
fee. Class B shares that have been acquired through the reinvestment of
dividends and distributions will be converted on a pro rata basis
together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the
total Class B shares not acquired through the reinvestment of dividends
and distributions.
As to each Series, Class C shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Series.
Class C shares are subject to a 1% CDSC, which is assessed only if you
redeem Class C shares within one year of purchase. See "How to Buy Fund
Shares _ Class C Shares" and "How to Redeem Fund Shares _ Contingent
Deferred Sales Charge _ Class C Shares." These shares also are subject
to an annual service fee at the rate of .25 of 1%, and an annual
distribution fee at the rate of .75 of 1%, of the value of the average
daily net assets of Class C. See "Distribution Plan and Shareholder
Services Plan". The distribution fee paid by Class C will cause such
Class to have a higher expense ratio and to pay lower dividends than
Class A.
The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution fees on Class B or Class C shares may exceed the initial
sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment
time frame. For example, while Class C shares have a shorter CDSC period
than Class B shares, Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing distribution fee. Thus, Class B
shares may be more attractive than Class C shares to investors with
long-term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares,
and for investors who invest between $250,000 and $999,999 in Fund shares
with long-term investment outlooks. Class A shares will not be
appropriate for investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios. Each portfolio is treated as a separate entity
for certain matters under the Investment Company Act of 1940 and for
other purposes, and a shareholder of one Series is not deemed to be a
shareholder of any other Series. As described below, for certain matters
Fund shareholders vote together as a group; as to others they vote
separately by Series. When used herein, the term "State" refers to the
State after which a Series is named.
INVESTMENT OBJECTIVE
The Fund's goal is to maximize current income exempt from
Federal income tax and, where applicable, from State income taxes for
residents of the States of Arizona, Colorado, Connecticut, Florida,
Georgia, Maryland, Massachusetts, Michigan, Minnesota, North Carolina,
Ohio, Oregon, Pennsylvania, Texas and Virginia, without undue risk. To
accomplish
Page 23
this goal, each Series invests primarily in the debt
securities of the State after which it is named, such State's political
subdivisions, authorities and corporations, the interest from which is,
in the opinion of bond counsel to the issuer, exempt from Federal and
such State's personal income taxes (collectively, "State Municipal
Obligations" or when the context so requires, "Arizona Municipal
Obligations," "Colorado Municipal Obligations," "Connecticut Municipal
Obligations," "Florida Municipal Obligations," etc.). To the extent
acceptable State Municipal Obligations are at any time unavailable for
investment, such Series will invest temporarily in other debt securities
the interest from which is, in the opinion of bond counsel to the issuer,
exempt from Federal income tax. Each Series' investment objective cannot
be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940) of such Series' outstanding voting
shares. There can be no assurance that the Series' investment objective
will be achieved.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of
bond counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds
for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations
are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase agree-
ments which are similar to installment purchase contracts for property or
equipment issued by municipalities. Municipal Obligations bear fixed,
floating or variable rates of interest, which are determined in some
instances by formulas under which the Municipal Obligation's interest
rate will change directly or inversely to changes in interest rates or an
index, or multiples thereof, in many cases subject to a maximum and
minimum. Certain Municipal Obligations are subject to redemption at a
date earlier than their stated maturity pursuant to call options, which
may be separated from the related Municipal Obligation and purchased and
sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that at least 80% of
the value of each Series' net assets (except when maintaining a temporary
defensive position) will be invested in Municipal Obligations and at
least 65% of the value of each Series' net assets (except when
maintaining a temporary defensive position) will be invested in bonds,
debentures and other debt instruments. At least 65% of the value of each
Series' net assets will be invested in Municipal Obligations issued by
issuers in such State, as defined above, and the remainder may be
invested in securities that are not State Municipal Obligations and
therefore may be subject to State income taxes. See "Risk Factors _
Investing in State Municipal Obligations" below, and "Dividends,
Distributions and Taxes."
At least 70% of the value of each Series' net assets must
consist of Municipal Obligations which, in the case of bonds, are rated
no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
by Standard & Poor's Corporation ("S&P") or Fitch Investors Service, Inc.
("Fitch"). Each Series may invest up to 30% of the value of its net
assets in Municipal Obligations which, in the case of bonds, are rated
lower than Baa by Moody's and BBB by S&P and Fitch and as low as the
lowest rating assigned by Moody's, S&P or Fitch. Each Series may
Page 24
invest in short-term Municipal Obligations which are rated in the two
highest rating categories by Moody's, S&P or Fitch. See "Appendix B"
in the Statement of Additional Information. Municipal Obligations
rated BBB by S&P or Fitch or Baa by Moody's are considered investment
grade obligations; those rated BBB by S&P or Fitch are regarded as having
an adequate capacity to pay principal and interest, while those rated
Baa by Moody's are considered medium grade obligations which lack
outstanding investment characteristics and have speculative
characteristics. Investments rated Ba or lower by Moody's and BB or lower
by S&P and Fitch ordinarily provide higher yields but involve greater
risk because of their speculative characteristics. Each Series may invest
in Municipal Obligations rated C by Moody's or D by S&P or Fitch, which
is such rating organizations' lowest rating and indicates that the
Municipal Obligation is in default and interest and/or repayment of
principal is in arrears. See "Risk Factors _ Lower Rated Bonds" below for
a further discussion of certain risks. Each Series also may invest in
securities which, while not rated, are determined by The Dreyfus Corpor-
ation to be of comparable quality to the rated securities in which the
Series may invest; for purposes of the 70% requirement described in this
paragraph, such unrated securities shall be deemed to have the rating so
determined. Each Series also may invest in Taxable Investments of the
quality described below. Under normal market conditions, the weighted
average maturity of each Series' portfolio is expected to exceed ten years.
In addition to usual investment practices, each Series may
use speculative investment techniques such as short-selling and lending
its portfolio securities. Each Series also may purchase, hold or deal in
futures contracts and options on futures contracts, as permitted by
applicable law. Futures and options on futures transactions involve
so-called "derivative securities." See "Investment Techniques" below, and
"Dividends, Distributions and Taxes."
Each Series may invest more than 25% of the value of its
total assets in Municipal Obligations which are related in such a way
that an economic, business or political development or change affecting
one such security also would affect the other securities; for example,
securities the interest upon which is paid from revenues of similar types
of projects. As a result, each Series may be subject to greater risk as
compared to a fund that does not follow this practice.
From time to time, a Series may invest more than 25% of the
value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), issued after August 7, 1986, while
exempt from Federal income tax, is a preference item for the purpose of
the alternative minimum tax. Where a regulated investment company
receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a
preference item to shareholders. Each Series may invest without
limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Risk Factors _ Other Investment Considerations."
Each Series may purchase floating and variable rate demand
notes and bonds, which are tax exempt obligations ordinarily having
stated maturities in excess of one year, but which permit the holder to
demand payment of principal at any time, or at specified intervals.
Variable rate demand notes include master demand notes which are
obligations that permit the Series to invest fluctuating amounts, at
varying rates of interest, pursuant to direct arrangements between such
Series, as lender, and the borrower. These obligations permit daily
changes in the amount borrowed. As mutually agreed, the Fund may increase
or decrease the amounts under these obligations or the borrower may repay
the amount borrowed without penalty. Because these obligations are direct
lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations,
although they are
Page 25
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. Each obligation
purchased will meet the quality criteria established for the purchase of
Municipal Obligations. The Dreyfus Corporation, on behalf of the Fund,
will consider on an ongoing basis the creditworthiness of the issuers of
the floating and variable rate demand obligations in each Series'
portfolio.
Each Series may purchase from financial institutions
participation interests in Municipal Obligations (such as industrial
development bonds and municipal lease/purchase agreements). A
participation interest gives the Series an undivided interest in the Muni-
cipal Obligation in the proportion that the Series' participation
interest bears to the total principal amount of the Municipal
Obligation. These instruments have fixed, floating or variable rates
of interest. If the participation interest is unrated, it will be
backed by an irrevocable letter of credit or guarantee of a bank that the
Board of Trustees has determined meets the prescribed quality
standards for banks set forth below, or the payment obligation otherwise
will be collateralized by U.S. Government securities. For certain partici-
pation interests, the Series will have the right to demand payment, on
not more than seven days' notice, for all or any part of the Series'
participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, each Series intends to exercise its
right to demand payment only upon a default under the terms of the
Municipal Obligation, as needed to provide liquidity to meet redemptions,
or to maintain or improve the quality of its investment portfolio.
Each Series may purchase tender option bonds. A tender option
bond is a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing interest at a
fixed rate substantially higher than prevailing short-term tax exempt
rates, that has been coupled with the agreement of a third party, such as
a bank, broker-dealer or other financial institution, pursuant to which
such institution grants the security holders the option, at periodic
intervals, to tender their securities to the institution and receive the
face value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference
between the Municipal Obligation's fixed coupon rate and the rate, as
determined by a remarketing or similar agent at or near the commencement
of such period, that would cause the securities, coupled with the tender
option, to trade at par on the date of such determination. Thus, after
payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax exempt
rate. The Dreyfus Corporation, on behalf of the Fund, will consider on an
ongoing basis the creditworthiness of the issuer of the underlying
Municipal Obligation, of any custodian and of the third party provider of
the tender option. In certain instances and for certain tender option
bonds, the option may be terminable in the event of a default in payment
of principal or interest on the underlying Municipal Obligation and for
other reasons. No Series will invest more than 15% of the value of its
net assets in illiquid securities, which could include tender option
bonds as to which it cannot exercise the tender feature on not more than
seven days' notice if there is no secondary market available for these
obligations.
Each Series may acquire "stand-by commitments" with respect
to Municipal Obligations held in its portfolio. Under a stand-by
commitment, the Fund obligates a broker, dealer or bank to repurchase, at
the Fund's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise
of a stand-by commitment, therefore, is subject to the ability of the
seller to make payment on demand. The Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend
to exercise its rights thereunder for trading purposes. The Fund may pay
for stand-by commitments if such action is deemed necessary, thus
increasing to a degree the cost of the underlying Municipal Obligation
and similarly decreasing such security's yield to investors. Each Series
also may acquire call options on specific Municipal Obligations. A Series
generally
Page 26
would purchase these call options to protect the Series from
the issuer of the related Municipal Obligation redeeming, or other holder
of the call option from calling away, the Municipal Obligation before
maturity. The sale by the Series of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable
income by such Series.
Each Series may purchase custodial receipts representing the
right to receive certain future principal and interest payments on
Municipal Obligations which underlie the custodial receipts. A number of
different arrangements are possible. In a typical custodial receipt
arrangement, an issuer or a third party owner of Municipal Obligations
deposits such obligations with a custodian in exchange for two classes of
custodial receipts. The two classes have different characteristics, but,
in each case, payments on the two classes are based on payments received
on the underlying Municipal Obligations. One class has the
characteristics of a typical auction rate security, where at specified
intervals its interest rate is adjusted, and ownership changes, based on
an auction mechanism. This class's interest rate generally is expected to
be below the coupon rate of the underlying Municipal Obligations and
generally is at a level comparable to that of a Municipal Obligation of
similar quality and having a maturity equal to the period between
interest rate adjustments. The second class bears interest at a rate that
exceeds the interest rate typically borne by a security of comparable
quality and maturity; this rate also is adjusted, but in this case
inversely to changes in the rate of interest of the first class. If the
interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate
paid on the second class. In no event will the aggregate interest paid
with respect to the two classes exceed the interest paid by the
underlying Municipal Obligations. The value of the second class and
similar securities should be expected to fluctuate more than the value of
a Municipal Obligation of comparable quality and maturity and their
purchase by a Series should increase the volatility of its net asset
value and, thus, its price per share. These custodial receipts are sold
in private placements. Each Series also may purchase directly from
issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
Each Series may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing
for settlement in more than seven days after notice. As to these
securities, the Series is subject to a risk that should such Series
desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Series' net
assets could be adversely affected.
Each Series may invest in zero coupon securities which are
debt securities issued or sold at a discount from their face value which
do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). The
amount of the discount varies depending on the time remaining until
maturity or cash payment date, prevailing interest rates, liquidity of
the security and perceived credit quality of the issuer. Zero coupon
securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities
generally are more volatile than the market prices of interest-bearing
securities and are likely to respond to a greater degree to changes in
interest rates than interest-bearing securities having similar maturities
and credit qualities. Each Series may invest up to 5% of its assets in
zero coupon bonds which are rated below investment grade. See "Risk
Factors _ Lower Rated Bonds" and "Other Investment Considerations" below,
and "Investment Objective and Management Policies _ Risk Factors _ Lower
Rated Bonds" and "Dividends, Distributions and Taxes" in the Statement of
Additional Information.
Page 27
From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of a
Series' net assets), or for temporary defensive purposes, each Series may
invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of purchase, a
quality rating within the two highest grades of Moody's, S&P or Fitch;
obligations of the U.S. Government, its agencies or instrumentalities;
commercial paper rated not lower than P-1 by Moody's, A-1 by S&P or F-1
by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of one billion dollars or
more; time deposits; bankers' acceptances and other short-term bank
obligations; and repurchase agreements in respect of any of the
foregoing. Dividends paid by a Series that are attributable to income
earned by the Series from Taxable Investments will be taxable to
investors. See "Dividends, Distributions and Taxes." Except for temporary
defensive purposes, at no time will more than 20% of the value of a
Series' net assets be invested in Taxable Investments. When a Series has
adopted a temporary defensive position, including when acceptable State
Municipal Obligations are unavailable for investment by a Series, in
excess of 35% of such Series' net assets may be invested in securities
that are not exempt from Federal and, where applicable, from State income
taxes. Under normal market conditions, each Series anticipates that not
more than 5% of the value of its total assets will be invested in any one
category of Taxable Investments. In certain states, dividends and
distributions paid by a Series that are attributable to interest income
earned by the Series from direct obligations of the United States may not
be subject to state income tax. Taxable Investments are more fully
described in the Statement of Additional Information, to which reference
hereby is made.
INVESTMENT TECHNIQUES
Each Series may employ, among others, the investment
techniques described below to the extent permitted by applicable law. Use
of certain of these techniques may give rise to taxable income.
WHEN-ISSUED SECURITIES _ New issues of Municipal Obligations usually
are offered on a when-issued basis, which means that delivery and payment
for such Municipal Obligations ordinarily take place within 45 days after
the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the Municipal Obligations are
fixed at the time the Fund enters into the commitment. The Fund will make
commitments to purchase such Municipal Obligations only with the
intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable,
although any gain realized on such sale would be taxable. No Series will
accrue income in respect of a when-issued security prior to its stated
delivery date. No additional when-issued commitments will be made for a
Series if more than 20% of the value of such Series' net assets would be
so committed.
Municipal Obligations purchased on a when-issued basis and
the securities held in a Series' portfolio are subject to changes in
value (both generally changing in the same way, i.e., appreciating when
interest rates decline and depreciating when interest rates rise) based
upon the public's perception of the creditworthiness of the issuer and
changes, real or anticipated, in the level of interest rates. Municipal
Obligations purchased on a when-issued basis may expose a Series to risk
because they may experience such fluctuations prior to their actual
delivery. Purchasing Municipal Obligations on a when-issued basis can
involve the additional risk that the yield available in the market when
the delivery takes place actually may be higher than that obtained in the
transaction itself. A segregated account of the Fund consisting of cash,
cash equivalents or U.S. Government securities or other high quality
liquid debt securities at least equal at all times to the amount of the
when-issued commitments will be established and maintained at the Fund's
custodian bank. Purchasing Municipal Obligations on a when-issued basis
when a Series is fully or almost fully invested may result in greater
potential fluctuation in the value of such Series' net assets and its net
asset value per share.
Page 28
FUTURES TRANSACTIONS _ IN GENERAL _ Neither the Fund nor any Series
is a commodity pool. However, as a substitute for a comparable market
position in the underlying securities or for hedging purposes, each
Series may engage, to the extent permitted by applicable regulations, in
futures and options on futures transactions, as described below.
A Series' commodities transactions must constitute bona fide
hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission. In addition, the
Series may not engage in such transactions if the sum of the amount of
initial margin deposits and premiums paid for unexpired commodity
options, other than for bona fide hedging transactions, would exceed 5%
of the liquidation value of the Series' assets after taking into account
unrealized profits and unrealized losses on such contracts it has entered
into; provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5%. Pursuant to regulations and/or published
positions of the Securities and Exchange Commission, a Series may be
required to segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount generally equal
to the value of the underlying commodity. To the extent a Series engages
in the use of futures and options on futures for other than bona fide
hedging purposes, the Series may be subject to additional risk.
Initially, when purchasing or selling futures contracts the
Series will be required to deposit with the Fund's custodian in the
broker's name an amount of cash or cash equivalents up to approximately
10% of the contract amount. This amount is subject to change by the
exchange or board of trade on which the contract is traded and members of
such exchange or board of trade may impose their own higher requirements.
This amount is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract which is returned
to the Series upon termination of the futures position assuming all
contractual obligations have been satisfied. Subsequent payments, known
as "variation margin," to and from the broker will be made daily as the
price of the index or security underlying the futures contract
fluctuates, making the long and short positions in the futures contract
more or less valuable, a process known as "marking-to-market." At any
time prior to the expiration of a futures contract, the Series may elect
to close the position by taking an opposite position at the then
prevailing price, which will operate to terminate the Series' existing
position in the contract.
Although the Fund intends to purchase or sell futures
contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at a price
beyond the limit or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Series to substantial losses. If it is not possible or the
Series determines not to close a futures position in anticipation of
adverse price movements, the Series will be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract. However, no
assurance can be given that the price of the securities being hedged will
correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
To the extent a Series is engaging in a futures transaction
as a hedging device, because of the risk of an imperfect correlation
between securities in a Series' portfolio that are the subject of a
hedging transaction and the futures contract used as a hedging device, it
is possible that the hedge will not be fully effective if for example,
losses on the portfolio securities exceed gains on the futures contract
or losses on the futures contract exceed gains on the portfolio
securities. For futures contracts based on indices, the risk of imperfect
correlation increases as
Page 29
the composition of a Series' portfolio varies from the composition of the
index. In an effort to compensate for the imperfect correlation of move-
ments in the price of the securities being hedged and movements in the
price of futures contracts, a Series may buy or sell futures contracts in
a greater or lesser dollar amount than the dollar amount of the securities
being hedged if the historical volatility of the futures contract has
been less or greater than that of the securities. Such "over hedging" or
"under hedging" may adversely affect a Series' net investment results if
the market does not move as anticipated when the hedge is established.
Successful use of futures by a Series also is subject to The
Dreyfus Corporation's ability to correctly predict movements in the
direction of the market or interest rates. For example, if the Series has
hedged against the possibility of a decline in the market adversely
affecting the value of the securities held in its portfolio and prices
increase instead, the Series will lose part or all of the benefit of the
increased value of the securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Series has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. The Series may
have to sell such securities at a time when it may be disadvantageous to
do so.
An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
option exercise period. The writer of the option is required upon
exercise to assume an offsetting futures position (a short position if
the option is a call and a long position if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by
the writer and holder of the option will be accompanied by delivery of
the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case
of a put, the exercise price of the option on the futures contract.
Call options sold by a Series with respect to futures
contracts will be covered by, among other things, entering into a long
position in the same contract at a price no higher than the strike price
of the call option, or by ownership of the instruments underlying, or
instruments the prices of which are expected to move relatively
consistently with the instruments underlying, the futures contract. Put
options sold by a Series with respect to futures contracts will be
covered when, among other things, cash or liquid securities are placed in
a segregated account to fulfill the obligation undertaken.
Each Series may utilize municipal bond index futures to
protect against changes in the market value of the Municipal Obligations
in the Series' portfolio or which the Series intends to acquire.
Municipal bond index futures contracts are based on an index of long-term
Municipal Obligations. The index assigns relative values to the Municipal
Obligations included in the index, and fluctuates with changes in the
market value of such Municipal Obligations. The contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount
of cash based upon the difference between the value of the index at the
close of the last trading day of the contract and the price at which the
index contract was originally written. The acquisition or sale of a
municipal bond index futures contract enables the Fund to protect a
Series' assets from fluctuations in rates on tax exempt securities
without actually buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACT _ Each Series may purchase and sell interest rate futures
contracts and options on interest rate futures contracts as a substitute
for a comparable market position or to hedge against adverse movements in
interest rates.
To the extent the Series has invested in interest rate
futures contracts or options on interest rate futures contracts as a
substitute for a comparable market position, such Series will be subject
to the investment risks of having purchased the securities underlying the
contract.
Page 30
Each Series may purchase call options on interest rate
futures contracts to hedge against a decline in interest rates and may
purchase put options on interest rate futures contracts to hedge such
Series' portfolio securities against the risk of rising interest rates.
Each Series may sell call options on interest rate futures
contracts to partially hedge against declining prices of such Series'
portfolio securities. If the futures price at expiration of the option is
below the exercise price, the Series will retain the full amount of the
option premium which provides a partial hedge against any decline that
may have occurred in such Series' portfolio holdings. Each Series may
sell put options on interest rate futures contracts to hedge against
increasing prices of the securities which are deliverable upon exercise
of the futures contract. If the futures price at expiration of the option
is higher than the exercise price, the Series will retain the full amount
of the option premium which provides a partial hedge against any increase
in the price of securities which the Series intends to purchase. If a put
or call option sold for such Series is exercised, such Series will incur
a loss which will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in the value of a
Series' portfolio securities and changes in the value of its futures
positions, such Series' losses from existing options on futures may, to
some extent, be reduced or increased by changes in the value of its
portfolio securities.
Each Series also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate such
Series' options positions. No assurance can be given that such closing
transactions can be effected or that there will be a correlation between
price movements in the options on interest rate futures and price
movements in the Series' portfolio securities which are the subject of
the hedge. In addition, the Series' purchase of such options will be
based upon predictions as to anticipated interest rate trends, which
could prove to be inaccurate.
SHORT-SELLING _ Each Series may make short sales of securities,
which are transactions in which the Series sells a security it does not
own in anticipation of a decline in the market value of that security. To
complete such a transaction, the Series must borrow the security to make
delivery to the buyer. The Series then is obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Series. A Series will incur a loss as
a result of the short sale if the price of the security increases between
the date of the short sale and the date on which the Series replaces the
borrowed security. A Series will realize a gain if the security declines
in price between those dates.
No securities will be sold short if, after effect is given to
any such short sale, the total market value of all securities sold short
would exceed 25% of the value of a Series' net assets. No Series may sell
short the securities of any single issuer listed on a national securities
exchange to the extent of more than 5% of the value of such Series' net
assets. No Series may sell short the securities of any class of an issuer
to the extent, at the time of the transaction, of more than 5% of the
outstanding securities of that class.
In addition to the short sales discussed above, the Series
may make short sales "against the box," a transaction in which a Series
enters into a short sale of a security which such Series owns. At no time
will a Series have more than 15% of the value of its net assets in
deposits on short sales against the box.
FUTURE DEVELOPMENTS _ Each Series may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other derivative investments which are not
presently contemplated for use by the Series or which are not currently
available but which may be developed, to the extent such opportunities
are both consistent with the Fund's investment objective and legally
permissible for the Series. Before entering into such transactions or
making any such investment, appropriate disclosure will be provided in
the Fund's prospectus or statement of additional information.
Page 31
LENDING PORTFOLIO SECURITIES _ From time to time, each Series may
lend securities from its portfolio to brokers, dealers and other
financial institutions needing to borrow securities to complete certain
transactions. As to each Series, such loans may not exceed 331\3% of the
value of the Series' total assets. In connection with such loans, the
Series will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at
all times in an amount equal to at least 100% of the current market value
of the loaned securities. A Series can increase its income through the
investment of such collateral. However, such income generally would not
be tax exempt. The Series continues to be entitled to payments in amounts
equal to the interest or other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will
be terminable at any time upon specified notice. The Series might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with such Series.
BORROWING MONEY _ As a fundamental policy, each Series is permitted
to borrow to the extent permitted under the Investment Company Act of
1940. However, each Series currently intends to borrow money only for
temporary or emergency (not leveraging) purposes, in an amount up to 15%
of the value of such Series' total assets (including the amount borrowed)
valued at the lesser of cost or market, less liabilities (not including
the amount borrowed) at the time the borrowing is made. While borrowings
exceed 5% of a Series' total assets, such Series will not make any
additional investments.
CERTAIN FUNDAMENTAL POLICIES
Each Series may (i) borrow money to the extent permitted
under the Investment Company Act of 1940, which currently limits
borrowing to no more than 331\3% of the value of the Series' total
assets; and (ii) invest up to 25% of its assets in the securities of
issuers in any industry, provided that there is no such limitation on
investments in Municipal Obligations and, for temporary defensive
purposes, obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. This paragraph describes fundamental
policies that cannot be changed as to a Series without approval by the
holders of a majority (as defined in the Investment Company Act of 1940)
of such Series' outstanding voting shares. See "Investment Objective and
Management Policies _ Investment Restrictions" in the Statement of
Additional Information.
RISK FACTORS
INVESTING IN STATE MUNICIPAL OBLIGATIONS _ You should consider
carefully the special risks inherent in the purchase of shares of each
Series resulting from its purchase of the respective State's Municipal
Obligations. Certain of the States have experienced financial
difficulties, the recurrence of which could result in defaults or
declines in the market values of various Municipal Obligations in which
such Series invests. If there should be a default or other financial
crisis relating to a State or an agency or municipality thereof, the
market value and marketability of outstanding State Municipal Obligations
in a Series' portfolio and the interest income to the Series could be
adversely affected. You should obtain and review a copy of the Statement
of Additional Information which more fully sets forth these and other
risk factors.
Page 32
ARIZONA SERIES _ The Arizona legislature and Arizona local
governmental entities are subject to certain limitations on their ability
to raise and assess taxes and levies which could affect their ability to
meet their respective financial obligations. Arizona's economy was
adversely affected by problems in the real estate sector during the past
decade, and current and proposed reductions in Federal military
expenditures are expected to cause additional difficulties with Arizona's
economy.
COLORADO SERIES _ During the mid-to-late 1980s, Colorado's economy
was adversely affected primarily by three factors: a contraction in the
energy sector, a decline caused by over-expansion in the high technology
sector and a general decline in the construction industry. Since 1990,
the economy has rebounded and has generally out-performed the national
economy. However, economic growth is expected to slow during 1995 through
1997, due in part to decreased defense spending and the recent completion
of several significant public works projects in the State.
On November 3, 1992, voters in Colorado passed the Bruce
Amendment, otherwise known as the "Taxpayers' Bill of Rights." The
Amendment restricts growth of government spending to the rate of
inflation plus the change in demand for government services (as measured
by population, school enrollment, or construction); limits the issuance
of debt to that which is voter approved; and requires voter approval of
all tax increases. Though the Bruce Amendment is not expected to have an
immediate effect on the credit quality of State and local governments, it
will likely reduce the financial flexibility of all levels of government
in Colorado over time. In addition, younger or rapidly growing
municipalities with large infrastructure requirements may have difficulty
finding the revenues needed to finance their growth.
CONNECTICUT SERIES _ Connecticut's economy relies in part on
activities that may be adversely affected by cyclical change, and recent
declines in defense spending have had a significant impact on
unemployment levels. Although the State recorded General Fund surpluses
in the fiscal years 1985 through 1987, and 1992 and 1993, Connecticut
reported deficits from its General Fund operations for the fiscal years
1988 through 1991. Together with the deficit carried forward from the
State's 1990 fiscal year, the total General Fund deficit for the 1991
fiscal year was $965.7 million. The total deficit was funded by the
issuance of General Obligation Economic Recovery Notes. The Comptroller
reported that the State ended the 1994 fiscal year with a General Fund
operating surplus of $19.7 million. The Comptroller, however, estimated
the cumulative projected deficit under GAAP for the fiscal year ended
June 30, 1994 to have been approximately $465.8 million. As a result of
the recurring budgetary problems, S&P downgraded the State's general
obligation bonds from AA+ to AA in April 1990 and to AA- in September
1991. Fitch downgraded the State's general obligation bonds from AA+ to
AA in March 1995. Moody's currently rates Connecticut's bonds Aa.
FLORIDA SERIES _ The Florida Constitution and Statutes mandate that
the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each fiscal
year. Florida's Constitution permits issuance of Florida Municipal
Obligations pledging the full faith and credit of the State, with a vote
of the electors, to finance or refinance fixed capital outlay projects
authorized by the Legislature, provided that the outstanding principal
does not exceed 50% of the total tax revenues of the State for the two
preceding years. Florida's Constitution also provides that the
Legislature shall appropriate monies sufficient to pay debt service on
State bonds pledging the full faith and credit of the State as the same
becomes due. All State tax revenues, other than trust funds dedicated by
Florida's Constitution for other purposes, would be available for such an
appropriation, if required. Revenue bonds may be issued by the State or
its agencies without a vote of Florida's electors only to finance or
refinance the cost of State fixed capital outlay projects which may be
payable solely from funds derived directly from sources other than State
tax revenues. Fiscal year 1993-94 total General Revenue and Working
Capital Funds available are estimated to
Page 33
have been $14.453 billion, which resulted in estimated unencumbered
reserves of $351.8 million at the end of fiscal 1993-94. The General
Revenue and Working Capital Funds ended the 1992-93 fiscal year with
unencumbered reserves of $544 million.
GEORGIA SERIES _ Georgia's Constitution limits appropriation of
funds for any given fiscal year to the sum of the amount of
unappropriated surplus expected to have accrued at the beginning of the
fiscal year and the amount not greater than the total receipts
anticipated, less refunds, as estimated. The State Constitution provides
for supplementary appropriations in accordance with its provisions as
well. Georgia's economy grew rapidly in the 1980's resulting in a general
fund reserve. In 1989 and 1990, however, the State's economy began to
slow and lower than projected growth in income and sales taxes and
increasing expenditure levels resulted in a reduction in the general fund
reserve. During fiscal years 1990, 1991 and 1992, state expenditures
exceeded revenues, effectively eliminating the State's general fund
reserve. In fiscal 1993 and 1994, however, revenues slightly exceeded
appropriations which increased the State's revenue shortfall reserve at
the end of fiscal 1994 to approximately $267 million. Revenues and
expenditures for fiscal 1995 are estimated to be equal, and revenues are
estimated to slightly exceed expenditures for fiscal 1996.
MARYLAND SERIES _ The public indebtedness of the State of Maryland
and its instrumentalities is divided into three basic types: general
obligation bonds for capital improvements and for various State-sponsored
projects to the payment of which the State ad valorem property tax is
exclusively pledged; limited, special obligation bonds issued by the
Maryland Department of Transportation for transportation purposes,
payable primarily from specific, fixed-rate excise taxes and other
revenues related mainly to highway use; and obligations issued by certain
authorities payable solely from specific non-tax, enterprise fund
revenues for which the State has no liability and has given no moral
obligation assurance.
Since at least the end of the Civil War, the State has paid
the principal of and interest on its general obligation bonds when due.
There is no general debt limit imposed by the State Constitution or
public general laws, but the Constitution does require the annual
operating budget to be in balance with estimated revenues. When the
fiscal year 1995 budget was enacted, it was estimated that the General
Fund surplus on a budgetary basis at June 30, 1995, would be
approximately $9.7 million. As of March 8, 1995, it was estimated that
the General Fund surplus on a budgetary basis at June 30, 1993, will be
$76.9 million. When the 1996 budget was submitted by the Governor to the
General Assembly, it was estimated that the General Fund surplus on a
budgetary basis at June 30, 1995 would be approximately $176.8 thousand,
including $60 million appropriated to the Revenue Stabilization Account
of the State Reserve Fund.
MASSACHUSETTS SERIES _ Massachusetts' economic and fiscal
difficulties of recent years appear to have abated. While the
Commonwealth's expenditures for state programs and services in each of
the fiscal years 1987 through 1991 exceeded each year's current revenues,
Massachusetts ended each of the fiscal years 1991 through 1994 and
expects to end fiscal 1995 with a positive fiscal balance in its general
operating funds.
MICHIGAN SERIES _ Michigan's economy has been undergoing certain
basic changes in its underlying structure. These changes reflect a
diversifying economy which is less reliant on the automobile industry. As
a result, it is anticipated that the State's economy in the future will
be less susceptible to cyclical swings and more resilient when national
downturns occur. The principal sectors of Michigan's diversifying economy
are manufacturing of durable goods (including automobile and office
equipment manufacturing), tourism and agriculture. Michigan's
unemployment rate averaged 9.9% in 1985 and averaged 5.9% in 1994.
Michigan's Annual Financial Reports for the fiscal years
ended September 30, 1987, 1988 and 1989 showed positive balances in the
State's general cash position representing an improvement from the
negative cash position of 1982. Michigan ended fiscal years 1989-90 and
1990-91 with negative balances of $310 million and $169 million,
respectively. This cumu-
Page 34
lative deficit was eliminated as of the fiscal year ended September 30,
1992. Michigan ended fiscal years 1992-93 and 1993-94 with surpluses of
approximately $308 million and $460 million, respectively.
MINNESOTA SERIES _ The structure of Minnesota's economy parallels
the structure of the United States' economy as a whole when viewed at a
highly aggregated level of detail. Diversity and a significant natural
resource base are two important characteristics of the State's economy.
However, the State of Minnesota experienced financial difficulties in the
early 1980s because of a downturn in the State's economy resulting from
the national recession. More recently, real growth has been equal to or
greater than national growth.
There can be no assurance that the financial problems
referred to or similar future problems will not affect the market value
or marketability of the Minnesota Municipal Obligations or the ability of
the issuer thereof to pay interest or principal thereon.
NORTH CAROLINA SERIES _ The economic profile of the State of North
Carolina consists of a combination of agriculture, industry and tourism,
with agriculture as the basic element in the economy. Tobacco production
is the leading source of agricultural income in the State, accounting for
20% of gross agricultural income. The poultry and pork industries also
are significant sources of gross agricultural income.
The North Carolina Constitution requires a balanced budget.
While North Carolina's Governor lacks the power to veto budget or other
legislative actions, the Governor does have the power as ex officio
Director of the Budget, after first making adequate provision for the
prompt payment of the principal of and interest on bonds and notes of the
State according to their terms, to reduce all appropriations for a
particular fiscal period on a pro rata basis to prevent an overdraft or
deficit for such fiscal period. The Governor also may take less drastic
action to reduce expenditures to maintain a balanced budget before the
need for across the board appropriations reductions arises.
OHIO SERIES _ Nonmanufacturing industries now employ more than 78%
of all payroll employees in Ohio. However, due to the continued
importance of manufacturing industries (including auto-related
manufacturing), economic activity in Ohio tends to be more cyclical than
in some other states and in the nation as a whole. Although Ohio's
economy has improved since the 1980-82 national recession, the State
experienced an economic slow-down during its 1990-91 fiscal year,
consistent with national economic conditions during that period. For
Ohio's 1995 fiscal year, the Ohio Office of Budget and Management
projects positive $681.5 million and $446.7 million ending fund and cash
balances, respectively. Each of the foregoing factors could have an
effect on the market for issuers generally or may have the effect of
impairing the ability of issuers to pay interest on, or repay principal
of, Ohio Municipal Obligations.
OREGON SERIES _ The Oregon economy generally has outperformed the
national economy in recent years. There is no assurance, however, that
this will continue to be the case. The State forecasts modest growth of
the economy through 1995 with jobs increasing at 3.6% per year, and
personal income growing at an annual rate of 4.6%. The State's population
has been growing, and the growth is expected to continue. Forest
products, housing, agriculture, trade and tourism are mainstays of the
economy. Oregon's economy is expected to slow over the next year. The
major factors slowing the economy are a softening of the State's housing
markets, reductions in timber output and employment, and weaker national
demand for Oregon's manufactured products.
PENNSYLVANIA SERIES _ Pennsylvania has been historically identified
as a heavy industry state although that reputation has recently changed
as the coal, steel and railroad industries declined. A more diversified
economy has developed in Pennsylvania as a long-term shift in jobs,
investment and workers away from the northeast part of the nation took
place. The major new sources of growth are in the service sector,
including trade, medical and health services, education and financial
institutions. Pennsylvania is highly urbanized, with approximately 50% of
the Commonwealth's total population contained in the metropolitan areas
which include the cities of Philadelphia and Pittsburgh. The
Commonwealth's adopted fiscal 1994-95 General Fund budget provided for no
new taxes. As of April 30, 1995, the General Fund had a surplus of $442.9
million or 3.4% above the official estimate.
TEXAS SERIES _ Economically and financially the State of Texas
suffered during the 1980s significant damage from the continued depressed
price of oil and gas and the overbuilding in the real estate market. The
decline in oil prices, particularly since 1986, and the recession that
followed have had a severe effect on the Texas banking and savings and
loan industries, resulting in a number of closings among banks and
savings and loans through the early 1990s. In recent years, the State's
overall financial situation has improved significantly, as Texas'
economic growth has been outpacing that of the United States as a whole.
In fiscal years 1991, 1992, 1993 and 1994, Texas' General Revenue Fund
ended with cash surpluses of $1.005 billion, $615 million, $1.630 billion
and $2.225 billion, respectively.
VIRGINIA SERIES _ Due to Virginia's proximity to Washington, D.C.
and the concentration of military installations in Northern Virginia and
the Tidewater, federal government spending is an important factor in
Virginia's economy. The federal government has a greater impact on
Virginia relative to its size than any other state except Alaska and
Hawaii. While federal employment in 1992 accounted for 10.0% of
Virginian's personal income (compared with a national average of 3.3% in
that year), it ranked behind services (19.7%), wholesale and retail trade
(10.6%) and manufacturing (10.5%).
The Commonwealth experienced a decrease in its General Fund
balances from fiscal 1989 to fiscal 1990 and again from fiscal 1991,
reflecting the effects of a nationwide recession and increasing
expenditures. General Fund balances have increased since fiscal 1991. In
fiscal 1994, revenues increased 6.0% from the previous year, while total
expenditures increased 4.5%. Revenues exceeded expenditures by $731.2
million, an increase of 20.0% over fiscal 1993.
LOWER RATED BONDS _ You should carefully consider the relative risks
of investing in the higher yielding (and, therefore, higher risk) debt
securities (commonly known as junk bonds) in which each Series may invest
up to 30% of the value of its net assets. These are bonds such as those
rated Ba by Moody's or BB by S&P or Fitch or as low as the lowest rating
assigned by Moody's, S&P or Fitch. They generally are not meant for
short-term investing and may be subject to certain risks with respect to
the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated fixed-income securities. Bonds rated Ba by Moody's
are judged to have speculative elements; their future cannot be
considered as well assured and often the protection of interest and
principal payments may be very moderate. Bonds rated BB by S&P are
regarded as having predominantly speculative characteristics and, while
such obligations have less near-term vulnerability to default than other
speculative grade debt, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. Bonds
rated BB by Fitch are considered speculative and the payment of principal
and interest may be affected at any time by adverse economic changes.
Bonds rated C by Moody's are regarded as having extremely poor prospects
of ever attaining any real investment standing. Bonds rated D by S&P are
in default and the payment of interest and/or repayment of principal is
in arrears. Bonds rated DDD, DD or D by Fitch are in actual or imminent
default, are extremely speculative and should be valued on the basis of
their ultimate recovery value in liquidation or reorganization of the
issuer; DDD represents the highest potential for recovery of such bonds;
and D represents the lowest potential for recovery. Such bonds, though
high yielding, are characterized by great risk. See "Appendix B" in the
Statement of Additional Information for a general description of Moody's,
S&P and Fitch ratings of Municipal Obligations. The ratings of Moody's,
S&P and Fitch represent their opinions as to the quality
Page 36
of the Municipal Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, The Dreyfus Corporation also will
evaluate these securities and the ability of the issuers of such
securities to pay interest and principal. The Fund's ability to achieve
its investment objective may be more dependent on The Dreyfus
Corporation's credit analysis than might be the case for a fund that
invested in higher rated securities. Once the rating of a portfolio
security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to continue to hold the security.
The market price and yield of bonds rated Ba or lower by
Moody's and BB or lower by S&P and Fitch are more volatile than those of
higher rated bonds. Factors adversely affecting the market price and
yield of these securities will adversely affect the Series' net asset
value. In addition, the retail secondary market for these bonds may be
less liquid than that of higher rated bonds; adverse market conditions
could make it difficult at times for the Fund to sell certain securities
or could result in lower prices than those used in calculating the
Series' net asset value.
Each Series may invest up to 5% of the value of its net
assets in zero coupon securities and pay-in-kind bonds (bonds which pay
interest through the issuance of additional bonds) rated Ba or lower by
Moody's and BB or lower by S&P and Fitch. These securities may be subject
to greater fluctuations in value due to changes in interest rates than
interest-bearing securities and thus may be considered more speculative
than comparably rated interest-bearing securities. See "Other Investment
Considerations" below, and "Investment Objective and Management Policies
_ Risk Factors _ Lower Rated Bonds" and "Dividends, Distributions and
Taxes" in the Statement of Additional Information.
OTHER INVESTMENT CONSIDERATIONS _ Even though interest-bearing
securities are investments which promise a stable stream of income, the
prices of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price
fluctuations. Certain securities that may be purchased by the Series,
such as those with interest rates that fluctuate directly or indirectly
based on multiples of a stated index, are designed to be highly sensitive
to changes in interest rates and can subject the holders thereof to
extreme reductions of yield and possibly loss of principal. The value of
fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities. Each Series' net
asset value generally will not be stable and should fluctuate based upon
changes in the value of such Series' portfolio securities. Securities in
which a Series invests may earn a higher level of current income than
certain shorter-term or higher quality securities which generally have
greater liquidity, less market risk and less fluctuation in market value.
Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to take into account annually a
portion of the discount (or deemed discount) at which such securities
were issued, prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company, a Series may be required
to distribute such portion of the discount and may have to dispose of
portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the
Series may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by
the leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus
Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Page 37
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions
could be to increase the cost of the Municipal Obligations available for
purchase by the Series and thus reduce the available yield. Shareholders
should consult their tax advisers concerning the effect of these
provisions on an investment in a Series. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations
may be introduced in the future. If any such proposal were enacted that
would reduce the availability of Municipal Obligations for investment by
the Fund so as to adversely affect Fund shareholders, the Fund would
reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to shareholders for their consideration.
If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth
herein.
The Fund's classification as a "non-diversified" investment
company means that the proportion of each Series' assets that may be
invested in the securities of a single issuer is not limited by the
Investment Company Act of 1940. A "diversified" investment company is
required by the Investment Company Act of 1940 generally to invest, with
respect to 75% of its total assets, not more than 5% of such assets in
the securities of a single issuer. However, each Series intends to
conduct its operations so as to qualify as a "regulated investment
company" for purposes of the Code, which requires that, at the end of
each quarter of its taxable year,
(i) at least 50% of the market value of each Series' total
assets be invested in cash, U.S. Government securities, the securities of
other regulated investment companies and other securities, with such
other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of each Series'
total assets, and (ii) not more than 25% of the value of each Series'
total assets be invested in the securities of any one issuer (other than
U.S. Government securities or the securities of other regulated
investment companies). Since a relatively high percentage of the Fund's
assets may be invested in the obligations of a limited number of issuers,
the Fund's portfolio securities may be more susceptible to any single
economic, political or regulatory occurrence than the portfolio
securities of a diversified investment company.
Investment decisions for the Fund are made independently from
those of other investment companies advised by The Dreyfus Corporation.
However, if such other investment companies are prepared to invest in, or
desire to dispose of, Municipal Obligations or Taxable Investments at the
same time as the Fund, available investments or opportunities for sales
will be allocated equitably to each investment company. In some cases,
this procedure may adversely affect the size of the position obtained for
or disposed of by the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary
of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of May 31, 1995, The Dreyfus Corporation
managed or administered approximately $76 billion in assets for more than
1.8 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. The primary portfolio manager for each
of the Arizona Series, the Colorado Series, the Georgia Series and the
Oregon Series is Stephen C. Kris, who has held that position with respect
to the Arizona Series and the Georgia Series since September 1992 and
with respect to the Colorado Series and the Oregon Series since
page 38
January 1994, and has been employed by The Dreyfus Corporation since
February 1988. The primary portfolio manager for each of the Connecticut
Series, the Massachusetts Series, the North Carolina Series and the
Virginia Series is Samuel J. Weinstock, who has held that position with
respect to the Connecticut Series and the Massachusetts Series since
August 1987 and with respect to the North Carolina Series and Virginia
Series since August 1991, and has been employed by The Dreyfus Corporation
since March 1987. The primary portfolio manager for each of the Florida
Series, the Maryland Series, the Pennsylvania Series and the Texas Series
is A. Paul Disdier, who has held that position since April 1988 and has
been employed by The Dreyfus Corporation since February 1988. The primary
portfolio manager for each of the Michigan Series, the Minnesota Series
and the Ohio Series is Joseph P. Darcy, who has held that position and
has been employed by The Dreyfus Corporation since May 1994. For more
than five years prior to joining The Dreyfus Corporation, Mr. Darcy was a
Vice President and Portfolio Manager for Merrill Lynch Asset Management.
The Fund's other portfolio managers are identified in the Fund's
Statement of Additional Information. The Dreyfus Corporation also
provides research services for the Fund as well as for other funds
advised by The Dreyfus Corporation through a professional staff of
portfolio managers and securities analysts.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Bank
Holding Company Act of 1956, as amended. Mellon provides a comprehensive
range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon Bank
(DE) National Association, Mellon Bank (MD), The Boston Company, Inc.,
AFCOCredit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including The
Dreyfus Corporation, Mellon managed approximately $200 billion in assets
as of March 31, 1995, including approximately $72 billion in mutual fund
assets. As of March 31, 1995, Mellon, through various subsidiaries,
provided non-investment services, such as custodial or administration
services, for approximately $680 billion in assets including
approximately $67 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. From
time to time, The Dreyfus Corporation may waive receipt of its fees
and/or voluntarily assume certain expenses of a Series which would have
the effect of lowering the overall expense ratio of that Series and
increasing yield to investors at the time such amounts are waived or
assumed, as the case may be. The Fund will not pay The Dreyfus
Corporation at a later time for any amounts it may waive, nor will the
Fund reimburse The Dreyfus Corporation for any amounts it may assume.
For the fiscal year ended April 30, 1995, the Fund paid The
Dreyfus Corporation a management fee at the effective annual rate set
forth below with respect to each Series pursuant to undertakings in
effect:
EFFECTIVE ANNUAL RATE
AS A PERCENTAGE OF
SERIES AVERAGE DAILY NET ASSETS
__________ ____________________________
Arizona .0
Colorado .0
Connecticut .54 of 1%
Florida .54 of 1%
Georgia .0
Maryland .54 of 1%
Massachusetts .54 of 1%
Michigan .54 of 1%
Page 39
EFFECTIVE ANNUAL RATE
AS A PERCENTAGE OF
SERIES AVERAGE DAILY NET ASSETS
__________ ____________________________
Minnesota .54 of 1%
North Carolina .24 of 1%
Ohio .54 of 1%
Oregon .0
Pennsylvania .54 of 1%
Texas .0
Virginia .0
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets,
including past profits but not including the management fee paid by the
Fund. The Fund's distributor may use part or all of such payments to pay
Service Agents in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which
in turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First
Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is
the Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent").
The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's Custodian.
HOW TO BUY FUND SHARES
GENERAL _ Fund shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals (collectively,
"Service Agents"), except that full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor. Subsequent purchases may be sent
directly to the Transfer Agent or your Service Agent. Service Agents may
receive different levels of compensation for selling different Classes of
shares. Management understands that some Service Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus, and, to the extent permitted by applicable
regulatory authority, may charge their clients a direct fee which would
be in addition to any amounts which might be received under the
Shareholder Services Plan. Each Service Agent has agreed to transmit to
its clients a schedule of such fees. You should consult your Service
Agent in this regard.
When purchasing Fund shares, you must specify which Class of
shares is being purchased. Share certificates are issued only upon your
written request. No certificates are issued for fractional shares. It is
not recommended that the Fund be used as a vehicle for Keogh, IRA or
other qualified retirement plans. The Fund reserves the right to reject
any purchase order.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Fund's Account Application.
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"Premier State Municipal Bond Fund," and should specify the Series in
which you are investing. Payments to open new accounts which are mailed
should be sent to Premier State Municipal Bond Fund, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account
page 40
number should appear on the check and an investment slip should be
enclosed and sent to Premier State Municipal Bond Fund, P.O. Box 105,
Newark, New Jersey 07101-0105. Neither initial nor subsequent investments
should be made by third party check. Wire payments may be made if your
bank account is in a commercial bank that is a member of the Federal
Reserve System or in any other bank having a correspondent bank in New
York City. Immediately available funds may be transmitted by wire to The
Bank of New York together with the applicable Series' DDA# as shown below,
for purchase of Fund shares in your name:
For Class A shares:
DDA #8900117052/Premier State Municipal Bond Fund/Arizona
Series _ Class A shares
DDA #8900088281/Premier State Municipal Bond Fund/Colorado
Series _ Class A shares
DDA #8900119489/Premier State Municipal Bond Fund/Connecticut
Series _ Class A shares
DDA #8900119381/Premier State Municipal Bond Fund/Florida
Series _ Class A shares
DDA #8900117087/Premier State Municipal Bond Fund/Georgia
Series _ Class A shares
DDA #8900119403/Premier State Municipal Bond Fund/Maryland
Series _ Class A shares
DDA #8900119470/Premier State Municipal Bond
Fund/Massachusetts Series _ Class A shares
DDA #8900119411/Premier State Municipal Bond Fund/Michigan
Series _ Class A shares
DDA #8900119438/Premier State Municipal Bond Fund/Minnesota
Series _ Class A shares
DDA #8900208635/Premier State Municipal Bond Fund/North
Carolina Series _ Class A shares
DDA #8900119446/Premier State Municipal Bond Fund/Ohio Series
_ Class A shares
DDA #8900088265/Premier State Municipal Bond Fund/Oregon
Series _ Class A shares
DDA #8900119454/Premier State Municipal Bond
Fund/Pennsylvania Series _ Class A shares
DDA #8900119462/Premier State Municipal Bond Fund/Texas
Series _ Class A shares
DDA #8900208678/Premier State Municipal Bond Fund/Virginia
Series _ Class A shares
For Class B shares:
DDA #8900115238/Premier State Municipal Bond Fund/Arizona
Series _ Class B shares
DDA #8900115432/Premier State Municipal Bond Fund/Colorado
Series _ Class B shares
DDA #8900115130/Premier State Municipal Bond Fund/Connecticut
Series _ Class B shares
DDA #8900115041/Premier State Municipal Bond Fund/Florida
Series _ Class B shares
DDA #8900115246/Premier State Municipal Bond Fund/Georgia
Series _ Class B shares
DDA #8900115068/Premier State Municipal Bond Fund/Maryland
Series _ Class B shares
DDA #8900115122/Premier State Municipal Bond
Fund/Massachusetts Series _ Class B shares
DDA #8900115076/Premier State Municipal Bond Fund/Michigan
Series _ Class B shares
DDA #8900115084/Premier State Municipal Bond Fund/Minnesota
Series _ Class B shares
DDA #8900115149/Premier State Municipal Bond Fund/North
Carolina Series _ Class B shares
DDA #8900115092/Premier State Municipal Bond Fund/Ohio Series
_ Class B shares
DDA #8900115424/Premier State Municipal Bond Fund/Oregon
Series _ Class B shares
DDA #8900115106/Premier State Municipal Bond
Fund/Pennsylvania Series _ Class B shares
DDA #8900115114/Premier State Municipal Bond Fund/Texas
Series _ Class B shares
DDA #8900115157/Premier State Municipal Bond Fund/Virginia
Series _ Class B shares
For Class C shares:
DDA #8900252049/Premier State Municipal Bond Fund/Arizona
Series _ Class C shares
DDA #8900252057/Premier State Municipal Bond Fund/Colorado
Series _ Class C shares
DDA #8900252065/Premier State Municipal Bond Fund/Connecticut
Series _ Class C shares
DDA #8900252073/Premier State Municipal Bond Fund/Florida
Series _ Class C shares
DDA #8900252081/Premier State Municipal Bond Fund/Georgia
Series _ Class C shares
DDA #8900252103/Premier State Municipal Bond Fund/Maryland
Series _ Class C shares
DDA #8900252111/Premier State Municipal Bond
Fund/Massachusetts Series _ Class C shares
DDA #8900252138/Premier State Municipal Bond Fund/Michigan
Series _ Class C shares
DDA #8900252146/Premier State Municipal Bond Fund/Minnesota
Series _ Class C shares
DDA #8900252154/Premier State Municipal Bond Fund/North
Carolina Series _ Class C shares
DDA #8900252162/Premier State Municipal Bond Fund/Ohio Series
_ Class C shares
Page 41
For Class C shares (continued):
DDA #8900252170/Premier State Municipal Bond Fund/Oregon
Series _ Class C shares
DDA #8900252189/Premier State Municipal Bond
Fund/Pennsylvania Series _ Class C shares
DDA #8900252200/Premier State Municipal Bond Fund/Texas
Series _ Class C shares
DDA #8900252197/Premier State Municipal Bond Fund/Virginia
Series _ Class C shares
The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, please call 1-800-645-6561
after completing your wire payment to obtain your Fund account number.
Please include your Fund account number on the Fund's Account Application
and promptly mail the Account Application to the Fund, as no redemptions
will be permitted until the Account Application is received. You may
obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if
any check used for investment in your account does not clear. The Fund
makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House member. You
must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and your Fund account number PRECEDED BY
THE DIGITS "1111."
Each Series' shares are sold on a continuous basis. Net asset
value per share is determined as of the close of trading on the floor of
the New York Stock Exchange (currently, 4:00 p.m., New York time), on
each day the New York Stock Exchange is open for business. For purposes
of determining net asset value, options and futures contracts will be
valued 15 minutes after the close of trading on the floor of the New York
Stock Exchange. Net asset value per share of each Class is computed by
dividing the value of the net assets of each Series represented by such
Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. Each Series' investments are
valued each business day by an independent pricing service approved by
the Board of Trustees and are valued at fair value as determined by the
pricing service. The pricing service's procedures are reviewed under the
general supervision of the Board of Trustees. For further information
regarding the methods employed in valuing the Series' investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Fund's Account Application for further information
concerning this requirement. Failure to furnish a certified TIN to the
Fund could subject you to a $50 penalty imposed by the Internal Revenue
Service (the "IRS").
If an order is received by the Transfer Agent by the close of
trading on the floor of the New York Stock Exchange (currently, 4:00
p.m., New York time) on any business day, Fund shares will be purchased
at the public offering price determined as of the close of trading on the
floor of the New York Stock Exchange on that day. Otherwise, Fund shares
will be purchased at the public offering price determined as of the close
of trading on the floor of the New York Stock Exchange on the next
business day, except where shares are purchased through a dealer as
provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next
page 42
determined public offering price. It is the dealers' responsibility to
transmit orders so that they will be received by the Distributor or its
designee before the close of its business day.
CLASS A SHARES _ The public offering price for Class A
shares is the net asset value per share of that Class plus a sales load
as shown below:
<TABLE>
<CAPTION>
SALES LOAD
--------------------
AS A % OF AS A % OFDEALERS' REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
---------------------- ----------------- ---------------- -------------------------
<S> <C> <C> <C>
Less than $50,000...... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more..... -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within two years after
purchase. The terms contained in the section of the Fund's Prospectus
entitled "How to Redeem Fund Shares _ Contingent Deferred Sales Charge"
(other than the amount of the CDSC and time periods) are applicable to
the Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage-related or clearing arrangement with an
NASD member firm or other financial institution with respect to sales of
Fund shares) may purchase Class A shares for themselves, directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at net asset value. In addition, Class A shares
are offered at net asset value to full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing.
Class A shares also may be purchased at net asset value
through certain broker-dealers and other financial institutions which
have entered into an agreement with the Distributor, which includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer or other financial institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by The
Dreyfus Corporation or its affiliates. The purchase of Class A shares of
the Fund must be made within 60 days of such redemption and the
shareholder must have either (i) paid an initial sales charge or a
contingent deferred sales charge or (ii) been obligated to pay at any
time during the holding period, but did not actually pay on redemption, a
deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumentality thereof, (iii) a charitable organization (as defined in
Section 501(c) (3) of the Internal Revenue
Page 43
Code of 1986, as amended (the "Code") investing $50,000 or more in Fund
shares, and (iv) a charitable remainder trust (as defined in Section 501
(c)(3) of the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its own
expense, may provide additional promotional incentives to dealers that
sell shares of funds advised by The Dreyfus Corporation which are sold
with a sales load, such as the Fund. In some instances, these incentives
may be offered only to certain dealers who have sold or may sell
significant amounts of such shares. For the period from May 1, 1994
through August 23, 1994, Dreyfus Service Corporation, a wholly-owned
subsidiary of The Dreyfus Corporation and distributor of the Fund's
shares until August 24, 1994, retained $ 80,071 from sales loads on Class
A shares.
CLASS B SHARES _ The public offering price for Class B shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on certain
redemptions of Class B shares as described under "How to Redeem Fund
Shares." The Distributor compensates certain Service Agents for selling
Class B shares at the time of purchase from the Distributor's own assets.
The proceeds of the CDSC and the distribution fee, in part, are used to
defray these expenses. For the period May 1, 1994 through August 23,
1994, $188,875 was retained by Dreyfus Service Corporation, as former
distributor, from the CDSC on Class B shares.
CLASS C SHARES _ The public offering price for Class C shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC, however, is imposed on
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares" above and "How to Redeem Fund Shares."
RIGHT OF ACCUMULATION _ CLASS A SHARES _ Reduced sales loads apply
to any purchase of Class A shares, shares of other funds in the Family of
Premier Funds, shares of certain other funds purchased through an
exchange from any funds in the Family of Premier Funds and shares of
certain other funds advised by The Dreyfus Corporation which are sold
with a sales load and shares acquired by a previous exchange of shares
purchased with a sales load (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined in the Statement
of Additional Information, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased
and still hold Class A shares of the Fund, or of any other Eligible Fund
or combination thereof, with an aggregate current market value of $40,000
and subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of a purchase
you or your Service Agent must notify the Distributor if orders are made
by wire, or the Transfer Agent if orders are made by mail. The reduced
sales load is subject to confirmation of your holdings through a check of
appropriate records.
TELETRANSFER PRIVILEGE _ You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Fund's
Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Page 44
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES
Clients of certain Service Agents may purchase, in exchange
for Class A, Class B or Class C shares of a Series, shares of the same
Class in one of the other Series, or of the same Class in certain other
funds managed or administered by The Dreyfus Corporation to the extent
such shares are offered for sale in your state of residence. These funds
have different investment objectives which may be of interest to you. You
also may exchange your Fund shares that are subject to a CDSC for shares
of Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so
purchased will be held in a special account created solely for this
purpose ("Exchange Account"). Exchanges of shares from an Exchange
Account only can be made into certain other funds managed or administered
by The Dreyfus Corporation. No CDSC is charged when an investor exchanges
into an Exchange Account; however, the applicable CDSC will be imposed
when shares are redeemed from an Exchange Account or other applicable
Fund account. Upon redemption, the applicable CDSC will be calculated
without regard to the time such shares were held in an Exchange Account.
See "How to Redeem Fund Shares." Redemption proceeds for Exchange Account
Shares are paid by Federal wire or check only. Exchange Account shares
also are eligible for the Auto-Exchange Privilege, Dividend Sweep and the
Automatic Withdrawal Plan. If you desire to use this service, you should
consult your Service Agent or call 1-800-645-6561 to determine if it is
available and whether any other conditions are imposed on its use.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of Personal Retirement Plans, the shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "NO" box on the Account Application,
indicating that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, or by a separate
signed Shareholder Services Form, also available by calling
1-800-645-6561. If you have established the Telephone Exchange Privilege,
you may telephone exchange instructions by calling 1-800-221-4060 or, if
you are calling from overseas, call 1-401-455-3306. See "How to Redeem
Fund Shares _ Procedures." Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is being made: Telephone Exchange Privilege, Check Redemption
Privilege, TELETRANSFER Privilege, and the dividend/capital gain
distribution option (except for Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged. If you are exchanging Class A
shares into a fund
Page 45
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load, if the
shares of the fund from which you are exchanging were: (a) purchased with
a sales load, (b) acquired by a previous exchange from shares purchased
with a sales load, or (c) acquired through reinvestment of dividends or
distributions paid with respect to the foregoing categories of shares.
To qualify, at the time of your exchange your Service Agent must notify
the Distributor. Any such qualification is subject to confirmation of
your holdings through a check of appropriate records. See "Shareholder
Services" in the Statement of Additional Information. No fees currently
are charged shareholders directly in connection with exchanges,
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal fee in accordance with rules pro-
mulgated by the Securities and Exchange Commission. The Fund reserves
the right to reject any exchange request in whole or in part. The avail-
ability of Fund Exchanges may be modified or terminated at any time upon
notice to shareholders.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis) in exchange for shares
of a Series, in shares of the same Class of one of the other Series, or
funds in the Premier Family of Funds or certain other funds in the
Dreyfus Family of Funds of which you are currently an investor. The
amount you designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged
automatically on the first and/or fifteenth of the month according to the
schedule you have selected. Shares will be exchanged at the then-current
net asset value; however, a sales load may be charged with respect to
exchanges of Class A shares into funds sold with a sales charge. No CDSC
will be imposed on Class B or Class C shares at the time of an exchange;
however, Class B or Class C shares acquired through an exchange will be
subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class
B or Class C shares will be calculated from the date of the initial
purchase of the Class B or Class C shares exchanged. See "Shareholder
Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or cancelled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege
at any time by writing to Premier State Municipal Bond Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587. The Fund may charge a service
fee for the use of this Privilege. No such fee currently is contemplated.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss. For more information concerning this Privilege and
the funds in the Premier Family of Funds or Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDERRegistration Mark
AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring
funds from the bank account designated by you. At your option, the bank
account designated by you will be debited in the specified amount, and
Fund shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained
at a domestic financial institution which is an Automated Clearing House
member may be so designated. To establish an AUTOMATIC Asset Builder
account, you must file an authorization form with the Transfer Agent. You
may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in
Page 46
this Privilege or change the amount of purchase at any time by mailing
written notification to Premier State Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587, and the notification will be effec-
tive three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
To enroll in Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this Privilege. The appropriate form may be
obtained from your Service Agent or by calling 1-800-645-6561. Death or
legal incapacity will terminate your participation in this Privilege. You
may elect at any time to terminate your participation by notifying in
writing the appropriate Federal agency. Further, the Fund may terminate
your participation upon 30 days' notice to you.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or the Dreyfus Family of Funds of which you are a shareholder. Shares of
the other fund will be purchased at the then-current net asset value;
however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund that charges a CDSC, the shares purchased will be
subject on redemption to the CDSC, if any, applicable to the purchased
shares. See "Shareholder Services" in the Statement of Additional
Information. Dividend ACHpermits you to transfer electronically on the
payment date dividends or dividends and capital gain distributions, if
any, from the Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. Banks may charge a fee for
this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier State Municipal Bond Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. To select a new fund after cancellation, you must
submit a new Dividend Options Form. Enrollment in or cancellation of
these privileges is effective three business days following receipt.
These privileges are available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply
for Dividend Sweep. The Fund may modify or terminate these privileges at
any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. There is a service charge of 50cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Class B or Class C shares withdrawn pursuant to the Automatic
Withdrawal Plan will be subject to any applicable CDSC. Purchases of
additional Class A shares where the sales load is imposed concurrently
with withdrawals of Class A shares generally are undesirable.
Page 47
LETTER OF INTENT _ CLASS A SHARES
By signing a Letter of Intent form, available from the
Distributor, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period.
A minimum initial purchase of $5,000 is required. To compute the
applicable sales load, the offering price of shares you hold (on the date
of submission of the Letter of Intent) in any Eligible Fund that may be
used toward "Right of Accumulation" benefits described above may be used
as a credit toward completion of the Letter of Intent. However, the
reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent. Purchases pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
HOW TO REDEEM FUND SHARES
GENERAL _ You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge a nominal fee for
effecting redemption of Fund shares. Any certificates representing shares
being redeemed must be submitted with the redemption request. The value
of the shares redeemed may be more or less than their original cost,
depending on the Series' then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH AUTOMATIC ASSET BUILDER
AND SUBSEQUENTLY SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK
CLEARANCE OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES PURSUANT
TO THE TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER
PURCHASE OR THE AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED.
Page 48
THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE
PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION
IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND
YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received
your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES _ A CDSC payable to the Distributor is imposed on any
redemption of Class B shares of a Series which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares
of such Series held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares
redeemed does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of Class B
shares above the dollar amount of all your payments for the purchase of
Class B shares of such Series held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has
declined below their original cost as a result of the Series'
performance, a CDSC may be applied to the then-current net asset value
rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
-------------------- -------------------------------
First...................................... 3.00
Second..................................... 3.00
Third...................................... 2.00
Fourth..................................... 2.00
Fifth...................................... 1.00
Sixth...................................... 0.00
In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the increase in
net asset value of Class B shares above the total amount of payments for
the purchase of Class B shares made during the preceding five years; then
of amounts representing the cost of shares purchased five years prior to
the redemption; and finally, of amounts representing the cost of shares
held for the longest period of time within the applicable five-year period.
For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired
five additional shares through dividend reinvestment. During the second
year after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 3%
(the applicable rate in the second year after purchase) for a total CDSC
of $7.20.
Page 49
CLASS C SHARES _ A CDSC of 1.00% payable to the Distributor is
imposed on any redemption of Class C shares within one year of the date
of purchase. The basis for calculating the payment of any such CDSC will
be the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge _ Class B Shares" above.
WAIVER OF CDSC _ The CDSC will be waived in connection with (a)
redemptions made within one year after the death or disability, as
defined in Section 72(m)(7) of the Code, of the shareholder, (b)
redemptions by employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs, or
(ii) such plan's or program's aggregate investment in the Dreyfus Family
of Funds or certain other products made available by the Distributor
exceeds one million dollars, (c) redemptions as a result of a combination
of any investment company with the relevant Series by merger, acquisition
of assets or otherwise, and (d) a distribution following retirement under
a tax-deferred retirement plan or upon attaining age 70-1/2 in the case
of an IRA or Keogh plan or custodial account pursuant to Section 403(b)
of the Code. If the Fund's Trustees determine to discontinue the waiver
of the CDSC, the disclosure in the Fund's prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased
prior to the termination of such waiver will have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such
shares.
To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES _ You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Check Redemption
Privilege with respect to Class A shares, the TELETRANSFER Privilege or,
if you are a client of a Selected Dealer, through the Selected Dealer. If
you have given your Service Agent authority to instruct the Transfer
Agent to redeem shares and to credit the proceeds of such redemptions to
a designated account at your Service Agent, you may redeem shares only in
this manner and in accordance with the regular redemption procedure
described below. If you wish to use the other redemption methods
described below, you must arrange with your Service Agent for delivery of
the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents. The
Fund makes available to certain large institutions the ability to issue
redemption instructions through compatible computer facilities.
Your redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or
administered by The Dreyfus Corporation that are not available through
the Exchange Privilege. The applicable CDSC will be charged upon the
redemption of Class B or Class C shares. Your redemption proceeds will be
invested in shares of the other fund on the next business day. Before you
make such a request, you must obtain and should review a copy of the
current prospectus of the fund being purchased. Prospectuses may be
obtained by calling 1-800-645-6561. The prospectus will contain
information concerning minimum investment requirements and other
conditions that may apply to your purchase.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Fund's Account Application or have filed a
Shareholder Services Form with the Transfer Agent. If you select the
TELETRANSFER redemption privilege or telephone exchange privilege (which
is granted automatically unless you refuse it), you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you, or a representative of your Service Agent,
and reasonably believed by the Transfer Agent to be genuine. The Fund
will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses
Page 50
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions reason-
ably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a TELETRANSFER redemption or an exchange of Series shares. In
such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in
your redemption request being processed at a later time than it would
have been if TELETRANSFER redemption had been used. During the delay, the
Series' net asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may
redeem shares by written request mailed to Premier State Municipal Bond
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. Written
redemption requests must specify the Class of shares being redeemed.
Redemption requests must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ CLASS A SHARES _ If you hold Class A
shares, you may request on the Account Application, Shareholder Services
Form or by later written request that the Fund provide Redemption Checks
drawn on the Fund's account. Redemption Checks may be made payable to the
order of any person in the amount of $500 or more. Potential fluctuations
in the net asset value of the Class A shares should be considered in
determining the amount of the check. Redemption Checks should not be used
to close your account. Redemption Checks are free, but the Transfer Agent
will impose a fee for stopping payment of a Redemption Check upon your
request or if the Transfer Agent cannot honor the Redemption Check due to
insufficient funds or other valid reason. You should date your Redemption
Checks with the current date when you write them. Please do not postdate
your Redemption Checks. If you do the Transfer Agent will honor, upon
presentment, even if presented before the date of the check, all
postdated Redemption Checks which are dated within six months of
presentment for payment, if they are otherwise in good order. Class A
shares for which certificates have been issued may not be redeemed by
Redemption Check. This Privilege may be modified or terminated at any
time by the Fund or the Transfer Agent upon notice to holders of Class A
shares.
TELETRANSFER PRIVILEGE _ You may redeem shares (minimum $500 per
day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed
a Shareholder Services Form with the Transfer Agent. The proceeds will be
transferred between your Fund account and the bank account designated in
one of these documents. Only such an account maintained in a domestic
financial institution which is an Automated Clearing House member may be
so designated. Redemption proceeds will be on deposit in your account at
an Automated Clearing House member bank ordinarily two days after receipt
of the redemption request or, at your request, paid by check (maximum
$150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the TELETRANSFER
Privilege for transfer to their bank account not more than $250,000 within
any 30-day period. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time or charge a service
fee upon notice to shareholders. No such fee currently is contemplated.
Page 5l
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of Fund shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares issued in certificate form are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER _ If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of
trading on the floor of the New York Stock Exchange, the redemption
request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Fund Shares"
for a discussion of additional conditions or fees that may be imposed
upon redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor has sales
agreements for the repurchase of shares held by shareholders. Repurchase
orders received by dealers by the close of trading on the floor of the
New York Stock Exchange on any business day and transmitted to the
Distributor or its designee by the close of its business day (normally
5:15 p.m., New York time) are effected at the price determined as of the
close of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the shares will be redeemed at the next determined net asset
value. It is the responsibility of the dealer to transmit orders on a
timely basis. The dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.
REINVESTMENT PRIVILEGE _ CLASS A SHARES
Upon written request, you may reinvest up to the number of
Class A shares you have redeemed, within 30 days of redemption, at the
then-prevailing net asset value without a sales load, or reinstate your
account for the purpose of exercising the Exchange Privilege. The
Reinvestment Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A, Class B and Class C shares are subject to a
Shareholder Services Plan and Class B and Class C shares only are subject
to a Distribution Plan.
DISTRIBUTION PLAN _ Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor for distributing the Fund's Class B and Class C shares of
each Series at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B and .75 of 1% of the value of the average
daily net assets of Class C.
SHAREHOLDER SERVICES PLAN _ Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of each such
Class. 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. Under the Shareholder
Services Plan the Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be
paid to Service Agents. Each Service Agent is required to disclose to its
clients any compensation payable to it by the Fund pursuant to the
Shareholder Services Plan and any other compensation payable by their
clients in connection with the investment of their assets in Class A,
Class B or Class C shares.
Page 52
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS _ Each Series of the Fund ordinarily
declares dividends from its net investment income on each day the New
York Stock Exchange is open for business. Fund shares begin earning
income dividends on the day immediately available funds ("Federal Funds"
(monies of member banks within the Federal Reserve System which are held
on deposit at a Federal Reserve Bank)) are received by the Transfer Agent
in written or telegraphic form. If a purchase order is not accompanied by
remittance in Federal Funds, there may be a delay between the time the
purchase order becomes effective and the time the shares purchased start
earning dividends. If your payment is not made in Federal Funds, it must
be converted into Federal Funds. This usually occurs within one business
day of receipt of a bank wire and within two business days of receipt of
a check drawn on a member bank of the Federal Reserve System. Checks
drawn on banks which are not members of the Federal Reserve System may
take considerably longer to convert into Federal Funds.
Dividends usually are paid on the last calendar day of each
month and are automatically reinvested in additional shares of the Series
and the same Class from which they were paid at net asset value without a
sales load or, at your option, paid in cash. Each Series' earnings for
Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. Distributions by
each Series from its net realized securities gains, if any, generally are
declared and paid once a year, but the Series may make distributions on a
more frequent basis to comply with distribution requirements of the Code,
in all events in a manner consistent with the provisions of the
Investment Company Act of 1940. No Series will make distributions from
its net realized securities gains unless capital loss carryovers, if any,
have been utilized or have expired. You may choose whether to receive
distributions in cash or to reinvest in additional shares of the Series
and the same Class from which they were paid at net asset value. All
expenses are accrued daily and deducted before declaration of dividends
to investors.
Dividends paid by each Class will be calculated at the same
time and in the same manner and will be of the same amount, except that
the expenses attributable solely to Class A, Class B or Class C will be
borne exclusively by that Class. Class B and Class C will receive lower
per share dividends than Class A shares because of the higher expenses
borne by the relevant Class. See "Fee Table."
FEDERAL TAX TREATMENT _ Under the Code, each Series of the Fund is
treated as a separate corporation for purposes of qualification and
taxation as a regulated investment company. Except for dividends from
Taxable Investments, the Fund anticipates that substantially all dividends
paid by a Series from net investment income will not be subject to Federal
income tax. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains and all
or a portion of any gains realized from the sale or other disposition of
certain market discount bonds, paid by the Fund are subject to Federal
income tax as ordinary income whether or not reinvested. Distributions
from net realized long-term securities gains of a Series generally are
subject to Federal income tax as long-term capital gains if you are a
citizen or resident of the United States. Dividends and distributions
attributable to gains derived from securities transactions and from the
use of certain of the investment techniques described under "Description
of the Fund _ Investment Techniques," will be subject to Federal income
tax. No dividend paid by any Series will qualify for the dividends
received deduction allowable to certain U.S. corporations. The Code
provides that the net capital gain of an individual generally will not
be subject to Federal income tax at a rate in excess of 28%. Under the
Code, interest on indebtedness incurred or continued to purchase or carry
shares of any Series which is deemed to relate to exempt-interest
dividends is not deductible.
Page 53
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares of a Series if you exchange your
Class A shares for shares of another Series or fund advised by The
Dreyfus Corporation within 91 days of purchase and such other Series or
other fund reduces or eliminates its otherwise applicable sales load
charge for the purpose of the exchange. In this case, the amount of your
sales load charge for Class A shares, up to the amount of the reduction
of the sales load charge on the exchange, is not included in the basis of
your Class A shares for purposes of computing gain or loss on the
exchange, and instead is added to the basis of the other Series or fund
shares received on the exchange.
Although all or a substantial portion of the dividends paid
by each Series may be excluded by shareholders of the Series from their
gross income for Federal income tax purposes, each Series may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for purposes
of the corporate alternative minimum tax as well as a component in
computing the corporate environmental tax or (iii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If a Series purchases such securities, the portion of the
Series' dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause an investor to be subject to such
taxes.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt
from Federal tax and the dollar amount, if any, subject to Federal tax.
These dollar amounts will vary depending on the size and length of time
of your investment in a Series. If a Series pays dividends derived from
taxable income, it intends to designate as taxable the same percentage of
the day's dividends as the actual taxable income earned on that day bears
to total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains and the
proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from
the IRS of being subject to backup withholding as a result of a failure
to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect
or if a shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that each Series has
qualified for the fiscal year ended April 30, 1995 as a "regulated
investment company" under the Code. Each Series intends to continue to so
qualify, if such qualification is in the best interests of its
shareholders. Qualification as a regulated investment company relieves
the Series of any liability for Federal income taxes to the extent its
earnings are distributed in accordance with applicable provisions of the
Code. Each Series of the Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains, if any.
Page 54
STATE AND LOCAL TAX TREATMENT _ Each Series will invest primarily in
Municipal Obligations of the State after which the Series is named.
Except to the extent specifically noted below, dividends by a Series are
not subject to an income tax by such State to the extent that the
dividends are attributable to interest on such Municipal Obligations.
However, some or all of the other dividends or distributions by a Series
may be taxable by those States that have income taxes, even if the
dividends or distributions are attributable to income of the Series
derived from obligations of the United States or its agencies or
instrumentalities.
The Fund anticipates that a substantial portion of the
dividends paid by each Series will not be subject to income tax of the
State after which the Series is named. However, to the extent that you
are obligated to pay State or local taxes outside of such State,
dividends earned by an investment in such Series may represent taxable
income. Also, all or a portion of the dividends paid by a Series that are
not subject to income tax of the State after which the Series is named
may be a preference item for such State's alternative minimum tax (where
imposed). Finally, you should be aware that State and local taxes, other
than those described above, may apply to the dividends, distributions or
shares of a Series.
The paragraphs below discuss the State tax treatment of
dividends and distributions by each Series to residents of the State
after which the Series is named. Investors should consult their own tax
advisers regarding specific questions as to Federal, State and local
taxes.
ARIZONA SERIES _ Dividends paid by the Series are not subject to
Arizona individual and corporate income taxes to the extent that such
dividends are derived from income received by the Series as interest from
Arizona Municipal Obligations, or from direct obligations of the United
States, certain Federal agency obligations, or obligations issued by the
governments of Puerto Rico, Virgin Islands or Guam. Dividends derived
from other sources including distributions that qualify as capital gain
dividends for Federal income tax purposes may be taxable by Arizona. In
addition, any gain realized on the redemption, sale or exchange of Series
shares is subject to Arizona income tax.
Arizona does not impose an alternative minimum tax.
Shares of the Arizona Series are not subject to property
taxation by the State of Arizona or its political subdivisions.
COLORADO SERIES _ Dividends paid by the Series to a Colorado
resident individual, trust or estate, or corporation doing business in
Colorado, will be exempt from Colorado income tax to the extent that such
dividends qualify as exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code that are derived from
interest received by the Series from (a) obligations of Colorado or its
political subdivisions issued on or after May 1, 1980, or if issued
before May 1, 1980, to the extent such interest is specifically exempt
from income taxation under the laws of the State of Colorado authorizing
the issuance of such obligations, (b) obligations of the United States or
its possessions to the extent included in Federal taxable income, and (c)
obligations of territories and possessions of the United States to the
extent Federal law exempts interest on such obligations from taxation by
the states. To the extent that Series, dividends and distributions are
attributable to sources not described in the preceding sentence, such as
short or long-term capital gains from investments sold or disposed of by
the Series, such dividends and distributions will not be exempt from
Colorado income tax.
The shares of the Colorado Series are not subject to property
taxation by Colorado or its political subdivisions.
CONNECTICUT SERIES _ Dividends by the Series that qualify as
exempt-interest dividends for Federal income tax purposes are not subject
to the Connecticut income tax imposed on individuals, trusts and estates,
to the extent that such dividends are derived from income received by the
Series as interest from Connecticut Municipal Obligations or obligations
the interest with respect to which Connecticut is prohibited by Federal
law from taxing. Dividends that qualify as capital
Page 55
gain dividends for Federal income tax purposes are not subject to the
Connecticut income tax to the extent they are derived from Connecticut
Municipal Obligations. Dividends derived from other sources are subject
to the Connecticut income tax. In the case of a shareholder subject to
the Connecticut income tax and required to pay the Federal alternative
minimum tax, the portion of exempt-interest dividends paid by the Series
that is derived from income received by the Series as interest from
Connecticut Municipal Obligations or obligations the interest with respect
to which Connecticut is prohibited by Federal law from taxing is not sub-
ject to the net Connecticut minimum tax even though treated as a pre-
ference item for purposes of the Federal alternative minimum tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes that are distributed by the Series to entities taxed
as corporations under the Connecticut corporation business tax are not
exempt from that tax.
The shares of the Series are not subject to property taxation
by the State of Connecticut or its political subdivisions.
FLORIDA SERIES _ Dividends or distributions by the Fund to a Florida
individual resident are not taxable by Florida. However, Florida imposes
an intangible personal property tax on shares of the Series owned by a
Florida resident on January 1 of each year unless such shares qualify for
an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes as well as other Federally taxable dividends and
distributions that are distributed by the Series to entities taxed as
corporations under Florida law may not be exempt from the Florida
corporate income tax.
The Fund has received a Technical Assistance Advisement from
the State of Florida, Department of Revenue, to the effect that Florida
Series' shares owned by a Florida resident will be exempt from the
intangible personal property tax so long as the Series' portfolio
includes only assets, such as notes, bonds, and other obligations issued
by the State of Florida or its municipalities, counties, and other taxing
districts, the United States Government, and its agencies, Puerto Rico,
Guam, and the U.S. Virgin Islands, and other assets which are exempt from
that tax.
GEORGIA SERIES _ Dividends and distributions by the Georgia Series
to a Georgia resident that are attributable to interest on Georgia
Municipal Obligations or direct obligations of the United States and its
territories and possessions are not subject to the State of Georgia
income tax. Dividends or other distributions by the Series which are
attributable to other sources, including all distributions that qualify
as capital gains dividends for Federal income tax purposes, are subject
to the State of Georgia income tax at the applicable rate.
There is no specific statutory or regulatory exception that
would exempt shares of a regulated investment company, including
regulated investment companies that only hold Municipal Obligations or
other direct obligations of the United States and its territories and
possessions, from the Georgia intangibles tax. The Georgia Department of
Revenue has taken the position that the fair market value of a regulated
investment company's shares are subject to Georgia's intangibles tax
regardless of the tax exempt character of the obligations in which the
Series invests or the tax exempt income generated by such investments.
MARYLAND SERIES _ Dividends and distributions by the Series to a
Maryland resident (including individuals, corporations, estates or trusts
who are subject to Maryland state and local income tax) will not be
subject to tax in Maryland to the extent that such dividends or
distributions (a) qualify, for Federal income tax purposes, as
exempt-interest dividends of a regulated investment company and are
attributable to (i) interest on Maryland Municipal Obligations or (ii)
interest on obligations of the United States or an authority, commission,
instrumentality, possession or territory of the United States, or (b) are
attributable to gain realized by the Series from the sale or exchange of
Maryland Municipal Obligations or obligations of the United States or an
authority, commission or instrumentality thereof. To the extent that
distributions
Page 56
by the Series are attributable to sources other than those described above,
such as (x) interest on obligations issued by states other than Maryland
or (y) income from repurchase agreements, such distributions will not be
exempt from Maryland state and local income taxes. In addition, any gain
realized by a shareholder upon a redemption or exchange of Series shares
will be subject to Maryland taxation.
Maryland presently includes in taxable net income items of
tax preferences as defined in the Code. Interest paid on certain private
activity bonds constitutes a tax preference. Accordingly, subject to a
threshold amount, 50% of any distributions by the Series attributable to
such private activity bonds will not be exempt from Maryland state and
local income taxes. Interest on indebtedness incurred (directly or
indirectly) by a shareholder of the Series to purchase or carry shares of
the Series will not be deductible for Maryland state and local income tax
purposes to the extent such interest is allocable to exempt-interest
dividends.
In the event the Series fails to qualify as a regulated
investment company, the Series would be subject to corporate Maryland
income tax and distributions generally would be taxable as ordinary
income to the shareholders.
Individuals will not be subject to personal property tax on
their shares of the Maryland Series.
MASSACHUSETTS SERIES _ Dividends by the Series to a Massachusetts
resident are not subject to the Massachusetts personal income tax to the
extent that the dividends are attributable to income received by the
Series from Massachusetts Municipal Obligations or direct U.S. Government
obligations, and are properly designated as such. Distributions of
capital gain dividends by the Series to a Massachusetts resident are not
subject to the Massachusetts personal income tax to the extent such
distributions are attributable to gain from the sale of certain
Massachusetts Municipal Obligations the gain from which is exempt from
the Massachusetts personal income tax, and the distributions are properly
designated as such. Dividends or distributions by the Series to a
Massachusetts resident that are attributable to most other sources are
subject to the Massachusetts personal income tax. In addition,
distributions from the Series may be included in the net income measure
of the corporate excise tax for corporate shareholders who are subject to
the Massachusetts corporate excise tax. The Series believes that
distributions from net realized long-term securities gains that are
taxable by Massachusetts are reportable as long-term capital gains,
irrespective of how long the resident has held shares in the Series.
The shares of the Series are not subject to property taxation
by Massachusetts or its political subdivisions.
MICHIGAN SERIES _ Dividends by the Series to a Michigan resident
individual are not subject to the Michigan personal income tax and are
excluded from the taxable income base of the Michigan intangibles tax to
the extent that the dividends are attributable to income received by the
Series as interest from the Series' investment in Michigan Municipal
Obligations, obligations of U.S. possessions, as well as direct U.S.
Government obligations. Dividends or distributions by the Series to a
Michigan resident that are attributable to most other sources are subject
to both the Michigan personal income tax and are included in the taxable
income base of the Michigan intangibles tax.
For Michigan personal income and intangibles tax purposes,
the proportionate share of dividends from the Series' net investment
income from other than Michigan Municipal Obligations and from
distributions from any short-term or long-term capital gains will be
included in Michigan taxable income and will be included in the taxable
income base of the Michigan intangibles tax, except that dividends from
net investment income or distributions from capital gains reinvested in
Series' shares are exempt from such tax. Additionally, for Michigan
personal income tax purposes, any gain or loss realized when the
shareholder sells or exchanges Series' shares will be included in
Michigan taxable income.
Persons engaging in business activities in Michigan may be
subject to the Michigan Single Business Tax and should consult their tax
advisers with respect to the application of such tax in connection with
an investment in the Series.
Page 57
MINNESOTA SERIES _ Dividends by the Series to a Minnesota resident
are not subject to the Minnesota personal income tax to the extent that
the dividends are attributable to income received by the Series as
interest from Minnesota Municipal Obligations, but only if the dividends
so attributable represent 95% or more of the exempt-interest dividends
that are paid by the Series. However, dividends paid by the Series to a
Minnesota resident are not subject to the Minnesota personal income tax
to the extent that the dividends are attributable to income received by
the Series as interest from a Series' investment in direct U.S.
Government obligations. Dividends and distributions by the Series to a
Minnesota resident that are attributable to most other sources are
subject to the Minnesota personal income tax. Dividends and distributions
from the Series will be included in the determination of taxable net
income of corporate shareholders who are subject to Minnesota income
(franchise) taxes. In addition, dividends attributable to interest
received by the Series that is a preference item for Federal income tax
purposes, whether or not such interest is from a Minnesota Municipal
Obligation, may be subject to the Minnesota alternative minimum tax.
The shares of the Series are not subject to property taxation
by Minnesota or its political subdivisions.
NORTH CAROLINA SERIES _ Dividends paid by the North Carolina Series
to a North Carolina resident that are attributable to interest on North
Carolina Municipal Obligations or direct U.S. Government obligations are
not subject to the North Carolina income tax. Dividends or distributions
attributable to gain realized by the Series from the sale or exchange of
certain North Carolina Municipal Obligations will not be included in the
North Carolina taxable income of a resident individual, trust or estate.
Other dividends or distributions which are attributable to net realized
securities gains and most other sources are subject to the North Carolina
income tax at the applicable rate. Gain realized by a North Carolina
resident shareholder from the sale or exchange of an interest held in the
North Carolina Series also will be subject to the North Carolina income
tax at the applicable rate.
The North Carolina intangibles tax previously imposed upon
certain intangible personal property has been repealed, effective as of
January 1, 1995. Accordingly, shares of the North Carolina Series will
not be subject to an intangibles tax in North Carolina.
To the extent that dividends or distributions from the North
Carolina Series increase the surplus of a corporate shareholder required
to file a North Carolina franchise tax return, such increase in the
surplus will be subject to the North Carolina franchise tax.
OHIO SERIES _ Dividends paid by the Series to an Ohio resident, or
to a corporation subject to the Ohio Corporation Franchise Tax, are not
subject to Ohio state and local income taxes or the net income basis of
the Ohio Corporation Franchise Tax to the extent that such dividends are
attributable to income received by the Series as interest from Ohio
Municipal Obligations and direct obligations of the United States,
certain Federal agencies and certain U.S. territories. Dividends or
distributions paid by the Series to an Ohio resident, or to a corporation
subject to the Ohio Corporation Franchise Tax, that are attributable to
most other sources are subject to Ohio state and local income taxes and
are includable in the net income basis of the Ohio Corporation Franchise
Tax. The shares of the Series are not subject to property taxation by the
State of Ohio or its political subdivisions, except when held by a
"dealer in intangibles" (generally, a person in the lending or brokerage
business), a decedent's estate, an Ohio insurance company, or a
corporation taxed on the net worth basis of the Ohio Corporation
Franchise Tax.
OREGON SERIES _ Dividends paid by the Series to an Oregon resident
individual, trust or estate are exempt from Oregon personal income tax to
the extent that such dividends qualify as exempt-interest dividends for
federal income tax purposes and such dividends are attributable to
interest on tax-exempt obligations of the State of Oregon and its
political as subdivisions and authorities or on obligations issued by the
governments of Puerto Rico, the U.S.
Page 58
Virgin Islands, Guam and the Northern Mariana Islands. To the extent that
the Series' dividends and distributions are attributable to sources not
described in the preceding sentence, such as short- or long-term capital
gains from investments sold or disposed of by the Series, such dividends
and distributions will not be exempt from Oregon personal income tax.
In addition, dividends and distributions paid by the Oregon Series are
expected to be fully includable in income in determining the Oregon excise
tax on corporations.
The shares of the Oregon Series are not subject to property
taxation by Oregon or its political subdivisions.
PENNSYLVANIA SERIES _ Dividends by the Series will not be subject to
the Pennsylvania personal income tax to the extent that the dividends are
attributable to interest received by the Series from its investments in
Pennsylvania Municipal Obligations and U.S. Government obligations,
including obligations issued by U.S. possessions. Dividends by the Series
will not be subject to the Philadelphia School District investment income
tax to the extent that the dividends are attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. obligations, including obligations issued by U.S.
possessions. Dividends or distributions by the Series to a Pennsylvania
resident that are attributable to most other sources may be subject to
the Pennsylvania personal income tax and (for residents of Philadelphia)
to the Philadelphia School District investment net income tax.
Dividends paid by the Series which are considered
"exempt-interest dividends" for Federal income tax purposes are not
subject to the Pennsylvania Corporate Net Income Tax, but other dividends
or distributions paid by the Series may be subject to that tax. An
additional deduction from Pennsylvania taxable income is permitted for
dividends or distributions paid by the Series attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. Government obligations to the extent included in
Federal taxable income, but such a deduction is reduced by any interest
on indebtedness incurred to carry the securities and other expenses
incurred in the production of such interest income, including expenses
deducted on the Federal income tax return that would not have been
allowed under the Code if the interest were exempt from Federal income
tax. It is the current position of the Department of Revenue of the
Commonwealth of Pennsylvania that Series shares are not considered exempt
assets (with a pro rata exclusion based on the value of the Series
attributable to its investments in Pennsylvania Municipal Obligations and
U.S. Government obligations, including obligations issued by U.S.
possessions) for purposes of determining a corporation's capital stock
value subject to the Pennsylvania Capital Stock/Franchise Tax.
Shares of the Series are exempt from Pennsylvania county
personal property taxes to the extent that the portfolio of the Series
consists of Pennsylvania Municipal Obligations and U.S. Government
obligations, including obligations issued by U.S. possessions.
TEXAS SERIES _ All dividends and distributions by the Series to
Texas resident individuals are not subject to taxation by Texas. However,
Texas enacted significant changes to its corporate franchise tax law for
reporting years beginning January 1, 1992 and thereafter. These changes
include the imposition of a tax measured by earned surplus, in addition
to the previously existing tax on a corporation's capital. The earned
surplus component of the Texas franchise tax is applicable only to the
extent that it exceeds the taxable capital component of the franchise
tax. For Texas franchise tax purposes, earned surplus is computed by
reference to Federal taxable income. Thus, any amounts subject to Federal
income tax that are payable by the Series to corporations doing business
in or incorporated in Texas generally will be included in the earned
surplus component of the Texas franchise tax, to the extent such earned
surplus is apportioned to Texas. Dividends and other distributions not
subject to Federal income tax generally will be excluded from the
calculation of the earned surplus component of the franchise tax.
Page 59
Both the capital tax and earned surplus tax components of the
Texas franchise tax are computed by reference to the portion of the
corporation's capital or earned surplus, respectively, based on the
corporation's gross receipts derived from Texas. To the extent dividend
and interest payments are made by a corporation not incorporated in
Texas, or another type of entity not legally domiciled in Texas, such
dividends and payments are not considered to be Texas sourced receipts
for franchise tax apportionment purposes.
Effective with franchise tax reports originally due after
January l, 1994 (which are based upon accounting years ending in 1993),
other taxable distributions from the Series to corporations doing
business in or incorporated in Texas (such as the proceeds resulting from
net gain upon the sale of Series bonds) may be allocable to Texas as
Texas sourced gross receipts for the earned surplus component of the
franchise tax if: (l) the activities of the recipient corporation do not
have a sufficient unitary connection with that corporation's other
activities conducted within the state giving rise to the underlying sale
of such assets; and (2) the recipient corporation has its commercial
domicile in Texas.
The shares of the Series are not subject to property taxation
by Texas or its political subdivisions.
VIRGINIA SERIES _ Dividends paid by the Series to a Virginia
resident or a corporation doing business in Virginia are exempt from
Virginia income tax to the extent that the dividends are attributable to
(a) Virginia Municipal Obligations, (b) obligations of the United States
or any authority, commission or instrumentality of the United States in
the exercise of the borrowing power of the United States and backed by
the full faith and credit of the United States, or (c) obligations issued
by particular Federal or Virginia agencies or political subdivisions
whose enabling statute exempts from state taxation interest or dividends
paid on securities of such entity; provided, that the exempt portion of
dividends can be determined with reasonable certainty and substantiated if
taxable income is commingled with exempt income. Other dividends and
distributions, including distributions of capital gains attributable to
the aforementioned obligations, are subject to Virginia income tax unless
specifically exempted by statutory provisions creating the agency or
political subdivisions.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares may be calculated on several bases, including current yield, tax
equivalent yield, average annual total return and/or total return.
These total return figures reflect changes in the price of
the shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. Class A total return figures
include the maximum initial sales charge and Class B and Class C total
return figures include any applicable CDSC. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and Class C should be expected to
be lower than that of Class A. Performance for each Class will be
calculated separately.
Current yield refers to each Series' annualized net
investment income per share over a 30-day period, expressed as a
percentage of the maximum offering price per share in the case of Class A
or the net asset value in the case of Class B or Class C at the end of
the period. For purposes of calculating current yield, the amount of net
investment income per share during that 30-day period, computed in
accordance with regulatory requirements, is compounded by assuming that
it is reinvested at a constant rate over a six-month period. An identical
result is then assumed to have occurred during a second six-month period
which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of each
Series' current yield may reflect absorbed expenses pursuant to any under-
taking that may be in effect. See "Management of the Fund."
Page 60
Tax equivalent yield is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in a Series of the
Fund was purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time, after
giving effect to the reinvestment of dividends and distributions during
the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of each
Series' performance will include each Series' average annual total return
for Class A, Class B and Class C for one, five and ten year periods, or
for shorter periods depending upon the length of time during which each
Series has operated. Computations of average total return for periods of
less than one year represent an annualization of the Class's actual total
return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
maximum offering price per share in the case of Class A or the net asset
value in the case of Class B or Class C at the beginning of the period.
Advertisements may include the percentage rate of total return or may
include the value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return.
Total return may also be calculated by using the net asset value per
share at the beginning of the period instead of the maximum offering
price per share at the beginning of the period for Class A shares or
without giving effect to any applicable CDSC at the end of the period for
Class B or Class C shares. Calculations based on the net asset value per
share do not reflect the deduction of the applicable sales charge which,
if reflected, would reduce the performance quoted.
Performance will vary from time to time and past results are
not necessarily representative of future results. Investors should
remember that performance is a function of portfolio management in
selecting the type and quality of portfolio securities and is affected by
operating expenses. Performance information, such as that described
above, may not provide a basis for comparison with other investments or
other investment companies using a different method of calculating
performance.
Comparative performance information may be used from time to
time in advertising the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman
Brothers Municipal Bond Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated
September 19, 1986. On July 2, 1990, the Fund's name was changed from
Premier State Tax Exempt Bond Fund to Premier State Municipal Bond Fund.
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, par value $.001 per share. The Fund's shares are
classified into three classes _ Class A, Class B and Class C. Each share
has one vote and shareholders will vote in the aggregate and not by class
except as otherwise required by law or when class voting is permitted by
the Board of Trustees. However, only holders of Class B or Class C shares,
as the case may be, will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan.
On August 3, 1994, the shareholders of each Series of the
Fund approved a proposal to change, among other things, certain of the
Fund's fundamental policies and investment restrictions to (i) increase
the amount the Series may borrow; and (ii) increase the amount of assets
the Series may pledge to secure such borrowing and make such policy
non-fundamental.
Page 61
To date, the Trustees have authorized the creation of fifteen
Series of shares. All consideration received by the Fund for shares of
one of the Series and all assets in which such consideration is invested,
will belong to that Series (subject only to the rights of creditors of
the Fund) and will be subject to the liabilities related thereto. The
income attributable to, and the expenses of, one Series would be treated
separately from those of the other Series.
Rule 18f-2 under the Investment Company Act of 1940 provides
that any matter required to be submitted under the provisions of the
Investment Company Act of 1940 or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company
such as the Fund will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of
each Series affected by such matter. Rule 18f-2 further provides that a
Series shall be deemed to be affected by a matter unless it is clear that
the interests of each Series in the matter are identical or that the
matter does not affect any interest of such Series. However, the Rule
exempts the selection of independent accountants and the election of
trustees from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund
itself would be unable to meet its obligations, a possibility which manage
ment believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying such liability will be entitled to reimburse-
ment from the general assets of the Fund. The Trustees intend to conduct
the operations of the Fund in such a way so as to avoid, as far as pos-
sible, ultimate liability of the shareholders for liabilities of the Fund.
As discussed under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove
Trustees.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
PSTEBF/P15081495
Page 62
APPENDIX
The average distribution of investments (at value) in
Municipal Obligations by ratings for the fiscal year ended April 30,
1995, computed on a monthly basis, for each Series indicated was as
follows:
<TABLE>
<CAPTION>
FITCH MOODY'S STANDARD &
INVESTORS INVESTORS POOR'S OHIO PENNSYLVANIA
SERVICE, INC. OR SERVICE, INC. OR CORPORATIONSERIES SERIES
----------------- -------------- ------------------- ----------- ---------------
<S> <C> <C> <C> <C>
AAA Aaa AAA 27.7% 29.6%
AAA Aa AA 7.4 14.7
A A A 27.1 16.5
BBB Baa BBB 24.7 22.2
BB Ba BB 5.4 1.7
F-1 MIG1/P-1 SP-1/A-1 1.1 2.2
Not Rated Not Rated Not Rated 6.7(1) 13.1(2)
----------- ---------------
100.0% 100.0%
=========== ===============
</TABLE>
(1) Included under the Not Rated category are securities
comprising 6.7% of the Ohio Series' market value which,
while not rated, have been determined by The Dreyfus Corporation to be of
comparable quality to securities in the following rating categories: Aaa/A
AA (3.8%), Baa/BBB (2.7%), B (.2%).
(2) Included under the Not Rated category are securities
comprising 13.1% of the Pennsylvania Series' market value which, while
not rated, have been determined by The Dreyfus Corporation to be of
comparable quality to securities in the following rating categories:
Aaa/AAA (3.7%), A/A (1.7%), Baa/BBB (3.9%), Ba/BB (3.0%) and B (.8%).
The actual distribution of the Series' investments in
Municipal Obligations by ratings on any given date will vary. In
addition, the distribution of the Series' investments by ratings as set
forth above should not be considered as representative of the Series'
future portfolio composition.
Page 63
PREMIER STATE MUNICIPAL BOND FUND
CLASS A AND CLASS B AND CLASS C SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
AUGUST 14, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier State Municipal Bond Fund (the "Fund"), dated August 14, 1995,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . .B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . .B-11
Management Agreement . . . . . . . . . . . . . . . . . . . . . .B-15
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . .B-18
Distribution Plan and Shareholder Services Plan . . . . . . . .B-21
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . .B-24
Shareholder Services . . . . . . . . . . . . . . . . . . . . . .B-26
Determination of Net Asset Value . . . . . . . . . . . . . . . .B-28
Dividends, Distributions and Taxes . . . . . . . . . . . . . . .B-29
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . .B-31
Performance Information. . . . . . . . . . . . . . . . . . . . .B-31
Information About the Fund . . . . . . . . . . . . . . . . . . .B-37
Custodian, Transfer and Dividend Disbursing Agent,
. . . . Counsel and Independent Auditors . . . . . . . . . . . B-37
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . .B-38
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . .B-114
Financial Statements . . . . . . . . . . . . . . . . . . . . . .B-122
Report of Independent Auditors . . . . . . . . . . . . . . . . .B-287
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended April 30, 1995, computed
on a monthly basis, was as follows:
<TABLE>
<CAPTION>
Fitch Moody's Standard &
Investors Investors Poor's
Service, Inc. Service, Inc. Corporation Arizona Colorado Connecticut Florida
("Fitch") or ("Moody's") or ("S&P") Series Series Series Series
- ------------- ------------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
AAA Aaa AAA 43.5% 37.7% 30.8% 36.4%
AA Aa AA 22.3 29.3 34.3 13.5
A A A 18.8 3.6 15.5 12.4
BBB Baa BBB 7.9 24.6 12.4 20.9
BB Ba BB 4.5 - - .9
F-1 MIG 1/P-1 SP-1/A-1 3.0 4.8 .1 3.8
Not Rated Not Rated Not Rated - - 6.9 12.1
100.0% 100.0% 100.0% 100.0%
Georgia Maryland Massachusetts Michigan
Fitch or Moody's or S&P Series Series Series Series
- ---------- ----------- ------- -------- --------- ------------- ---------
AAA Aaa AAA 39.3% 31.1% 42.9% 32.9%
AA Aa AA 42.8 35.5 10.2 25.4
A A A 11.4 19.6 33.0 17.5
BBB Baa BBB 4.9 5.3 5.9 13.7
BB Ba BB .9 - - -
F-1 MIG 1/P-1 SP-1/A-1 .7 1.3 - 2.7
Not Rated Not Rated Not Rated - 7.2 8.0 7.8
100.0% 100.0% 100.0% 100.0%
______________________________
1 Included in the Not Rated category are securities comprising 6.9% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (.3%) and Baa/BBB (6.6%).
2 Included in the Not Rated category are securities comprising 12.1% of the Series' market value which, while not
rated, have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (.5%), Baa/BBB (10.3%), Ba/BB (.8%) and B/B (.5%).
3 Included in the Not Rated category are securities comprising 7.2% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Baa/BBB (6.7%) and B (.5%).
4 Included in the Not Rated category are securities comprising 8.0% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (.4%), A/A (1.1%) and Baa/BBB (6.5%).
5 Included in the Not Rated category are securities comprising 7.8% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (2.9%), A/A (.9%) and Baa/BBB (4.0%).
</TABLE>
<TABLE>
<CAPTION>
North
Minnesota Carolina Ohio Oregon
Fitch or Moody's or S&P Series Series Series Series
- --------- ----------- ------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
AAA Aaa AAA 38.3% 27.6% 27.7% 48.6%
AA Aa AA 25.8 18.8 7.4 32.4
A A A 19.7 37.4 27.1 16.8
BBB Baa BBB 10.1 12.3 24.7 -
BB Ba BB - - 5.4 -
F-1 MIG 1/P-1 SP-1/A-1 1.3 2.0 1.0 2.2
Not Rated Not Rated Not Rated 4.8 1.9 6.7 -
100.0% 100.0% 100.0% 100.0%
Pennsylvania Texas Virginia
Fitch or Moody's or S&P Series Series Series
- --------- ----------- -------- ------------ ------- ---------
AAA Aaa AAA 29.6% 37.7% 31.7%
AA Aa AA 14.7 32.8 28.0
A A A 16.5 7.9 25.3
BBB Baa BBB 22.2 13.8 11.7
BB Ba BB 1.7 - -
F-1 MIG 1/P-1 SP-1/A-1 2.2 1.6 1.6
Not Rated Not Rated Not Rated 13.1 6.2 1.7
100.0% 100.0% 100.0%
___________________________________
6 Included in the Not Rated category are securities comprising 4.8% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (1.4%) and Baa/BBB (3.4%).
7 Included in the Not Rated category are securities comprising 1.9% of the Series' market value which, while not rated,
have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (.3%) and Baa/BBB (1.6%).
8 Included under the Not Rated category are securities comprising 6.7% of the Series' market value which, while not
rated, have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (3.8%), Baa/BBB (2.7%) and B (.2%).
9 Included under the Not Rated category are securities comprising 13.1% of the Series' market value which, while not
rated, have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (3.7%), A/A (1.7%), Baa/BBB (3.9%), Ba/BB (3.0%) and B (.8%).
10 Included under the Not Rated category are securities comprising 6.2% of the Series' market value which, while not
rated, have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Aaa/AAA (.8%) and Baa/BBB (5.4%).
11 Included under the Not Rated category are securities comprising 1.7% of the Series' market value which, while not
rated, have been determined by the Manager to be of comparable quality to securities in the following rating categories:
Baa/BBB (1.7%).
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Fund's Shareholder Services Plan,
with respect to Class A, Class B and Class C shares, and the Distribution
Plan, with respect to Class B and Class C shares only, will have the effect
of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The staff of the Securities
and Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully
each Series' investment in such securities with particular regard to (1)
the frequency of trades and quotes for the lease obligation; (2) the number
of dealers willing to purchase or sell the lease obligation and the number
of other potential buyers; (3) the willingness of dealers to undertake to
make a market in the lease obligation; (4) the nature of the marketplace
trades including the time needed to dispose of the lease obligation, the
method of soliciting offers and the mechanics of transfer; and
(5) such other factors concerning the trading market for the lease
obligation as the Manager may deem relevant. In addition, in evaluating
the liquidity and credit quality of a lease obligation that is unrated, the
Fund's Board has directed the Manager to consider (a) whether the lease can
be cancelled; (b) what assurance there is that the assets represented by
the lease can be sold; (c) the strength of the lessee's general credit
(e.g., its debt, administrative, economic, and financial characteristics);
(d) the likelihood that the municipality will discontinue appropriating
funding for the leased property because the property is no longer deemed
essential to the operations of the municipality (e.g., the potential for an
"event of nonappropriation"); (e) the legal recourse in the event of
failure to appropriate; and (f) such other factors concerning credit
quality as the Manager may deem relevant. No Series will invest more than
15% of the value of its net assets in lease obligations that are illiquid
and in other illiquid securities. See "Investment Restriction No. 6"
below.
A Series will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option arrangements, including the
fee payment arrangements, will not adversely affect the tax exempt status
of the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Series. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will be
monitored to assure that it is valued at fair value.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and
are not absolute standards of quality. Although these ratings may be an
initial criterion for selection of portfolio investments, the Manager also
will evaluate these securities.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in
the writer's futures margin account, which represents the amount by which
the market price of the futures contract exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of options on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the time
of sale, there are no daily cash payments to reflect changes in the value
of the underlying contract; however, the value of the option does change
daily and that change would be reflected in the net asset value of the
relevant Series.
Lending Portfolio Securities. To a limited extent, each Series may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, a Series
can increase its income through the investment of the cash collateral. For
purposes of this policy, the Fund considers collateral consisting of U.S.
Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Series to be the
equivalent of cash. From time to time, the Series may return to the
borrower or a third party which is unaffiliated with the Series, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(3) the Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as any
interest or other distributions payable on the loaned securities, and any
increase in market value; and (5) the Series may pay only reasonable
custodian fees in connection with the loan. These conditions may be
subject to future modification.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the U.S. Treasury; others
such as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of the
agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be
given that it will always do so, since it is not so obligated by law. The
Fund will invest in such securities only when it is satisfied that the
credit risk with respect to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Series of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Series to resell, the instrument at a fixed price,
usually not more than one week after its purchase. The Fund's custodian or
sub-custodian will have custody of, and will hold in a segregated account,
securities acquired by the Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Series which entered into them. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement,
each Series will enter into repurchase agreements only with domestic banks
with total assets in excess of one billion dollars or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which such Series may invest, and
will require that additional securities be deposited with it if the value
of the securities purchased should decrease below resale price. The
Manager will monitor on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. Certain
costs may be incurred by the Series in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities
by the Series may be delayed or limited. The Fund will consider on an
ongoing basis the creditworthiness of the institutions with which it enters
into repurchase agreements.
Short-Selling. The Fund may engage in short-selling. Until the Fund
replaces a borrowed security in connection with a short sale, the Fund will
(a) maintain daily a segregated account, containing cash or U.S. Government
securities, at such a level that (i) the amount deposited in the account
plus the amount deposited with the broker as collateral will equal the
current value of the securities sold short and (ii) the amount deposited in
the segregated account plus the amount deposited with the broker as
collateral will not be less than the market value of the security at the
time it was sold short; or (b) otherwise cover its short position.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted securities held by the
Fund, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Fund's Board
of Trustees has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity in its portfolio during such period.
Risk Factors
Lower Rated Bonds. Each Series is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See "Description of the
Fund--Risk Factors--Lower Rated Bonds" in the Prospectus for a discussion
of certain risks and "Appendix B" for a general description of Moody's, S&P
and Fitch ratings of Municipal Obligations. Although ratings may be useful
in evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these bonds. The Fund will rely on the
Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in a
Series' portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether such Series should
continue to hold the bond.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by S&P, Moody's and
Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues when
necessary to meet the Series' liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing a Series' portfolio and calculating such
Series' net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Fund may acquire these bonds during any initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Lower rated zero coupon securities and pay-in-kind bonds, in which
each Series may invest up to 5% of its net assets, involve special
considerations. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon bonds and pay-in-kind
bonds. Such zero coupon, pay-in-kind or delayed interest bonds carry an
additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Series will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer
defaults, the Series may obtain no return at all on its investment. See
"Dividends, Distributions and Taxes."
Investing in State Municipal Obligations. Investors should review the
information in "Appendix A," which provides a brief summary of special
investment considerations and risk factors relating to investing in State
Municipal Obligations.
Investment Restrictions
The Fund has adopted the following investment restrictions (except as
otherwise noted) as fundamental policies which will apply to each Series.
These restrictions cannot be changed as to a Series without approval by the
holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "Act")) of such Series' outstanding voting shares. Investment
restrictions numbered 3 and 6 are not fundamental policies and may be
changed as to a Series by a vote of a majority of the Trustees at any time.
No Series may:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus and
those arising out of transactions in futures and options.
2. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33-1/3% of the value of the
Series' total assets). Transactions in futures and options and the entry
into short sales transactions do not involve any borrowing for purposes of
this restriction.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings. The deposit
of assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed-delivery
basis and collateral arrangements with respect to initial or variation
margin for futures contracts and options on futures contracts or indices
will not be deemed to be pledges of assets.
4. Purchase securities on margin, but may make margin deposits in
connection with transactions in futures, including those related to
indices, and options on futures or indices.
5. Underwrite the securities of other issuers, except that the
Series may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Series may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
6. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests that are not
subject to the demand feature described in the Fund's Prospectus and
floating and variable rate demand obligations as to which the Fund cannot
exercise the demand feature described in the Fund's Prospectus on not more
than seven days' notice if there is no secondary market), if, in the
aggregate, more than 15% of the value of the Series' net assets would be so
invested.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein, or prevent the Fund from
purchasing and selling futures contracts, including those related to
indices, and options on futures contracts or indices.
8. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Fund's Prospectus; however, the Fund may lend each Series'
portfolio securities in an amount not to exceed 33-1/3% of the value of the
Series' total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange Commission
and the Fund's Trustees.
9. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
10. Invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
For purposes of Investment Restriction No. 9, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."
If a percentage restriction is adhered to at the time of investment, a
later increase in percentage resulting from a change in values or assets
will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Series shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series in the state
involved.
In addition, although not fundamental policies, the Pennsylvania
Series may vary its portfolio investments only to (i) eliminate unsafe
investments and investments not consistent with the preservation of capital
or the tax status of investments of the Pennsylvania Series; (ii) honor
redemption orders, meet anticipated redemption requirements and negate
gains from discount purchases; (iii) reinvest the earnings from securities
in like securities; or (iv) defray ordinarily administrative expenses.
While not a fundamental policy, the Texas Series will not invest in
real estate limited partnerships.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund (as defined in the Act) is indicated by an asterisk.
Trustees of the Fund
CLIFFORD L. ALEXANDER, JR., Trustee. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the
Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation,
The Dun & Bradstreet Corporation, MCI Communications Corporation,
Mutual of America Life Insurance Company and Equitable Resources,
Inc., a producer and distributor of natural gas and crude petroleum.
Mr. Alexander is also a Board member of 17 other funds in the Dreyfus
Family of Funds. He is 61 years old and his address is 400 C Street,
N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Trustee. Shad Professor of Law, New York University School
of Law. Professor Davis has been a member of the New York University
law faculty since 1983. Prior to that time, she served for three
years as a judge in the courts of New York State; was engaged for
eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. Professor Davis is also a Board member of
15 other funds in the Dreyfus Family of Funds. She is 52 years old
and her address is c/o New York University School of Law, 249 Sullivan
Street, New York, New York 10012.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board for various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and until August
1994, the Fund's distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Bank Corporation. He is Chairman of the
Board of Noel Group, Inc., a venture capital company; a trustee of
Bucknell University; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Hemingway, Inc.,
a manufacturer and marketer of industrial threads, specialty yarns,
home furnishings and fabrics, Curtis Industries, Inc., a nationwide
distributor of security products, chemicals and automotive and other
hardware, Simmons Outdoor Corporation and Staffing Resources, Inc.
Mr. DiMartino is also a Board member of 93 other funds in the Dreyfus
Family of Funds. He is 51 years old and his address is 200 Park
Avenue, New York, New York 10166.
ERNEST KAFKA, Trustee. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. For more
than the past five years, Dr. Kafka has held numerous administrative
positions and has published many articles on subjects in the field of
psychoanalysis. Dr. Kafka is also a Board member of 15 other funds in
the Dreyfus Family of Funds. He is 62 years old and his address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Trustee. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions, and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. Dr. Klaman is also a Board member of 15 other
funds in the Dreyfus Family of Funds. He is 75 years old and his
address is 431-B Dedham Street, The Gables, Newton Center,
Massachusetts 02159.
NATHAN LEVENTHAL, Trustee. President of Lincoln Center for the Performing
Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of New York
City from September 1979 to March 1984 and Commissioner of the
Department of Housing Preservation and Development of New York City
from February 1978 to September 1979. Mr. Leventhal was an associate
and then a member of the New York law firm of Poletti Freidin Prashker
Feldman and Gartner from 1974 to 1978. He was Commissioner of Rent
and Housing Maintenance for New York City from 1972 to 1973. Mr.
Leventhal serves as Chairman of Citizens Union, an organization which
strives to reform and modernize City and State government. Mr.
Leventhal is also a Board member of 15 other funds in the Dreyfus
Family of Funds. He is 52 years old and his address is 70 Lincoln
Center Plaza, New York, New York 10023-6583.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Trustees of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
Ordinarily meetings of shareholders for the purpose of electing
Trustees will not be held unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders
at which time the Trustees then in office will call a shareholders' meeting
for the election of Trustees. Under the Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Fund may remove a
Trustee through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. The Trustees are required to
call a meeting of shareholders for the purpose of voting upon the question
of removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
The Fund typically pays its Trustees an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. The aggregate
amount paid to each Trustee by the Fund, for the fiscal year ended April
30, 1995, and, by all funds in the Dreyfus Family of Funds for which such
person is a Board member for the year ended December 31, 1994, were as
follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
- --------------------- ----------------- -------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Clifford L. Alexander, Jr $4,000 none none $ 73,210
Peggy C. Davis $4,250 none none $ 61,751
Joseph S. DiMartino $4,375** none none $445,000***
Ernest Kafka $3,750 none none $ 61,001
Saul B. Klaman $4,250 none none $ 61,751
Nathan Leventhal $4,250 none none $ 61,751
__________________________
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $266 for all Trustees as a
group.
** Estimated amount for the current fiscal year ending April 30, 1996.
*** Estimated amount for the year ending December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment companies
advised or administered by the Manager. From December 1991 to July
1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company, Inc.
Prior to December 1991, she served as Vice President and Controller, and
later as Senior Vice President, of The Boston Company Advisors, Inc.
She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate at
Ropes & Gray, and prior to August 1990, he was employed as an Associate
at Sidley & Austin. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of Springs
Industries Inc. He is 33 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
JOSEPH F. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an officer
of other investment companies advised or administered by the Manager.
From July 1988 to August 1994, he was employed by The Boston Company,
Inc. where he held various management positions in the Corporate Finance
and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was Assistant
Vice President in the Mutual Fund Accounting Department of the Manager.
He is 59 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of all officers of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of the
Fund's shares of beneficial interest outstanding on July 17, 1995.
As of July 17, 1995, the following persons owned 5% or more of the
outstanding shares of beneficial interest of the Fund; Arizona Series Class
A: Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL - 6.8%;
Arizona Series Class B: Merrill Lynch/FDS, Jacksonville, FL - 10.43%;
Colorado Series Class A: Major Trading Corporation, New York, NY - 36.69%;
Colorado Series Class B: Major Trading Corporation, New York, NY - 11.66%,
Smith Barney, Inc., New York, NY - 6.20%; Connecticut Series Class A:
Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL - 8.13%;
Connecticut Series Class B: Merrill Lynch Pierce Fenner & Smith, Inc.,
Jacksonville, FL - 6.38%; Florida Series Class A: Merrill Lynch Pierce
Fenner & Smith, Inc., Jacksonville, FL - 5.07%; Florida Series Class B:
Merrill Lynch/FDS, Jacksonville, Fl - 7.14%; Georgia Series Class B:
Merrill Lynch Funds, Jacksonville, FL - 15.70%; Maryland Series Class A:
Stephens, Inc., Little Rock, AR - 6.00%; Maryland Series Class B: Merrill
Lynch/FDS, Jacksonville, FL - 5.29%; Massachusetts Series Class B: Edwin J.
Buczak, Worchester, MA - 5.33%; Michigan Series Class A: Merrill Lynch
Pierce Fenner & Smith, Inc., Jacksonville, FL - 6.92%; Michigan Series
Class B: Merrill Lynch/FDS, Jacksonville, FL - 9.02%; North Carolina Series
Class A: Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL -
7.12%; Ohio Series Class A: BHC Securities, Philadelphia, PA - 5.42%;
Oregon Series Class A: Major Trading Corporation, New York, NY - 43.04%;
and Oregon Series Class B: Major Trading Corporation, New York, NY -
51.26%, Prudential Securities FBO Elwood Mead & Erma V. Mead, JT TEN,
Wilsonville, OR - 12.74%, Smith Barney, Inc., New York, NY - 5.32%. A
shareholder who beneficially owned, directly or indirectly, 25% or more of
a Series' voting securities may be deemed to be a "control person" (as
defined in the Act) of that Series.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the
Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated August 24, 1994. As to
each Series, the Agreement is subject to annual approval by (i) the Fund's
Board of Trustees or (ii) vote of a majority (as defined in the Act) of the
outstanding voting securities of such Series, provided that in either event
the continuance also is approved by a majority of the Trustees who are not
"interested persons" (as defined in the Act) of the Fund or the Manager, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The Agreement was last approved by the Fund's Board of Trustees,
including a majority of the Trustees who are not "interested persons" of
any party to the Agreement, at a meeting held on July 19, 1995.
Shareholders of each Series approved the Agreement on August 3, 1994. The
Agreement is terminable without penalty, as to each Series, on 60 days'
notice, by the Fund's Board of Trustees or by vote of the holders of a
majority of such Series' shares, or, on not less than 90 days' notice, by
the Manager. The Agreement will terminate automatically, as to the relevant
Series, in the event of its assignment (as defined in the Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director;Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration; Daniel C. Maclean, Vice President and General Counsel;
Barbara E. Casey, Vice President-Dreyfus Retirement Services; Diane M.
Coffey, Vice President-Corporate Communications; Elie M. Genadry, Vice
President-Institutional Sales; Henry D. Gottmann, Vice President-Retail
Sales and Service; William F. Glavin, Jr., Vice President-Product Management;
Mark N. Jacobs, Vice President-Legal and Secretary; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Katherine C. Wickham, Vice President-
Human Resources; Andrew S. Wasser, Vice President-Information Services;
Elvira Oslapas, Assistant Secretary; Maurice Bendrihem, Controller; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling and David B. Truman, directors.
The Manager manages each Series' portfolio of investments in accordance
with the stated policies of such Series, subject to the approval of the
Fund's Board of Trustees. The Manager is responsible for investment
decisions, and provides the Fund with portfolio managers who are authorized
by the Board of Trustees to execute purchases and sales of securities. The
Fund's portfolio managers are Joseph P. Darcy, A. Paul Disdier, Karen M.
Hand, Stephen C. Kris, Richard J. Moynihan, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as for other funds advised by the Manager. All purchases and sales
are reported for the Board of Trustees' review at the meeting subsequent to
such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include, without limitation, the following:
taxes, interest, loan commitment fees, interest and distributions on
securities sold short, brokerage fees and commissions, if any, fees of
Trustees who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of the Manager, Securities and
Exchange Commission fees and state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside auditing and
legal expenses, costs of independent pricing services, costs of maintaining
the Fund's existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, costs of
shareholders' reports and meetings, and any extraordinary expenses. Class
A, Class B and Class C shares are subject to an annual service fee for
ongoing personal services relating to shareholder accounts and services
related to the maintenance of shareholder accounts. In addition, Class B
and Class C shares are subject to an annual distribution fee for
distributing the relevant Class of shares pursuant to a distribution plan
adopted in accordance with Rule 12b-1 under the Act. See "Distribution
Plan and Shareholder Services Plan." Expenses attributable to a particular
Series are charged against the assets of that Series; other expenses of the
Fund are allocated among the Series on the basis determined by the Board of
Trustees, including, but not limited to, proportionately in relation to the
net assets of each Series.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services to the Fund, the Fund has
agreed to pay the Manager a monthly management fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. For the
fiscal years ended April 30, 1993, 1994 and 1995, the management fee
payable, the reduction in such fee and the net management fee paid for each
Series was as set forth below:
<TABLE>
<CAPTION>
Series Management Fee Payable Reduction in Fee
- ----- ---------------------- ----------------
1993 1994 1995 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Arizona $ 12,227(1) $ 77,253 $ 106,761 $ 12,227 $ 77,253 $ 106,761
Colorado - - 16,404(2) - - 16,404(2)
Connecticut 1,780,354 2,222,426 2,082,924 694,635 378,489 35,533
Florida 1,496,430 1,811,102 1,599,553 589,747 328,323 27,718
Georgia 20,072(1) 120,183 149,119 20,072 120,183 149,119
Maryland 1,634,121 2,079,227 1,901,194 663,156 375,233 32,614
Massachusetts 406,583 466,331 426,673 179,550 95,389 7,190
Michigan 910,442 1,124,896 1,074,186 411,882 219,841 18,112
Minnesota 745,093 952,683 943,548 328,657 184,360 15,888
North Carolina 228,381 533,032 535,236 228,381 475,442 297,996
Ohio 1,489,944 1,811,687 1,707,720 629,804 386,259 28,783
Oregon - - 15,174(2) - - 15,174(2)
Pennsylvania 1,406,107 1,544,000 1,589,232 472,202 317,330 26,631
Texas 301,425 503,485 485,593 301,425 503,485 485,593
Virginia 227,861 464,237 496,788 227,861 464,237 496,788
______________
1 For the period from September 3, 1992 (commencement of operations)
through April 30, 1993.
2 For the period from May 6, 1994 (commencement of operations) through
April 30, 1995.
</TABLE>
Series Net Fee Paid
- ------ ------------
1993 1994 1995
Arizona $ -0-(1) $ -0- $ -0-
Colorado - - -0-(2)
Connecticut 1,085,719 1,843,937 2,047,391
Florida 906,683 1,482,779 1,571,835
Georgia -0- -0- -0-
Maryland 970,965 1,703,994 1,868,580
Series Net Fee Paid
- ------ ------------
1993 1994 1995
Massachusetts 227,033 370,942 419,483
Michigan 498,560 905,055 1,056,074
Minnesota 416,346 768,323 927,660
North Carolina -0- 57,590 237,240
Ohio 860,140 1,425,428 1,678,937
Oregon - - -0-(2)
Pennsylvania 933,905 1,226,670 1,562,601
Texas -0- -0- -0-
Virginia -0- -0- -0-
______________
1 For the period from September 3, 1992 (commencement of operations)
through April 30, 1993.
2 For the period from May 6, 1994 (commencement of operations)
through April 30, 1995.
The Manager has agreed that if in any fiscal year the aggregate
expenses of each Series, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over such Series, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction of
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Series' net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Premier Family of Funds, for
the funds in the Dreyfus Family of Funds and for certain other investment
companies.
Using Federal Funds. The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), or the Fund
may attempt to notify the investor upon receipt of checks drawn on banks
that are not members of the Federal Reserve System as to the possible delay
in conversion into Federal Funds and may attempt to arrange for a better
means of transmitting the money. If the investor is a customer of a
securities dealer ("Selected Dealer") and his order to purchase Fund shares
is paid for other than in Federal Funds, the Selected Dealer, acting on
behalf of its customer, will complete the conversion into, or itself
advance, Federal Funds generally on the business day following receipt of
the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares
placed by an investor with sufficient Federal Funds or a cash balance in
his brokerage account with a Selected Dealer will become effective on the
day that the order, including Federal Funds, is received by the Transfer
Agent.
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code")), although more than
one beneficiary is involved; or a group of accounts established by or on
behalf of the employees of an employer or affiliated employers pursuant to
an employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k), and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that
it is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
TeleTransfer Privilege. TeleTransfer purchase orders may be made
between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any
business day that the Transfer Agent and the New York Stock Exchange are
open. Such purchases will be credited to the shareholder's Fund account on
the next bank business day. To qualify to use the TeleTransfer Privilege,
the initial payment for the purchase of Fund shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Fund's Account Application or Shareholder Services Form on file. If
the proceeds of a particular redemption are to be wired to an account at
any other bank, the request must be in writing and signature-guaranteed.
See "Redemption of Fund Shares--TeleTransfer Privilege."
Offering Price. Based upon each Series' net asset value at the close
of business on April 30, 1995, the maximum offering price of the Fund's
Class A and Class B shares would have been as follows (Class C shares were
not offered as of April 30, 1995):
<TABLE>
<CAPTION>
Arizona Colorado Connecticut Florida
Series Series Series Series
<S> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . $12.74 $12.43 $11.76 $14.51
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net asset
value per share) . . . . . . . . . . . . . . .60 .58 .55 .68
Offering price to public . . . . . . . . . . . $13.34 $13.01 $12.31 $15.19
Class B Shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . $12.75 $12.43 $11.76 $14.51
Georgia Maryland Massachusetts Michigan
Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . $12.80 $12.54 $11.53 $15.14
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net asset
value per share) . . . . . . . . . . . . . . .60 .59 .54 .71
Offering price to public . . . . . . . . . . . $13.40 $13.13 $12.07 $15.85
Class B Shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . $12.80 $12.54 $11.52 $15.13
North
Minnesota Carolina Ohio Oregon
Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . $14.90 $12.72 $12.62 $12.95
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net asset
value per share) . . . . . . . . . . . . . . .70 .60 .59 .61
Offering price to public . . . . . . . . . . . $15.60 $13.32 $13.21 $13.56
Class B Shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . $14.92 $12.71 $12.63 $12.95
Pennsylvania Texas Virginia
Series Series Series
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . $16.12 $20.69 $16.03
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net asset
value per share) . . . . . . . . . . . . . . .76 .97 .75
Offering price to public . . . . . . . . . . . $16.88 $21.66 $16.78
Class B Shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . $16.11 $20.69 $16.03
_____________________
*Class B shares are subject to a contingent deferred sales charge on certain redemptions. See "How to Redeem Fund Shares" in
the Fund's Prospectus.
</TABLE>
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
Class A, Class B and Class C shares are subject to a Shareholder
Services Plan and Class B and Class C shares only are subject to a
Distribution Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
of Trustees has adopted such a plan (the "Distribution Plan") with respect
to the Class B and Class C shares of each Series, pursuant to which the
Fund pays the Distributor for distributing the relevant Class of shares.
The Fund's Board of Trustees believes that there is a reasonable likelihood
that the Distribution Plan will benefit the Fund and the holders of each
Series' relevant Class of shares. In some states, certain institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Trustees for their review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of the relevant Class of shares may bear for distribution pursuant
to the Distribution Plan without such shareholders' approval and that other
material amendments of the Distribution Plan must be approved by the Board
of Trustees, and by the Trustees who are not "interested persons" (as
defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of the Distribution Plan or in any agreements
entered into in connection with the Distribution Plan, by vote cast in
person at a meeting called for the purpose of considering such amendments.
The Distribution Plan is subject to annual approval by such vote of the
Trustees cast in person at a meeting called for the purpose of voting on
the Distribution Plan. The Distribution Plan was last approved by the
Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" at a meeting held on April 12, 1995 and by the Fund's
shareholders on August 3, 1994. As to the relevant Class of shares, the
Distribution Plan may be terminated at any time by vote of a majority of
the Trustees who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Distribution Plan, or
by vote of the holders of a majority of the outstanding shares of such
Class.
For the period from May 1, 1994 through August 23, 1994, each Series
paid Dreyfus Service Corporation, as former distributor, the following
amounts with respect to Class B under the Distribution Plan:
Amount Charged
Series Class B
Arizona $ 11,124
Colorado 1,410(1)
Connecticut 53,190
Florida 36,592
Georgia 27,219
Maryland 49,777
Massachusetts 6,115
Michigan 23,763
Minnesota 34,128
North Carolina 63,468
Ohio 45,293
Oregon 735(1)
Pennsylvania 98,376
Texas 26,110
Virginia 40,954
__________________________
1 From May 6, 1994 (commencement of operations) to August 23, 1994.
For the period from August 24, 1994 through April 30, 1995, each
Series paid the Distributor the following amounts with respect to Class B
shares under the Distribution Plan:
Amount Charged
Series Class B
Arizona $26,079
Colorado 9,770
Connecticut 117,044
Florida 82,256
Georgia 61,066
Maryland 112,582
Massachusetts 13,418
Michigan 52,967
Minnesota 75,643
North Carolina 136,431
Ohio 104,049
Oregon 4,598
Pennsylvania 226,769
Texas 56,193
Virginia 93,928
There were no payments made under the Distribution Plan with respect
to Class C shares during the fiscal year ended April 30, 1995, as Class C
shares had not yet been offered.
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A, Class B and Class
C shares. Under the Shareholder Services Plan, the Distributor may make
payments to certain securities dealers, financial institutions and other
financial industry professionals (collectively "Service Agents") in respect
of these services.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Trustees for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Board of Trustees, and by the Trustees who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan by vote cast in person at a meeting called for the purpose of
considering such amendments. The Shareholder Services Plan is subject to
annual approval by such vote cast in person at a meeting called for the
purpose of voting on the Shareholder Services Plan. The Shareholder
Services Plan was so approved on April 12, 1995. As to each Series, the
Shareholder Services Plan is terminable at any time by vote of a majority
of the Trustees who are not "interested persons" and who have no direct or
indirect financial interest in the operation of the Shareholder Services
Plan.
For the period from May 1, 1994 through August 23, 1994, each Series
paid Dreyfus Service Corporation, as former distributor, the following
amounts with respect to Class A and Class B, under the Shareholder Services
Plan:
<TABLE>
<CAPTION>
Series Class A Class B
<S> <C> <C>
Arizona $ 9,574 $ 5,562
Colorado 368(1) 937(1)
Connecticut 284,876 26,594
Florida 224,083 18,296
Georgia 7,959 13,610
Maryland 260,906 24,888
Massachusetts 60,131 3,058
Michigan 147,668 11,774
Minnesota 122,540 17,064
North Carolina 52,956 31,456
Ohio 229,922 22,647
Oregon 527(1) 368(1)
Pennsylvania 184,959 49,188
Texas 60,108 13,056
Virginia 51,924 20,477
___________________________________
1 From May 6, 1994 (commencement of operations) to August 23, 1994.
</TABLE>
For the period from August 24, 1994 through April 30, 1995, each
Series paid the Distributor the following amounts with respect to Class A
and Class B under the Shareholder Services Plan:
<TABLE>
<CAPTION>
Series Class A Class B
<S> <C> <C>
Arizona $ 20,352 $13,040
Colorado 1,498 4,653
Connecticut 576,791 58,523
Florida 443,562 41,128
Georgia 15,680 30,533
Maryland 522,094 56,291
Massachusetts 124,045 6,708
Michigan 302,233 26,591
Minnesota 251,460 37,821
North Carolina 90,383 68,494
Ohio 471,643 52,024
Oregon 3,703 2,299
Pennsylvania 347,846 113,385
Texas 119,464 28,096
Virginia 106,447 46,965
</TABLE>
There were no payments made under the Shareholder Services Plan with
respect to Class C during the fiscal year ended April 30, 1995, as Class C
shares had not been offered.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege - Class A Shares. An investor may indicate
on the Account Application, Shareholder Services Form or by later written
request that the Fund provide Redemption Checks ("Checks") with respect to
Class A shares, drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application, Shareholder Services Form or later written request
must be manually signed by the registered owner(s). Checks may be made
payable to the order of any person in an amount of $500 or more. When a
Check is presented to the Transfer Agent for payment, the Transfer Agent,
as the investor's agent, will cause the Fund to redeem a sufficient number
of full and fractional Class A shares in the investor's account to cover
the amount of the Check. Dividends are earned until the Check clears.
After clearance, a copy of the Check will be returned to the investor.
Investors generally will be subject to the same rules and regulations that
apply to checking accounts, although the election of this Privilege creates
only a shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the Class A
shares in the investor's account, the Check will be returned marked
insufficient funds. Checks should not be used to close an account.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected through the Automated Clearing House ("ACH")
system unless more prompt transmittal specifically is requested.
Redemption proceeds will be on deposit in the investor's account at an ACH
member bank ordinarily two business days after receipt of the redemption
request. See "Purchase of Fund Shares--TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Series, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Series' net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in excess of
such amount, the Board of Trustees reserves the right to make payments in
whole or in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the Series to
the detriment of the existing shareholders. In this event, the securities
would be valued in the same manner as the Series' portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
In connection with a redemption request where the Fund delivers in-kind
securities instead of cash to an investor, the in-kind securities will be
readily marketable securities.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Fund Exchanges. Class A, Class B and Class C shares of the Fund may
be exchanged for shares of the respective Class of certain other funds
advised or administered by the Manager. Shares of the same Class of such
other funds purchased by exchange will be purchased on the basis of
relative net asset value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales
load may be exchanged without a sales load for Class A
shares of other funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load, and additional Class A
shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to
herein as "Purchased Shares") may be exchanged for Class A
shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales
load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were
acquired), without giving effect to any reduced loads, the
difference will be deducted.
D. Class B or Class C shares of any fund may be exchanged for
the same Class of shares of other funds without a sales
load. Class B or Class C shares of any fund exchanged for
the same Class of shares of another fund will be subject to
the higher applicable contingent deferred sales charge
("CDSC") of the two exchanged funds and, for purposes of
calculating CDSC rates and conversion periods, will be deemed
to have been held since the date the shares being exchanged
were initially purchased.
To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's account number.
To request an exchange, the investor's Service Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this Privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer
Agent to act on telephonic instructions from any person representing
himself or herself to be a representative of the investor's Service Agent,
and reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment being required for shares of the same Class of the fund into
which the exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs
and IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") with
only one participant, the minimum initial investment is $750. To exchange
shares held in Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than
one participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same Class of the funds in the
Dreyfus Family of Funds. To exchange shares held in Personal Retirement
Plans, the shares exchanged must have a current value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for Class A, Class B or Class C shares
of a Series, shares of the same Class of one of the other Series or another
fund in the Premier Family of Funds or the Dreyfus Family of Funds. This
Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as described above under
"Fund Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the series or fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
the Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been issued
may not be redeemed through the Automatic Withdrawal Plan. Class B or
Class C shares withdrawn pursuant to the Automatic Withdrawal Plan will be
subject to any applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest on the
payment date their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid with respect to Class A
shares by a fund may be invested without imposition of a
sales load in Class A shares of other funds that are offered
without a sales load.
B. Dividends and distributions paid with respect to Class A
shares by a fund which does not charge a sales load may be
invested in Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid with respect to Class A
shares by a fund which charges a sales load may be invested
in Class A shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that,
if the sales load applicable to the Offered Shares exceeds
the maximum sales load charged by the fund from which
dividends or distributions are being swept, without giving
effect to any reduced loads, the difference will be deducted.
D. Dividends and distributions paid with respect to Class B or
Class C shares by a fund may be invested without imposition
of any applicable CDSC in the same Class of shares of other
funds and the relevant Class of shares of such other funds
will be subject on redemption to any applicable CDSC.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Each Series' investments are
valued each business day by an independent pricing service (the "Service")
approved by the Board of Trustees. When, in the judgment of the Service,
quoted bid prices for investments are readily available and are
representative of the bid side of the market, these investments 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 bonds of
comparable quality, coupon, maturity and type; indications as to values
from dealers; and general market conditions. The Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. The Service's procedures are reviewed by the Fund's officers
under the general supervision of the Board of Trustees. Expenses and fees,
including the management fee (reduced by the expense limitation, if any)
and, fees pursuant to the Shareholder Services Plan, with respect to Class
A, Class B and Class C shares, and fees pursuant to the Distribution Plan,
with respect to Class B and Class C shares only, are accrued daily and are
taken into account for the purpose of determining the net asset value of
the relevant Class of each Series' shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value of
each Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that each Series qualified as a "regulated
investment company" under the Code for the fiscal year ended April 30,
1995, and each Series intends to continue to so qualify, so long as such
qualification is in the best interests of its shareholders. As a regulated
investment company, a Series will pay no Federal income tax on net
investment income and net realized capital gains to the extent that such
income and gains are distributed to shareholders in accordance with
applicable provisions of the Code. To qualify as a regulated investment
company, a Series must distribute to its shareholders at least 90% of its
net income (consisting of net investment income from tax exempt obligations
and taxable obligations, if any, and net short-term capital gains), must
derive less than 30% of its annual gross income from gain on the sale of
securities held for less than three months, and must meet certain asset
diversification and other requirements. Accordingly, a Series may be
restricted in the selling of securities held for less than three months,
and in the utilization of certain of the investment techniques described in
the Prospectus under "Description of the Fund--Investment Techniques." The
Code, however, allows a Series to net certain offsetting positions making
it easier for the Series to satisfy the 30% test. The terms "regulated
investment company" does not imply the supervision of management or
investment practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of his shares below the
cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated in "Dividends,
Distributions and Taxes" in the Prospectus. In addition, the Code provides
that if a shareholder has not held his shares for more than six months (or
such shorter period as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be
disallowed to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of any gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss a Series realizes from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures and options
as well as from closing transactions. In addition, such futures and
options remaining unexercised at the end of a Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to a Series characterized in the manner described above.
Offsetting positions held by a Series involving certain futures and
options transactions may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is
governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Section 1256. As
such, all or a portion of any short- or long-term capital gain from certain
"straddle" and/or conversion transactions may be recharacterized to
ordinary income.
If a Series were treated as entering into "straddles" by reason of its
engaging in certain futures or options transactions, such "straddles" would
be characterized as "mixed straddles" if the futures or options
transactions comprising a part of such "straddles" were governed by Section
1256 of the Code. A Series may make one or more elections with respect to
"mixed straddles." Depending on which election is made, if any, the
results to a Series may differ. If no election is made to the extent the
"straddle" and the conversion transaction rules apply to positions
established by a Series, losses realized by a Series will be deferred to
the extent of unrealized gain in the offsetting position. Moreover, as a
result of the "straddle" and the conversion transaction rules, short-term
capital losses on "straddle" positions may be recharacterized as long-term
capital losses, and long-term capital gains may be treated as short-term
capital gains or ordinary income.
Investment by a Series in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, a Series could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such
portion in order to maintain its qualification as a regulated investment
company. In such case, a Series may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to
the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
Each Series anticipates that its annual portfolio turnover rate
generally will not exceed 100%, but the turnover rate will not be a
limiting factor when each Series deems it desirable to sell or purchase
securities. Therefore, depending upon market conditions, each Series'
annual portfolio turnover rate may exceed 100% in particular years.
The amount of transactions during the last fiscal year in newly issued
debt instruments in fixed price public offerings directed to an underwriter
or underwriters in consideration of, among other things, research services
for the Florida Series was $1,550,384.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
Class C shares had not been offered as of the date of the financials
and, therefore, no performance data is provided for Class C.
The current yield for the 30-day period ended April 30, 1995, for
Class A and Class B of each Series was as follows:
<TABLE>
<CAPTION>
Current Net of Absorbed
Series Yield Expenses(1)
- ------ ------- ---------------
<S> <C> <C>
Class A:
Arizona 5.64 4.68
Colorado 5.86 4.34
Connecticut 5.08 -
Florida 5.31 -
Georgia 5.46 4.73
Maryland 4.94 -
Massachusetts 4.87 -
Michigan 4.96 -
Minnesota 4.80 -
North Carolina 5.26 5.01
Ohio 5.13 -
Oregon 5.57 4.31
Pennsylvania 5.27 -
Texas 5.57 5.04
Virginia 5.47 4.94
Current Net of Absorbed
Series Yield Expenses(1)
- ------ ------- ----------------
Class B:
Arizona 5.40 4.38
Colorado 5.62 4.03
Connecticut 4.78 -
Florida 4.92 -
Georgia 5.21 4.45
Maryland 4.64 -
Massachusetts 4.57 -
Michigan 4.67 -
Minnesota 4.49 -
North Carolina 4.99 4.73
Ohio 4.83 -
Oregon 5.31 3.97
Pennsylvania 5.00 -
Texas 5.30 4.75
Virginia 5.21 4.66
____________________________
(1) This column sets forth current yield had expenses not been absorbed.
</TABLE>
Current yield is computed pursuant to a formula which operates as follows:
The amount of each Series' expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by the Series
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were
entitled to receive dividends, and (b) the maximum offering price per share
in the case of Class A or the net asset value per share in the case of
Class B on the last day of the period less any undistributed earned income
per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to the
6th power, after which 1 is subtracted. The current yield is then arrived
at by multiplying the result by 2.
Based upon the 1995 combined (except where noted) Federal and
applicable State tax rate specified below, the tax equivalent yield for the
30-day period ended April 30, 1995, for Class A and Class B of each Series
was as follows:
<TABLE>
<CAPTION>
Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)
- ------ -------- -------------- ----------------
<S> <C> <C> <C>
Class A:
Arizona 43.77 10.03 8.32
Colorado 42.62 10.21 7.56
Connecticut 42.32 8.81 -
Florida(2) 39.60 8.79 -
Georgia 43.22 9.62 8.33
Maryland 42.62 8.61 -
Massachusetts 46.85 9.16 -
Michigan 42.26 8.59 -
Minnesota 44.73 8.68 -
North Carolina 44.28 9.44 8.99
Ohio 44.13 9.18 -
Oregon 45.04 10.13 7.84
Pennsylvania 41.29 8.98 -
Texas(2) 39.60 9.22 8.34
Virginia 43.07 9.61 8.68
Class B:
Arizona 43.77 9.60 7.79
Colorado 42.62 9.79 7.02
Connecticut 42.32 8.29 -
Florida(2) 39.60 8.15 -
Georgia 43.22 9.18 7.84
Maryland 42.62 8.09 -
Massachusetts 46.85 8.60 -
Michigan 42.26 8.09 -
Minnesota 44.73 8.12 -
North Carolina 44.28 8.96 8.49
Ohio 44.13 8.65 -
Oregon 45.04 9.66 7.22
Pennsylvania 41.29 8.52 -
Texas(2) 39.60 8.77 7.86
Virginia 43.07 9.15 8.19
____________________________
(1) This column sets forth tax equivalent yield had expenses not been
absorbed.
(2) Federal tax rate only. No state personal income tax imposed during
1995.
</TABLE>
Tax equivalent yield is computed by dividing that portion of the current
yield (calculated as described above) which is tax-exempt by 1 minus a
stated tax rate and adding the quotient to that portion, if any, of the
yield of the Series that is not tax-exempt.
The tax equivalent yield noted above represents the application of the
highest marginal personal tax rates currently in effect. For Federal
personal income tax purposes, a 39.60% tax rate has been used. The tax
equivalent figure, however, does not include the potential effect
of any local (including, but not limited to, county, district or city)
taxes, including applicable surcharges. In addition, there may be pending
legislation which could affect such stated tax rates or yields. Each
investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.
The average annual total return for the periods indicated for Class A of
each Series was as follows:
<TABLE>
<CAPTION>
1-year period 5-year period 7.926-year period
Series ended April 30, 1995 ended April 30, 1995 ended April 30, 1995
- ------ -------------------- -------------------- --------------------
<S> <C> <C> <C>
Arizona 2.61 4.99(1) -
Colorado 0.99(2) - -
Connecticut 0.70 6.99 7.18
Florida 1.91 7.76 9.30
Georgia 2.05 4.99(1) -
Maryland 1.70 7.27 6.47
Massachusetts 0.95 7.43 6.63
Michigan 1.85 8.00 8.85
Minnesota 2.35 7.44 7.93
North Carolina 0.94 6.42(3) -
Ohio 0.86 7.63 4.73
Oregon 5.08(2) - -
Pennsylvania 1.88 7.87 7.63(4)
Texas 2.79 8.24 10.72
Virginia 1.63 6.96(3) -
____________________________
(1) For the 2.658 year period ended April 30, 1995.
(2) For the 0.989 year period ended April 30, 1995.
(3) For the 3.748 year period ended April 30, 1995.
(4) For the 7.753 year period ended April 30, 1995.
</TABLE>
The average annual total return since inception and for the periods
indicated for Class B of each Series was as follows:
1-year period 2.290-year period
Series ended April 30, 1995 ended April 30, 1995
- ------ -------------------- --------------------
Arizona 3.88 5.04
Colorado 2.231 -
Connecticut 2.00 3.96
Florida 3.21 4.56
Georgia 3.33 4.75
Maryland 2.94 4.09
1-year period 2.290-year period
Series ended April 30, 1995 ended April 30, 1995
- ------ --------------------- --------------------
Massachusetts 2.18 4.06
Michigan 3.04 5.17
Minnesota 3.57 4.80
North Carolina 2.12 3.63
Ohio 2.08 4.47
Oregon 6.511 -
Pennsylvania 3.02 4.62
Texas 4.05 5.41
Virginia 2.83 4.14
_________________________
(1) For the 0.989 year period ended April 30, 1995.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. A Class'
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or in the case of Class B or Class C the maximum applicable CDSC has been
paid upon redemption at the end of the period.
The total return for the period May 28, 1987 through April 30, 1995 (except
where indicated) for Class A of each Series was as follows:
Based on Maximum Based on Net Asset
Series Offering Price Value per Share
- ------ ---------------- ------------------
Arizona(1) 13.82 19.20
Colorado(2) 0.98 5.75
Connecticut 73.25 81.44
Florida 102.40 112.01
Georgia(1) 13.82 19.19
Maryland 64.35 72.11
Massachusetts 66.30 74.12
Michigan 95.84 105.02
Minnesota 83.11 91.80
North Carolina(3) 26.25 32.25
Ohio 44.22 50.97
Oregon(2) 5.02 9.98
Pennsylvania(4) 76.79 85.15
Texas 124.10 134.64
Virginia(3) 28.69 34.77
____________________________
(1) For the period from September 3, 1992 (commencement of
operations) through April 30, 1995.
(2) For the period from May 6, 1994 (commencement of operations)
through April 30, 1995.
(3) For the period from August 1, 1991 through (commencement of
operations) April 30, 1995.
(4) For the period from July 30, 1987 through (commencement of
operations) April 30, 1995.
The total return for the period January 15, 1993 to April 30, 1995
(except where indicated) for Class B of each Series was as follows:
Series Based on Net Asset Based on
Class B: Value per Share Maximum CDSC
- -------- ------------------ -------------
Arizona 13.91 11.91
Colorado(1) 5.19 2.21
Connecticut 11.27 9.29
Florida 12.74 10.75
Georgia 13.22 11.22
Maryland 11.61 9.62
Massachusetts 11.48 9.53
Michigan 14.23 12.24
Minnesota 13.34 11.34
North Carolina 10.48 8.51
Ohio 12.52 10.53
Oregon(1) 9.44 6.44
Pennsylvania 12.89 10.89
Texas 14.82 12.82
Virginia 11.71 9.74
____________________________
(1) For the period from May 6, 1994 (commencement of operations) through
April 30, 1995.
Total return is calculated by subtracting the amount of the Series'
net asset value (maximum offering price in the case of Class A) per share
at the beginning of a stated period from the net asset value per share at
the end of the period (after giving effect to the reinvestment of dividends
and distributions during the period and any applicable CDSC), and dividing
the result by the net asset value (maximum offering price in the case of
Class A) per share at the beginning of the period. Total return also may
be calculated based on the net asset value per share at the beginning of
the period for Class A shares or without giving effect to any applicable
CDSC at the end of the period for Class B or Class C shares. In such
cases, the calculation would not reflect the deduction of the sales load
with respect to Class A shares or any applicable CDSC with respect to Class
B or Class C shares which, if reflected, would reduce the performance
quoted.
From time to time, the Fund may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and are not as representative of the
Fund's past or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to actual or proposed tax legislation.
Advertising materials for the Fund also may refer to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute. From
time to time, advertising materials for the Fund, also may refer to
Morningstar ratings and related analyses supporting such ratings.
The Fund may compare its performance, directly as well as against
inflation, with that of other instruments, such as short-term Treasury
bills (which are direct obligations of the U.S. Government), FDIC-insured
bank money market accounts and FDIC-insured fixed-rate certificates of
deposit. In addition, advertising for the Fund may indicate that investors
may consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series' shares have no preemptive or subscription rights
and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
The Manager's legislative efforts led to the 1976 Congressional
Amendment to the Code permitting an incorporated mutual fund to pass
through tax exempt income to its shareholders. The Manager offered to the
public the first incorporated tax exempt fund and currently manages or
administers over twenty-five billion dollars in tax exempt assets.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9617, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS -- INVESTING
IN STATE MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based primarily on
information drawn from official statements relating to securities
offerings of the relevant State available as of the date of this Statement
of Additional Information. While the Fund has not independently verified
this information, it has no reason to believe that such information is not
correct in all material respects.
Arizona Series. . . . . . . . . . . . . . . . . . . . . . . . . B-39
Colorado Series . . . . . . . . . . . . . . . . . . . . . . . . B-43
Connecticut Series. . . . . . . . . . . . . . . . . . . . . . . B-48
Florida Series. . . . . . . . . . . . . . . . . . . . . . . . . B-51
Georgia Series. . . . . . . . . . . . . . . . . . . . . . . . . B-56
Maryland Series . . . . . . . . . . . . . . . . . . . . . . . . B-61
Massachusetts Series. . . . . . . . . . . . . . . . . . . . . . B-63
Michigan Series . . . . . . . . . . . . . . . . . . . . . . . . B-66
Minnesota Series. . . . . . . . . . . . . . . . . . . . . . . . B-71
North Carolina Series . . . . . . . . . . . . . . . . . . . . . B-75
Ohio Series . . . . . . . . . . . . . . . . . . . . . . . . . . B-81
Oregon Series . . . . . . . . . . . . . . . . . . . . . . . . . B-87
Pennsylvania Series . . . . . . . . . . . . . . . . . . . . . . B-92
Texas Series. . . . . . . . . . . . . . . . . . . . . . . . . . B-100
Virginia Series . . . . . . . . . . . . . . . . . . . . . . . . B-106
Arizona Series
Arizona's population increased by approximately 35% during the 10-
year period from 1980 to 1990, ranking Arizona as the third fastest
growing State in the country for the period. Over the past several
decades, the State has outpaced most other regions of the country in other
major categories of growth, including personal income, gross State product
and job creation. While the rate of growth has increased in recent years,
growth slowed during the late 1980s and early 1990s.
The State's principal economic sectors include services, trade,
government, manufacturing, tourism, travel, mining, agriculture and the
military. About 65% of total non-agricultural employment comes from
manufacturing, services and trade. While mining and agricultural
employment have diminished over the last twenty-five years, significant
job growth has occurred in aerospace and high technology, construction,
finance, insurance and real estate. Arizona's economy, however, has been
adversely affected by problems in the real estate industry, including an
excessive supply of commercial, residential and retail buildings and
severe problems with Arizona-based savings and loan associations, many of
which have been or are in the process of being liquidated by the
Resolution Trust Corporation. In addition, current and proposed
reductions in Federal military expenditures are expected to cause
difficulties with the State's economy. Defense-related business plays an
important role in Arizona's economy, particularly in the manufacturing
sector, and reductions in the defense budget could adversely affect these
businesses. These factors are expected to negatively impact Arizona's
economy for the foreseeable future. In addition, while Arizona's
political climate has stabilized with the passage in 1992 of a paid State
holiday honoring Dr. Martin Luther King, Jr., Arizona earlier experienced
a number of political difficulties, including the impeachment and removal
from office of the State's governor, and the conviction of several State
legislators in connection with alleged payments for votes to approve
legalized gambling.
Arizona's unemployment rate, as of April 1995, was 5.1%, a decrease
of close to 2.0% from 1994. Per capita income levels are less than the
United States average (85% of the United States average in 1991) and
Arizona's average annual growth rate of per capita income has been less
than the United States average for several years. Arizona's per capita
income growth rate in 1994 and 1995, however, has exceeded that of the
United States. The former trend of lower personal income growth likely
resulted from the fact that Arizona has a higher percentage of its
employment in the service sector and a lower percentage of its employment
in the manufacturing sector than the United States average. In recent
years, however, Arizona has seen an increase in manufacturing employment.
This slow growth in per capita income, if it recurs, could adversely
affect both State and local budgets in the near future.
Arizona is required by law to maintain a balanced budget. To achieve
this objective, the State, in the past, has used a combination of spending
reductions and tax increases. For the 1990-91 budget, the Arizona
Legislature increased taxes by over $250 million, which led to a citizen's
referendum designed to stop the tax increase until the voters could
consider it at the general election. A court determined that the
referendum could not be used to stop this tax increase, so that tax
increase went into effect. Since then, legislators have been reluctant to
increase taxes, despite heightened demands for services due to the State's
growing population and the general recession. Moreover, in 1992, Arizona
voters adopted an initiative, Proposition 108, which requires a two-thirds
vote by the Legislature for any future tax or fee increase. This makes
any future tax increase more difficult to achieve.
Arizona's budget picture has stabilized in recent years. The 1991-92
budget contained no tax increase, but the Legislature was called into
special session twice to adjust aspects of that budget due to projected
deficits. The 1992-93 budget, the 1993-94 budget, the 1994-95 budget and
the 1995-96 budget all provided tax decreases, and relied solely on
spending cuts to balance the budget. After eight years of contrary
experience, there was no need for a mid-year correction to balance the
1992-93, 1993-94 and 1994-95 budgets. The largest part of the spending
cuts for these budget years came from cuts in State aid to education and
in Arizona's Medicaid program. Substantial revenue increases permitted a
balanced 1994-95 budget without any such spending cuts, and with a $100
million personal income tax cut. Similarly, the 1994-95 budget made few
spending cuts, and included a $200 million personal income tax cut
beginning in 1995 and a $200 million property tax cut beginning in 1996.
The largest impact of the tax cuts adopted in 1992 through 1995 will
take place in future years, which could have the effect
- -- especially in light of Proposition 108 -- of making it difficult to
meet the increased demands for services for Arizona's growing population
even if the Arizona economy improves. Although revenue growth has been
healthy in recent years, revenue may decline if the economy slows.
Projections by the Joint Legislative Budget Committee ("JLBC") staff in
1993 suggest that there will be a need for either further spending cuts or
tax increases to balance the budget in future fiscal years. These
projections show continued growth in school populations, Medicaid
participants and prison beds that could increase at a rate faster than
revenue growth. The most likely budget cut will be the refusal of the
Legislature to fund an otherwise required $100 million contribution to a
Budget Stabilization Fund, which is a "rainy day" fund designed to
accumulate revenues for use in recessionary years. In the 1993-94 budget,
for example, only $42 million was put into this fund, while $78 million
was required by statute. In 1995, the Legislature capped the fund at five
percent of revenue, which will mean that no new contributions are likely
to be made after the 1996 fiscal year.
Arizona law also requires municipalities to maintain balanced
budgets. The slower economy has strained their budgets. For example, the
1992-93 annual budget for the City of Phoenix, for the first time in the
city's history, was less than the prior year's budget. Moreover, the
State tax cuts in 1992 through 1995 will have the effect of worsening the
budget picture in future years because municipalities in Arizona rely
heavily on State-shared revenues. It is likely that municipalities in
Arizona will need to either increase taxes or reduce spending to
compensate for this lost State-shared revenue. The budget picture could
get worse, depending on how the legislature treats State-shared revenue
programs when setting the future State budgets.
The State general fund is funded primarily by sales and income taxes,
with only a small contribution by property taxes. In fiscal year 1995,
the total general fund revenues were estimated at $4,278,400,000. Of this
amount, 44.6% will be raised by sales taxes, 37.0% will be raised by
income taxes, and 4.4% will be raised by property taxes. Other revenue
sources, such as luxury taxes, the lottery and insurance premium taxes,
will constitute 14.0% of this revenue. These revenue components change
little from year to year. Over half of the general fund is appropriated
for K-12 and university education (54% in fiscal year 1995). Other major
budget items include Medicare (11%), social welfare programs (9%) and
corrections (8%). As is the case with other States, Medicare expenditures
have been the fastest growing part of the State budget.
Municipalities also rely on a variety of revenue sources. While
municipalities cannot collect an income tax, they do impose sales and
property taxes. Municipalities also rely on State-shared revenues. In
fiscal year 1992, the total State-shared sales tax revenue to countries
and cities was $430.7 million. Additionally, cities received $176.1
million in State-shared income tax revenues. School districts are funded
by a combination of local property taxes and State assistance. In fiscal
year 1995, State assistance of $1.461 billion was appropriated to school
districts.
Arizona's Constitution limits the amount of debt that may be
contracted by the State to $350,000. This, as a practical matter,
precludes the use of general revenue bonds for State projects. In recent
years, however, the State has used lease-purchase financing to finance
several university, court and prison building projects. The legislature
has not treated these lease-purchase financing projects as subject to the
constitutional debt limit, and there has been no legal challenge to the
use of lease-purchase financing as a means of financing State capital
projects. Additionally, certain other issuers have the power to issue
obligations which affect the whole or large portions of the State. The
debts are not considered debts of the State because they are secured
solely by separate revenue sources. For example, the Transportation Board
of the State of Arizona Department of Transportation may issue debt for
highways that is payable from revenues generated from State gasoline
taxes, motor vehicle registration fees, and other automobile taxes and
fees. The three Arizona universities may issue debt for university
building projects payable from tuition and other fees. Salt River Project
Agricultural & Improvement District, an agricultural improvement district
that operates the Salt River Project (a Federal reclamation project and an
electric system which generates, purchases and distributes electric power
to residential, commercial, industrial and agricultural power users in a
2,900 square-mile service area around Phoenix), may issue debt payable
from a number of sources.
Arizona's Constitution also restricts the debt of certain of the
State's political subdivisions. No county, city, town, school district or
other municipal corporation of the State may for any purpose become
indebted in any manner in an amount exceeding six percent of the taxable
property in such county, city, town, school district or other municipal
corporation without the assent of a majority of the qualified electors
thereof voting at an election provided by law to be held for that purpose;
provided, however, that (i) under no circumstances may any county or
school district of the State become indebted in an amount exceeding
fifteen percent (or thirty percent in the case of a unified school
district) of such taxable property and (ii) any incorporated city or town
of the State with such assent may be allowed to become indebted in up to a
twenty percent additional amount for (a) supplying such city or town with
water, artificial light or sewers, when the works for supplying such
water, light or sewers are or will be owned and controlled by the
municipality and (b) acquiring and developing land or interests therein
for open space preserves, parks, playgrounds and recreational facilities.
Irrigation, power, electrical, agricultural improvement, drainage, flood
control and tax levying public improvement districts, however, are exempt
from such restrictions of the constitution.
Annual property tax levies for the payment of general obligation
bonded indebtedness of political subdivisions are unlimited as to rate or
amount. Other obligations may be issued by such entities, sometimes
without an election, which are payable from, among other sources, project
revenues, special assessments and excise taxes.
Arizona's local government entities are subject to certain other
limitations on their ability to assess taxes and levies which could affect
their ability to meet their financial obligations. Subject to certain
exceptions, the maximum amount of property taxes levied by any Arizona
county, city, town or community college district for their operations and
maintenance expenditures cannot exceed the amount levied in a preceding
year by more than two percent. Certain taxes are specifically exempt from
this limit, including taxes levied for debt service payments.
Colorado Series
The Colorado economy continued to grow at a rate in excess of the
national economy during 1994. With the exception of the construction
industry, most indicators of economic activity were stronger in 1994 than
in 1993. Overall, 1993 and 1994 combined to provide Colorado with its
strongest two-year period of economic growth during the past 15 years.
The State's population growth and the continuation of significant public
works projects contributed to strong job creation, housing starts and
personal income growth. With the exception of the mining sector, which
now employs less than 1% of the State's work force, each of Colorado's
major industries experienced job growth during 1994.
Throughout the 1970s and early 1980s, the Colorado economy expanded
at rates faster than the national economy. However, during the
mid-to-late 1980s, Colorado experienced a significant economic recession,
attributable in part to a dramatic decline in oil prices. During this
time, employment in the State grew at rates lower than in the national
economy. A total of just 269,000 jobs were created in the 1980-1990
decade, representing just 65% of the jobs created in the prior decade.
Since 1990, the Colorado economy has rebounded and has expanded at a
rate in excess of the national economy. The State's unemployment rate has
been lower than the nation in each year since 1990, and personal income
has grown at a rate in excess of the nation. A number of conditions have
supported Colorado's recent growth above rates of the national economy.
First, the State has a more service-oriented economy. The reduced
reliance on heavy manufacturing industries, such as automobiles, has
insulated the Colorado economy during periods of national recession.
Thus, problems in the manufacturing sector nationwide have not affected
Colorado to the same extent. In addition, Coloradans have had
significantly lower debt levels compared to the rest of the nation.
Finally, a number of major infrastructure projects have been undertaken in
Colorado. Major projects have included the $4.2 billion Denver
International Airport, highway improvements, a $215 million baseball
stadium, a $140 million expansion of the Colorado Springs airport, a $95
million amusement park, a new $65 million Denver library, and federal and
State prisons.
Beginning in 1995 and continuing through 1997, growth in the Colorado
economy is expected to slow. Completion of each of the infrastructure
projects described above in 1994 or early 1995 will contribute to the
slower rate of growth predicted for 1995 through 1997. As one of the
States most reliant on defense contracts and military payroll, Colorado
also remains vulnerable to reductions in the U.S. defense budget. In
addition to the September 1994 closure of Lowry Air Force Base, Fort
Carson Air Force Base and Fitzsimons Army Medical Center are military
facilities which have been identified for downsizing and closure,
respectively. The Rocky Flats nuclear weapons plant also reduced its work
force by 1,300 positions in 1994 and is expected to eliminate an
additional 1,700 jobs by October 1995.
Employment. Nonagriculture job growth in Colorado was 4.7% and 4.6%
during 1994 and 1993, respectively. Reflecting the strong job market, the
State's unemployment rate fell to 4.2% during 1994, its lowest level since
1974. For the second consecutive year, construction was the strongest
industry in the State, with employment up 12.6% in 1994 following a 15.1%
increase in 1993. Although construction accounts for only 5.5% of
Colorado's jobs, it accounted for 14% of the State's 1994 job growth.
Colorado's services industry also experienced strong growth during
1994, as jobs increased at a 7.0% rate. The services industry is the
largest industry in the State, accounting for 28.7% of all jobs. All
segments of the services industry registered job growth in 1994, led by a
12.9% increase in business services and an 11.0% increase in data
processing services. The wholesale and retail trade industry and the
finance, insurance and real estate industry also showed healthy job growth
during 1994, expanding by 5.6% and 4.1%, respectively.
Colorado's manufacturing and government industries experienced
nominal job growth in 1994, while the mining industry continued to lose
jobs. The manufacturing industry had job growth of 1.4% in 1994 and 1.2%
in 1993 after experiencing significant job losses in prior years.
Government job growth was just 1.0% in 1994. Growth in federal and State
government jobs was flat or declining, due in part to military lay-offs.
Local government job growth was relatively strong due to the increased
hiring of teachers in public schools. The Colorado mining industry was
the only industry to lose jobs during 1994. The mining industry has lost
jobs in each year since 1981, and it now accounts for just .9% of the
State's jobs.
The Colorado Legislative Council expects that the rate of job growth
will decline beginning in 1995. Job growth rates of 2.0%, 1.8% and 1.4%
are forecasted for 1995, 1996 and 1997, respectively. Factors
contributing to the reduced growth rate are expected to include layoffs at
military bases and defense contractors located in the State; the recent
completion of Denver International Airport and other major infrastructure
projects; and the downsizing of major utilities, including US WEST and
Public Service Company of Colorado.
Income Growth. Through the third quarter of 1994, personal income in
the State grew at an annual rate of 7.5%. The Colorado Legislative
Council expects that the rate of growth in personal income will decline to
6.8% in 1995, reflecting the anticipated slower job growth. On an
inflation-adjusted basis, personal income growth in 1995 is expected to be
at its weakest level since 1987. Personal income growth in Colorado is
projected to rebound slightly after 1995 to 7.2% in each of 1996 and 1997.
Retail Sales. Growth in the State's retail sales have exceeded the
national growth rate since 1989. The State enjoyed retail sales growth of
8.2%, 9.6% and 12.1% in 1992, 1993 and 1994, respectively. As the
Colorado economy settles into a more moderate growth rate, the growth in
retail sales is projected to decline, with 6.3%, 6.2% and 6.6% growth
projected for 1995, 1996 and 1997, respectively.
Real Estate. The housing sector has been a bright spot in the
Colorado economy since 1990. During 1991, 1992 and 1993, the number of
total housing permits grew at rates of 18.3%, 66.9% and 27.4%,
respectively. The growth rate experienced in 1994 is currently estimated
at 20%. However, the number of housing permits is expected to decline
significantly during the three years thereafter, as in-migration slows and
housing supply meets demand. The number of total housing permits is
expected to decline in 1995, 1996 and 1997 by 10.1%, 9.2% and 6.8%.
Nonresidential construction declined by 4.3% during 1994 due in large
part to the completion of significant public infrastructure projects.
However, most segments of private nonresidential construction posted
strong growth during 1994. For example, retail construction increased by
9.3% following a 41.9% increase in 1993; office building construction
increased by 49.7% following a 4.3% increase in 1993; and industrial
building construction increased by 33.6% following a 53.5% increase in
1993. Overall, nonresidential construction is expected to decline by 2.4%
in 1995, followed by slight gains in 1996 and 1997.
Population. Colorado's population grew 2.6% in 1994, one of the
strongest growth rates among the States. This compares to the State's
population growth of 2.9% in 1993. Slower job growth during 1995,
combined with an improved national economy which is expected to enhance
job opportunities throughout the country, is expected to slow population
growth. Colorado's population is expected to grow by 2.0% in 1995 and
1.8% in 1996.
Because of limitations contained in the State Constitution, the State
of Colorado issues no general obligation bonds secured by the full faith
and credit of the State. Consequently, there are no outstanding general
obligation bond ratings for Colorado. Several agencies and
instrumentalities of State government are authorized by statute to issue
bonds secured by revenues from specific projects and activities.
Additionally, the State is authorized to issue short-term tax and revenue
anticipation notes. To the extent the Portfolio holds debt of local units
of government whose revenues may rely in part on distributions from the
State, the fiscal health of the State will have an indirect effect on the
Portfolio.
As of the fiscal year ended June 30, 1994, Colorado had a General
Fund balance of approximately $405 million, up considerably from the $327
million balance at June 30, 1993. The June 30, 1994 balance was 12.1% of
expenditures, well in excess of the statutorily required reserve of 4% of
expenditures. The State's General Fund balance as of June 30, 1995 is
projected to be approximately $410 million after required transfers. As
of June 30, 1996, the State's General Fund balance is expected to be
approximately $501 million after required transfers. The foregoing
General Fund balances include funds restricted to comply with the
emergency reserve requirement contained in the State Constitution. The
General Fund balance at June 30, 1994 included $39 million in funds
restricted for such purpose.
Leading the revenue growth in fiscal 1994 were strong increases in
excise taxes (which include sales and use taxes), corporate income taxes
and personal income taxes. Growth in the General Fund balance is also due
to excess Medicaid revenues received by the State. Pursuant to the
federal government's disproportionate share program, Colorado has received
Medicaid revenues which have been in excess of its corresponding expenses.
For example, from fiscal year 1992 through fiscal year 1996, Colorado
expects to have received a net General Fund benefit of approximately $238
million attributable to the Medicaid disproportionate share program.
General Fund gross revenues were $3.725 billion in fiscal year 1994.
The major revenue sources of the State are the individual income tax,
excise taxes, and the corporate income tax. These taxes represented
approximately 52%, 32% and 4.0%, respectively, of General Fund gross
revenues for fiscal 1994. Individual income tax, excise taxes and
corporate income tax are expected to represent 53.2%, 33.8% and 4.8%,
respectively, of the $3.912 billion in gross revenues which are projected
for fiscal year 1995.
There are approximately 2,000 units of local government in Colorado,
including counties, statutory cities and towns, home rule cities and
counties, charter cities, school districts and a variety of water,
irrigation and other special improvement districts, all with various
constitutional and statutory authority to levy taxes and incur
indebtedness. The major source of revenue for funding such indebtedness
is the ad valorem property tax, which presently is imposed and collected
solely at the local level (although the State is also authorized to levy
the tax), and revenue from special projects. Residential real property is
presently assessed at 10.5% of its actual value. All other property is
assessed at 29% of its actual value except producing mines and oil and gas
properties. Agricultural land is assessed at 29% of its value based on
its ability to produce agricultural crops, and oil and gas properties are
assessed based on certain factors, including the means of recovery and the
production of the property.
Colorado's tax system is closely linked to the federal tax system in
that it uses federal taxable income as the basis for determining Colorado
income taxes. As a result, any change in the federal tax laws which
reduces the federal taxable income base would also reduce Colorado
individual and corporate income taxes.
On November 3, 1992, voters in Colorado passed the Bruce Amendment,
otherwise known as the "Taxpayers Bill of Rights." The Amendment restricts
the growth of government spending and cash reserve increases based upon
the rate of inflation and the change in demand for government services (as
measured by population, school enrollment, or construction); the effect of
this restriction is that if the increase in spending and cash reserves
exceeds that permitted by inflation and the demand for government
services, the excess revenues must be refunded to taxpayers. The
Amendment also limits the issuance of debt to that which is voter approved
and requires voter approval of all tax increases. To date, the Amendment
has not affected State revenues and programs, as the increase in the
State's spending and cash reserves has been less than the allowable limit.
However, given projected revenue growth and estimates of limitations to be
imposed by the Amendment, spending and cash reserves may begin to approach
the allowable limit in the year ending June 30, 1998. Over time, the
Amendment will likely reduce the financial flexibility of all levels of
government in Colorado. In addition, younger or rapidly growing
municipalities with large infrastructure requirements may have ongoing
difficulty generating the revenues needed to finance their growth.
Connecticut Series
Connecticut's economy is diverse, with manufacturing, services and
trade accounting for approximately 70% of total non-agricultural
employment. The State's manufacturing industry is diversified, but from
1970 to 1993 manufacturing employment declined 33.5%, while non-
manufacturing employment increased 63.3%, particularly in the service,
trade and finance categories, resulting in an increase of 27.6% in total
growth in non-agricultural sectors. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms.
From 1984 to 1993, Connecticut ranked from sixth to twelfth among all
States in total defense contract awards, receiving 2.5% of all such
contracts in 1993. In recent years, the Federal government has reduced
the amount of defense-related spending and the largest defense-related
employers in the State have announced substantial labor force reductions.
The future effect of these and other industrial labor force reductions on
the Connecticut economy cannot be predicted at this time.
Connecticut has a high level of personal income. According to Bureau
of Economic Analysis figures, personal income of State residents for
calendar year 1992 was $89.0 billion, a 5.2% increase over the previous
year. Total personal income in the State increased 29.6% from 1987 to
1992 and 11.1% from 1989 to 1992, compared with national increases of
35.4% and 17.5%, respectively. According to U.S. Department of Commerce
projections, the State is expected to continue to rank among the highest
in State per capita income. As of January 1994, the estimated rate of
unemployment (on a seasonably adjusted basis) in the State was 6.2%.
While the State's General Fund ended fiscal 1984-85, 1985-86 and
1986-87 with operating surpluses of approximately $365.5 million, $250.1
million and $365.2 million, respectively, the State recorded operating
deficits of $115.6 million, $28.0 million, $259.5 million and $808.5
million for fiscal 1987-88, 1988-89, 1989-90 and 1990-91, respectively.
Together with the deficit carried forward from fiscal 1989-90, the total
deficit for the fiscal year 1990-91 was $965.7 million. The total deficit
amount was funded by the issuance of General Obligation Economic Recovery
Notes in late 1991. As of March 1, 1995, $455,610,000 of such Notes
remained outstanding. The Comptroller's annual report for the fiscal year
ended June 30, 1992 reflected a General Fund operating surplus of $110.2
million, which surplus was used to retire $110.1 million of the State's
Economic Recovery Notes. The Comptroller's annual report for the fiscal
year ended June 30, 1993 reflected a General Fund operating surplus of
$113.5 million. The Comptroller's annual report for the fiscal year ended
June 30, 1994 reflected a General Fund operating surplus of $19.7 million.
The unappropriated surplus in the General Fund is deemed to be
appropriated for debt service for the fiscal year ending June 30, 1995.
Since 1988, the Comptroller's annual report has reported results on
the basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. The
Comptroller's monthly report for the period ended January 31, 1995
estimated that on a GAAP basis the cumulative deficit is $511 million for
fiscal 1994-95. The modified cash basis of accounting used for statutory
financial reporting and the modified accrual basis used for GAAP financial
reporting are different and, as a result, often produce varying financial
results, primarily because of differences in the recognition of revenues
and expenditures.
The State finances its operations primarily through the General Fund.
All tax and most non-tax revenues of the State, except for motor fuels
taxes and other transportation-related taxes, fees and revenues, are paid
into, and substantially all expenditures pursuant to legislative
appropriations are made out of, the General Fund. The State derives over
70% of its revenues from taxes. Miscellaneous fees, receipts, transfers
and Federal grants account for most of the other State revenue. The Sales
and Use Taxes, the corporation business tax and the recently enacted broad
based personal income tax are the major revenue raising taxes. For fiscal
1994-95, the adopted budget anticipates General Fund expenditures of
$8.116 billion and General Fund revenues of $8.117 billion.
On November 3, 1992, Connecticut voters approved a constitutional
amendment which requires a balanced budget for each year and imposes a cap
on the growth of expenditures. The General Assembly is required by the
constitutional amendment to adopt by three-fifths vote certain spending
cap definitions. The statutory spending cap limits the growth of
expenditures to either (1) the rolling five-year average annual growth in
personal income, or (2) the increase in the consumer price index for urban
consumers during the preceding twelve-month period, whichever is greater.
Expenditures for the payment of bonds, notes and other evidences of
indebtedness are excluded from the constitutional and statutory
definitions of general budget expenditures. To preclude shifting
expenditures out of the General Fund to other funds, the spending cap
applies to all appropriated funds combined. For fiscal 1994-95, permitted
growth in capped expenditures is 4.49%. The adoption Budget for fiscal
1994-95 is approximately $24 million below the spending cap.
The State has no constitutional or other organic limit on its power
to issue obligations or incur indebtedness other than that it may only
borrow for public purposes. There are no reported court decisions
relating to State bonded indebtedness other than two cases validating the
legislative determination of the public purpose for improving employment
opportunities and related activities. The State Constitution has never
contained provisions requiring submission of the questions of incurring
indebtedness to a public referendum. Therefore, the authorization and
issuance of State debt, including the purpose, amount and nature thereof,
the method and manner of the incurrence of such debt, the maturity and
terms of repayment thereof, and other related matters are statutory.
The State has established a program of temporary note issuances to
cover periodic cash flow requirements. The maximum volume of cash flow
borrowing is determined based upon the State's actual cash needs on a
daily basis. The State, as of April 17, 1990, commenced a program
permitting the issuance of up to $539 million of General Obligation
Temporary Notes (the "April 1990 Program"). Under the April 1990 Program,
the State may issue notes during a five-year period concluding in April of
1995. Additionally, a separate $200 million temporary note program
commenced as of April 30, 1991 and concluded on October 31, 1991. There
are currently no notes outstanding under either program.
The General Assembly has empowered, pursuant to bonds acts in effect,
the State Bond Commission to authorize general obligation bonds in the
amount of $10,194,811,925. As of March 1, 1995, the State Bond Commission
has authorized $8,673,257,266 in such bonds and the balance of
$1,521,554,659 was available for authorization. From such total
authorizations of $8,673,257,266, bonds in the aggregate of
$7,334,468,663.09 have been issued and the balance of $1,338,788,602.91
remained authorized but unissued as of March 1, 1995.
General obligation bonds issued by Connecticut municipalities are
payable primarily from ad valorem taxes on property subject to taxation by
the municipality. Certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits in recent years. The most notable of these is the City of
Bridgeport.
S&P, Moody's and Fitch rate Connecticut's municipal bonds AA-, Aa and
AA, respectively.
Florida Series
Revenues and Expenditures. Financial operations of the State of
Florida covering all receipts and expenditures are maintained through the
use of three funds: General Revenue Fund, Trust Funds and Working Capital
Fund. The General Revenue Fund receives the majority of State tax
revenues. The Trust Funds consist of monies received by the State which
under law or trust agreement are segregated for a purpose authorized by
law. Revenues in the General Revenue Fund which are in excess of the
amount needed to meet appropriations may be transferred to the Working
Capital Fund. Beginning in 1993-94, the Florida Constitution requires
that the State establish a Budget Stabilization Fund. This fund is to
contain a balance of at least 1% of the previous year's net General
Revenue collections in 1994-95, 2% in 1995-96, 3% in 1996-97, 4% in 1997-
98 and 5% in 1998-99 and thereafter. These monies can be only spent for
the purpose of covering revenue shortfalls and for emergency purposes as
defined by general law. Implementing legislation establishing this fund
was enacted during the 1994 Session of the Florida legislature.
In November of 1994, Florida voters approved an amendment to the
Florida Constitution which set forth limitations on revenue collections by
the State. With certain exceptions, State revenues collected for any
fiscal year are limited to State revenues allowed under the amendment for
the prior fiscal year plus an adjustment for growth.
As used in the amendment, "growth" means an amount equal to the
average annual rate of growth in Florida personal income over the most
recent twenty quarters times the State revenues allowed under the
amendment for the prior fiscal year. For the 1995-1996 fiscal year, the
State revenues allowed under the amendment for the prior fiscal year shall
equal the State revenues collected for the 1994-1995 fiscal year. Florida
personal income will be determined by the Legislature, from information
available from the United States Department of Commerce or its successor
on the first day of February prior to the beginning of the fiscal year.
State revenues collected for any fiscal year in excess of this limitation
will be transferred to the Budget Stabilization Fund until the fund
reaches the maximum balance specified above, and thereafter shall be
refunded to taxpayers as provided by general law. State revenues allowed
under the amendment for any fiscal year may be increased by a two-thirds
vote of the membership of each house of the Florida Legislature.
For purposes of the amendment "State revenues" means taxes, fees,
licenses, and charges for services imposed by the Legislature on
individuals, businesses, or agencies outside State government. However,
"State revenues" does not include: revenues that are necessary to meet the
requirements set forth in documents authorizing the issuance of bonds by
the State; revenues that are used to provide matching funds for the
Federal Medicaid program with the exception of the revenues used to
support the Public Medical Assistance Trust Fund or its successor program
and with the exception of State matching funds used to fund elective
expansions made after July 1, 1994; proceeds from the State Lottery
returned as prizes; receipts of the Florida Hurricane Catastrophe Fund;
balances carried forward from prior fiscal years; taxes, licenses, fees
and charges for services imposed by local, regional, or school district
governing bodies; or revenue from taxes, licenses, fees and charges for
services required to be imposed by any amendment or revision to the
Constitution after July 1, 1994. An adjustment to the revenue limitation
will be made by general law to reflect the fiscal impact of transfers of
responsibility for the funding of governmental functions between the State
and other levels of government.
The amendment became effective January 1, 1995.
The Florida Constitution and Statutes mandate that the State budget
as a whole, and each separate fund within the State budget, be kept in
balance from currently available revenues each State fiscal year.
Florida ended fiscal years 1992-93 and 1993-94 with General Revenue
plus Working Capital Funds unencumbered reserves of approximately $543.5
million and $351.8 million, respectively. Estimated fiscal year 1994-95
General Revenue plus Working Capital Funds available total $14.453
billion. Total effective appropriations for the 1994-95 fiscal year are
estimated at $14.281 billion, resulting in estimated unencumbered reserves
of $171.0 million at the end of the fiscal year. The massive effort to
rebuild and replace destroyed or damaged property in the wake of Hurricane
Andrew is responsible for the substantial positive revenue growth shown.
Most of the impact is in the sales tax.
In fiscal year 1993-94, the State derived approximately 63% of its
total direct revenues from the General Revenue Fund, Trust Funds and
Working Capital Fund from State taxes. Federal grants and other special
revenues accounted for the remaining revenues. Major sources of tax
revenues to the General Revenue Fund are the sales and use tax, corporate
income tax, and beverage tax, which amounted to 68.4%, .6% and 4.0%,
respectively, of total General Revenue Fund receipts.
State expenditures are categorized for budget and appropriation
purposes by type of fund and spending unit, which are further subdivided
by line item. In fiscal year 1993-94, expenditures from the General
Revenue Fund for education, health and welfare and public safety amounted
to approximately 48.9%, 31.6% and 13%, respectively, of total General
Revenues.
Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax. The sales tax is 6% of the sales price
of tangible property sold at retail in the State. The use tax is 6% of
the cost price of tangible personal property when the same is not sold but
is used, or stored for use, in the State. The use tax also applies to the
use in the State of tangible personal property purchased outside Florida
which would have been subject to the sales tax if purchased from a Florida
dealer. Less than 10% of the sales tax is designated for local
governments and is distributed to the respective counties in which it is
collected for use by such counties and municipalities therein. In
addition to this distribution, local governments may (by referendum)
assess a .5% or 1% discretionary sales surtax within their county.
Proceeds from this local option sales tax are earmarked for funding local
infrastructure programs and acquiring land for public recreation or
conservation or protection of natural resources. In addition, non-
consolidated counties with populations in excess of 800,000 may levy a
local option sales tax to fund indigent health care. This tax rate may
not exceed .5% and the combined levy of the indigent health care surtax
and the infrastructure surtax described above may not exceed 1%.
Furthermore, charter counties which adopted a charter prior to June 1,
1976, and each county with a consolidated county/municipal government, may
(by referendum) assess up to a 1% discretionary sales surtax within their
county. Proceeds from this tax are earmarked for the development,
construction, maintenance and operation of a fixed guideway rapid transit
system or may be remitted to an expressway or transportation authority for
use on country roads and bridges, for a bus system, or to service bonds
financing roads and bridges. The two taxes, sales and use, stand as
complements to each other, and taken together provide a uniform tax upon
either the sale at retail or the use of all tangible personal property
irrespective of where it may have been purchased. This tax also includes
a levy on the following: (i) rentals of tangible personal property,
transient lodging and non-residential real property; (ii) admissions to
places of amusements, most sports and recreation events; (iii) utilities,
except those used in homes; and (iv) restaurant meals. Exemptions
include: groceries; medicines; hospital rooms and meals; fuels used to
produce electricity; purchases by religious, charitable and educational
nonprofit institutions; most professional, insurance and personal service
transactions; apartments used as permanent dwellings; the trade-in value
of motor vehicles; and residential utilities.
All receipts of the sales and use tax, with the exception of the tax
on gasoline and special fuels, are credited to either the General Revenue
Fund, the Solid Waste Management Trust Fund, or counties and cities. For
the State fiscal year which ended June 30, 1994, receipts from this source
were $10.505 billion, an increase of 11.4% from fiscal year 1992-93.
Motor Fuel Tax. The second largest source of State tax receipts is
the tax on motor fuels. Preliminary data show collections from this
source in the State fiscal year ended June 30, 1994, were $1.416 billion.
However, these revenues are almost entirely dedicated trust funds for
specific purposes and are not included in the State General Revenue Fund.
State and local taxes on motor fuels (gasoline and special fuel)
include several distinct fuel taxes: (i) the State sales tax on motor
fuels, levied at 6% of the average retail price per gallon of fuel, not to
fall below 6.9 cents per gallon; (ii) the State excise tax of four cents
per gallon of motor fuel, proceeds distributed to local governments; (iii)
the State Comprehensive Enhanced Transportation System (SCETS) tax, which
is levied at a rate in each county equal to two-thirds of the sum of the
county's local option motor fuel taxes; and (iv) local option motor fuel
taxes, which may range between one cent to seven cents per gallon.
Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an
excise tax on beer, wine, and liquor. This tax is one of the State's
major tax sources, with revenues totalling $559.3 million in State fiscal
year ended June 30, 1994. Alcoholic beverage receipts declined from the
previous year's total. The revenues collected from this tax are deposited
into the State's General Revenue Fund.
The 1990 Legislature established a surcharge on alcoholic beverages.
This cargo is levied on alcoholic beverages sold for consumption on
premises. The surcharge is at ten cents per ounce of liquor, ten cents
per four ounces of wine, four cents per twelve ounces of beer. Most of
these proceeds are deposited into the General Revenue Fund. In fiscal
1993-94 a total of $95.1 million was collected.
Corporate Income Tax. Pursuant to an amendment to the State
Constitution, the State Legislature adopted, effective January 1, 1972,
the "Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations and other artificial entities
for the privilege of conducting business, deriving income or existing
within the State. This tax does not apply to natural persons who engage
in a trade or business or profession under their own or any fictitious
name, whether individually as proprietorships or in partnerships with
others, estates of decedents or incompetents, or testamentary trusts.
The tax is imposed in an amount equal to 5.5% of the taxpayer's net
corporate income for the taxable year, less a $5,000 exemption, as defined
in such Code. Net income is defined by the Code as that share of a
taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales
(50%), property (25%) and payroll (25%). All business income is
apportioned and non-business income is allocated to a single jurisdiction,
usually the State of commercial domicile.
All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year ended June 30, 1994, receipts from this
source were $1.009 billion, an increase of 19.0% from fiscal year 1992-93.
Documentary Stamp Tax. Deeds and other documents relating to a
realty are taxed at 70 cents per $100 of consideration, while corporate
shares, bonds, certificates of indebtedness, promissory notes, wage
assignments and retail charge accounts are taxed at 35 cents per $100 of
consideration. Documentary stamp tax collections totalled $777 million
during fiscal year 1993-94, posting a 22% increase from the previous
fiscal year. The General Revenue Fund receives approximately 62% of
documentary stamp tax collections.
Gross Receipts Tax. Effective July 1, 1992, the tax rate was
increased from 2.25% to 2.5% of the gross receipts of electric, natural
gas and telecommunications services. All gross receipts utilities
collections are credited to the Public Education Capital Outlay and Debt
Service Trust Fund. In fiscal year 1993-94, gross receipts utilities tax
collections totalled $488.2 million, an increase of 8.9% over the previous
fiscal year.
Intangible Personal Property Tax. This tax is levied on two distinct
bases: (i) stocks, bonds, including bonds secured by Florida realty,
notes, government leaseholds, interests in limited partnerships registered
with the SEC, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2
mills, (ii) mortgages and other obligations secured by liens on Florida
realty, taxed with a non-recurring 2 mill tax.
Of the tax proceeds, 33.5% is distributed to the Municipal Revenue
Sharing Trust Fund. The remainder is distributed to the General Reserve
Fund.
Fiscal year 1993-94 total intangible personal property tax
collections were $816.5 million, a 4% increase over the prior year.
Severance Taxes. The severance tax includes the taxation of oil, gas
and sulfur production and a tax on the severance of primarily phosphate
rock and other solid minerals. Total collections from severance taxes
totalled $54.8 million during fiscal year 1993-94, down 15.0% from the
previous fiscal year.
Lottery. The 1987 Legislature created the Department of the Lottery
to operate the State Lottery and setting forth the allocation of the
revenues. Of the revenues generated by the Lottery, 50% is to be returned
to the public as prizes; at least 38% is to be deposited in the
Educational Enhancement Trust Fund (for public education); and no more
than 12% can be spent on the administrative cost of operating the lottery.
Fiscal year 1993-94 produced ticket sales of $2.2 billion, of which
education received approximately $948.8 million.
Georgia Series
Georgia's economy grew rapidly in the 1980s, resulting in a general
fund reserve. In fiscal 1989 and 1990, however, the State's economy began
to slow and lower than projected growth in income and sales taxes and
increasing expenditure levels resulted in a reduction of the general
fund's reserve.
During fiscal years 1990, 1991, and 1992, State expenditures exceeded
revenue, effectively eliminating the State's general fund reserve.
In fiscal 1993 and 1994, however, revenues exceeded appropriations,
which increased the State's revenue shortfall reserve at the end of Fiscal
1994 to approximately $267 million. Revenues and expenditures for Fiscal
1995 are estimated to be equal, and revenues are estimated to slightly
exceed expenditures for Fiscal 1996. Fiscal 1995 estimates indicate that
revenues also will slightly exceed expenditures.
Georgia's unemployment rate was 5.6% for 1994 (January- November
annualized rate), which is an increase of 0.1% over the State's 1993
annual average unemployment rate. The largest sectors of Georgia's
economy are wholesale and retail trade, services, manufacturing and
government. Per capita income levels are less than the U.S. average
(92.6% of the U.S. average in 1993), but Georgia's average annual growth
rate of per capita income has exceeded that of the United States as a
whole since 1960.
Constitutional Provisions. Georgia's Constitution limits the
appropriation of funds for any given fiscal year to the sum of the amount
of unappropriated surplus expected to have accrued at the beginning of the
fiscal year and the amount not greater than the total receipts
anticipated, less refunds, as estimated. The State Constitution provides
for supplementary appropriations in accordance with its provisions as
well.
Georgia may incur public debt to supply a temporary deficit due to a
delay in collecting the taxes of that fiscal year. Such debt may not
exceed, in the aggregate, 5% of the total revenue receipts, less refunds,
in the fiscal year immediately preceding the year in which such debt is
incurred. The debt incurred is to be repaid on or before the last day of
the fiscal year in which it is incurred out of taxes levied for that
fiscal year. No such debt may be incurred in any fiscal year under this
provision if there is then outstanding unpaid debt from any previous
fiscal year which was incurred to supply a temporary deficit. No such
debt has been incurred under this provision since its inception.
The State Constitution also provides that the State may incur public
debt for three types of public purposes: (1) debt to "repel invasion,
suppress insurrection, and defend the State in time of war;" (2) general
obligation debt and (3) guaranteed revenue debt. General obligation debt
may be incurred to acquire, construct, develop, extend, enlarge or improve
land, waters, property, highways, buildings, structures, equipment or
facilities of the State, its agencies, departments, institutions and
certain State Authorities, to provide educational facilities for county
and independent school systems, to provide public library facilities for
county and independent school systems, counties, municipalities, and
boards of trustees of public libraries or boards of trustees of public
library systems, and to make loans to counties, municipal corporations,
political subdivisions, local authorities and other local government
entities for water and sewerage facilities or systems. Guaranteed revenue
debt may be incurred by guaranteeing the payment of certain revenue
obligations issued by an instrumentality of the State as set forth in its
Constitution.
Georgia may not incur debt at any time when the highest aggregate
annual debt service requirements for the then current year or any
subsequent year for outstanding general obligation debt and guaranteed
revenue debt, including the proposed debt, and the highest aggregate
annual payments for the then current year or any subsequent fiscal year of
the State under certain contracts then in force, exceed 10% of the total
revenue receipts, less refunds, of the State treasury in the fiscal year
immediately preceding the year in which any such debt is to be incurred.
No general obligation debt may be incurred at any time when the term of
the debt is in excess of 25 years.
The State Constitution also provides that Georgia counties,
municipalities, and other political subdivisions may not incur debt
(including debt incurred on behalf of any special district) in excess of
10% of the assessed value of all taxable property within such county,
municipality, or political subdivision. However, a separate provision of
the State Constitution permits certain long-term, intergovernmental
contracts for services and facilities. The Georgia Supreme Court has held
that certain categories of intergovernmental contracts give rise to
payment obligations which are not "debts" subject to the 10% debt
limitation. It is possible that the intergovernmental contracts clause
could be used by local governments to justify entering into transactions
which increase their financial obligations, and such transactions could
result in increasing the credit risk associated with debt obligations
issued by such governmental units.
Revenues and Expenditures. Georgia's major revenue sources are its
sales tax and its income tax. The State also receives revenues from its
motor fuels tax, from miscellaneous fees and sales, from other taxes (such
as the intangibles tax, alcohol taxes, inheritance tax, and license
taxes), and from the State lottery. Unaudited information from the
Georgia Revenue Department indicates that revenues from these sources
increased 8% in fiscal year 1994 from fiscal year 1993, and that these
revenue sources generated the following percentages of total Georgia State
revenue in fiscal year 1994:
Sales Tax 34.6%
Income Tax 43.9%
Motor Fuels Tax 5.2%
Lottery 3.8%
Other Taxes 12.5%
TOTAL 100.0%
State expenditures are classified by major policy category for
budgetary purposes. In the fiscal year 1995 operating budget, Georgia
expenditures for educational development, human resources, protection of
persons and property, and transportation amounted to 51%, 26%, 9.1%, and
4.6%, respectively, of total budgeted expenditures. Debt service for
issued obligations accounts for 4.1% of total budgeted expenditures for
fiscal year 1995, and is projected to account for 4.0% of total budgeted
expenditures in fiscal year 1996.
For fiscal years ended June 30, 1975 through June 30, 1995, the
aggregate general obligation debt and guaranteed revenue debt authorized
by the State General Assembly are $6.9 billion and $195 million,
respectively. The aggregate amount of general obligation debt and
guaranteed revenue debt actually issued by the State, as of March 1, 1995,
is $7.1 billion. The total outstanding principal amount of indebtedness
of the State as of March 1, 1995 is $4.3 billion. Of this outstanding
debt, 32% is due and payable on or before January 1, 2000 and 57% is due
and payable on or before January 1, 2005.
Significant Contingent Liabilities. The State from time to time is
named as a party in certain lawsuits, which may or may not have a material
adverse impact on the financial position of the State if decided in a
manner adverse to the State's interests. Certain of such lawsuits which
could have a significant impact on the State's financial position are
summarized below.
Reich v. Collins. On December 6, 1994, the U.S. Supreme Court
reversed the Georgia Supreme Court's decision in Reich v. Collins, 263 Ga.
602 (1993), which had determined that the plaintiff federal retiree was
not entitled to a refund of taxes paid on federal retirement pension
benefits for tax years before 1989. The plaintiff had sought refunds
under the U.S. Supreme Court's decision in Davis v. Michigan Department of
Treasury, 489 U.S. 803(1989). The U.S. Supreme Court in Reich remanded
the case to the Georgia Supreme Court for "the provision of meaningful
backward-looking relief consistent with due process and the McKesson line
of cases." On February 1, 1995, the Governor signed H.B. 90 into law,
which provides for the payment of refunds to federal retirees who filed
timely claims for any of the tax years 1985 through 1988, inclusive. The
total amount payable is estimated at approximately $110 million, to be
paid in four roughly equal annual installments beginning on or before
October 15, 1995. Based on this legislation, it is anticipated that Reich
will shortly be dismissed.
James B. Beam Distilling Co. v. State. Three suits have been filed
against the State of Georgia seeking refunds of liquor taxes under
O.C.G.A. Section 48-2-35, in light of Bacchus Imports. Ltd. v. Dias, 468 U.S.
263(1984) under Georgia's pre-Bacchus statute. In the Beam case, the
Supreme Court indicated that Bacchus was retroactive, but only within the
bounds of State statutes of limitations and procedural bars, and left
State courts to determine any remedy in light of reliance interests,
equitable considerations, and other defenses. Georgia's statute of
limitations in O.C.G.A. Section 48-2-35 has run on all pre-Bacchus claims for
refund except five pending claims seeking 31.7 million dollars in tax plus
interest. On remand, the Fulton County Superior Court ruled that
procedural bars and other defenses bar any recovery by taxpayers on Beam's
claims for refund. The Georgia Supreme Court has affirmed, Beam
petitioned the United States Supreme Court for a writ of certiorari, and
said petition was denied. Beam filed a petition for rehearing which was
denied on February 22, 1995.
Age International, Inc. v. State (two cases) and Age International,
Inc. v. Miller. Three suits (two for refund and one for declaratory and
injunctive relief) have been filed against the State of Georgia by
out-of-state producers of alcoholic beverages. The first suit for refund
seeks 96 million dollars in refunds of alcohol taxes imposed under
Georgia's post-Bacchus (see previous note) statute, O.C.G.A. Section 3-4-60.
These claims constitute 99% of all such taxes paid during the 3 years
preceding these claims. In addition, the claimants have filed a second
suit for refund for an additional 23 million dollars for later time
periods. These two cases encompass all known or anticipated claims for
refund of such type within the apparently applicable statutes of
limitations. The two Age refund cases are still pending in the trial
court. The Age declaratory/injunctive relief case was dismissed by the
District Court. That dismissal was affirmed by the Eleventh Circuit Court
of Appeals, and plaintiffs have filed a petition for rehearing which is
pending.
Board of Public Education for Savannah/Chatham County v. State of
Georgia. This case is based on the local school board's claim that the
State is obligated to finance the major portion of the costs of its
desegregation program. The Savannah Board originally requested
restitution in the amount of approximately $30,000,000, but the Federal
District Court set forth a formula which would require a State payment in
the amount of approximately $8,900,000 computed through June 30, 1994.
Plaintiffs, dissatisfied with the apportionment of desegregation costs
between State and county, and an adverse ruling on the State funding
formula for transportation costs, have appealed to the Eleventh Circuit
Court of Appeals. The State has filed a responsive cross-appeal on the
ground that there is no basis for any liability. Subsequently, the
parties agreed to a settlement, which has been submitted to the Court for
approval. The proposed settlement calls for the State to pay the amount
awarded to the plaintiff and to offer an option regarding a future funding
methodology for pupil transportation.
DeKalb County v. State of Georgia. A similar complaint has been
filed by DeKalb County. The Plaintiffs sought approximately $67,500,000
in restitution. The Federal District court ruled that the State's funding
formula for pupil transportation (which the District Court in the
Savannah/Chatham County case upheld) was contrary to State law. This
ruling would require a State payment of a state law funding entitlement in
the amount of approximately $34,000,000 computed through June 30, 1994.
Motions to reconsider and amend the Court's judgment were filed by both
parties. The State's motion was granted, in part, which reduced the
required State payment to approximately $28,000,000. Notices of appeal to
the Eleventh Circuit Court of appeals have been filed. There are
approximately five other school districts which might file similar claims.
Leslie K. Johnson v. Collins. Plaintiff in this case has filed suit
in federal district court and in the State Superior Court of Chatham
County. Plaintiff challenges the constitutionality of Georgia's transfer
fee provided by O.C.G.A. Section 40-3-21.1 (often referred to as "impact fee")
by asserting that the fee violates the commerce clause, due process, equal
protection and privilege and immunities provisions of the constitution.
Plaintiff seeks to prohibit the State from further collections and to
require the State to return to her and those similarly situated all fees
previously collected. A similar lawsuit has also been filed in the
Superior Court of Fulton County (Mueller v. Collins). From May of 1992 to
February 15, 1995, the State has collected $20,006,834.72. The State
continues to collect approximately $500,000 to $600,000 per month.
Daniel W. Tedder v. Marcus E. Collins, Sr., Cobb County Superior
Court, Civil Action No. 931553028. Class action challenging the validity
of a Georgia Department of Revenue Regulation issued in July of 1992,
which resulted in enforcement of sales tax collections on sales of used
transportation equipment, most notably sales of used cars where neither
party is engaged in the regular sale of used cars. The trial court
declared the regulation invalid. Approximately $30,000,000 of tax on such
sales was collected before the regulation was rescinded and collections
ceased. Accordingly, refund claims of up to $30,000,000 plus interest,
could be sought. Approximately $21,900,000 in refunds have been paid.
Maryland Series
The State's total expenditures for the fiscal years ending June 30,
1992, 1993 and 1994 were $11.585 billion, $11.786 billion and $12.351
billion, respectively. As of March 8, 1995, it was estimated that total
expenditures for fiscal year 1995 would be $13.834 billion. The State's
General Fund, representing approximately 54% - 60% of each year's total
budget, had a surplus on a budgetary basis of $55 thousand in fiscal year
1991, a deficit of $56 million in fiscal year 1992 and a surplus of $11
million in fiscal year 1993. The Governor of Maryland reduced fiscal year
1993 appropriations by approximately $56 million to offset the fiscal year
1992 deficit. The State Constitution mandates a balanced budget.
In April 1994, the General Assembly approved the $13.343 billion 1995
fiscal year budget. The Budget includes $2.6 billion in aid to local
governments (reflecting a $102.4 million increase in funding over 1994
that provides for substantial increase in education, health and police
aid), and 104.8 million in general fund deficiency appropriations for
fiscal year 1994, of which $60.5 million is a legislatively mandated
appropriation to the Revenue Stabilization Account of the State Reserve
Fund. The Revenue Stabilization Account was established in 1986 to retain
State revenues for future needs and to reduce the need for future tax
increases. The 1995 Budget does not include any proposed expenditures
dependent on additional revenue from new or broad-based taxes. When the
1995 Budget was enacted, it was estimated that the general fund surplus on
a budgetary basis at June 30, 1995, would be approximately $9.7 million.
As of March 8, 1995, it is estimated that the general fund surplus on a
budgetary basis at June 30, 1995, will be $76.9 million.
In January 1995, the Governor submitted his proposed 1996 Fiscal Year
Budget to the General Assembly. The Budget includes $2.8 billion in aid
to local governments (reflecting a $161.0 million increase over 1995 that
provides substantial increases in education, health and police aid), and
$142.1 million in general fund deficiency appropriations for fiscal year
1995, of which $60.0 million is an appropriation to the Revenue
Stabilization Account of the State Reserve Fund. As of March 8, 1995, it
is estimated that the general fund surplus on a budgetary basis at June
30, 1996 will be $176.8 thousand.
The public indebtedness of Maryland and its instrumentalities is
divided into three basic types. The State issues general obligation bonds
for capital improvements and for various State-sponsored projects. The
Department of Transportation of Maryland issues limited special
obligations bonds for transportation purposes payable primarily from
specific, fixed-rate excise taxes and other revenues related mainly to
highway use. Certain authorities issue obligations solely from specific
non-tax enterprise fund revenues and for which the State has no liability
and has given no moral obligation assurance.
At least since the end of the Civil War, the State has paid the
principal of and interest on its general obligation bonds when due. There
is no general debt limit imposed by the State Constitution or public
general laws. Although the State has the authority to make short-term
borrowings in anticipation of taxes and other receipts up to a maximum of
$100 million, the State in the past has not issued short-term tax
anticipation and bond anticipation notes, or made any other similar short-
term borrowings for cash flow purposes.
As of May 1995, the State's general obligation bonds were rated "Aaa"
by Moody's and "AAA" by S&P Fitch.
The Maryland Department of Transportation issues Consolidated
Transportation Bonds, which are payable out of specific excise taxes,
motor vehicle taxes and corporate income taxes, and from the general
revenues of the Department. Issued to finance highway, port, transit,
rail or aviation facilities, as of May 1995, these bonds were rated "Aa"
by Moody's and "AA" by S&P Fitch. The Maryland Transportation Authority,
an entity of the Department issues its own revenue bonds for
transportation facilities, which are payable from certain highway, bridge
and tunnel tolls. These bonds were rated "A1" by Moody's and "A+" by S&P
as of May 1995.
According to recent available ratings, general obligation bonds of
Montgomery County (abutting Washington, D.C.) are rated "Aaa" by Moody's
and "AAA" by S&P. Prince George's County, also in the Washington, D.C.
suburbs, issues general obligation bonds rated "Aa" by Moody's and "AA-"
by S&P, while Baltimore County, a separate political subdivision
surrounding the City of Baltimore, issues general obligation bonds rated
"Aaa" by Moody's and "AA+" by S&P. The City of Baltimore's general
obligation bonds are rated "A1" by Moody's and "A" by S&P. The other
counties in Maryland which are rated by Moody's all have general
obligation bond ratings of "A" or better from Moody's, except for
Allegheny County, the bonds of which are rated "Baa" by Moody's. The
Washington Suburban Sanitary district, a bi-county agency providing water
and sewerage services in Montgomery and Prince George's Counties, issues
general obligation bonds rated "Aa1" by Moody's and "AA" by S&P as of May
1995. Additionally, some of the large municipal corporations in Maryland
(such as the cities of Rockville and Annapolis) have issued general
obligation bonds. There can be no assurance that any of the foregoing
ratings will continue.
Massachusetts Series
At the present time, the Commonwealth of Massachusetts' economy is
experiencing a modest recovery following a slowdown that began in mid-
1988. Massachusetts has nonetheless undergone serious financial
difficulties in recent years that have adversely affected the
Commonwealth's credit standing. While Massachusetts had benefitted from
an annual job growth rate of approximately 2% since the early 1980s, by
1989 employment started to decline. Between 1988 and 1992, total
employment in Massachusetts declined 10.7%. In 1993 and 1994, however,
total employment increased by 1.6% and 2.2%, respectively. Employment
levels increased in all sectors except manufacturing. Between 1990 and
1992, the Commonwealth's unemployment rate was considerably higher than
the national average, although unemployment rates in Massachusetts since
1993 have declined faster than the national average. As a result, the
average monthly unemployment rate in Massachusetts for 1993 was only
slightly higher than the national average (6.9% compared to 6.8%) and the
unemployment rate in Massachusetts in 1994 was slightly below the national
average (6.0% compared to 6.1%).
Massachusetts' economic and fiscal difficulties of recent years
appear to have abated. While the Commonwealth's expenditures for State
programs and services in each of the fiscal years 1987 through 1991
exceeded each year's current revenues, Massachusetts ended each of the
fiscal years 1991 to 1994 and expects to end fiscal 1995 with a positive
closing fund balance in its budgeted operating funds.
Massachusetts expenditures for State government programs and services
in each of the fiscal years 1987 through 1991, inclusive, exceeded each
fiscal year's current revenues. In fiscal years 1987 and 1988, largely by
drawing on fund balances from prior years, Massachusetts ended each fiscal
year with budgetary surpluses. However, fiscal years 1989 and 1990 ended
with operating deficits of $672.5 million and $1.25 billion, respectively.
In fiscal 1991, total revenues and other sources of the budgeted
operating funds increased by 13.8% over the prior year, to $13.913
billion. This increase was due chiefly to State tax rate increases
enacted in 1990 and to a substantial federal reimbursement under the
Medicaid program for uncompensated patient care payments, as well as other
factors. The Commonwealth ended fiscal 1991 with an operating loss of
$21.2 million, but with positive closing fund balances of $237.1 million.
Budgeted revenues and other sources for fiscal 1992 were $13.728
billion, including tax revenues of $9.484 billion. Budgeted revenues and
other sources increased by approximately 0.7% from fiscal 1991 to fiscal
1992, while tax revenues increased by 5.4% for the same period.
Commonwealth expenditures and other uses were approximately $13.420
billion for fiscal 1992, which is $238.7 million or 1.7% lower than fiscal
1991 budgeted expenditures and other uses. Final fiscal 1992 budgeted
expenditures were approximately $300 million higher than the initial July
1991 estimates of budgetary expenditures. A large portion of the increase
in spending resulted from increases in certain human services programs,
including an increase of $268.7 million for the Medicaid program and $50.0
million for mental retardation consent decree requirements. Fiscal 1992
expenditures for Medicaid were $2.818 billion, or 1.9% higher than fiscal
1991. This increase compares favorably with the 19.25% average annual
growth rate of Medicaid expenditures for fiscal years 1988 through 1991.
Overall, the budgeted operating funds ended fiscal 1992 with an excess of
revenues and other sources over expenditures and other uses of $312.3
million.
The budgeted operating funds of the Commonwealth ended fiscal 1993
with a surplus of revenues and other sources over expenditures and other
uses of $13.1 million. Budgeted revenues and other sources for fiscal
1993 totaled approximately $14.710 billion, including tax revenues of
$9.40 billion. Total revenues and other sources increased by
approximately 6.9% from fiscal 1992 to fiscal 1993, while tax revenues
increased by 4.7% for the same period.
Budgeted operating funds of the Commonwealth ended fiscal 1994 with a
surplus of revenues and other sources over expenditures and other uses of
$26.8 million and the aggregate ending fund balance in the budgeted
operating funds of the Commonwealth was approximately $589.3 million.
Budgeted revenues and other sources for fiscal 1994 totaled approximately
$15.55 billion, including tax revenues of $10.607 billion. Budgeted
expenditures and other uses in fiscal 1994 totaled $15.52 billion,
approximately 5.6% higher than budgeted expenditures and other uses in
fiscal 1993.
In recent years, health care related costs have risen dramatically in
Massachusetts and across the nation and the increase in the State's
Medicaid and group health insurance costs reflects this trend. In fiscal
1993, Medicaid was the largest item in Massachusetts' budget and has been
one of the fastest growing budget items. During fiscal years 1989, 1990,
1991 and 1992, Medicaid expenditures were $1.83 billion, $2.12 billion,
$2.77 billion and $2.82 billion, respectively, representing an average
annual increase of 15.4%. Expenditures for fiscal 1993 were $3.15
billion, an 11.8% increase over fiscal 1992. Medicaid expenses in fiscal
1994 were $3.31 billion.
Massachusetts' pension costs have risen dramatically as the State has
appropriated funds to address in part the unfunded liabilities that had
accumulated over several decades. Total pension costs increased at an
average annual rate of 7.1% from $659.7 million in fiscal 1989 to $868.2
million in fiscal 1993. Pension costs (inclusive of current benefits and
pension reserves) for fiscal 1994 were $908.9 million, an increase of 4.7%
over fiscal 1993 expenditures.
Payments for debt service on Massachusetts general obligation bonds
and notes have risen at an average annual rate of 11.6% from $649.8
million in fiscal 1989 to $1.15 billion in fiscal 1994. Debt service
payments were $898.3 million in fiscal 1992, $1.14 billion in fiscal 1993
and $1.15 billion in fiscal 1994. In 1990, legislation was enacted which
generally imposes a 10% limit on the total appropriations in any fiscal
year that may be expended for payment of interest and principal on general
obligation debt. As of January 1, 1995, the State had approximately
$9,595 billion of long-term general obligation debt outstanding and short-
term direct obligations of the Commonwealth totalled $264 million.
Certain independent authorities and agencies within the State are
statutorily authorized to issue debt for which Massachusetts is either
directly, in whole or in part, or indirectly liable. The State's
liabilities are either in the form of (i) a direct guaranty, (ii) State
support through contract assistance payments for debt service, or (iii)
indirect obligations. The State is indirectly liable for the debt of
certain authorities through the funding of reserve funds which are pledged
as security for the authorities' debt.
In November 1980, voters in the Commonwealth approved a State-wide
tax limitation initiative petition, commonly known as Proposition 2 1/2,
to constrain levels of property taxation and to limit the charges and fees
imposed on cities and towns by certain government entities, including
county governments. The law is not a constitutional provision and
accordingly is subject to amendment or repeal by the legislature.
Proposition 2 1/2 limits the property taxes which a Massachusetts city or
town may assess in any fiscal year to the lesser of (i) 2.5% of the full
and fair cash value of real estate and personal property therein and (ii)
2.5% over the previous year's levy limit plus any growth in the tax base
from certain new construction and parcel subdivisions. In addition,
Proposition 2 1/2 limits any increase in the charges and fees assessed by
certain governmental entities, including county governments, on cities and
towns to the sum of (i) 2.5% of the total charges and fees imposed in the
preceding fiscal year, and (ii) any increase in charges for services
customarily provided locally or services obtained by the city or town at
its option. The law contains certain override provisions which require
voter approval at a general or special election. Proposition 2 1/2 also
limits any annual increase in the total assessments on cities and towns by
any county, district, authority, the Commonwealth, or any other
governmental entity. During the 1980s, Massachusetts increased payments
to the cities, towns and regional school districts ("Local Aid") to
mitigate the impact of Proposition 2 1/2 on local programs and services.
In fiscal 1994, approximately 17.59% of Massachusetts' budget was
allocated to Local Aid. Direct Local Aid has dropped from a high of
$2.961 billion in fiscal 1989 to $2.727 billion in fiscal 1994.
Many factors affect the financial condition of the Commonwealth and
its cities, towns and public bodies, such as social, environmental, and
economic conditions, many of which are not within the control of such
entities. As is the case with most urban States, the continuation of many
of Massachusetts' programs, particularly its human services programs, is
in significant part dependent upon continuing Federal reimbursements which
have been steadily declining. The loss of grants to Massachusetts and its
cities and towns could further slow economic development. To the extent
that such factors may exist, they could have an adverse effect on economic
conditions in Massachusetts, although what effect, if any, such factors
would have on Massachusetts' Municipal Obligations cannot be predicted.
Michigan Series
General. Recently, the State's economy has been undergoing certain
basic changes in its underlying structure. These changes reflect a
diversifying economy which is less reliant on the automobile industry. As
a result, the State anticipates that its economy in the future will be
less susceptible to cyclical swings and more resilient when national
downturns occur. In 1994, approximately 77% of wage and salary employment
was in the State's non-manufacturing sectors. In 1994, total employment
was 4,473,000 with manufacturing wage and salary employment totaling
949,400. Manufacturing employment remains below the peak employment level
of 1,179,600 attained in 1978. Employment in the durable goods
manufacturing industries was 706,700 and non-durable goods employment was
242,800 in the State in 1994. The motor vehicle industry, which is still
an important component in the State's economy, employed 278,200 in 1994.
The State's average unemployment rate for calendar year 1994 was 5.9%.
The State's general obligation bonds are rated A1 by Moody's, AA by
S&P and AA by Fitch. Because most of the State Municipal Obligations are
revenue or general obligations of local government or authorities, rather
than general obligations of the State of Michigan itself, ratings on such
State Municipal Obligations may be different from those given to the State
of Michigan.
State Constitutional Provisions Affecting Revenues and Expenditures.
The State Constitution provides that proposed expenditures and revenues of
any operating fund must be in balance and that any prior year's surplus or
deficit must be included in the succeeding year's budget for that fund.
In 1978, the State Constitution was amended to limit the amount of
total State revenues raised from taxes and certain other sources. State
revenues (excluding Federal aid and revenues for payment of principal and
interest on general obligation bonds) in any fiscal year are limited to a
fixed percentage of State personal income in the prior calendar year or
average of the prior three calendar years, whichever is greater. The
percentage is fixed by the amendment to equal the ratio of the 1978-79
fiscal year revenues to total calendar 1977 State personal income.
If, in any fiscal year, revenues exceed the revenue limitation by 1%
or more, the entire amount of such excess shall be rebated in the
following fiscal year's personal income tax or single business tax. Any
excess of less than 1% may be transferred to the State's Budget
Stabilization Fund. The State may raise taxes in excess of the limit for
emergencies when deemed necessary by the Governor and two-thirds of the
members of each house of the Legislature.
The State Constitution provides that the proportion of State spending
paid to all units of local government to total State spending may not be
reduced below the proportion in effect in the 1978-79 fiscal year. If
such spending does not meet the required level in a given year, an
additional appropriation for local governmental units is required by the
following fiscal year. Spending for local units met this requirement for
fiscal years 1985-86 through 1991-92.
The State has settled litigation with Oakland County, Michigan in
which Oakland County had alleged that the classification of State
expenditures for certain mental health programs as spending for local
units was improper. As part of the settlement, the State agreed to
reclassify these expenditures, beginning in fiscal year 1992-93. The
State has prepared a preliminary calculation to reclassify these
expenditures and does not foresee any material financial impact from the
reclassification.
The State Constitution also requires the State to finance any new or
expanded activity of local governments mandated by State law. Any
expenditures required by this provision would be counted as State spending
for local units of government for the purpose of determining compliance
with the provision cited above.
Economic and Fiscal Condition. Legislation requires that the
administration prepare two economic forecasts each year. These are
presented to a Consensus Revenue Estimating Conference in January and May
of each year. The January 1995 forecast is summarized below.
The State's economic forecast for calendar year 1995 projects modest
growth. Real GDP is projected to grow 2.9% in 1995, on a calendar year
basis. Car and light truck sales are expected to total 15.7 million units
in 1995.
The forecast assumes moderate inflation, accompanied by steady
interest rates. Ninety-day T-Bill rates are expected to average 6.0% for
1995. The United States' unemployment rate is projected to decline to an
average of 5.6% for 1995.
The State's forecast for the Michigan economy reflects the above
national outlook. Total wage and salary employment is projected to grow
2.9% in 1995. This slight growth reflects the ongoing diversification of
the Michigan economy. The unemployment rate is projected to average 5.4%
in 1995, continuing the recent trend to Michigan's unemployment rate being
near the national average compared to the 15-year history of having higher
unemployment.
The Governor's Executive Budget for fiscal year 1994-1995 was
submitted to the Legislature in December 1993. The fiscal year 1994-1995
general fund/general purpose Executive Budget recommendation totalled
$7,865.8 million. The 1994-95 budget was passed by the Legislature in
July 1994.
The Governor's Executive Budget for fiscal year 1995-96 was submitted
to the Legislature on February 9, 1995. The fiscal
year 1995-96 general fund/general purpose Executive Budget recommendation
totaled $8,507.6 million.
Property Tax Reform Proposals. On August 19, 1993, the Governor
signed into law Act 145, Public Acts of Michigan, 1993 ("Act 145"), a
measure which would have significantly impacted financing of primary and
secondary school operations and which has resulted in additional property
tax and school finance reform legislation. Act 145 would have exempted
all property in the State of Michigan from millage levied for local and
intermediate school districts operating purposes, other than millage
levied for community colleges, effective July 1, 1994. In order to
replace local property tax revenues lost as a result of Act 145, the
Michigan Legislature, in December 1993, enacted several statutes which
address property tax and school finance reform.
The property tax and school finance reform measures included a ballot
proposal which was approved by the voters on March 15, 1994. Effective
May 1, 1994, the State sales and use tax was increased from 4% to 6%, the
State income tax was decreased from 4.6% to 4.4%, the cigarette tax was
increased from $.25 to $.75 per pack and an additional tax of 16% of the
wholesale price was imposed on certain other tobacco products. A 0.75%
real estate transfer tax became effective January 1, 1995. Beginning in
1994, a State-wide property tax of 6 mills will be imposed on all real and
personal property currently subject to the general property tax. The
ability of school districts to levy property taxes for school operating
purposes has been partially restored. A school board will, with voter
approval, be able to levy up to the lesser of 18 mills or the number of
mills levied in 1993 for school operating purposes, on non-homestead
property. The adopted ballot proposal contains additional provisions
regarding the ability of local school districts to levy taxes as well as a
limit on assessment increases for each parcel of property, beginning in
1995 to the lesser of 5% or the rate of inflation. When property is
subsequently sold, its assessed value will revert to the current
assessment level of 50% of true cash value. Under the adopted ballot
proposal, much of the additional revenue generated by the new taxes will
be dedicated to the State School Aid Fund.
The adopted ballot proposal contains a system of financing local
school operating costs relying upon a foundation allowance amount which
may vary by district based upon historical spending levels. State funding
will provide each school district an amount equal to the difference
between their foundation allowance and the revenues generated by their
local property tax levy. Local school districts will also be entitled to
levy supplemental property taxes to generate additional revenue if their
foundation allowance is less than their historical per pupil expenditures.
The adopted proposal also contains provisions which allow for the levy of
a limited number of enhancement mills on regional and local school
district bases.
The adopted ballot proposal shifts significant portions of the cost
of local school operations from local school districts to the State and
raises additional State revenues to fund these additional State
expenditures. These additional revenues will be included within the
State's constitutional revenue limitations and may impact the State's
ability to raise additional revenues in the future.
Budget Stabilization Fund. In 1977, the BSF was established to
accumulate balances during years of significant economic growth which may
be utilized in years when the State's economy experiences cyclical
downturns or unforeseen fiscal emergencies. The unreserved ending accrued
balance of the BSF on September 30, 1990 was $385.1 million, on September
30, 1991 was $182.2 million, on September 30, 1992 was $20.1 million and
on September 30, 1993 was $303.4 million. The ending unreserved fiscal
year 1993-94 General Fund balance of $460.2 million was transferred to the
Budget Stabilization Fund.
State and State-Related Indebtedness. The State Constitution limits
State general obligation debt to (i) short-term debt for State operating
purposes, (ii) short- and long-term debt for the purpose of making loans
to school districts and (iii) voter-approved long-term debt.
Short-term debt for operating purposes is limited to an amount not in
excess of 15% of undedicated revenues received during the preceding fiscal
year and must be issued only to meet obligations incurred pursuant to
appropriation and repaid during the fiscal year in which incurred.
Debt incurred by the State for the purpose of making loans to school
districts may be issued in whatever amount required without voter
approval. All other general obligation bonds issued by the State must be
approved as to amount, purpose and method of repayment by a two-thirds
vote of each house of the Legislature and by a majority vote of the public
at a general election. There is no limitation as to number of size of
such general obligation issues.
There are also various State authorities and special purpose agencies
created by the State which issue bonds secured by specific revenues. Such
debt is not a general obligation of the State.
The State has issued outstanding general obligation full faith and
credit bonds and notes for Water Resources, Environmental Protection,
Recreation Program, and School Loan purposes. As of September 30, 1994,
the outstanding principal amount of all State general obligation bonds was
$382 million. The State anticipates issuing additional general obligation
environmental bonds in 1995. On March 16, 1995, the State issued $500
million in short-term general obligation notes in order to meet cash flow
requirements. These notes will mature on September 29, 1995. On April 6,
1995, the State issued $85.0 million in short-term general obligation
school loan notes. These notes are due on August 15, 1995.
As of December 31, 1994, approximately $4.1 billion in principal
amount of "qualified" bonds of local school districts was outstanding. In
the past 30 years, the State has been required only once to advance monies
from the State School Bond Loan Fund to make a debt service payment on
behalf of a school district, other than for routine loans. In that case
the tax collections available to the school district for payment of debt
service were escrowed on the due date because of litigation. After the
litigation was completed, the escrowed funds were repaid in full to the
State School Bond Loan Fund.
Minnesota Series
Constitutional and Statutory Provisions Relating to State and Local
Funding. State revenues in Minnesota are generated primarily from
individual and corporate income taxes, sales and use taxes, inheritance
and gift taxes, motor fuel taxes and excise taxes on liquor and tobacco.
County, municipal and certain special purpose districts (such as water,
flood or mosquito control districts) are authorized to levy property taxes
within specified legislative limits. A portion of State revenues is
allocated from State government to other governmental units within the
State such as municipal and county governments, school districts and State
agencies through a complex series of appropriations and financial aid
formulas. This financial interdependency of the State government with
other units of government subjects all levels of government, in varying
degrees, to fluctuations in the State's overall economy.
The State's constitutionally prescribed fiscal period is a biennium,
and Minnesota operates on a biennial budget basis with revenues credited
in the period in which they are collected and expenditures debited in the
period in which the corresponding liabilities are incurred. The biennium
begins on July 1st of the odd numbered year and runs through June 30th of
the next odd numbered year.
Minnesota's ability to appropriate funds is limited by the Minnesota
Constitution, which directs that State government shall not in any
biennium appropriate funds in excess of projected tax revenues from all
sources. The State is authorized to levy additional taxes to resolve any
inadvertent shortfalls.
Legislative appropriations for each biennium are prepared and adopted
during the final legislative session of the immediately preceding
biennium. A revenue forecast is normally prepared during the legislative
session to provide the legislature with updated information for the
appropriations process. During each biennium, regular forecasts of
revenues and expenditures are prepared.
The State's biennial appropriation process relies on revenue
forecasting as the basis for establishing aggregate expenditure levels.
Risks are inherent in the revenue and expenditure forecasts. Assumptions
about U.S. economic activity and federal tax and expenditure policies
underlie these forecasts. Any federal law changes that increase federal
income taxes or reduce federal spending programs may adversely affect
these forecasts. Finally, even if economic and federal tax assumptions
are correct, revenue forecasts are still subject to some normal level of
error. The correctness of revenue forecasts and the strength of the
State's overall economy may restrict future aid or appropriations from
State government to other units of government.
For fiscal year 1994, ending June 30, 1994, revenues received were
$9.040 billion. Expenditures and transfers were $8.075 billion and, after
deducting a cash flow account appropriations carry forward of $500
million, a budgetary balance of $216 million remained.
For fiscal year 1995, ending June 30, 1995, revenues are estimated to
be $9.610 billion. Expenditures and transfers are estimated at $8.610
billion and, after deducting a cash flow account appropriations carry
forward of $500 million, it is estimated that a budgetary balance of $421
million will remain.
For fiscal years 1996 and 1997, revenues are estimated at $9.756
billion and $9.862 billion, respectively. Expenditures and transfers are
estimated at $8.827 billion and $9.223 billion, respectively. A cash flow
account is maintained in the amount of $350 million for each such fiscal
year and projections show a budgetary balance of $290 million at the end
of fiscal year 1996 and a budgetary balance of zero at the end of the 1997
fiscal year.
In 1992, the Minnesota Legislature adopted "MinnesotaCare" which was
designed to provide universal health care coverage for Minnesota citizens
while controlling the escalation of health care costs. The program has
been funded primarily from a 2% provider tax which is the subject of
ongoing litigation in Minnesota. Similar tax provisions have been enacted
in other states and are also subject to litigation. Litigation will
probably continue until the U.S. Supreme Court issues a definitive ruling
on the powers of the state to tax employee benefit plans. In 1995, the
Minnesota legislature delayed mandates for universal coverage and other
provisions of the MinnesotaCare law thus reducing the exposure for
deficits in the health care program.
When the Minnesota legislature convened in early 1994, the Governor
announce a "no new taxes" position. In 1995, legislators from both
political parties joined the Governor in the "no new tax" pledge and, as a
result, the legislature adopted few changes in the tax laws of the State.
The Minnesota legislature completed its tax and appropriations process in
June 1995. However, given the relationship between state and federal
expenditures and the anticipated reduction in federal aid to the states,
it is anticipated that the Minnesota legislature will meet in special
session to make budget adjustments shortly after the level of federal
expenditures for the next biennium is determined.
State and local governments in Minnesota have been well served by the
creation of a "rainy day fund" or "cash flow account" which can be drawn
upon at a time of economic downturn. However, the amount budgeted for the
account was reduced from $500 million in fiscal year '94/'95 to $350
million for fiscal year '96/'97.
The amount of revenue generated by Minnesota's tax structure, because
of the dependence on the income and sales taxes, is sensitive to the
status of the national and local economy. There can be no assurance that
the financial problems referred to or similar future problems will not
affect the market value or marketability of the Minnesota Municipal
Obligations or the ability of the issuers thereof to pay the interest or
principal of such obligations.
Minnesota general obligation bonds are rated Aa by Moody's and AA+ by
S&P and Fitch.
Statewide Economic and Demographic Factors. Diversity and a
significant natural resource base are two important characteristics of
Minnesota's economy.
Minnesota's economy is being lifted by strong earnings growth in the
service industry, rising housing construction, and job gains which are
slowly firming up the labor market.
When viewed in 1995 at a highly aggregate level of detail, the
structure of the State's economy parallels the structure of the United
States' economy as a whole. Minnesota employment in ten major industrial
sectors was distributed in approximately the same proportions as national
employment. In all sectors, the share of State employment was within two
percentage points of the share of national employment.
The State's employment in the durable goods industries continues to
be highly concentrated in industries specializing in the manufacturing of
industrial machinery, fabricated metals and instruments. This emphasis is
partially explained by the location in the State of IBM, Cray Research and
other computer equipment manufacturers. Further, manufacturers of food
products, wood products, and printed and published materials joined the
high technology manufacturing group which has led to significant business
expansion in Minnesota in this decade.
The importance of the State's rich natural resource base for overall
employment is apparent in the employment mix in non-durable goods
industries. in 1989, approximately 29.9% of the State's non-durable goods
employment was concentrated in food and kindred industries, and
approximately 19.9% in paper and allied industries. This compares to
approximately 21.4% and 8.8%, respectively, for comparable sectors in the
national economy. Both of these industries rely heavily on renewable
resources in the State. Over half of the State's acreage is devoted to
agricultural purposes and nearly one-third to forestry. Printing and
publishing are also relatively more important in the State than in the
United States.
Mining is currently a less significant factor in the State economy
than it once was. Mining employment primarily in the iron or taconite
industry dropped from 17.3 per thousand people in 1979 to 7.9 per
thousand. It is not expected that mining employment will soon return to
1979 levels. However, Minnesota retains vast quantities of taconite as
well as copper, nickel, cobalt and peat which may be utilized in the
future.
While Minnesota's involvement in the defense industry is limited, as
military procurement cuts continue, Minnesota employers like Alliant Tech
and United Defense FMC/BMY (formerly FMC) will face challenges in
maintaining employment and sales. More importantly, Minnesota firms
producing electronic components, communication equipment, electrical
equipment, chemicals, plastics, computers and software will face
additional competition from companies converting from military to civilian
production.
Job expansion and business start-ups improved remarkably in this
decade with an average rate for new businesses at 2%, while business
dissolutions were on the decline.
Finally, despite a state economy that is outperforming the national
economy, the future economic outlook is guarded primarily because the
growth of the health care industry has slowed significantly and the
mainframe computer and airline industries face continued softness.
Employment and Income Growth in the State. During the 1980 to 1990
period, total employment in Minnesota increased 17.8% as compared to 20.5%
nationally. Most of Minnesota's slower growth can be associated with
declining agricultural employment and two recessions in the U.S. economy
in the early 1980's which were more severe in Minnesota than nationwide.
The most recent recession which began in July 1990 was less severe in
Minnesota than it was nationally. Since 1988, non-farm employment in
Minnesota grew at a more rapid rate than it did at the national level.
The Minnesota work force will remain stable with slow growth expected
between now and 1996. The large size of the baby boom generation will
lend stability. Not much change is expected in composition. Female labor
force participation rates will continue to increase slowly. Employment
growth is projected to be most rapid for professional, para-professional
and technical occupations. Minnesota has a well educated work force as
compared to the nation as a whole, and occupations projected to grow most
rapidly are those requiring the most education and training.
Since 1980, State per capital personal income has been within three
percentage points of national per capital personal income. The State's
per capita income, which is computed by dividing personal income by total
resident population, has generally remained above the national average in
spite of the early 1980's recessions and some difficult years in
agriculture. In 1991, Minnesota per capita personal income was 100.2% and
in 1992, 101% of its U.S. counterpart.
Another measure of the vitality of the State's economy is its
unemployment rate. For 1991, the State's unemployment rate was 5.1% as
compared to a national average of 6.7%. In 1992, the State's unemployment
rate was again 5.1% with a national average of 7.4%. In April 1995, the
State rate was 3.7% and the national rate 5.6%.
North Carolina Series
Economic Characteristics. The economic profile of North Carolina
consists of a combination of industry, agriculture, and tourism.
Non-agricultural wage and salary employment accounted for approximately
3,244,600 jobs in 1993, of which approximately 845,900 were in
manufacturing. According to the North Carolina Employment Security
Commission, in May 1994, the State ranked tenth in non-agricultural
employment and eighth in manufacturing employment. During the period from
1980 to 1993, per capita income in the State grew from $7,999 to $18,702,
an increase of 133.8%. The North Carolina Employment Security Commission
estimated the June 1994 seasonally adjusted unemployment rate to be 3.7%,
as compared with a national unemployment rate of 6.0%.
Agriculture is a basic element in North Carolina's economy. Gross
agricultural income in 1993 exceeded $5.3 billion, placing the State tenth
in the nation in gross agricultural income. Tobacco production is the
leading source of agricultural income, accounting for 20% of gross
agricultural income. The poultry industry (chicken, eggs, broilers, and
turkeys) provides nearly 34% of the total agricultural income. The pork
industry continues to expand and North Carolina is now the second largest
pork-producing State. Pork production accounts for 17% of gross
agricultural income.
North Carolina's agricultural diversity and a continuing push in
marketing efforts have protected farm income from some of the wide
variations experienced in States where most of the agricultural economy is
dependent on a small number of agricultural commodities. North Carolina
is the third most diversified agricultural State in the nation. In 1993,
there were approximately 59,000 farms in the State. A strong
agribusiness sector also supports farmers with farm inputs (agricultural
chemicals and fertilizer, farm machinery, and building supplies) and
processing of commodities produced by farmers (vegetable canning and
cigarette manufacturing). North Carolina's agricultural industry,
including food, fiber and forest, contributes over $42 billion annually to
the State's economy.
The labor force has undergone significant changes during recent
years. The State has moved from an agricultural to a service and goods
producing economy. According to the Employment Security Commission, the
labor force has grown from 2,855,200 in 1980 to 3,556,000 in 1993, an
increase of 24.5%.
The Travel and Tourism Division of the North Carolina Department of
Commerce has estimated that in excess of $8 billion was spent on tourism
in the State in 1993 (up from slightly less than $7 billion in 1990),
two-thirds of which was derived from out-of-State travelers. The Travel
and Tourism Division estimates approximately 250,000 people were employed
in tourism-related jobs in the State. The State maintains 43 State parks
covering an area of approximately 134,908 acres. State forests cover an
area of approximately 35,355 acres.
Revenue Structure. North Carolina's two major operating funds which
receive revenues and from which monies are expended are the General Fund
and the Highway Fund. The 1989 General Assembly also created the Highway
Trust Fund to provide monies for a major highway construction program for
the State. There are no prohibitions or limitations in the North Carolina
Constitution on the State's power to levy taxes except an income tax rate
limitation of 10% and a prohibition against a capitation or "poll" tax.
A portion of North Carolina's tax revenue is generated from
individual and corporate income taxes, sales and use taxes, highway use
tax on certain motor vehicle rentals, corporate franchise tax, taxes on
alcoholic beverages, tobacco products and soft drinks, inheritance taxes,
insurance taxes levied on insurance companies and other taxes, which
revenues are deposited into the State's General Fund. Additional tax
revenue is generated from a motor fuels tax, highway use tax and motor
vehicle license tax, which revenue is deposited in the Highway Fund and
Highway Trust Fund. Additional non-tax revenue deposited to the General
Fund consists of (i) institutional and departmental receipts which are
deposited with the State Treasurer, including fees, tuition payments, and
Federal funds collected by State agencies, (ii) interest earned by the
State Treasurer on investments of General Fund monies, and (iii) revenues
from the judicial branch. Federal aid is an important source of non-tax
revenue for the Highway Fund and Highway Trust Fund.
State Budget. The North Carolina Constitution requires that the
total expenditures of the State for the fiscal period covered by the
budget not exceed the total of receipts during the fiscal period and the
surplus remaining in the State Treasury at the beginning of the period.
The Executive Budget Act, adopted by the General Assembly in 1925,
sets out the procedure by which the State's budget is adopted and
administered. The Act requires the adoption of a balanced budget. North
Carolina's Governor does not have the power to veto budget or other
legislative actions; however, North Carolina General Statute Section
143-25 provides that the Governor, as ex officio Director of the Budget,
"may reduce all of said appropriations, pro rata when necessary, to
prevent an overdraft or deficit to the fiscal period for which such
appropriations are made. The purpose and policy of this Article is to
provide and insure that there shall be no overdraft or deficit in the
General Fund of the State at the end of the fiscal period, growing out of
appropriations for maintenance, and the Director of the Budget is directed
and required to so administer this Article so as to prevent any such
overdraft or deficit. Prior to taking any action under this section to
reduce appropriations pro rata, the Governor may consult with the Advisory
Budget Commission." The Governor may take less drastic action to reduce
expenditures to maintain a balanced budget before the need for
across-the-board appropriations reduction arises.
The 1993 Sessions of the General Assembly reduced departmental
operating requirements $357.6 million in 1994-95 and authorized
continuation funding of $8,603.4 million for 1994-95. Saving reductions
were based on recommendations from the Governor, the Government
Performance Audit Committee and selective savings identified by the
General Assembly. After review of the continuation budget, the General
Assembly authorized funding for planned expansion to existing programs and
new initiatives for children, economic development, education, human
services and environmental programs. Expansion funds of $1,650.4 million
for 1994-95 were approved by the 1993 Regular Session, the 1994 Special
Session and the 1994 Regular Session of the General Assembly. In 1993,
the General Assembly appropriated a $66.7 million transfer to the Savings
Reserve Account, in addition to the regularly scheduled transfer thereto
from the credit balance in the General Fund. The General Assembly has
authorized $189.4 million for capital improvements spending and $60
million for repairs and renovations for 1994-95.
With capital projects being financed with bond proceeds and fund
balance, continuation appropriations and expansion items discussed above
are supported with the assistance of a number of new taxes and fees
enacted by the 1991 Session of the General Assembly. These taxes and fees
generated an estimated $665.5 million in 1991-92. Revenues for 1992-93
were estimated to include an additional $95.6 million as a result of the
actions of the 1991 Session of the General Assembly. These taxes and fees
combined with a projected growth of 4.8% for 1994-95 finance the
authorized budget by the 1993 Session of the General Assembly.
The Highway Fund revenue collections totalled $982.4 million in
fiscal year 1993-94, $37.8 million above budgeted revenues. Sources of
revenue for the Highway Fund include taxes on the sale of motor fuels as
well as registration and licensing fees for motor vehicles.
The Highway Trust Fund is more dependent on consumption-based
revenues, such as taxes and fees derived from sales of motor fuels and
vehicles, than the Highway Fund, which draws upon more stable sources for
its revenue, such as motor vehicle registration and licensing fees.
Collections for the Highway Trust Fund totaled $643.7 million in 1993-94,
$86 million more than the budgeted amount. Total Highway Trust Fund
collections increased approximately 12.5% in 1993-94 over 1992-93.
The budget is based upon estimated revenues and a multitude of
existing and assumed State and non-State factors, including State and
national economic conditions, international activity and federal
government policies and legislation.
State Indebtedness. The North Carolina Constitution provides in
substance that the State shall not contract a debt, other than refunding
debt, by borrowing money in any biennium and pledge its faith and credit
to the payment thereof for an amount in excess of two-thirds of the amount
by which the outstanding debt of the State was reduced in the preceding
biennium unless the proposed debt is submitted to and approved by the
voters at an election.
The State is authorized by the Constitution to borrow in anticipation
of the collection of taxes due and payable within the current fiscal year
to an amount not exceeding 50% of such taxes. The State has not borrowed
in anticipation of taxes since fiscal year 1959-60.
There are no bonds of the State outstanding which contemplate the
appropriation by the General Assembly of such amount as may be necessary
to make up any deficiency in a debt service reserve. Furthermore, no
legislation has been enacted by the General Assembly which would authorize
the issuance of any such bonds.
Litigation. The following are cases pending in which the State of
North Carolina faces the risk of either a loss of revenue or an
unanticipated expenditure but which, in the opinion of the Department of
State Treasurer, would not materially adversely affect the State of North
Carolina's ability to meet its financial obligations:
1. Leandro, et al. v. State of North Carolina and State Board of
Education. On May 25, 1994 students and boards of education in five
counties in the State filed suit in Superior Court requesting a
declaration that the public education system of North Carolina, including
its system of funding, violates the State constitution by failing to
provide adequate or substantially equal educational opportunities and
denying due process of law and violates various statutes relating to
public education. The suit requests the Court for such other equitable
relief, including injunction or mandamus, as the Court deems proper.
The suit is similar to a number of suits in other States, some of
which resulted in holdings that the respective systems of public education
funding were unconstitutional under the applicable State law. The
defendants filed a motion to dismiss, which was denied. An appeal from
the decision is pending. The North Carolina Attorney General's Office
believes that sound legal arguments support the State's position.
2. Francisco Case. On August 10, 1994, a class action lawsuit was
filed in Wake County Superior Court against the Superintendent of Public
Instruction and the State Board of Education on behalf of a class of
parents and their children who are characterized as limited English
proficient. The complaint alleges that the State has failed to provide
funding for the education of these students and has failed to supervise
local school systems in administering programs for them. The complaint
does not allege an amount in controversy, but asks the Court to order the
defendants to fund a comprehensive program to insure equal educational
opportunities for limited English proficient children. Discovery is
underway, but no trial date has been set. The North Carolina Attorney
General's Office believes that sound legal arguments support the State's
position.
3. Swanson Case -- State Tax Refunds-Federal Retirees. In Davis v.
Michigan (1989), the United States Supreme Court ruled that a Michigan
income tax statute which taxed federal retirement benefits while exempting
those paid by State and local governments violated the constitutional
doctrine of intergovernmental tax immunity. At the time of the Davis
decision, North Carolina law contained similar exemptions in favor of
State and local retirees. Those exemptions were repealed prospectively,
beginning with the 1989 tax year. All public pension and retirement
benefits are now entitled to a $4,000 annual exclusion.
Following Davis, federal retirees filed a class action suit in
federal court in 1989 seeking damages equal to the North Carolina income
tax paid on federal retirement income by the class members. A companion
suit was filed in State court in 1990. The complaints alleged that the
amount in controversy exceeded $140 million. The North Carolina
Department of Revenue estimate of refunds and interest liability is
$280.89 million as of June 30, 1994. In 1991, the North Carolina Supreme
Court ruled in favor of the State in the State court action, concluding
that Davis could only be applied prospectively and that the taxes
collected from the federal retirees were thus not improperly collected.
In 1993, the United States Supreme Court vacated that decision and
remanded the case back to the North Carolina Supreme Court. The North
Carolina Supreme Court then ruled in favor of the State on the grounds
that the federal retirees had failed to comply with State procedures for
challenging unconstitutional taxes. Plaintiffs petitioned the United
States Supreme Court for review of that decision and the Supreme Court
denied that petition. The United States District Court has ruled in favor
of the defendants in the companion federal case, and a petition for
reconsideration was denied. Plaintiffs have appealed to the United States
Court of Appeals. Oral arguments have been held, but no decision has been
made. The North Carolina Attorney General's Office believes that sound
legal arguments support the State's position.
4. Bailey case -- State Tax Refunds-State Retirees. State and local
government retirees filed a class action suit in 1990 as a result of the
repeal of the income tax exemptions for State and local government
retirement benefits. The original suit was dismissed after the North
Carolina Supreme Court ruled in 1991 that the plaintiffs had failed to
comply with State law requirements for challenging unconstitutional taxes
and the United States Supreme Court denied review. In 1992, many of the
same plaintiffs filed a new lawsuit alleging essentially the same claims,
including breach of contract, unconstitutional impairment of contract
rights by the State in taxing benefits that were allegedly promised to be
tax exempt and violation of several State constitutional provisions. The
North Carolina Attorney General's Office estimates that the amount in
controversy is approximately $40-$45 million annually for tax years 1989
through 1992. The case has been tried in Superior Court, but a decision
has not yet been made by the trial judge. The North Carolina Attorney
General's Office believes that sound legal arguments support the State's
position.
5. Faulkenbury v. Teacher's and State Employees' Retirement System,
Peele v. Teachers' and State Employees' Retirement System and Woodard v.
Local Governmental Employees' Retirement System. Plaintiffs are
disability retirees who brought class actions in State court challenging
changes in the formula for payment of disability retirement benefits and
claiming impairment of contract rights, breach of fiduciary duty,
violation of other federal constitutional rights, and violation of State
constitutional and statutory rights. The State estimates that the cost in
damages and higher prospective benefit payments to plaintiffs and class
members would probably amount to $50 million or more in Faulkenbury, $50
million or more in Peele and $15 million or more in Woodward, all
ultimately payable, at least initially, from the funds of the Retirement
Systems. Upon review in Faulkenbury, the North Carolina Court of Appeals
and Supreme Court have held that claims made in Faulkenbury, substantially
similar to those in Peele and Woodward, for breach of fiduciary duty and
violation of federal constitutional rights brought under the federal Civil
Rights Act either do not state a cause of action or are otherwise barred
by the statute of limitations. In 1994 plaintiffs took voluntary
dismissals of their claims for impairment of contract rights in violation
of the United States Constitution and filed new actions in federal court
asserting the same claims along with claims for violation of
constitutional rights in the taxation of retirement benefits. The
remaining State court claims in all cases are scheduled to be heard in the
Superior Court of Wake County in late May, 1995. The federal court
actions have been stayed pending the trial in State Court. The Attorney
General's Office believes that sound legal arguments support the State's
position in these cases.
6. Fulton Case. The State's intangible personal property tax levied
on certain shares of stock, as in effect for taxable years ending before
January 1, 1995, has been challenged by the plaintiff on grounds that it
violates the United States Constitution Commerce Clause by discriminating
against stock issued by corporations that do all or part of their business
outside the State. The plaintiff in the action is a North Carolina
corporation that does all or part of its business outside the State. The
plaintiff seeks to invalidate the tax in its entirety and to recover tax
paid on the value of its shares in other corporations. The North Carolina
Court of Appeals invalidated the taxable percentage deduction and excised
it from the statute beginning with the 1994 tax year. The effect of this
ruling was to increase collections by rendering all stock taxable on 100%
of its value. The North Carolina Supreme Court reversed the Court of
Appeals and held that the tax is valid and constitutional. The
plaintiff's petition or review by the United States Supreme Court was
granted. Oral argument is expected in Fall, 1995 and a decision expected
by mid-1996. Net collections from the tax for the fiscal year ended on
June 30, 1993 amounted to $120.6 million. The North Carolina Attorney
General's Office believes that sound legal arguments support the State's
position.
Ohio Series
State Economy and Budget. Non-manufacturing industries now employ
approximately 78.6% of all payroll workers in the State of Ohio. However,
due to the continued importance of manufacturing industries (including
auto-related manufacturing), economic activity in Ohio, as in many other
industrially developed States, tends to be more cyclical than in some
other States and in the nation as a whole. Agriculture also is an
important segment of the Ohio economy. The financial condition of the
State has fluctuated in a pattern related to national economic conditions,
with periods of prolonged stringency characterizing fiscal years 1980
through 1983. Additionally, the 1980-82 recession brought with it a
substantial increase in bankruptcies and foreclosures. While the State's
economy improved since 1983, the State experienced an economic slowdown in
1990-91, consistent with the national economic conditions during that
period.
The State constitution imposes a duty on the Ohio General Assembly to
"provide for raising revenue, sufficient to defray the expenses of the
State, for each year, and also a sufficient sum to pay the principal and
interest as they become due on the State debt." The State is effectively
precluded by law from ending a fiscal year or a biennium in a "deficit"
position. State borrowing to meet casual deficits or failures in revenues
or to meet expenses not otherwise provided for is limited by the
constitution to $750,000.
The State finances most of its operations through the General Revenue
Fund ("GRF") which receives general State revenues not otherwise dedicated
pursuant to certain constitutional and statutory claims on State revenues.
The GRF sources consist primarily of personal income and sales-use taxes.
The GRF ending (June 30) fund balance is reduced during less favorable
national economic periods and then increases during more favorable
economic periods.
The Office of Budget and Management ("OBM") projects positive $681.5
million and $446.7 million ending fund and cash balances, respectively,
for the GRF for fiscal year 1995. In addition, as of March 31, 1995 the
Budget Stabilization Fund ("BSF") had a cash balance of $288.7 million.
The GFR appropriations bill for the biennium ending June 30, 1995 was
passed on June 30, 1993 and promptly signed, with selective vetoes, by the
Governor. The act provides for total GRF biennial expenditures of
approximately $30.7 billion, an increase over those for the 1992-93 fiscal
biennium. Authorized expenditures in fiscal year 1995 are 6.6% higher
than in fiscal year 1994. Any unobligated and unreserved fund balances in
the GRF, in excess of $70.0 million by the end of fiscal year 1995, must
be transferred to the BSF. Accordingly, the OBM reports that a transfer
of approximately $611.5 million will be made from the GRF to the BSF.
State statutory provisions permit the adjustment of payment schedules
and the use of the Total Operating Fund ("TOF") to manage temporary GRF
cash flow deficiencies. The State has not undertaken external revenue
anticipation borrowing.
TOF includes the total consolidated total cash balances, revenues,
disbursements and transfers of the GRF and several other specified funds.
TOF cash balance at March 31, 1995 was $3.434 billion. These cash
balances are consolidated only for the purpose of meeting cash flow
requirements and, except for the GRF, a positive cash balance must be
maintained for each discrete fund included in the TOF. The GRF is
permitted to incur a temporary cash deficiency by drawing upon the
available consolidated cash balance in the TOF. The amount of that
permitted GRF cash deficiency at any time is limited to 10% of GRF
revenues for the then-preceding fiscal year. GRF cash flow deficiencies
occurred in six months of fiscal year 1994, the highest being $500.6
million in December 1993. In the first eight months of fiscal year 1995,
a GRF cash flow deficiency occurred in four months with the highest being
$338.0 million in November 1994. In addition, GRF cash flow deficiencies
have occurred in five months of fiscal year 1995.
State Debt. The Ohio Constitution prohibits the incurrence or
assumption of debt by the State without a popular vote except to (i) cover
causal deficits or failures in revenues limited in amount to $750,000 and
(ii) repel invasion, suppress insurrection or defend the State in war.
At various times from 1921, the voters of Ohio, by thirteen specific
constitutional amendments, have authorized the incurrence of up to $4.864
billion in State debt to which taxes or excises were pledged for payment.
As of April 17, 1995, excluding Highway Obligations Bonds discussed below,
$3.375 billion had been issued, of which $2.584 billion had been retired
and approximately $790.1 million (all evidenced by bonds) remained
outstanding. The only such debt still authorized to be incurred is a
portion of the Highway Obligations Bonds and Coal Development Bonds as
well as State general obligation bonds for local government infrastructure
projects, described below and general obligation park bonds.
The total voted authorization of State debt includes authorization
for $500 million in Highway Obligations to be outstanding at any one time,
with no more than $100 million to be issued in any one calendar year. As
Highway Obligations are retired, additional Highway Obligations may be
issued so long as the principal amount outstanding does not exceed $500
million. As of April 17, 1995, approximately $1.545 billion in Highway
Obligations had been issued and $446.3 million were outstanding.
A 1985 constitutional amendment authorized up to $100 million in
State full faith and credit obligations for coal research and development
to be outstanding at any one time. In addition, the General Assembly has
authorized the issuance of an additional $35 million of Coal Development
Bonds. As of April 17, 1995, $80 million of Coal Development Bonds were
issued, of which $34.7 million were outstanding.
A 1987 State constitutional amendment authorizes the issuance of $1.2
billion of State full faith and credit obligations for infrastructure
improvements of which no more than $120 million may be issued in any
calendar year. As of April 17, 1995, approximately $840.0 million of such
obligations were issued, of which $728.3 million were outstanding.
A constitutional amendment adopted in November 1990, authorizes
greater State and political subdivision participation in the provision of
housing for individuals and families. This supplements the previously
constitutionally authorized for loans-for-lenders and other housing
assistance programs, financed in part with State Revenue Bonds. The
amendment authorizes the General Assembly to provide for State assistance
for housing in a variety of manners. The General Assembly could authorize
State borrowing for the purpose by the issuance of State obligations
secured by a pledge of all or a portion of State revenues or receipts,
although the obligations may not be supported by the State's full faith
and credit.
A constitutional amendment approved by the voters in November 1993
authorizes $200.0 million in State general obligation bonds to be
outstanding for parks, recreation and natural resource purposes (no more
than $50.0 million to be issued in any one fiscal year). The General
Assembly in the general capital appropriations act for the 1995-96 capital
appropriations biennium authorized the Commissioners of the Sinking Fund
to issue $100.0 million of such obligations.
In addition, a constitutional amendment adding express exclusions
from sales or other excise taxes upon food was approved at the November
1994 election. The estimate of resulting reduced annual State-level
revenues approximates $30.0 million for the current fiscal year. However,
in OBM's judgment, the amendment has not had and will not have a
materially negative effect on State finances and appropriations for the
remainder of the current biennium.
A constitutional amendment approved at the November 1994 election
pledges the full faith and credit and taxing power of the State to meeting
certain guarantees under the State's tuition credit program. That program
provides for purchase of tuition credits, for the benefit of State
residents, guaranteed to cover a specified amount when applied to the cost
of higher education tuition. Under the amendment, to secure the tuition
guarantees the General Assembly shall appropriate moneys sufficient to
offset any deficiency that may occur from time to time in the trust fund
that provides for the guarantees and at any time necessary to make payment
of the full amount of any tuition payment or refund required by a tuition
payment contract.
Resolutions have been introduced in both houses of the General
Assembly that would submit at the November 1995 election a constitutional
amendment relating to the State debt. The amendment would authorize,
among other things, the issuance of general obligation debt for a variety
of purposes and without additional vote of the people to the extent that
debt service on all State general obligation debt and GRF-supported
obligations would not exceed 5% of the preceding fiscal year's GRF
expenditures. It cannot be predicted whether any such amendment will in
fact be submitted, or, if submitted, whether it would be approved by the
electors.
In addition, the State constitution authorizes the issuance, for
certain purposes, of State obligations not secured by a pledge of taxes or
excises to pay principal and interest. Such special obligations include
bonds and notes issued by, among others, the Ohio Public Facilities
Commission ("OPFC"), the Ohio Building Authority ("OBA") and certain
obligations issued by the Treasurer of State. As of April 17, 1995 the
OPFC had issued $3.531 billion for higher education facilities,
approximately $2.164 billion of which were outstanding, $957.5 million for
mental health facilities, approximately $473.1 million of which were
outstanding and $165.0 million for parks and recreation facilities,
approximately $103.1 million of which were outstanding.
Only a portion of State capital needs can be met by direct GRF
appropriations; therefore, additional State borrowing for capital purposes
has been and will be required. Under present constitutional limitations,
most of that borrowing will be primarily by lease-rental supported
obligations such as those issued by OPFC and OBA.
The general capital appropriations act for the 1995-96 capital
appropriations biennium authorizes additional borrowing. It authorizes
issuance by OPFC of obligations, in addition to those previously
authorized by the General Assembly, in the amounts of $679.2 million for
higher education capital facilities projects (a substantial number of
which are renovations of equipment and improvements to existing
facilities), $77.5 million for mental health and retardation facilities
projects, and $30.0 million for parks and recreation facilities. It also
authorized the OBA to issue obligations in the amounts of $221.0 million
for local jails and prisons, $48.0 million for Department of Youth
Services facilities, $230.3 million for Department of Administrative
Services facilities, $42.5 million for Ohio Arts Facilities Commission
facilities, $11.2 million for Department of Public Safety and $43.95
million for Ohio Department of Transportation facilities. In addition,
the Treasurer of State was authorized to issue obligations in addition to
those previously authorized by the General Assembly, in the amounts of
$70.0 million for the Department of Education and $240.0 million ($120
million for calendar year 1995 and $120 million for calendar year 1996)
for the Public Works Commission. The Commissioners of the Sinking Fund
presently have General Assembly authorization to issue $70.0 million of
Coal Development Bonds, $118.17 million of Highway Obligation Bonds, and
$80.0 million of parks and natural resources bonds.
A State law, originally enacted in 1986 and recently amended (the
"Rail Act"), authorizes the Ohio Rail Development Commission (replacing
the prior Ohio High-Speed Rail Authority to issue obligations to finance
the cost of rail service projects within the State, either directly or by
loans to other entities. The Rail Act originally was limited to inter-
city passenger services. The 1994 amendments extend the authority to
include freight and commuter service. The Rail Development Commission (or
the predecessor Authority) from time to time has considered financing plan
options and the general possibility of issuing bonds or notes. The Rail
Act prohibits, without express approval by joint resolution of the General
Assembly, the collapse of any escrow of financing proceeds for any purpose
other than payment of the original financing, the substitution of any
other security, and the application of any proceeds to loans or grants.
The Rail Act authorizes the Rail Development Commission (or the
predecessor Authority), but only with subsequent General Assembly action,
to pledge the faith and credit of the State but not the State's power to
levy and collect taxes (except ad valorem property taxes if subsequently
authorized by the General Assembly) to secure debt service on any post-
escrow obligations and, provided it obtains the annual consent of the
State Controlling Board, to pledge to and use for the payment of debt
service on any such obligations all excises, fees, fines and forfeitures
and other revenues (except highway receipts) of the State after provision
for the payment of certain other State obligations.
Notwithstanding the constitutional provisions prohibiting the
incurrence of certain debt without popular vote, the State and State
agencies have issued revenue bonds that are payable from net revenues of
revenue-producing facilities or categories of facilities, which revenue
bonds are not "debt" within the meaning of such constitutional provisions.
Investment in such bonds carries the risk that the issuing agency or the
specific revenue source may not provide sufficient funds to service the
debt incurred. Certain of these bonds consist of those issued by the Ohio
Turnpike Commission.
The State is a party to various legal proceedings seeking damages or
injunctive relief and generally incidental to its operations. In
particular, two actions contesting the Ohio system of school funding are
pending.
The outstanding State Bonds issued by the OPFC are rated A + by S&P
and A1 by Moody's. (Certain recent issues or portions of issues of
Commission bonds are the object of municipal bond insurance procured by
the original or subsequent purchasers and bear different ratings.) S&P
rates certain of the State's general obligation bonds AA, with AAA ratings
on the State's Highway Obligations Bonds. The State's general obligation
debt is rated as Aa by Moody's.
State Employees and Retirement Systems. The State has established
five public retirement systems to provide retirement, disability
retirement and survivor benefits. Three cover both State and local
employees, one State employees only and one local government employees
only. The Public Employees Retirement System ("PERS"), the largest of the
five, covers both State and local public employees. The State Teachers
Retirement System ("STRS") and School Employees Retirement System ("SERS")
primarily cover school district employees and public higher education
employees. The Highway Patrol Retirement System ("HPRS") covers State
troopers and the Police and Fire Pension and Disability System ("PFPDS")
covers local safety forces.
As of the most recent year reported by the particular system, the
unfunded accrued liabilities of STRS and SERS were $8.043 billion and
$3.182 billion, respectively, and the unfunded accrued liabilities of
PERS, HPRS and PFPDS were $5.032 billion, $88.5 million and $840.2
million, respectively.
State Municipalities. Ohio has a mixture of urban and rural
population, with approximately three-quarters urban. There are
approximately 943 incorporated cities and villages (populations under
5,000) in the State; six cities have populations of over 100,000 and
nineteen over 50,000. A 1979 act established procedures for identifying
and assisting those few cities and villages experiencing defined "fiscal
emergencies."
A commission composed of State and local officials, and private
sector members experienced in business and finance appointed by the
Governor, is to monitor the fiscal affairs of a municipality facing
substantial financial problems. That act requires the municipality to
develop, subject to approval and monitoring by its commission, a financial
plan to eliminate deficits and cure any defaults and otherwise remedy
fiscal emergency conditions, and to take other actions required under its
financial plan. It also provides enhanced protection for the
municipality's bonds and notes and, subject to the act's stated standards
and controls, permits the State to purchase limited amounts of the
municipality's short-term obligations (used only once, in 1980).
As of 1994, the act has been applied to 11 cities and to 12 villages.
The situations in nine cities and nine villages have been resolved and
their commissions terminated. Only the Cities of East Cleveland and
Nelsonville and three of the villages remain under the procedure.
Summary. Many factors affect or could affect the financial condition
of the State and other issuers of debt obligations, many of which are not
within the control of the State or such issuers. There can be no
assurance that such factors and the resulting impact on State and local
governmental finances will not affect adversely the market value of Ohio
Municipal Obligations held in the portfolio of the Fund or the ability of
the respective obligors to make required payments on such obligations.
Oregon Series
State Tax Revenues. Oregon does not have a sales tax. As a result,
State tax revenues are particularly sensitive to economic recessions. The
principal sources of State tax revenues are personal income and corporate
income taxes. For the 1993-95 biennium, approximately 96.3% of the
State's revenues will come from combined income taxes, insurance taxes,
gift and inheritance taxes, and cigarette and tobacco taxes. Since 1983
State revenues have improved substantially, and in recent years the State
has granted tax credits because of budget surpluses, as required by
statute. The State's economic and revenue forecast dated May 15, 1995
issued by The Office of Economic Analysis predicts that State General Fund
revenues for the 1993-1995 biennium will exceed the legislatively approved
budget forecast by approximately $314.0 million (or 5.1%).
The most significant feature of the budgeting process in Oregon is
the constitutional requirement that the budget be in balance at the end of
each biennium. Actual General Fund revenues have exceeded budget
estimates in every biennium since 1983 and the State predicts an ending
1993-95 biennium General Fund balance of $546.4 million.
Employment. Oregon's economy has outperformed the nation's economy
in recent years. Oregon employment increased 15.4% between 1987 and 1992;
national employment during the same period increased only 6.1%. According
to a report issued by the State of Oregon, non-agricultural employment in
Oregon increased 4.3% from 1993 to 1994 while national employment
increased only 2.6%. Non-agricultural employment in Oregon is predicted to
continue increasing at a faster rate than the national average through the
year 2000. During the same period personal income for wage earners in
Oregon is expected to rise 55% before adjustment for inflation, compared
to 48.9% for the nation. Despite favorable income and job growth
projections Oregon's per capita income is expected to slip behind the rest
of the nation because of expanding labor supply due to in-migration and
downsizing of the timber industry and government.
As the economy has grown, it has diversified, becoming less dependent
on the forest products industry and expanding the number of high
technology industries. Compared to 1980, 15,500 fewer people worked in
lumber and products manufacturing in 1992, while 7,700 more people worked
in high technology sectors. Timber industry employment in Western Oregon
is projected to fall to 56,000 jobs over the next decade, a 23% decrease
relative to 1990 employment.
Most of the recent job gains have come from non-manufacturing
sectors. Since 1985, non-manufacturing employment has increased by 27%,
led by trade (up 23%), services (up 41%) and construction (up 53%).
Non-manufacturing sectors now provide more that 83% of total Oregon
employment.
Despite recent developments in employment, however, Oregon per
capital personal income remains at about 93.6% of the national average.
State Forecast. In May 1995, the State of Oregon forecast that
modest growth of the economy which began in the second half of 1992 would
continue through 1994 and into 1995, with an expected rate of growth in
non-agricultural wage and salary employment increasing 3.6% in 1995.
Personal income is expected to increase 4.6% in 1995, after a 4.3% gain in
1994. The rate of growth is expected to slow as a result of softening of
Oregon's housing markets, reductions in timber output and employment and
weaker national demand for Oregon's manufactured products.
The State forecast for the economy through the year 2000 anticipates
gradually improving national conditions, continued strong net in-migration
to Oregon, accelerating construction activity, and continued strength in
the State's electronics and office equipment manufacturing industries. In
the 1990's, the State's economy is expected to exceed the rate achieved in
Oregon in the 1980's, based on forecast competitive cost advantages
compared to national averages, in-migration, growth in Oregon's high
technology sector and expanding exports, but to fall well below the rates
of growth in the 1960's and 1970's.
Population. Oregon's population as of July 1, 1992 was estimated to
be 2,979,000. Since 1960 the State's population has increased almost 61%;
between 1980 and 1990, Oregon's population increased approximately 7.7%.
The rate of population growth through the 1990's is expected to be more
than twice the rate of growth in the 1980's. Oregon's population is
expected to grow by 63,000 in 1994 with two thirds of the growth from net
in-migration. Growth is expected to slow to 50,000 per year in 1995 as
the California economy rebounds.
There are four major population areas in Oregon. The City of
Portland, located at the northern end of the Willamette Valley, is the
largest city in the State, and its primary metropolitan statistical area
was estimated to have a population of 1,285,100 in 1991, or 44% of the
total State population. The City of Eugene, located at the southern end
of the Willamette Valley, is the second largest city, with a metropolitan
statistical area population of 290,900 in 1991, or 10% of the State's
total population. Salem, located in the middle of the Willamette Valley,
is the third largest city, had a metropolitan statistical area population
of 287,900 in 1991, or 10% of the State's total population. The fourth
largest city, Medford, is located in southwestern Oregon outside the
Willamette Valley, and had a metropolitan statistical area of 151,400 in
1991. Approximately 70% of the State's population resides in the
Willamette Valley.
Western Oregon consists largely of small coastal communities which
focus on tourism, fishing, agriculture and dairy operations. Central
Oregon, west of the Cascade Mountains, has the Willamette Valley, Oregon's
four largest cities, and the highly economically diversified Portland
metropolitan area. East of the Cascade Mountains communities tend to be
smaller, and economic activity centers on agriculture, forestry and
ranching. A number of small, timber dependent communities throughout the
State have been particularly adversely affected by the recent reductions
in timber and forestry products employment. Local economies in Oregon
vary substantially, and respond to different factors; statistical data on
the economic activity in the State as a whole may mask significant
differences in local economies.
Housing, Agriculture, Trade and Forest Products. Much of the recent
and forecast growth in the Oregon non-manufacturing sectors can be traced
to population growth. Oregon's quality of life and low housing costs have
always encouraged in-migration. The State's rapid job growth since 1987
pushed Oregon's population growth above the nation's. The growth caused
Oregon housing starts to increase in 1987, 1988, 1989 and 1990, even
though national housing starts declined. In 1990, Oregon housing starts
(including single and multiple family dwellings) increased by two percent,
compared to a national decline of 12.9%. In 1991, housing starts
declined, but increased again in 1992 and 1993 primarily due to single
family dwelling increases.
Oregon has a highly diversified agricultural base, with gross farm
sales of over $2.8 billion in 1993, over 84 commodities with sales of
$1,000,000 or more, and over 37 commodities with gross sales of
$10,000,000 or more. Agriculture in Oregon follows the national trend of
increasing capital intensity, with employment decreasing as constant
dollar output has increased. Recent agricultural expansion is attributed
to use of more efficient methods and increased use of irrigation.
Although every county in the State is involved in agricultural production,
activity is concentrated in Willamette Valley.
Oregon's forest products industry consists of several components:
lumber and wood products, paper and allied products, and a small number of
workers in reforestation and other services. In 1992, farm forest
products were, collectively, the third largest agricultural commodity for
the State, with gross sales of $258 million. Employment for paper and
allied products has remained relatively constant at about 9,000.
Reforestation currently employs about 4,000, and has been growing
steadily. Lumber and wood products, once Oregon's manufacturing mainstay,
has experienced massive, and probably permanent, reductions in employment,
with jobs declining from about 65,000 to about 50,000 during the period
from 1988 to 1992.
Oregon is located on the western coast of the United States, where
the Columbia River flows into the Pacific Ocean. International trade and
exports are an important part of the Oregon economy, with much of the
trade occurring through Oregon's 23 port districts. The Port of Portland
is most active, having developed an efficient system for dealing with
large numbers of vessels, including modern grain elevators, cranes,
break-bulk and containerized cargo facilities, and ship repair and dry
dock facilities. Substantial activity also occurs throughout the
Columbia-Snake River basin and through the ports of Newport and Coos Bay,
on the Oregon coast. Chief export items include grains, logs, lumber and
other forest products, paper and paper products, vegetables, metal
products and chemical/petroleum products. Items imported in amounts in
excess of $100 million in 1991 include cars, chemical/petroleum products,
metals/metal products, food and headware/flat goods, computing equipment,
electronic components, electrical machinery, general purpose machinery and
rubber/plastic. Imports through the Oregon Columbia-Snake River, Newport
and Coos Bay Customs Districts increased approximately 14% over the five
year period beginning in 1987. In 1992, the Columbia-Snake River ports,
together with the ports of Newport and Coos Bay, reported exports of over
$5.3 billion (representing a 20.1% increase from 1991) and imports of over
$1.8 billion (representing a 4.0% decrease from 1991).
Recent Developments Affecting the Oregon Economy and Creditworthiness
of Oregon Issuers. Article XI, section 11b of the Oregon Constitution,
adopted by Oregon's voters in November 1990 (the "Ballot Measure 5")
imposes an aggregate limit on the rate of property taxes, including ad
valorem taxes, that may be levied against any real or personal property.
The limit is being phased in over a 5-year period that will be complete in
the 1995 tax year. Beginning with the 1995 tax year, not more that $15.00
per $1,000 of real market value may be assessed against any real or
personal property, of which amount not more than $10.00 may be levied for
combined general governmental purposes and not more than $5 may be levied
for educational purposes.
The Ballot Measure 5 limits do not apply to taxes imposed to pay the
principal of and interest on bonds issued by the State of Oregon under a
specific provision of the State Constitution. Therefore, the ability of
the State to levy taxes to service its general obligations bonds is not
subject to the limit. In addition, because the State currently receives
its revenues from sources other than property taxes, the Ballot Measure 5
has not directly affected State revenues.
The Ballot Measure 5 does affect the financial condition of the
State, however, since it (1) requires the State to replace losses to
school funds until fiscal year 1996-97 and (2) restricts the ability of
Oregon local governments to raise revenues through the imposition of
property tax increases. The Legislative Revenue Office of the State has
projected that the State's obligation to replace school revenues will be
$1,535.2 million during the 1993-95 biennium and $1,364.1 million during
the 1995-96 fiscal year. The State's obligation to replace school
revenues terminates after fiscal year 1995-96.
All local governments which use property taxes as a source of
revenues will be affected. The Ballot Measure 5 does not apply to
specially levied ad valorem taxes to pay the principal and interest on
general obligation bonds for capital construction or improvements if the
bonds were either: (1) issued on or prior to November 6, 1990 or (2)
approved by the electors of the issuing governmental unit, so local
general obligation bonds will be unaffected. To date, only a few local
governments have experienced restrictions on their ability to levy taxes
as a result of the Ballot Measure 5.
User fees, licenses, excise or income taxes and incurred charges for
local improvements are also exempted from the Ballot Measure 5. As a
result, local governments have begun to rely more heavily on such fees and
taxes to finance services and improvements.
Pending litigation and environmental proceedings relating to the
logging of old growth forest and the protection of the Northern Spotted
Owl make it difficult to predict future timber supplies in Oregon.
Competitive pressures, productivity improvements and fluctuations in
demand for wood products may result in additional losses. In 1991 and
1992, in response to concerns over diminishing salmon runs, three
populations of Snake River salmon were placed on the Endangered Species
list. More recently, the National Marine Fisheries Service and the U.S.
Fish and Wildlife Service have commenced status reviews of hundreds of
additional salmon and trout populations in the Columbia Basin and
throughout Western Oregon. The Snake River salmon listings have already
had substantial economic impacts, primarily through increased electricity
rates and related impacts on rate-sensitive industries such as the
aluminum industry. Efforts to protect salmon and steelhead populations
may eventually affect a wide variety of industrial, recreational and land
use activities, with corresponding impacts on long-term economic growth.
There is a relatively small active market for municipal bonds of
Oregon issuers other than the general obligations of the State itself, and
the market price of such other bonds may therefore be volatile. If the
Oregon Series were forced to sell a large volume of Oregon Obligations
owned by it for any reason, such as to meet redemption requests for a
large number of its shares, there is a risk that the large sale itself
would adversely affect the value of the Fund's portfolio.
Pennsylvania Series
General. Pennsylvania has historically been dependent on heavy
industry although recent declines in the coal, steel and railroad
industries have led to diversification of the Commonwealth's economy.
Recent sources of economic growth in Pennsylvania are in the service
sector, including trade, medical and health services, education and
financial institutions. Agriculture continues to be an important component
of the Commonwealth's economic structure, with nearly one-fourth of the
Commonwealth's total land area devoted to cropland, pasture and farm
woodlands.
In 1994, the population of Pennsylvania was 12.1 million people.
According to the U.S. Bureau of the Census, Pennsylvania experienced a
slight increase from the 1984 estimate of 11.8 million. Pennsylvania has
a high proportion of persons 65 or older. The Commonwealth is highly
urbanized, with almost 85% of the 1990 census population residing in
metropolitan statistical areas. The cities of Philadelphia and
Pittsburgh, the Commonwealth's largest metropolitan statistical areas,
together comprise approximately 50% of the Commonwealth's total
population.
Pennsylvania's average annual unemployment rate remained below the
national average between 1986 and 1990. Slower economic growth caused the
rate to rise to 6.9% in 1991 and 7.5% in 1992. The resumption of faster
economic growth resulted in a decrease in the Commonwealth's unemployment
rate to 7.1% in 1993. Seasonally adjusted data for October 1994 shows an
unemployment rate of 6.0% compared to an unemployment rate of 5.8% for the
United States as a whole.
Financial Accounting. Pennsylvania utilizes the fund method of
accounting and over 150 funds have been established for the purpose of
recording receipts and disbursements, of which the General Fund is the
largest. Most of the operating and administrative expenses are payable
from the General Fund. The Motor License Fund is a special revenue fund
that receives tax and fee revenues relating to motor fuels and vehicles
(except one-half cent per gallon of the liquid fuels tax which is
deposited in the Liquid Fuels Tax Fund for distribution to local
municipalities) and all such revenues are required to be used for highway
purposes. Other special revenue funds have been established to receive
specified revenues appropriated to specific departments, boards and/or
commissions. Such funds include the Game, Fish, Boat, Banking Department,
Milk Marketing, State Farm Products Show, State Racing and State Lottery
Funds. The General Fund, all special revenue funds, the Debt Service Funds
and the Capital Project Funds combine to form the Governmental Fund Types.
Enterprise funds are maintained for departments or programs operated
like private enterprises. The largest of the Enterprise funds is the
State Stores Fund, which is used for the receipts and disbursements of the
Commonwealth's liquor store system. Sale and distribution of all liquor
within Pennsylvania is a government enterprise.
Financial information for the funds is maintained on a budgetary
basis of accounting ("Budgetary"). Since 1984, the Commonwealth has also
prepared financial statements in accordance with generally accepted
accounting principles ("GAAP"). The GAAP statements have been audited
jointly by the Auditor General of the Commonwealth and an independent
public accounting firm. The Budgetary information is adjusted at fiscal
year end to reflect appropriate accruals for financial reporting in
conformity with GAAP. The Commonwealth maintains a June 30th fiscal year
end.
The Constitution of Pennsylvania provides that operating budget
appropriations may not exceed the actual and estimated revenues and
available surplus in the fiscal year for which funds are appropriated.
Annual budgets are enacted for the General Fund and for certain special
revenue funds which represent the majority of expenditures of the
Commonwealth.
Revenues and Expenditures. Pennsylvania's Governmental Fund Types
receive over 57% of their revenues from taxes levied by the Commonwealth.
Interest earnings, licenses and fees, lottery ticket sales, liquor store
profits, miscellaneous revenues, augmentations and federal government
grants supply the balance of the receipts to these funds. Revenues not
required to be deposited in another fund are deposited in the General
Fund. The major tax sources for the General Fund are the 6% sales and use
tax (33.7% of General Fund revenues in fiscal 1994), the 2.8% personal
income tax (32.0% of General Fund revenues in fiscal 1994) and the 10.99%
corporate net income tax (10.2% of General Fund revenues in fiscal 1994).
Tax and fee proceeds relating to motor fuels and vehicles are
constitutionally dedicated to highway purposes and are deposited into the
Motor License Fund. The major sources of revenues for the Motor License
Fund include the liquid fuels tax, the oil company franchise tax, aviation
taxes and revenues from fees levied on heavy trucks. These revenues are
restricted to the repair and construction of highway bridges and aviation
programs. Revenues from lottery ticket sales are deposited in the State
Lottery Fund and are reserved by statute for programs to benefit senior
citizens.
Pennsylvania's major expenditures include funding for education ($6.2
billion of fiscal 1993 expenditures, $6.4 billion of the fiscal 1994
budget and $6.7 billion of the fiscal 1995 budget) and public health and
human services ($11.1 billion of fiscal 1993 expenditures, $11.7 billion
of the fiscal 1994 budget and $12.6 billion of the fiscal 1995 billion
budget).
Governmental Fund Types: Financial Condition/Results of Operations
(GAAP Basis). Reduced revenue growth and increased expenses contributed
to negative unreserved-undesignated fund balances of the Governmental Fund
Types at the end of the 1990 and 1991 fiscal years, largely due to
operating deficits in the General Fund and State Lottery Fund during those
years. Actions taken during fiscal 1992 to bring the General Fund back
into balance, including tax increases and expenditure restraints, resulted
in a $1.1 billion reduction to the unreserved-undesignated fund deficit
for combined Governmental Fund Types and a return to a positive fund
balance. Financial performance continued to improve during fiscal 1993
resulting in a positive unreserved-undesignated balance for combined
Governmental Fund Types at June 30, 1993, as a result of a $420.4 million
in the balance. These gains were produced by continued efforts to control
expenditure growth. At the end of fiscal 1993, the total fund balance and
other credits for the total governmental Fund types was $1,959.9 million,
a $732.1 million increase from the balance at June 30, 1992. During
fiscal 1993, total assets increased by $1,296.7 million to $7,096.4
million, while liabilities increased $564.6 million to $5,136.5 million.
General Fund: Financial Condition/Results of Operations.
Five Year Overview (GAAP Basis). The five year period from fiscal
1989 through fiscal 1993 was marked by public health and welfare costs
growing at a rate double the growth rate for all the State expenditures.
Rising caseloads, increased utilization of services and rising prices
joined to produce the rapid rise of public health and welfare costs at a
time when a national recession caused tax revenues to stagnate and even
decline. During the period from fiscal 1989 through fiscal 1993, public
health and welfare costs rose by an average annual rate of 10.9% while tax
revenues were growing at an average annual rate of 5.5%. Consequently,
spending on other budget programs was restrained to a growth rate below
5.0% and sources of revenues other than taxes became larger components of
fund revenues. Among those sources are transfers from other funds and
hospital and nursing home pooling of contributions to use as federal
matching funds.
Tax revenues declined in fiscal 1991 as a result of the recession in
the economy. A $2.7 billion tax increase enacted for fiscal 1992 brought
financial stability to the General Fund. That tax increase included
several taxes with retroactive effective dates which generated some
one-time revenues during fiscal 1992. The absence of those revenues in
fiscal 1993 contributed to the decline in tax revenues for fiscal 1993.
During fiscal 1992 enactment of over $2.7 billion in General Fund tax
increases and implementation of expenditure control initiatives helped the
General Fund balance return to a surplus at June 30, 1992, of $87.5
million. The actions taken to increase revenues and restrain expenditure
growth were necessary to offset the effects on General Fund finances of a
period of slow economic growth including a national economic recession.
The recession caused tax revenues during fiscal 1991 to be below the
amount received during fiscal 1990 while spending, particularly for public
health and welfare programs to support needy individuals, increased.
Fiscal 1993 Financial Results (GAAP Basis). The fund balance of the
General Fund increased by $611.4 million during the fiscal year, led by an
increase in the unreserved balance of $576.8 million over the prior fiscal
year balance. At June 30, 1993, the fund balance totaled $698.9 million
and the unreserved-undesignated balance totaled $64.4 million. A
continuing recovery of the Commonwealth's financial condition from the
effects of the national economic recession of 1990 and 1991 is
demonstrated by this increase in the balance and a return to a positive
unreserved-undesignated balance. The previous positive
unreserved-undesignated balance was recorded in fiscal 1987. For the
second consecutive fiscal year the increase in the unreserved-undesignated
balance exceeded the increase recorded in the budgetary basis
unappropriated surplus during the fiscal year.
Fiscal 1994 Financial Results (Budgetary Basis). Commonwealth
revenues during the 1994 fiscal year totaled $15,210.7 million, $38.6
million above the fiscal year estimate, and 3.9% over commonwealth
revenues during the previous fiscal year. The sales tax was an important
contributor to the higher than estimated revenues. The strength of
collections from the sales tax offset the lower than budgeted performance
of the personal income tax which ended the fiscal year $74.4 million below
estimate. The shortfall in the personal income tax was largely due to
shortfalls in income not subject to withholding such as interest,
dividends and other income. Tax refunds in fiscal 1994 were reduced
substantially below the amount provided in fiscal 1993. Expenditures,
excluding pooled financing expenditures, increased by 7.2% over fiscal
1993 expenditures. Medical assistance and corrections spending
contributed to the rate of spending growth for the fiscal year. The
Commonwealth maintained an operating balance on a budgetary basis for
fiscal 1994 producing a fiscal year ending unappropriated surplus of
$335.8 million. By State statute, ten percent ($33.6 million) of that
surplus transferred to the Tax Stabilization Reserve Fund and the
remaining balance was carried over into the 1995 fiscal year. The balance
in the Tax Stabilization Reserve Fund as of October 31, 1994, was $63.9
million.
Fiscal 1995 Budget. The fiscal 1994-95 budget was approved by the
Governor in June 1994 and provided for $15,652.9 million of appropriations
from commonwealth funds, an increase of 3.9% over appropriations,
including supplemental appropriations, for fiscal 1994. Medical
assistance expenditures represent the largest single increase in the
budget ($221 million) representing a 9% increase over the prior fiscal
year. Education subsidies to local school districts were increased by
$132.2 million to continue the increased funding for the poorest school
districts in the State.
The budget also includes tax reductions totaling an estimated $166.4
million. A reduction to the corporate net income tax rate from 12.25% to
9.99% to be phased in over a period of four years was enacted. Several
other tax changes to the sales tax, the inheritance tax and the capital
stock and franchise tax were also enacted.
The fiscal 1994-95 budget projects a $4 million fiscal year-end
unappropriated surplus based on estimates for fiscal 1994 and the adopted
budget. As of April 30, 1995, the General Fund had a surplus of $442.9
million, or 3.4% above the official estimate. The fiscal 1995-96 budget
is currently the subject of discussion and negotiations between the
Governor and the General Assembly.
Commonwealth Debt. Current constitutional provisions permit
Pennsylvania to issue the following types of debt: (i) debt to suppress
insurrection or rehabilitate areas affected by disaster, (ii) electorate
approved debt, (iii) debt for capital projects subject to an aggregate
debt limit of 1.75 times the annual average tax revenues of the preceding
five fiscal years, (iv) tax anticipation notes payable in the fiscal year
of issuance. All debt except tax anticipation notes must be amortized in
substantial and regular amounts.
General obligation debt totaled $5,075.8 million at June 30, 1994.
Over the 10-year period ended June 30, 1994, total outstanding general
obligation debt increased at an annual rate of 1.3% and for the five years
ended June 30, 1994, at an annual rate of 1.5%. All outstanding general
obligation bonds of the Commonwealth are rated AA- by Standard and Poor's
Corporation, A1 by Moody's Investors Service, and AA- by Fitch Investors
Service. The ratings reflect only the views of the rating agencies.
Pennsylvania engages in short-term borrowing to fund expenses within
a fiscal year through the sale of tax anticipation notes which must mature
within the fiscal year of issuance. The principal amount issued, when
added to that already outstanding, may not exceed in aggregate 20% of the
revenues estimated to accrue to the appropriate fund in the fiscal year.
The Commonwealth is not permitted to fund deficits between fiscal years
with any form of debt. All year-end deficit balances must be funded
within the succeeding fiscal year's budget. Pennsylvania issued a total
of $600.0 million of tax anticipation notes for the account of the General
Fund in fiscal 1995, all of which will mature on June 30, 1995, and will
be paid from fiscal 1995 General Fund receipts.
Pending the issuance of bonds, Pennsylvania may issue bond
anticipation notes subject to the applicable statutory and constitutional
limitations generally imposed on bonds. The term of such borrowings may
not exceed three years. Currently, there are no bond anticipation notes
outstanding.
State-related Obligations. Certain State-created agencies have
statutory authorization to incur debt for which no legislation providing
for State appropriations to pay debt service thereon is required. The
debt of these agencies is supported by assets of, or revenues derived
from, the various projects financed and the debt of such agencies is not
an obligation of Pennsylvania although some of the agencies are indirectly
dependent on Commonwealth appropriations. The following agencies had debt
currently outstanding as of June 30, 1994: Delaware River Joint Toll
Bridge Commission ($57.4 million), Delaware River Port Authority ($233.8
million), Pennsylvania Economic Development Financing Authority ($380.8
million), Pennsylvania Energy Development Authority ($163.7 million),
Pennsylvania Higher Education Assistance Agency ($1,158.8 million),
Pennsylvania Higher Educational Facilities Authority ($1,933.7 million),
Pennsylvania Industrial Development Authority ($357.3 million),
Pennsylvania Infrastructure Investment Authority ($107.5 million),
Pennsylvania Turnpike Commission ($1,268.3 million), Philadelphia Regional
Port Authority ($53.1 million) and the State Public School Building
Authority ($280.9 million). In addition, the Governor is statutorily
required to place in the budget of the Commonwealth an amount sufficient
to make up any deficiency in the capital reserve fund created for, or to
avoid default on, bonds issued by the Pennsylvania Housing Finance Agency
($1,972.0 million of revenue bonds and $13.0 million of notes outstanding
as of June 30, 1994), and an amount of funds sufficient to alleviate any
deficiency that may arise in the debt service reserve fund for bonds
issued by The Hospitals and Higher Education Facilities Authority of
Philadelphia ($1.64 million of the loan principal was outstanding as of
June 30, 1994.)
Litigation. Certain litigation is pending against the Commonwealth
that could adversely affect the ability of the Commonwealth to pay debt
service on its obligations, including suits relating to the following
matters: (a) Approximately 3,500 tort suits are pending against the
Commonwealth pursuant to the General Assembly's 1978 approval of a limited
waiver of sovereign immunity which permits recovery of damages for any
loss up to $250,000 per person and $1,000,000 per accident ($27 million
was appropriated from the Motor License Fund for fiscal 1995); (b) The
ACLU filed suit in April 1990 in federal court demanding additional
funding for child welfare services (no available estimates of potential
liability), which the Commonwealth is seeking to have dismissed based on,
among other things, the settlement in a similar Commonwealth court action
that provided for more funding in fiscal 1991 as well as a commitment to
pay to counties $30.0 million over 5 years. In January 1992, the district
court denied the ACLU's motion for class certification, and the parties
have stipulated to a judgment against the plaintiffs in order for
plaintiffs to appeal the denial of class certification to the Third
Circuit; (c) In 1987, the Supreme Court of Pennsylvania held that the
statutory scheme for county funding of the judicial system was in conflict
with the Pennsylvania Constitution but stayed judgment pending enactment
by the legislature of funding consistent with the opinion. The
legislature has yet to consider legislation implementing the judgment; (d)
In November 1990, the ACLU brought a class action suit on behalf of the
inmates in thirteen Commonwealth correctional institutions challenging
confinement conditions and including a variety of other allegations.
Although no damages are sought, if injunctive relief is granted, the cost
to the Commonwealth in capital and personnel expenses may be substantial.
The parties have reached a tentative settlement; (e) In 1991, a consortium
of public interest law firms filed a class action suit alleging that the
Commonwealth had failed to comply with the 1989 federal mandate with
respect to certain services for Medicaid-eligible children under the age
of 21. The parties have reached a tentative settlement; (f) Actions have
been filed in both State and federal court by an association of rural and
small schools and several individual school districts and parents
challenging the constitutionality of the Commonwealth's system for funding
local school districts. The federal case has been stayed pending
resolution of the State case, and the State case is in the pre-trial
discovery stage. The trial has not yet been scheduled, and there is no
available estimate of potential liability; and (g) The Pennsylvania
Medical Society has challenged the State's reimbursement rates for
outpatient services provided to needy citizens under the Medical
Assistance Program. The favorable District Court decision received by the
Commonwealth was reversed by the U.S. Third Circuit Court and an appeal is
under consideration. Estimated potential costs to the Commonwealth
approximate $50 million per year.
Philadelphia. The City of Philadelphia is the largest city in the
Commonwealth, with an estimated population of 1,585,577 people according
to the 1990 Census. Philadelphia functions both as a city of the first
class and a county for the purpose of administering various governmental
programs.
Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class
cities in remedying fiscal emergencies was enacted by the General Assembly
and approved by the Governor in June 1991. PICA is designed to provide
assistance through the issuance of funding debt to liquidate budget
deficits and to make factual findings and recommendations to the assisted
city concerning its budgetary and fiscal affairs. An intergovernmental
cooperation agreement between Philadelphia and PICA was approved by City
Council and the PICA Board and signed by the Mayor in January, 1992. At
this time, Philadelphia is operating under a five year fiscal plan
approved by PICA on April 6, 1992. The most recent amended five year plan
was approved in May 1994.
As of November 1, 1994, PICA had issued $1,296,660,000 of its Special
Tax Revenue Bonds. This financial assistance has included the refunding
of certain general obligation bonds to fund capital projects and to
liquidate the Cumulative General Fund balance deficit as of June 30, 1992,
of $224.9 million. The audited General Fund balance as of June 30, 1993,
showed a surplus of approximately $3 million. The unaudited preliminary
General Fund balance as of June 30, 1994, estimates a surplus of
approximately $15.4 million.
Texas Series
General. Beginning in late 1982, the decline of the State's oil and
gas industry, the devaluation of the Mexican peso and the generally soft
national economy combined to cause a significant reduction in the rate of
growth of State revenues. During late 1985 and early 1986, the price of
oil fell dramatically worldwide. This drop in oil prices created a ripple
that caused other sectors of the State's economy, such as real estate, to
decline. As a result of an increase in non-performing loans in the energy
and real estate sectors, major Texas bank holding companies, individual
banks and savings and loans experienced losses or sharp downturns in
profitabilities and many sought Federal assistance from the FDIC.
As a further result of the drastic drop in the price of oil, the
subsequent loss of jobs and the overbuilding in the real estate market,
the State experienced deficits for fiscal years ended August 31, 1986 and
1987 or $230 million and $744 million, respectively. However, as a result
of the budget trimming and increasing taxes and the improving Texas
economy, the State finished fiscal years 1989, 1990, 1991, 1992, 1993 and
1994 with surpluses in the General Revenue Fund of $295 million, $768
million, $1,006.4 billion, $615.3 million, $1,630 billion and $2.239
billion, respectively. Since the early 1990's, the State's economy has
rebounded in several areas and has, to a large extent, significantly
improved its performance since the deep recession of the 1980's.
The Texas economy bottomed out at the end of 1986 and moved into
recovery. Based upon information gathered by the U.S. Bureau of Labor,
the State has more than doubled the jobs that it lost during the 1986-87
recession. By December 1990, the Texas unemployment rate had declined to
6.6%. The unemployment rate, however, began to increase in 1991 and by
December 1992 was 7.6%. This increase appears to have been merely
temporary since by September 1994, the unemployment rate had again
declined to just over 6.5%.
Manufacturing employment has added a cumulative total of about 35,000
jobs from 1992-1994, but forecasts are for a levelling off of growth in
that employment sector over the next few years. In the overall race for
new job growth, however, Texas has been the national leader for most of
the 1990's. Total employment in Texas has been steadily improving since
1991. Over the 12 month period ending in December 1994, Texas gained
249,600 jobs, an increase of 3.3%. Most of the new jobs have been in the
service sector, which added an estimated 231,900 jobs from 1993 to 1994.
State Debt. Except as specifically authorized, the Texas
Constitution generally prohibits the creation of debt by or on behalf of
the State, with two exceptions: (i) debt created to supply casual
deficiencies in revenues which does not exceed in the aggregate, at any
one time, $200,000 and (ii) debt to repel invasion, suppress insurrection,
defend the Sate in war or pay existing debt. In addition, the State
Constitution prohibits the Legislature from lending the credit of the
State to or in aid of any person, including municipalities, or pledging
the credit of the State in any manner for the payment of the liabilities
of any individual, association of individuals, corporation or
municipality. The limitations of the State Constitution do not prohibit
the issuance of revenue bonds. Furthermore, obligations which are payable
from funds expected to be available during the current budget period, such
as tax and revenue anticipation notes issued by the State Treasurer, do
not constitute "debt" within the meaning of the Texas Constitution. The
State may issue short term obligations like Tax and Revenue Anticipation
Notes which must mature and be paid in full during the biennium in which
notes were issued; such obligations are not deemed to be debt within the
meaning of the State constitutional prohibition.
At various times, State voters, by constitutional amendment, have
authorized the issuance of debt by the State, including general obligation
indebtedness for which the full faith and credit and the taxing power of
the State may be pledged. The total amount of general obligation bonds
that have been authorized by the voters is in excess of $10.03 billion.
Bond income during the State's fiscal year ending August 31, 1994
continued a trend toward increased issuance of nonself-supporting Texas
bonds. On August 31, 1994, Texas had $3.1 billion in bonds outstanding
which must be paid back from the State's general revenue fund. This is up
from $2.3 billion in such bonds outstanding at the end of fiscal 1993,
$1.8 billion outstanding at the end of fiscal 1992, and $1.5 billion
outstanding at the end of fiscal 1991.
Revenue Sources and Tax Collection. Historically, the primary
sources of the State's revenues have been sales taxes, mineral severance
taxes and Federal grants. Due to the collapse of oil and gas prices and
the resulting enactment of recent State Legislatures of new tax measures,
including those increasing the rates of existing taxes and expanding the
tax base and adding a component of the corporate (franchise) tax measured
by income, there has been a reordering in the relative importance of the
State's taxes in terms of their contribution to the State's revenue in any
year. Federal grants are the State's single largest revenue source,
accounting for approximately 28.7% of total revenue during fiscal year
1994. Sales taxes are the State's second largest source of revenues (and
by far the largest source of tax revenue), accounting for approximately
26.7% of the State's total revenues during fiscal year 1994. Licenses,
fees and permits, motor fuels taxes and interest and investment income,
accounted for approximately 8.6%, 5.9% and 4.6%, respectively, of the
State's total revenue in fiscal year 1994. The remainder of the State's
revenues are derived primarily from other taxes. The State has no
personal income tax. The State does impose a corporate franchise tax
based on the greater of a corporation's capital or net earned surplus
(i.e.,income), from which it derived approximately 3.4% of total revenues
in fiscal 1994. The corporate franchise tax is, in essence, based upon net
income apportionable to the State, and thus works very much like a
corporate income tax. It is likely to become a larger source of revenues
in future years.
Total net revenues and opening balances for fiscal years 1989, 1990,
1991, 1992, 1993 and 1994 amounted to approximately $21.657 billion,
$23.622 billion, $26.190 billion, $29.647 billion, $33.795 billion and
$36.707 billion, respectively, while tax collections for the same period
amounted to $12.905 billion, $14.922 billion, $15.849 billion, $17.011
billion and $18.106 billion, respectively.
The 73rd State Legislative Session convened in January 1993 and
before adjourning passed a budget for the 1994-95 biennium. The 1994-95
budget provides for appropriations totalling $38.8 billion from general
revenue related funds and $70.1 billion from all fund sources. The
1994-95 biennium budget increases general revenue funding by 10.6%, which
funding from all funds increased by 11.4%. Funding for education has been
increased to $1.4 billion, or 5.8%, while health and human services
increased $4.3 billion, or 22.5%.
Limitations on Taxing Powers. The State Constitution prohibits the
State from levying ad valorem taxes on property for general revenue
purposes. Property taxes are levied exclusively by county and local
taxing authorities.
The State Constitution also limits the rate of growth of
appropriations from tax revenues not dedicated by the Constitution during
any biennium to the estimated rate of growth for the State's economy. The
Legislature may avoid the constitutional limitation if it finds, by a
majority vote of both houses, that an emergency exists. The State
Constitution authorizes the Legislature to provide by law for the
implementation of this restriction, and the Legislature, pursuant to such
authorization, has defined the estimated rate of growth in the State's
economy to mean the estimate increase in State personal income.
Petroleum Production and Mining. The Texas economy and the oil and
gas industry have been intricately linked since the discovery of the
Spindletop Field in southeast Texas in 1901. Dramatic increases in the
price of oil in 1973-74 and 1979-81 propelled Texas into a leadership
position in national economic growth. This situation, however, changed
rapidly for Texas during the 1980's. The Texas economy reeled in 1982-83
and again in 1986 as the price of West Texas Intermediate crude oil
declined over 50% from $30 per barrel in November 1985 to under $12 per
barrel in July 1986. During the oil-patch recession of 1986-87,
employment levels declined as the effects of the downturn in the energy
industry rippled through the rest of the economy. While there have been
fluctuations in petroleum production and mining employment since the
recession, the overall trend of that sector in its importance to the Texas
economy has been downward. Texas mining employment is currently at its
lowest level since 1977. Oil and gas comprises 95% of Texas employment in
the mining sector. Because of substantial weakness in the oil and gas
industry, mining employment in the State totals approximately 158,000,
down 7,500 from 1993 and 30,000 since early 1991. The shift of drilling
activity to other parts of the world and weak natural gas prices indicate
a likely persistent sluggishness in the industry.
Financial Institutions. The decline in oil prices, particu-larly
since January 1986, and the recession that followed have had a severe
effect on the banking and savings and loans industries in Texas. In most
cases, major Texas bank holding companies, individ-ual banks and savings
and loans have experienced losses or sharp downturns in profitability due
to the increase in non-performing loans in the energy and real estate
sectors. The financial dif-ficulties also led to a number of closings
among banks and savings and loans. Texas bank failures peaked in 1989,
reaching 133 or two-thirds of all bank closings in the nation. Texas bank
failures declined to 103 in 1990, 31 in both 1991 and 1992, and 29 in 1993
(of which 20 were subsidiaries of a single bank holding company). No
Texas banks failed in 1994.
Some signs of recovery are now appearing. Texas bank profits in
1991, 1992 and 1993 were $1.1 billion, $1.9 billion and $2.4 billion,
respectively. Total loans, total equity capital, and total assets also
rose in 1993 and 1994. Most loan growth was in consumer real estate, and
even business lending rose for the first time since 1985. Texas banks had
a 9% growth in loans during the first three quarters in 1994 following a
nearly 11% increase in dollars lent in 1993.
Many Texas banks and banking organizations have consolidated. Texas
had 991 banks at the end of 1994 down from 1,125 banks as of the end of
1991. Also, in keeping with a nationwide trend, Texas banks have been
shifting a substantial amount of their portfolios away from loans and into
federal securities. The annualized return on assets for Texas banks in
1992 and 1993 was 1.08% and 1.07%, respectively.
No industry was more severely affected by the decline in Texas real
estate values during the 1980's than the savings and loan industry. At
the end of 1992, assets of private Texas savings and loan associations
totaled $42.9 billion, down from the industry high in 1988 of $112.4
billion in assets. Further, the number of Texas savings and loans has
decreased from 273 in 1984 to 62 in 1993. However, in terms of profits,
after a nearly flat year in 1991, the State's thrifts posted a record $705
million profit for 1992, the second highest in the nation. Texas' savings
and loans also led the nation in profits for most of 1993. Texas' savings
and loan problems of recent years has mostly been resolved, with steady
progress being made in increasing capital levels.
Property Values and Taxes. Various State laws place limits upon the
amounts of tax that can be levied upon the property subject to ad valorem
taxes within various taxing units, such as cities, counties and the
districts which have ad valorem taxing powers (including, without
limitation, school and hospital districts). Similarly, the amounts of
sales and use taxes which can be levied and the types of property and
services to which sales and use taxes apply are subject to legal
restrictions.
The 1993 total value of taxable property in Texas School Districts
amounted to approximately $628 billion in 1993, according to records
compiled by the Property Tax Division of the Office of the Comptroller
(derived from school districts in the State). This $628 billion valuation
total included approximately $270.2 billion of single-family residences,
an increase of 4.2%. The value of utility property rose 3.5% from 1992 to
1993, while multi-family residential property values increased 1.6% during
the same period. By way of contrast, the valuation of oil, gas and mineral
properties dropped 6.4% during 1993. The values of vacant lots and rural
real estate also declined 8.1% and 1.9%, respectively, during the year.
Litigation. In 1986, a group of school districts in the State with
relatively low ad valorem tax bases filed suit challenging the
constitutionality of Texas' system of financing public education. In June
1987, a final judgment was entered by the District Court in Edgewood v.
Kirby, holding that the Texas School Financing System (implemented in
conjunction with local school district boundaries that contain unequal
taxable property wealth for the financing of public education) is
"unconstitutional and unenforceable" under the Texas Constitution. On
October 2, 1989, the Texas Supreme Court ruled that the State's school
financing system violates the State constitutional requirement that the
State Legislature "establish and make suitable provisions for the support
and maintenance of an efficient system of public free schools." The Texas
Supreme Court did not instruct the Legislature as to the specifics of the
legislation it should enact or order the Legislature to raise taxes.
After four special sessions, the Legislature passed a comprehensive
school reform bill (Senate Bill 1) in June 1990. In September 1990 a State
District judge ruled that the school finance section of Senate Bill 1 was
unconstitutional because it contained inequities in the system and ordered
the State to devise a new system by September 1, 1991. The State appealed
the ruling and the Texas Supreme Court ruled in January 1991 to enforce
the injunction against State funding disbursements until April 1, 1991.
On April 15, 1991, a new school finance reform bill (Senate Bill 351)
was enacted. Under Senate Bill 351, local districts are entitled to a
minimum local property tax rate plus a guaranteed basic State allotment
per pupil. The funding mechanism is predicated upon tax base
consolidation and created 188 new taxing units known as County Education
Districts (CEDs), drawn largely along county lines. Within each taxing
unit, school districts share the revenue raised by the minimum local
property tax. Local school districts can raise additional monies and
enrich programs by leaving additional amounts.
Several school districts challenged the constitutionality of Senate
Bill 351 in June 1991. In August 1991, the State District Court held that
the creation of the CEDs did not violate the Texas Constitution. In
November 1991, the case was appealed to the Texas Supreme Court. The
appeal was based upon (among others) the claim that the creation of CEDs
amounted to a State property tax in contravention of the State
constitution. On January 30, 1992 (the day before property tax payments
for 1991 could be paid without becoming delinquent and incurring
penalties), the Texas Supreme Court reversed the decision of the State
District Court. While the Texas Supreme Court concluded that the CEDs and
the taxes they levy are unconstitutional, the Court allowed the
Legislature until June 1, 1993 to develop a new plan to be put in place by
September 1993. In the interim, the CEDs could continue to collect and
distribute the school district property taxes for the 1991 and 1992 years,
notwithstanding the fact that the levy has been declared unconstitutional
by the Texas Supreme Court.
In February 1993, the Texas Legislature approved proposed
constitutional amendments that were intended to address the constitutional
deficiencies in the State's system of funding public schools that have
been noted by the courts. At an election held on May 1, 1993, the voters
of the State rejected all of the proposed constitutional amendments.
The 73rd State Legislature enacted in late May 1993 and the Governor
signed on May 31, 1993, Senate Bill 7, which included provisions
concerning the operation of school districts as well as created a whole
new funding system for public education in the State. This bill provided
for a two-tiered education finance structure, known as the Foundation
School Program. Tier 1 provides that each school district is entitled to
a basic allotment of $2,300.00 per student, financed by ad valorem taxes
of $.86 per $100.00 valuation on property within the district, with any
deficiency to be made up by the State. Tier 2 provides that school
districts may levy additional ad valorem taxes of as much as $.64 per
$100.00 valuation. For every cent of the additional tax levy a district
undertakes, the State guarantees a yield of $20.55 per student, regardless
of how much tax revenue is actually collected. Senate Bill 7 also imposes
a cap on a school district's taxable property at a level of $280,000 per
student. School districts with property more valuable than $280,000 per
student have various choices as to how their taxable property may be
brought within the $280,000 cap.
Senate Bill 7 was immediately challenged by numerous groups of
plaintiffs, representing hundreds of school districts, both property-rich
and property-poor, as well as many parents and local officials. After a
trial on the consolidated actions in the case of Edgewood v. Meno, the
district court held that Senate Bill 7 was constitutional, but found that
the Legislature had failed to provide efficiently for facilities. The
district court accordingly denied most of the relief sought by the
plaintiffs but ordered by injunction that no bonds for any school district
could be approved, registered, or guaranteed after September 1, 1995,
unless the Legislature had provided for the efficient funding of
educational facilities by that time. On appeal, the Texas Supreme Court
affirmed the constitutionality of the public school finance system enacted
in Senate Bill 7 in all respects. The Supreme Court modified the district
court's judgment to provide that the relief requested by the plaintiffs is
denied in all respects and that the district court's injunction is
vacated. In all other respects, the Supreme Court affirmed the district
court's judgment.
Virginia Series
Economic Growth and Structure. The rate of economic growth in the
Commonwealth of Virginia has increased steadily over the past decade.
From 1984 to 1993, the Commonwealth's 4.8% rate of growth in per capita
personal income was slightly ahead of the national rate of growth of 4.7%.
During 1990 and 1992, Virginia's per capita personal income grew at a
slightly lower rate than the U.S. average. Per capita income in Virginia
has been consistently above national levels over the past decade and, in
1993, was $21,634 compared with the national level of $20,817. The
services sector in Virginia generated the largest number of jobs in 1992
(19.7%), followed by wholesale and retail trade (10.6%), manufacturing
(10.5%), federal government employment (including civilian and military,
10.0%) and local government employment (8.0%). Because of Virginia's
proximity to Washington, D.C. and the concentration of military
installations in the Commonwealth (the largest such concentration in the
United States), the federal government has a greater economic impact on
Virginia relative to its size than on any of the other States except
Alaska and Hawaii. There can be no assurances that current efforts by the
federal government to restructure the defense budget would not have an
adverse effect on the long-term economic conditions of the Commonwealth.
According to statistics published by the U.S. Department of Labor,
the Commonwealth typically has one of the lowest unemployment rates in the
nation. This is generally attributed to the balance among the various
sectors represented in the economy. Unemployment rates in Virginia from
1984 to 1993 were substantially below the national rates. In 1993, an
average of 5% of Virginians were unemployed as compared with the national
average of 6.8%. Population during that decade generally grew faster than
the national rate, then slowed in 1992 and 1993, so that in 1993 the 1.8%
rate in Virginia equaled the national rate. The rate of increase in such
population growth has declined since reaching a high of 2.1% annually in
1987 and, in 1993, was approximately 1.8%.
Virginia is one of 20 States with a right-to-work law and is
generally regarded as having a favorable business climate marked by few
strikes or work stoppages. Virginia is also one of the least unionized
among the industrialized States.
Budget and Deficit Matters. Virginia's State government operates on
a two-year budget. The Constitution vests the ultimate responsibility and
authority for levying taxes and appropriating revenue in the General
Assembly, but the Governor has broad authority to manage the budgetary
process. The budgetary process begins in May of even-numbered years,
approximately 14 months before the start of a biennium when the Governor
gives initial guidance to State agencies regarding base budgets, maximum
employment levels and policy initiatives. By the following December,
final revenue estimates are submitted by the Department of Taxation and
reviewed by the Governor, the Advisory Board of Economists and the
Advisory Council on Revenue Estimates. Final adjustments to revenues and
services are then made, and a bill detailing the Governor's budget is
prepared. The Governor is required by statute to present the budget bill
and a narrative summary of the bill to the General Assembly by December 20
in the year immediately prior to each even-year session. In the odd-year
sessions of the General Assembly, amendments are considered to the
Appropriation Act of the previous year.
Once an appropriation act becomes law, revenue collections and
expenditures are constantly monitored by the Governor, assisted by the
Secretary of Finance and the Department of Planning and Budget, to ensure
that a balanced budget is maintained. If projected revenue collections
fall below amounts appropriated at any time, the Governor must reduce
expenditures and withhold allotments of appropriations (other than for
debt service and other specified purposes) to restore balance. Up to 15%
of a general fund appropriation to an agency may be withheld, if required.
The Constitution further requires the Governor to ensure that
expenses do not exceed anticipated total revenues plus fund balances
during the two-and-a-half-year period following the end of the General
Assembly session in which appropriations are made. An amendment to the
Constitution, effective January 1, 1993, established a Revenue
Stabilization Fund. This fund is used to offset a portion of anticipated
shortfalls in revenues in years when appropriations based on initial
forecasts exceed expected revenues in any subsequent forecast. The
Revenue Stabilization Fund consists of an amount not to exceed 10% of the
Commonwealth's average annual tax revenues derived from taxes on income
and retail sales as certified by the Auditor of Public Accounts for the
three immediately preceding fiscal years. If in any year total revenues
are forecasted to decline by more than two percent of the certified tax
revenues collected in the most recently ended fiscal year, the General
Assembly may appropriate an amount for transfer from the Revenue
Stabilization Fund to the General Fund in an amount not to exceed one-half
of the forecasted shortfall. Earnings in excess of the 10% cap are
transferred to the General Fund as received. As of June 30, 1994,
approximately $79 million was on deposit in the Fund for the 1994-1996
Biennium.
In fiscal 1994, revenues increased 6.0% from the previous year, while
total expenditures increased by 4.5%. Revenues exceeded expenditures by
$731.2 million, an increase of 20.0% over fiscal 1993.
Tax Matters. General fund revenues are principally composed of
direct taxes. In fiscal year 1994, approximately 94.9% of total tax
revenues was derived from five major taxes imposed by the Commonwealth on
individual and fiduciary income, sales and use, corporate income, public
services corporations and premiums of insurance companies.
Nongeneral revenues consist of all revenues not formally accounted
for in the general fund. Included in this category are special taxes and
user charges earmarked for specific purposes, the majority of
institutional revenues and revenues from the sale of property and
commodities, plus receipts from the federal government.
Approximately 50% of the nongeneral revenues consist of grants and
donations from the federal government, motor vehicle taxes and
institutional revenues. Institutional revenues consist primarily of fees
and charges collected by institutions of higher education, medical and
mental hospitals and correctional institutions. Motor vehicle-related
taxes include the motor vehicle fuel tax, a motor vehicle sales and use
tax, oil excise tax, fees generated from driver's licenses, title
registration, and motor vehicle registrations and other miscellaneous
revenues.
Debt Management. In September 1991, the Debt Capacity Advisory
Committee was created by the Governor through an executive order. During
the 1994 General Assembly session, the Committee was established under the
general laws of the Commonwealth. The committee is charged with annually
estimating the amount of tax-supported debt that may prudently be
authorized consistent with the financial goals, capital needs and policies
of the Commonwealth. The committee reviews the outstanding debt of all
agencies, institutions, boards and authorities of the Commonwealth for
which the Commonwealth has either a direct or indirect pledge of tax
revenues or moral obligation. The committee released its first report in
January 1992 and its most recent report in January 1994.
The Department of Planning and Budget has prepared a Six-Year Capital
Outlay Plan for the Commonwealth. The Plan lists proposed capital
projects, and it recommends how the proposed projects should be financed.
More specifically, the Plan distinguishes between immediate demands and
longer-term needs, assesses the State's ability to meet its highest
priority needs and outlines approaches for addressing priorities in terms
of costs, benefits and financing mechanisms.
The Constitution of Virginia prohibits the creation of debt by or on
behalf of the Commonwealth that is backed by the Commonwealth's full faith
and credit, except as provided in Section 9 of Article X. Section 9 of
Article X contains several different provisions for the issuance of
general obligation and other debt:
Section 9(a)(2) provides that the General Assembly may incur general
obligation debt to meet certain types of emergencies, subject to
limitations on amount and duration; to meet casual deficits in the revenue
or in anticipation of the collection of revenues of the Commonwealth; and
to redeem a previous debt obligation of the Commonwealth. Total
indebtedness issued pursuant to this Section may not exceed 30% of an
amount equal to 1.15 times the annual tax revenues derived from taxes on
income and retail sales, as certified by the Auditor of Public Accounts
for the preceding fiscal year.
Section 9(b) provides that the General Assembly may authorize the
creation of general obligation debt for capital projects. Such debt is
required to be authorized by an affirmative vote of a majority of each
house of the General Assembly and approved in a statewide election. The
outstanding amount of such debt is limited to an amount equal to 1.15
times the average annual tax revenues derived from taxes on income and
retail sales, as certified by the Auditor of Public Accounts for the three
preceding fiscal years less the total amount of bonds outstanding. The
amount of 9(b) debt that may be authorized in any single fiscal year is
limited to 25% of the limit on all 9(b) debt less the amount of 9(b) debt
authorized in the current and prior three fiscal years.
Section 9(c) provides that the General Assembly may authorize the
creation of general obligation debt for revenue-producing capital projects
(so-called "double-barrel" debt). Such debt is required to be authorized
by an affirmative vote of two-thirds of each house of the General Assembly
and approved by the Governor. The Governor must certify before the
enactment of the authorizing legislation and again before the issuance of
the debt that the net revenues pledged are expected to be sufficient to
pay principal of and interest on the debt. The outstanding amount of 9(c)
debt is limited to an amount equal to 1.15 times the average annual tax
revenues derived from taxes on income and retail sales, as certified by
the Auditor of Public Accounts for the three preceding fiscal years.
While the debt limits under Sections 9(b) and 9(c) are each calculated as
the same percentage of the same average tax revenues, these debt limits
are separately computed and apply separately to each type of debt.
Based on individual, fiduciary and corporate income taxes and the
State sales and use tax, as certified as of July 1, 1994, the debt limits
and remaining debt margins under Article X, Section 9 are set forth below
(in $ thousands).
Section 9(a)(2) General Obligation Debt Limit(5):
Debt Limit (30% of 1.15 times annual tax revenues
for fiscal year 1994) $1,954,008
Less Bonds Outstanding: (none) -
Debt Margin $1,954,008
Section 9(b) General Obligation Debt Limit:
Debt Limit (1.15 times average tax revenues for
three fiscal years as calculated above) $6,136,996
Less Bonds Outstanding:
Public Facilities Bonds 372,470
Transportation Facilities Refunding Bond 71,825
Debt Margin $5,692,701
Additional Section 9(b) Debt Borrowing Restriction:
Four-year authorization restriction
(25% of 9(b) Debt Limit) $1,534,249
Less 9(b) Debt authorized in past three years 612,944
Total Additional Borrowing
Restriction (maximum amount
that could be authorized
by the General Assembly) $921,305
Section 9(c) General Obligation Debt Limit and Debt Margin
Debt Limit (1.15 times average tax revenues for
three fiscal years as calculated above) $6,136,996
Less Bonds Outstanding:
Parking Facilities 10,645
Transportation Facilities 122,267
Higher Education Institutions 419,710
Debt Margin $5,584,374
Article X further provides in Section 9(d) that the restrictions of
Section 9 are not applicable to any obligation incurred by the
Commonwealth or any of its institutions, agencies or authorities if the
full faith and credit of the Commonwealth is not pledged or committed to
the payment of such obligation. There are currently outstanding various
types of such 9(d) revenue bonds. Certain of these bonds, however, are
paid in part or in whole from revenues received as appropriations by the
General Assembly from general tax revenues, while others are paid solely
from revenues of the applicable project.
The debt repayments of the Virginia Public Building Authority, the
Virginia Port Authority, the Virginia College Building Authority Equipment
Leasing Program and The Innovative Technology Authority are supported in
large part by General Fund appropriations. Together, payments to these
authorities totaled $87.3 million in fiscal 1994.
The Commonwealth Transportation Board ("CTB") had $533.5 million in
Section 9(d) transportation facility bonds outstanding as of June 30,
1994. This debt was issued to finance costs related to CTB's Route 28
project, its U.S. Route 58 Corridor Development Program and its Northern
Virginia Transportation District Program. These bonds are secured by and
payable from funds appropriated by the General Assembly from the
Transportation Trust Fund for such purpose. The Transportation Trust Fund
was established by the General Assembly in 1986 as a special non-reverting
fund administered and allocated by the Transportation Board to provide
increased funding for construction, capital and other needs of State
highways, airports, mass transportation and ports. The Virginia Port
Authority has also issued bonds in the approximate amount of $106 million
which are secured by a portion of the Transportation Trust Fund. The fund
balance of the Transportation Trust Fund administered by the
Transportation Board at June 30, 1994, was $278.9 million.
The Commonwealth is also involved in numerous leases that are subject
to appropriation of funding by the General Assembly. For all capital
leases, the principal balance was $27.5 million as of June 30, 1994.
The Commonwealth finances the acquisition of certain personal
property and equipment through installment purchase agreements. The
length of the agreements and the interest rates charged vary. In most
cases, the agreements are collateralized by the personal property and
equipment acquired. Installment purchase agreements contain
nonappropriation clauses indicating that continuation of the installment
purchase is subject to funding by the General Assembly. The balance of
installment purchase obligations was $37.7 million as of June 30, 1994.
Bonds issued by the Virginia Housing Development Authority, the
Virginia Resources Authority and the Virginia Public School Authority are
designed to be self-supporting from their individual loan programs. A
portion of the Virginia Housing Development Authority and Virginia Public
School Authority bonds and all of the Virginia Resources Authority bonds
are secured in part by a moral obligation pledge of the Commonwealth.
Should the need arise, the Commonwealth may consider funding deficiencies
in the respective debt service reserves for such moral obligation debt.
To date, none of these authorities has advised the Commonwealth that any
such deficiencies exist.
Local Government. Local government in the Commonwealth is comprised
of 95 counties, 41 incorporated cities, and 190 incorporated towns. The
Commonwealth is unique among the several States in that cities and
counties are independent, and their land areas do not overlap. Cities and
counties are the units of general government that have traditionally
provided all services not provided by the Commonwealth; they levy and
collect their own taxes. On the other hand, towns constitute a part of
the counties in which they are located; they levy and collect taxes for
town purposes, but their residents are also subject to county taxes. The
largest expenditure by local governments in the Commonwealth are for
education, but local governments also provide other services such as water
and sewer, police and fire protection and recreational facilities.
According to figures prepared by the Auditor of Public Accounts of
Virginia, the total outstanding general obligation and revenue debt of
counties in the Commonwealth was approximately $4.1 billion as of June 30,
1993, most of which was borrowed for school construction. The amount of
debt of Virginia's cities outstanding as of June 30, 1993, was
approximately $3.6 billion, while towns had approximately $233 million
outstanding as of June 30, 1993.
Pending Litigation. On March 28, 1989, in Davis v. Michigan the
United States Supreme Court declared unconstitutional a Michigan statute
exempting from state income tax the retirement benefits paid to former
workers by the State and local governments but not comparable benefits
paid by the federal government. At that time, Virginia exempted State and
local but not federal government benefits. At a special session held in
April 1989, the General Assembly repealed the exemption of State and local
retirement benefits. Following Davis, at least five suits, some with
multiple plaintiffs, were filed by federal retirees seeking refunds of
Virginia income taxes. These suits have been consolidated as Harper v.
Department of Taxation. Harper is a suit by federal retirees seeking
refund of State income taxes paid during the period from 1985 to 1988. An
initial decision adverse to the plaintiffs was handed down in 1990 by the
trial court in Alexandria, Virginia. Several appellate and further trial
proceedings have occurred since that date. In June 1993, the U.S. Supreme
Court reversed a decision of the Virginia Supreme Court favorable to the
Commonwealth and remanded the case for further proceedings. The opinion
requires that Virginia "choose the form of relief it will provide, . . .
consistent with federal due process principles." A subsequent decision by
the trial court denying refunds was again appealed to the Virginia Supreme
Court in May 1994, and the Court stayed further proceedings until January
1995, pending the outcome of General Assembly action on various settlement
proposals. The stay has been lifted, and further arguments were heard by
the Virginia Supreme Court in June 1995. No decision is expected to be
handed down before September 15, 1995.
In a July 1994 special session, the Virginia General Assembly passed
emergency legislation to provide payments to federal retirees in
settlement of the principal amount, excluding interest, of the retirees'
claims for overpaid taxes. The settlement payments are to be made over a
five-year period, commencing on March 31, 1995. The total amount of the
proposed settlement is $340 million plus earnings on the investment of
such amount that may be appropriated. These amounts will be paid to
participating retirees in installments of $60 million on March 31, 1995,
and $70 million on each succeeding March 31 through 1999, subject to
appropriation by the General Assembly.
Retirees who choose to accept and remain eligible to recover such
taxes must have responded to the Department of Taxation by November 1,
1994. By February 1, 1995, retirees must have signed and returned to the
Tax Commissioner a settlement agreement releasing the Commonwealth from
any further liability for claims arising out of such taxes and dismissing
any related litigation to which the taxpayer is a party. Approximately
90% of the retirees accepted the settlement. The legislation also
provides that in the event the total principal amount of the claims of
taxpayers opting out of the settlement exceeds $20 million, the entire
settlement is null and void unless reauthorized by the General Assembly on
or before March 1, 1995. Although claims of retirees opting out exceeded
$20 million, the General Assembly in its regular 1995 session reauthorized
the settlement, and the Governor signed the reauthorization legislation on
February 28, 1995. The General Assembly also enacted legislation to
provide relief to retirees who failed to meet deadlines in the original
settlement legislation, or filed incomplete claims. The total principal
amount of the claims of the retirees opting out of the settlement is in
excess of $47 million. Those retirees opting out have elected to be bound
by the final resolution of pending litigation.
If the courts ultimately rule that the Commonwealth must refund taxes
imposed prior to Davis v. Michigan, the potential cost of refunding all
Virginia income taxes paid on federal government pensions for taxable
years 1985, 1986, 1987 and 1988 to federal government pensioners who opted
out of the settlement is approximately $75 million, including interest
earnings as of March 1, 1995. The outcome of this litigation cannot be
predicted.
Current Rating. Most recently, Moody's has rated the long-term
general obligation bonds of the Commonwealth Aaa, and Standard & Poor's
has rated such bonds AAA. There can be no assurance that the economic
conditions on which these ratings are based will continue or that
particular bond issues may not be adversely affected by changes in
economic or political conditions.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA is the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligations Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledge revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligations Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" ratings is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3
The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefor not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest potential
for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 13-36
months or the DDD, DD, or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-90.7% AMOUNT VALUE
------- -------
<S> <C> <C>
ARIZONA-84.1%
Arizona Board of Regents - Arizona State University, System Revenue,
Refunding:
6.125%, 7/1/2015........................................................ $ 100,000 $ 101,303
5.50%, 7/1/2019......................................................... 750,000 699,683
Arizona Educational Loan Marketing Corp., Educational Loan Revenue
6.375%, 9/1/2005........................................................ 100,000 104,422
Arizona Health Facilities Authority, Hospital System Revenue, Refunding
(Samaritan Health System) 5.625%, 12/1/2015 (Insured; MBIA)............. 700,000 672,350
Casa Grande Industrial Development Authority, PCR
(Frito-Lay, Inc. Pollution Control Project) 6.60%, 12/1/2010 (Guaranteed; Pepsico) 200,000 205,036
Chandler, Water and Sewer Revenue, Refunding 6.25%, 7/1/2013 (Insured; FGIC) 200,000 205,026
Douglas Industrial Development Authority, IDR, Refunding (KMart Corp.
Project)
6%, 1/1/2003............................................................ 460,000 459,673
Glendale, Improvement Revenue, District Number 59 6%, 1/1/2013.............. 100,000 98,917
Maricopa County Hospital District Number 1, Hospital Facilities, Refunding:
6.25%, 6/1/2010 (Insured; FGIC)......................................... 100,000 104,302
6.125%, 6/1/2015 (Insured; FGIC)........................................ 200,000 201,666
Maricopa County Industrial Development Authority:
Health Facility Revenue (Catholic Healthcare West) 5.50%, 7/1/2010 (Insured; MBIA) 500,000 484,460
MFHR, Refunding (Laguna Private Apartments Project) 6.75%, 7/1/2019..... 1,000,000 1,007,670
Maricopa County Pollution Control Corp., PCR, Refunding
(Public Service Co.-Palo Verde) 6.375%, 8/15/2023....................... 1,000,000 913,060
Maricopa County School District:
Number 6 (Washington Elementary) 6%, 7/1/2009 (Insured; AMBAC).......... 200,000 207,908
Number 28 (Kyrene Elementary) 6%, 7/1/2013 (Insured; AMBAC)
(Prerefunded 7/1/2001) (a)............................................ 175,000 183,615
School Improvement Number 3 (Tempe Elementary) 6%, 7/1/2008
(Prerefunded 7/1/2006) (a)............................................ 100,000 101,824
Maricopa County Stadium District, Revenue 5.50%, 7/1/2013 (Insured; MBIA)... 1,000,000 954,600
Maricopa County Unified School District, School Improvement:
Chandler, Refunding 6.40%, 7/1/2010 (Insured; FGIC)..................... 300,000 312,732
Gilbert, Refunding, Zero Coupon, 7/1/2005 (Insured; FGIC) (b)........... 1,860,000 1,049,914
Paradise Valley 5.875%, 7/1/2012 (Insured; FGIC)........................ 200,000 198,380
Scottsdale 6%, 7/1/2012 (Prerefunded 7/1/2002) (a)...................... 100,000 105,854
City of Mesa 5.70%, 7/1/2008 (Insured; MBIA)................................ 300,000 299,421
Navajo County Pollution Control Corp., PCR, Refunding (Arizona Public Service
Co.)
5.875%, 8/15/2028 (Insured; AMBAC)...................................... 1,000,000 967,990
City of Phoenix, Refunding:
5.10%, 7/1/2013......................................................... 750,000 675,848
Street and Highway User Revenue:
6.60%, 7/1/2007....................................................... 250,000 267,905
6.25%, 7/1/2011 (Insured; FGIC)....................................... 200,000 206,456
Phoenix Civic Improvement Corp.:
Wastewater System Lease Revenue:
6.125%, 7/1/2014 (Prerefunded 7/1/2003) (a)........................... 100,000 107,924
6.125%, 7/1/2023 (Prerefunded 7/1/2003) (a)........................... 500,000 539,095
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
ARIZONA (CONTINUED)
Phoenix Civic Improvement Corp. (continued):
Water Systems Revenue 5.40%, 7/1/2014................................... $ 1,000,000 $ 926,730
Phoenix Industrial Development Authority, SFMR
6.30%, 12/1/2012 (Insured: FNMA, GNMA) (c).............................. 1,000,000 987,380
Pima County, Tuscon Unified School District Number 1, School Improvement:
6.10%, 7/1/2010 (Insured; FGIC)......................................... 100,000 101,958
5.875%, 7/1/2014 (Insured; FGIC)........................................ 1,000,000 992,520
Pima and Maricopa Counties Industrial Development Authority, Multi-Family
Revenue
5.875%, 1/1/2029 (Insured; FNMA)........................................ 500,000 456,180
Salt River Agricultural Improvement and Power District,
Electric System Revenue (Salt River Project):
6%, 1/1/2013.......................................................... 150,000 150,185
5.50%, 1/1/2028....................................................... 1,000,000 901,070
Refunding 5.75%, 1/1/2013............................................. 200,000 193,942
City of Scottsdale Municipal Property Corp., Excise Tax Revenue, Refunding
6.25%, 11/1/2014 (Insured; FGIC)........................................ 100,000 101,976
City of Tempe 6%, 7/1/2009.................................................. 200,000 204,512
City of Tuscon, Refunding:
6.10%, 7/1/2012 (Insured; FGIC)......................................... 250,000 253,300
Water System Revenue:
5.75%, 7/1/2012....................................................... 100,000 98,384
5.75%, 7/1/2018....................................................... 500,000 478,385
University of Arizona, COP (Administrative and Packaging Facility Project)
6%, 7/15/2023 (Insured; MBIA)........................................... 1,000,000 989,160
University of Arizona Medical Center Corp., HR, Refunding
6.25%, 7/1/2010 (Insured; MBIA)......................................... 200,000 207,032
U.S. RELATED-6.6%
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014......................... 400,000 391,492
Puerto Rico Electric Power Authority, Power Revenue:
6%, 7/1/2010............................................................ 550,000 541,876
6.25%, 7/1/2017......................................................... 520,000 517,473
-------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $20,297,684).................... $19,930,589
===========
SHORT-TERM MUNICIPAL INVESTMENTS-9.3%
ARIZONA;
Pima County, Industrial Development Authority, Industrial Revenue, VRDN
(Tuscon Electric Power-Ivington Project):
4.70%, 7/1/2022 (LOC; Societe Generale) (d)........................... $ 1,950,000 $ 1,950,000
4.70%, 10/1/2022 (LOC; Bank of America) (d)........................... 100,000 100,000
-------
TOTAL SHORT_TERM MUNICIPAL INVESTMENTS (cost $2,050,000)................... $ 2,050,000
============
TOTAL INVESTMENTS-100.0%
(cost $22,347,684)...................................................... $21,980,589
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Association
FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue
GNMA Government National Mortgage Association PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ----- ----- ---------- ------------
<S> <C> <S> <C>
AAA Aaa AAA 48.6%
AA Aa AA 19.4
A A A 16.4
BBB Baa BBB 2.1
BB Ba BB 4.2
F1+ VMIG1 SP1 9.3
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(c) Purchased on a when-issued basis.
(d) Secured by letter of credit. Securities payable on demand. The
interest rate, which is subject to change, is based upon bank prime rates
or an index of market rates.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $22,347,684)-see statement...................................... $21,980,589
Interest receivable..................................................... 354,387
Receivable for shares of Beneficial Interest subscribed................. 29,558
Prepaid expenses........................................................ 11,230
Due from The Dreyfus Corporation........................................ 8,185
-------
22,383,949
LIABILITIES:
Due to Distributor...................................................... $ 7,815
Due to Custodian........................................................ 94,110
Payable for investment securities purchased............................. 1,003,150
Payable for shares of Beneficial Interest redeemed...................... 13
Accrued expenses and other liabilities.................................. 51,116 1,156,204
------- ------
NET ASSETS ................................................................ $21,227,745
==========
REPRESENTED BY:
Paid-in capital......................................................... $21,938,293
Accumulated net realized (loss) on investments.......................... (343,453)
Accumulated net unrealized (depreciation) on investments-Note 3......... (367,095)
-------
NET ASSETS at value......................................................... $21,227,745
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 1,018,275
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 647,399
==========
NET ASSET VALUE per share:
Class A Shares
($12,972,013 / 1,018,275 shares)...................................... $12.74
======
Class B Shares
($8,255,732 / 647,399 shares)......................................... $12.75
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,173,115
EXPENSES:
Management fee-Note 2(a).............................................. $ 106,761
Shareholder servicing costs-Note 2(c)................................. 68,466
Distribution fees (Class B shares)-Note 2(b).......................... 37,203
Auditing fees......................................................... 8,357
Prospectus and shareholders' reports.................................. 6,495
Organization expenses................................................. 4,600
Registration fees..................................................... 2,360
Custodian fees........................................................ 2,269
Legal fees............................................................ 1,819
Trustees' fees and expenses-Note 2(d)................................. 195
Miscellaneous......................................................... 9,833
-----
248,358
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 210,380
_____
TOTAL EXPENSES.................................................. 37,978
______
INVESTMENT INCOME-NET........................................... 1,135,137
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(343,444)
Net unrealized appreciation on investments.............................. 602,025
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 258,581
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,393,718
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
----------------
1994 1995
-------- ------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 748,595 $ 1,135,137
Net realized (loss) on investments...................................... -- (343,444)
Net unrealized appreciation (depreciation) on investments for the year.. (1,152,136) 602,025
_______ ______
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (403,541) 1,393,718
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (524,294) (722,637)
Class B shares........................................................ (224,301) (412,500)
Net realized gain on investments:
Class A shares........................................................ (5,370) --
Class B shares........................................................ (2,805) --
_______ ______
TOTAL DIVIDENDS................................................... (756,770) (1,135,137)
______ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 8,029,274 3,423,651
Class B shares........................................................ 5,684,625 2,606,355
Dividends reinvested:
Class A shares........................................................ 282,465 336,271
Class B shares........................................................ 94,531 161,187
Cost of shares redeemed:
Class A shares........................................................ (736,531) (3,489,944)
Class B shares........................................................ (534,479) (1,143,645)
_______ ______
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 12,819,885 1,893,875
_______ ______
TOTAL INCREASE IN NET ASSETS.................................... 11,659,574 2,152,456
NET ASSETS:
Beginning of year....................................................... 7,415,715 19,075,289
_______ ______
End of year............................................................. $19,075,289 $21,227,745
======== ========
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------
CLASS A CLASS B
---------------- ----------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------- ----------------
1994 1995 1994 1995
------ ------- ------- -------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 594,166 281,816 420,705 206,514
Shares issued for dividends reinvested. 21,163 27,031 7,085 12,967
Shares redeemed........................ (54,791) (283,309) (39,666) (93,196)
------- -------- ------- -------
NET INCREASE IN SHARES OUTSTANDING 560,538 25,538 388,124 126,285
======= ======= ======= =======
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 8 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Arizona Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $262,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
has undertaken from May 1, 1994 through April 2, 1995 to reimburse all fees
and expenses of the Series (excluding 12b-1 distribution plan fees and
certain expenses as described above), and thereafter through April 30, 1995,
to reduce the shareholder services plan fee paid by and reimburse such excess
expenses of the Series, to the extent that the Series' aggregate expenses
(excluding certain expenses as described above) exceeded specified annual
percentages of the Series' average daily net assets. The expense
reimbursement, pursuant to the undertakings, amounted to $210,380 for the
year ended April 30, 1995.
The Manager has currently undertaken through June 30, 1995 or until such
time as the net assets of the Series exceed $50 million, regardless of
whether they remain at that level, to reimburse all fees and expenses of the
Series (excluding 12b-1 distribution plan fees, shareholder services plan
fees and certain expenses as described above).
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $5,509 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to August 24, 1994, Dreyfus Service Corporation retained $9,435 from
contingent deferred sales charges imposed upon redemptions of the Series'
Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pays Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $26,079 was charged to the Series
pursuant to the Class B Distribution Plan and $11,124 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $9,574 and $5,562 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $20,352 and $13,040 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $13,042,072 and $10,087,640, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized depreciation on investments
was $367,095, consisting of $178,743 gross unrealized appreciation and
$545,838 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Arizona Series (one of the series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Arizona Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-92.9% AMOUNT VALUE
------------ ------------
<S> <C> <C>
COLORADO--88.1%
Adams County, PCR, Refunding (Public Service Co. of Colorado Project)
5.875%, 4/1/2014 (Insured; MBIA)........................................ $ 200,000 $ 196,738
Arvada, Sales and Use Tax Revenue, Refunding and Improvement
6.25%, 12/1/2012 (Insured; FGIC)........................................ 200,000 205,080
Colorado Board of Community Colleges and Occupational Education, Revenue
(Red Rocks Community College Project) 6%, 11/1/2019 (Insured; AMBAC).... 300,000 297,336
Colorado Health Facilities Authority, Revenues:
Hospital (PSL Healthcare Systems Project) 6.875%, 2/15/2023............. 500,000 483,420
Refunding (Boulder Community Hospital) 5.875%, 10/1/2023 (Insured; MBIA) 200,000 193,164
Colorado Housing Finance Authority, Single Family Program
7.55%, 8/1/2023 (Insured; FHA).......................................... 195,000 201,893
Colorado Springs, Utilities Revenue:
6.75%, 11/15/2021....................................................... 200,000 212,516
Refunding 6.50% 11/15/2015.............................................. 165,000 171,117
Colorado Water Resource Power Development Authority, Clean Water Revenue
6.30%, 9/1/2014......................................................... 200,000 205,952
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 200,000 195,556
Garfield, Pitkin and Eagle Counties, School District Number 1
9%, 12/15/2008 (Insured; MBIA).......................................... 200,000 255,918
Lakewood, Multi-Family Housing Revenue, Mortgage
6.55%, 10/1/2015 (Insured; FHA)......................................... 200,000 199,094
Metro Wastewater Reclamation District, Gross Revenue 6%, 4/1/2010........... 200,000 202,494
Platte River Power Authority, Power Revenue, Refunding 6.125%, 6/1/2014..... 200,000 202,136
San Miguel County Housing Authority, Multi-Family Housing Revenue, Refunding
(Telluride Village Apartments Project) 6.40%, 7/1/2023.................. 300,000 277,947
Westminster, Sales and Use Tax Refunding, Revenue 6.25%, 12/1/2012
(Insured; FGIC)......................................................... 200,000 204,710
U.S. RELATED-4.8%
Puerto Rico Electric Power Authority, Power Revenue 6%, 7/1/2014 (Insured; FSA) 200,000 201,436
----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $3,866,801)....................................................... $3,906,507
==========
SHORT-TERM MUNICIPAL INVESTMENTS-7.1%
COLORADO:
Colorado Student Obligation Board Authority, Student Loan Revenue, VRDN
4.65% (LOC; Student Loan Marketing Association; Sumitomo Bank Ltd.) (a,b) $ 200,000 $ 200,000
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
COLORADO (CONTINUED)
Denver City and County, VRDN (Rose Medical Center) 4.25% (Insured; AMBAC) (b) $ 100,000 $ 100,000
-----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $300,000)......................................................... $ 300,000
==========
TOTAL INVESTMENTS-100.0%
(cost $4,166,801)....................................................... $4,206,507
==========
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 44.1%
AA Aa AA 28.4
BBB Baa BBB 22.7
F1 MIG1 SP1 4.8
-------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30,1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $4,166,801)-see statement....................................... $4,206,507
Cash.................................................................... 52,475
Receivable for shares of Beneficial Interest subscribed................. 79,251
Interest receivable..................................................... 73,436
Prepaid expenses-Note 1(e).............................................. 26,337
Due from The Dreyfus Corporation........................................ 3,559
----------
4,441,565
LIABILITIES:
Due to Distributor...................................................... $ 2,131
Payable for investment securities purchased............................. 200,036
Accrued expenses........................................................ 36,855 239,022
--------- ----------
NET ASSETS ................................................................ $4,202,543
===========
REPRESENTED BY:
Paid-in capital......................................................... $4,193,030
Accumulated net realized (loss) on investments.......................... (30,193)
Accumulated net unrealized appreciation on investments-Note 3........... 39,706
----------
NET ASSETS at value......................................................... $4,202,543
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 80,713
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 257,285
===========
NET ASSET VALUE per share:
Class A Shares
($1,003,407 / 80,713 shares).......................................... $12.43
======
Class B Shares
($3,199,136 / 257,285 shares)......................................... $12.43
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
STATEMENT OF OPERATIONS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $182,239
EXPENSES:
Management fee-Note 2(a).............................................. $ 16,404
Shareholder servicing costs-Note 2(c)................................. 22,633
Distribution fees (Class B shares)-Note 2(b).......................... 11,180
Organization expenses-Note 1(e)....................................... 6,271
Prospectus and shareholders' reports.................................. 4,111
Legal fees............................................................ 2,916
Registration fees..................................................... 2,130
Custodian fees........................................................ 1,025
Auditing fees......................................................... 645
Trustees' fees-Note 2(d).............................................. 29
Miscellaneous......................................................... 2,821
--------
70,165
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 58,829
--------
TOTAL EXPENSES.................................................. 11,336
--------
INVESTMENT INCOME-NET........................................... 170,903
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(30,193)
Net unrealized appreciation on investments.............................. 39,706
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 9,513
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $180,416
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
OPERATIONS:
<S> <C>
Investment income-net..................................................................... $ 170,903
Net realized (loss) on investments........................................................ (30,193)
Net unrealized appreciation on investments for the period................................. 39,706
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 180,416
-----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares.......................................................................... (46,233)
Class B shares.......................................................................... (124,670)
-----------
TOTAL DIVIDENDS..................................................................... (170,903)
-----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.......................................................................... 2,423,449
Class B shares.......................................................................... 4,771,752
Dividends reinvested:
Class A shares.......................................................................... 27,461
Class B shares.......................................................................... 77,605
Cost of shares redeemed:
Class A shares.......................................................................... (1,455,718)
Class B shares.......................................................................... (1,651,519)
-----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....................... 4,193,030
-----------
TOTAL INCREASE IN NET ASSETS..................................................... 4,202,543
NET ASSETS:
Beginning of period....................................................................... ---
-----------
End of period............................................................................ $ 4,202,543
==========
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------------------------
CLASS A CLASS B
------------ ------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................ 196,569 386,112
Shares issued for dividends reinvested..................................... 2,240 6,325
Shares redeemed............................................................ (118,096) (135,152)
----------- ------------
NET INCREASE IN SHARES OUTSTANDING................................... 80,713 257,285
=========== ============
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 9 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series of shares of Beneficial Interest including the
Colorado Series (the "Series") which commenced operations on May 6, 1994.
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary
of The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the
Manager became a direct subsidiary of Mellon Bank, N.A.
As of April 30, 1995, Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, held 34,070 shares of Class A and 33,922 shares
of Class B. Mellon Bank Investments Corporation is a subsidiary of Mellon
Bank.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of $563 available for
Federal income tax purposes to be applied against future net securities
profit, if any, realized subsequent to April 30, 1995. The carryover does not
include net realized securities losses from November 1, 1994 through April
30, 1995 which are treated, for Federal income tax purposes, as arising in
fiscal 1996. If not applied, the carryover expires in fiscal 2003.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 6, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At April 30, 1995, the
unamortized balance of such expenses amounted to $25,083.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 6, 1994 through April 2, 1995 to reimburse all fees
and expenses of the Series (excluding 12b-1 distribution plan fees and
certain expenses as described above), and thereafter through April 30, 1995,
to reduce management fee paid by and reimburse such excess expenses of the
Series', to the extent that the Series aggregate expenses (excluding certain
expenses as described above) exceeded specified annual percentages of the
Series' average daily net assets. The expense reimbursement, pursuant to the
undertakings, amounted to $58,829 for the period ended April 30, 1995.
The Manager has currently undertaken through June 30, 1995 or until such
time as the net assets of the Series exceed $50 million, regardless of
whether they remain at that level, to reimburse all fees and
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
expenses of the Series (excluding 12b-1 distribution plan fees, and certain
expenses as described above). The undertaking may be modified by the Manager
from time to time, provided that the resulting expense reimbursement would
not be less than the amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $671 during the period ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to 12b-1 under the Act. Pursuant to the Class B
Distribution Plan, effective August 24, 1994, the Fund pays the distributor
for distributing the Series' Class B shares at an annual rate of .50 of 1% of
the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series' pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the period ended April 30, 1995, $9,770 was charged to the Series
pursuant to the Class B Distribution Plan and $1,410 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to Serv
ice Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 6, 1994 through August 23,
1994, $368 and $937 were charged to Class A and Class B shares, respectively,
by Dreyfus Service Corporation. From August 24, 1994 through April 30, 1995,
$1,498 and $4,653 were charged to the Class A and Class B shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $6,784,482 and $2,585,794, respectively, for the period ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $39,706, consisting of $64,805 gross unrealized appreciation and $25,099
gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, COLORADO SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Colorado Series, (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statements of operations and
changes in net assets and financial highlights for the period from May 6,
1994 (commencement of operations) to April 30, 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Colorado Series at April 30,
1995, the results of its operations, the changes in its net assets and the
financial highlights for the period from May 6, 1994 to April 30, 1995, in
conformity with generally accepted accounting principles.
(Ernst & Young LLP Signature logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
CONNECTICUT--85.4%
Connecticut:
7.20%, 3/1/2007 (Prerefunded 3/1/1999) (a).............................. $ 1,350,000 $ 1,484,811
6.90%, 3/15/2009 (Prerefunded 3/15/2000) (a)............................ 3,000,000 3,299,310
5.50%, 3/15/2010........................................................ 3,000,000 2,916,690
6.875%, 7/15/2010 (Prerefunded 7/15/2000) (a)........................... 7,100,000 7,823,774
6.75%, 3/1/2011 (Prerefunded 3/1/2001) (a).............................. 3,000,000 3,307,830
Special Tax Obligation Revenue (Transportation Infrastructure):
Refunding 6.125%, 2/15/2008........................................... 8,800,000 9,061,096
Refunding 5.375%, 9/1/2008............................................ 2,500,000 2,381,950
6.80%, 12/1/2009 (Prerefunded 12/1/1999) (a).......................... 3,000,000 3,284,880
7.125%, 6/1/2010...................................................... 8,400,000 9,490,404
6.75%, 6/1/2011 (Prerefunded 6/1/2003) (a)............................ 8,500,000 9,390,205
Connecticut Clean Water Fund, Revenue
7%, 1/1/2011............................................................ 6,700,000 7,131,882
Connecticut Development Authority, Revenue:
First Mortgage Gross
(Elim Park Baptist Home Inc. Project) 9%, 12/1/2020................... 3,565,000 3,752,056
Health Care:
(Jerome Home Project) 8%, 11/1/2019................................... 1,970,000 2,025,062
(Masonic Charity Foundation of Connecticut) 6.50%, 8/1/2020 (Insured; AMBAC) 4,150,000 4,262,797
Life Care Facilities
(Seabury Project) 10%, 9/1/2021....................................... . 11,175,000 11,606,132
Pollution Control:
(New England Power Co. Project) 7.25%, 10/15/2015..................... 4,000,000 4,203,160
(Pfizer Inc. Project) 6.55%, 2/15/2013................................ 2,000,000 2,084,340
Solid Waste and Electric
(Ogden Martin System-Bristol Inc.) 10%, 7/1/2014...................... 2,250,000 2,336,738
Water Facilities, Refunding:
(Bridgeport Hydraulic Project):
7.25%, 6/1/2020................................................... 1,000,000 1,047,760
5.60%, 6/1/2028 (Insured; MBIA)................................... 2,600,000 2,351,336
(Stamford Water Company Project) 5.30%, 9/1/2028...................... 1,000,000 841,900
Connecticut Health and Educational Facilities Authority, Revenue:
7%, 1/1/2020 (Insured; MBIA)............................................ 3,000,000 3,231,630
(Bristol Hospital) 7%, 7/1/2020 (Insured; MBIA)......................... 2,850,000 3,066,287
(Cherry Brook Nursing Center Project) 6%, 11/1/2022..................... 4,600,000 4,479,204
(Connecticut College) 6.625%, 7/1/2011 (Insured; MBIA).................. 1,200,000 1,264,392
(Danbury Hospital) 6.50%, 7/1/2014 (Insured; MBIA)...................... 3,250,000 3,355,527
(Fairfield University) 6.90%, 7/1/2014.................................. 1,500,000 1,500,540
(Hartford University):
6.75%, 7/1/2012....................................................... 3,500,000 3,319,295
6.80%, 7/1/2022....................................................... 8,500,000 7,712,900
8%, 7/1/2018.......................................................... 3,125,000 3,571,531
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- ---------------
CONNECTICUT (CONTINUED)
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Hebrew Home and Hospital) 7%, 8/1/2030 (Insured; FHA)................. . $ 865,000 $ 871,807
(Johnson Evergreen Corp.) 8.50%, 7/1/2022............................... 4,500,000 4,640,490
(Lawrence and Memorial Hospital):
7%, 7/1/2020 (Insured; MBIA) (Prerefunded 7/1/2000) (a)............... 2,500,000 2,766,400
6.25%, 7/1/2022 (Insured; MBIA) (Prerefunded 7/1/2002) (a)............ 3,750,000 4,039,537
(Lutheran General Health Care System) 7.375%, 7/1/2019.................. 1,400,000 1,674,232
(Manchester Memorial Hospital) 7%, 7/1/2010 (Insured; MBIA)............. 1,000,000 1,076,590
(Mansfield Nursing Center Project) 6%, 11/1/2022........................ 2,700,000 2,629,098
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA).................... 2,500,000 2,503,175
(New Britain Memorial Hospital) 7.75%, 7/1/2022......................... . 16,000,000 16,153,760
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)...................... 3,600,000 3,604,572
(Nursing Home Program-Noble Horizon) 6%, 11/1/2022...................... 1,500,000 1,460,610
(Quinnipiac College):
6%, 7/1/2013.......................................................... 4,550,000 4,081,259
7.25%, 7/1/2019 (Prerefunded 7/1/1999) (a)............................ 2,375,000 2,613,473
7.75%, 7/1/2020 (Prerefunded 7/1/2000) (a)............................ 1,000,000 1,140,890
(Refunding-Saint Francis Hospital and Medical Center)
6.20%, 7/1/2022 (Insured; MBIA)....................................... 1,725,000 1,713,598
(Sacred Heart University) 5.80%, 7/1/2023............................... 1,700,000 1,379,669
(Saint Raphael Hospital):
6.20%, 7/1/2014 (Insured; AMBAC)...................................... 1,100,000 1,105,599
6.625%, 7/1/2014 (Insured; AMBAC)..................................... 2,500,000 2,601,150
(Taft School) 7.375%, 7/1/2020 (Prerefunded 7/1/2000) (a)............... 1,150,000 1,289,759
(Waterbury Hospital) 7%, 7/1/2020 (Insured; FSA)........................ 4,450,000 4,787,710
(William W. Backus Hospital):
6%, 7/1/2012.......................................................... 1,500,000 1,411,095
6.375%, 7/1/2022...................................................... 2,250,000 2,161,507
(Yale-New Haven Hospital) 7.10%, 7/1/2025 (Insured; MBIA)............... . 10,475,000 11,368,099
Connecticut Higher Education Supplemental Loan Authority, Revenue:
7.375%, 11/15/2005...................................................... 10,000 10,554
7.50%, 11/15/2010....................................................... 1,955,000 2,064,284
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
7.20%, 11/15/2008....................................................... . 11,545,000 12,152,960
7.50%, 11/15/2009....................................................... 810,000 856,688
5.60%, 5/15/2014........................................................ 4,000,000 3,725,280
6.45%, 5/15/2022........................................................ 6,000,000 5,954,160
6.70%, 11/15/2022....................................................... . 17,500,000 17,932,600
6.75%, 11/15/2023....................................................... 6,000,000 6,173,880
6.05%, 11/15/2025....................................................... . 11,225,000 10,671,383
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
CONNECTICUT (CONTINUED)
Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue
7%, 1/1/2016 (Insured; AMBAC)........................................... $ 1,000,000 $ 1,037,390
Connecticut Resources Recovery Authority:
(Middle Connecticut System Bonds) 7.875%, 11/15/2012 (Insured; MBIA).... 2,500,000 2,675,900
(Municipal Service Fee Subordinated Bridgeport) 7.50%, 1/1/2009......... 2,500,000 2,605,925
(Resources Recovery-American Refunding-Fuel) 8%, 11/15/2015............. . 11,835,000 12,916,364
Eastern Connecticut Resource Recovery Authority, Solid Waste Revenue
(Wheelabrator Lisbon Project):
5.50%, 1/1/2014....................................................... . 10,000,000 8,485,800
5.50%, 1/1/2020....................................................... . 7,250,000 5,950,873
New Haven 7.40%, 8/15/2011.................................................. 1,500,000 1,593,210
South Central Connecticut Regional Water Authority, Water Systems Revenue:
5.75%, 8/1/2012 (Insured; AMBAC)........................................ 6,000,000 5,877,300
7.125%, 8/1/2012 (Prerefunded 8/1/1996) (a)............................. 2,480,000 2,607,621
Stamford 6.60%, 1/15/2010................................................... 2,750,000 3,043,315
Stratford 7.30%, 3/1/2012 (Prerefunded 3/1/2001) (a)........................ 1,130,000 1,277,635
U. S. RELATED-14.6%
Puerto Rico:
(Public Improvement):
7.70%, 7/1/2020 (Prerefunded 7/1/2000) (a)............................ 3,000,000 3,429,240
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)............................ 6,000,000 6,676,260
Refunding 5.50%, 7/1/2013 .............................................. 3,000,000 2,778,810
Puerto Rico Aqueduct and Sewer Authority, Revenue
7.875%, 7/1/2017........................................................ 1,860,000 2,047,376
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021............ 6,775,000 7,275,402
Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.236%, 7/1/2010(b)..................................................... 3,200,000 2,780,000
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. 5,000,000 5,511,500
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Motorola Inc. Project) 6.75%, 1/1/2014.... 2,000,000 2,117,160
Puerto Rico Municipal Finance Agency 5%, 7/1/1998 ......................... 3,655,000 3,633,582
Puerto Rico Ports Authority, Special Facilities Revenue
(American Airlines) 6.30%, 6/1/2023..................................... 2,000,000 1,891,960
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities:
7.125%, 7/1/2009 (Prerefunded 7/1/1998) (a)........................... 4,830,000 5,232,291
Refunding 5.75%, 7/1/2015............................................. 8,000,000 7,561,520
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018........................................................ 2,000,000 2,067,340
--------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $351,813,948)................... $363,275,061
==============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- ----------------------
<S> <C> <C> <C>
AAA Aaa AAA 32.4%
AA Aa AA 32.9
A A A 16.2
BBB Baa BBB 11.3
Not Rated (d) Not Rated (d) Not Rated (d) 7.2
-----
100.0%
======
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
FHA Federal Housing Administration MBIA Municipal Bond Investors Assurance Insurance
Corporation
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collataralized by U.S. government
securities which are held in escrow and are used to pay prinicpal 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) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
(e) At April 30, 1995, the series had $96,059,865 (25.9% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $351,813,948)-see statement..................................... $363,275,061
Cash.................................................................... 150,836
Interest receivable..................................................... 8,243,086
Receivable for shares of Beneficial Interest subscribed................. 150,513
Prepaid expenses........................................................ 9,609
--------------
371,829,105
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $168,937
Due to Distributor...................................................... 91,478
Payable for shares of Beneficial Interest redeemed...................... 75,057
Accrued expenses and other liabilities.................................. 104,687 440,159
---------- --------------
NET ASSETS ................................................................ $371,388,946
==============
REPRESENTED BY:
Paid-in capital......................................................... $362,106,350
Accumulated net realized capital losses and distributions in excess
of net realized gain on investments................................... (2,178,517)
Accumulated net unrealized appreciation on investments-Note 3........... 11,461,113
--------------
NET ASSETS at value......................................................... $371,388,946
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 28,568,040
==============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,013,154
==============
NET ASSET VALUE per share:
Class A Shares
($335,964,194 / 28,568,040 shares).................................... $11.76
=======
Class B Shares
($35,424,752 / 3,013,154 shares)...................................... $11.76
=======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $25,194,629
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,082,924
Shareholder servicing costs-Note 2(c)................................. 1,182,330
Distribution fees (Class B shares)-Note 2(b).......................... 170,234
Professional fees..................................................... 52,876
Custodian fees........................................................ 38,846
Prospectus and shareholders' reports.................................. 16,912
Trustees' fees and expenses-Note 2(d)................................. 3,371
Registration fees..................................................... 1,825
Miscellaneous......................................................... 24,945
-------------
3,574,263
Less--reduction in management fee due to
undertakings-Note 2(a) 35,533
-------------
TOTAL EXPENSES.................................................. 3,538,730
-------------
INVESTMENT INCOME-NET........................................... 21,655,899
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... . $(1,973,798)
Net unrealized (depreciation) on investments............................ (287,865)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (2,261,663)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $19,394,236
=============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------------------
1994 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net........................................... $ 21,803,044 $ 21,655,899
Net realized (loss) on investments..................................... (185,245) (1,973,798)
Net unrealized (depreciation) on investments for the year.............. (15,446,724) (287,865)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. 6,171,075 19,394,236
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net:
Class A shares....................................................... (20,717,006) (19,881,887)
Class B shares....................................................... (1,086,038) (1,774,012)
From net realized gain on investments:
Class A shares....................................................... (758,152) --
Class B shares....................................................... (50,982) --
In excess of net realized gain on investments:
Class A shares....................................................... (18,247) --
Class B shares....................................................... (1,227) --
-------------- --------------
TOTAL DIVIDENDS.................................................. (22,631,652) (21,655,899)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 44,016,008 15,947,221
Class B shares....................................................... 25,201,426 5,896,601
Dividends reinvested:
Class A shares....................................................... 12,291,154 11,434,147
Class B shares....................................................... 839,531 1,240,658
Cost of shares redeemed:
Class A shares....................................................... (37,453,609) (53,507,884)
Class B shares....................................................... (1,518,578) (3,788,582)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS.......................................... 43,375,932 (22,777,839)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ 26,915,355 (25,039,502)
NET ASSETS:
Beginning of year...................................................... 369,513,093 396,428,448
-------------- --------------
End of year............................................................ $396,428,448 $371,388,946
==============- =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- --------------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
--------------------------------- --------------------------------
1994 1995 1994 1995
------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 3,521,978 1,373,091 2,016,083 503,373
Shares issued for dividends reinvested. 987,215 983,180 67,670 106,773
Shares redeemed........................ (3,026,083) (4,637,620) (125,740) (329,539)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING........ 1,483,110 (2,281,349) 1,958,013 280,607
============== ============== =============== ==============
</TABLE>
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 10 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Connecticut Series (the "Series").
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
or sold on a when-issued or delayed-delivery basis may be settled a month or
more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $513,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $33,000 of the carryover
expires in fiscal 2002 and $480,000 expires in fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the
Series' aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Series for any full fiscal year. However,
the Manager had undertaken from May 1, 1994 through June 30, 1994, to waive
receipt of the management fee payable to it by the Series in excess of an
annual rate of .50 of 1% (excluding certain expenses as described above) of
the Series' average daily net assets and thereafter, had undertaken from July
1, 1994 through July 7, 1994 to reduce the management fee paid by the Series,
to the extent that the Series' aggregate expenses (excluding certain expenses
as described above) exceeded specified annual percentages of the Series'
average daily net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $35,533 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $9,130 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $21,361
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series'
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Class B shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $117,044 was charged to the Series
pursuant to the Class B Distribution Plan and $53,190 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $284,876 and $26,594 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $576,791 and $58,523 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $43,233,085 and $64,530,561, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $11,461,113, consisting of $17,120,455 gross unrealized appreciation and
$5,659,342 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Connecticut Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Connecticut Series at April
30, 1995, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernest & Young LLP Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
FLORIDA-95.1%
Alachua County Health Facilities Authority, Health Facilities Revenue
(Refunding - Santa Fe Healthcare Facilities Project) 7.60%, 11/15/2013.. $ 3,500,000 $ 3,602,725
Arcadia, Water and Sewer Revenue 7.75%, 12/1/2021........................... 2,215,000 2,339,306
Brevard County Health Facilities Authority, HR
(Holmes Regional Medical Center Project) 5.70%, 10/1/2008............... 4,585,000 4,546,578
Broward County Health Facilities Authority, Revenue, Refunding
(Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) (a) 1,000,000 1,045,610
Charlotte County, Health Care Facilities Revenue
(Charlotte Community Mental Health Project) 9.25%, 7/1/2020............. 1,650,000 1,827,128
Clay County Housing Finance Authority, SFMR
8.20%, 6/1/2021 (Collateralized; GNMA).................................. 670,000 715,004
Dade County, Aviation Revenue:
6.55% 10/1/2013 (Insured; MBIA)......................................... 4,225,000 4,371,734
(Miami International Airport) 5.75%, 10/1/2015.......................... 2,250,000 2,143,485
Dade County Educational Facilities Authority, Revenue (Saint Thomas
University)
7.65%, 1/1/2014 (LOC; Sun Bank, Prerefunded 1/1/2000) (a,b)............. 2,500,000 2,817,050
Dade County Health Facilities Authority, HR
(South Shore Hospital and Medical Center) 7.60%, 8/1/2024 (Insured; FHA) 2,505,000 2,685,786
Dade County Housing Finance Authority, Revenue, Refunding:
MFMR (Cutler Meadows Apartment) 6.50%, 7/1/2022 (Insured; FHA).......... 1,785,000 1,791,069
SFMR 6.70%, 4/1/2028 (Collateralized: FNMA & GNMA)...................... 4,500,000 4,518,000
Dunes Community Development District, Revenue, Refunding
(Intracoastal Waterway Bridge) 5.50%, 10/1/2007......................... 7,895,000 7,673,308
Duval County Housing Finance Authority, SFMR:
7.85%, 12/1/2022 (Collateralized; GNMA)................................. 2,625,000 2,774,783
7.70%, 9/1/2024 (Collateralized; GNMA).................................. 1,460,000 1,570,303
Escambia County, PCR (Champion International Corp. Project) 5.875%, 6/1/2022 5,000,000 4,487,200
Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022............. 1,205,000 1,280,059
Florida Board of Education, Capital Outlay, Refunding 5.125%, 6/1/2018...... 4,450,000 3,916,044
Florida Housing Finance Agency:
(Brittany Rosemont Apartments) 7%, 2/1/2035............................. 6,000,000 6,139,080
Multi-Family Housing (Driftwood Terrace Project)
7.65%, 12/20/2031 (Collateralized; GNMA).............................. 3,440,000 3,642,685
Single Family Mortgage, Refunding 6.65%, 1/1/2024....................... 3,500,000 3,533,495
Florida Municipal Power Agency, Revenue (All Requirements Power Supply
Project)
5.10%, 10/1/2025 (Insured; AMBAC)....................................... 6,000,000 5,203,740
Florida Turnpike Authority, Turnpike Revenue:
7.50%, 7/1/2019 (Prerefunded 7/1/1999) (b).............................. 5,685,000 6,342,982
(Refunding - Department of Transportation) 5%, 7/1/2019................. 3,000,000 2,592,090
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
- ------------------------------------------------------------------------- ------- -------
FLORIDA (CONTINUED)
Greater Orlando Aviation Authority, Airport Facilities Revenue, Refunding
5.50%, 10/1/2008 (Insured; AMBAC)....................................... $ 5,940,000 $ 5,823,814
5.50%, 10/1/2013 (Insured; AMBAC)....................................... 4,750,000 4,497,205
Highlands County Health Facilities Authority, Revenue (Adventist Sunbelt
Hospital)
7%, 11/15/2014.......................................................... 1,500,000 1,604,985
Hillsborough County, Utility Revenue, Refunding:
6.625%, 8/1/2011........................................................ 4,000,000 4,110,680
7%, 8/1/2014............................................................ 4,765,000 4,995,292
Hillsborough County Aviation Authority, Revenue, Refunding:
(Delta Airlines):
6.80%, 1/1/2024....................................................... 2,500,000 2,476,325
7.75%, 1/1/2024....................................................... 1,500,000 1,565,130
(Tampa International Airport) 5.375%, 10/1/2023 (Insured; FGIC)......... 5,750,000 5,140,500
Hillsborough County Port District, Revenue (Tampa Port Authority)
8.25%, 6/1/2009 (Prerefunded 12/1/2000) (b)............................. 3,000,000 3,375,270
Indian Trace Community Development District,
Water and Sewer Revenue 8.50%, 4/1/1997................................. 340,000 361,624
Jackson County, PCR, Refunding (Gulf Power Co. Project) 6.75%, 3/1/2022..... 3,930,000 4,051,044
Jacksonville, Capital Improvement Revenue Certificates (Gator Bowl Project)
5.50%, 10/1/2019 (Insured; AMBAC)....................................... 2,225,000 2,075,124
Jacksonville Electric Authority, Revenue, Refunding (Bulk Power - Scherer 4
Project)
5.25%, 10/1/2021........................................................ 1,250,000 1,103,913
Jacksonville Health Facilities Authority, HR, Refunding (Saint Luke's
Hospital)
7.125%, 11/15/2020...................................................... 6,700,000 7,170,273
Lake County, Resource Recovery IDR, Refunding (NRG/Recovery Group)
5.85%, 10/1/2009........................................................ 6,000,000 5,616,780
Leesburg, HR, Refunding:
(Leesburg Regional Medical Center Project - A):
6.25%, 7/1/2009....................................................... 1,850,000 1,794,056
6.125%, 7/1/2012...................................................... 5,000,000 4,733,000
(Leesburg Regional Medical Center Project - B) 5.65%, 7/1/2008.......... 4,000,000 3,691,720
Leon County Educational Facilities Authority, COP (Southgate Residence Hall
Project):
3.75%, 12/1/1995........................................................ 259,200 25,920
9%, 9/1/2014 (c)........................................................ 5,235,000 523,500
Miami Beach Redevelopment Agency, Tax Increment Revenue
(City Center - Historic Convention Village) 5.625%, 12/1/2009........... 2,000,000 1,884,980
Nassau County, PCR, Refunding (ITT Rayonier, Inc. Project):
7.65%, 6/1/2006......................................................... 4,500,000 4,696,965
6.20%, 7/1/2015......................................................... 1,420,000 1,369,235
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
FLORIDA (CONTINUED)
North Miami, Educational Facilities Revenue (Johnson & Whales University
Project)
6.10%, 4/1/2013......................................................... $ 5,000,000 $ 4,978,150
North Miami Health Facilities Authority, Health Facilities Revenue
(Villa Maria Nursing Housing Project) 7.50%, 9/1/2012................... 2,735,000 2,924,125
Orange County, Sales Tax Revenue 5.375%, 1/1/2024........................... 4,425,000 3,976,039
Orange County Health Facilities Authority, Health Facilities Revenue
(Mental Health Service Project) 9.25%, 7/1/2020......................... 3,815,000 4,052,255
Orlando and Orange County Expressway Authority, Expressway Revenue, Refunding
(Junior Lien):
5.125%, 7/1/2020 (Insured; FGIC)...................................... 5,120,000 4,493,363
5.95%, 7/1/2023....................................................... 2,500,000 2,407,325
Orlando Utilities Commission, Water and Electric Revenue:
5.125%, 10/1/2019....................................................... 3,220,000 2,814,570
5.25%, 10/1/2023........................................................ 3,000,000 2,639,280
5.50%, 10/1/2026........................................................ 12,440,000 11,320,400
5.50%, 10/1/2027........................................................ 4,000,000 3,636,320
Refunding 5%, 10/1/2020................................................. 4,900,000 4,179,896
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 7.75%, 7/1/2017................ 5,235,000 5,555,696
Palm Beach County, Solid Waste Industrial Development Revenue:
(Okeelanta Power LP Project) 6.85%, 2/15/2021........................... 11,000,000 10,463,530
(Osceola Power LP) 6.85%, 1/1/2014...................................... 4,300,000 4,219,590
Palm Beach County Housing Finance Authority, Single Family Mortgage,
Purchase Revenue 6.55%, 4/1/2027........................................ 2,750,000 2,735,205
Pinellas County, PCR, Refunding (Florida Power Corp.) 7.20%, 12/1/2014...... 3,000,000 3,178,590
Pinellas County Housing Finance Authority, SFMR:
7.70%, 8/1/2022......................................................... 2,810,000 2,996,584
(Multi-County Program) 6.70%, 2/1/2028 (Insured; FHA)................... 5,000,000 5,043,800
Saint Lucie County:
Sales Tax Revenue, Refunding 5%, 10/1/2019.............................. 2,500,000 2,158,625
SWDR (Florida Power and Light Co. Project) 7.15%, 2/1/2023.............. 4,000,000 4,190,600
Sunrise, Special Tax District Number 1, Refunding
6.375%, 11/1/2021 (LOC; Bayerische Hypotheken-und Weschel Bank) (a)..... 2,500,000 2,571,775
Tampa, Water and Sewer Revenue, Refunding
6.60%, 10/1/2014 (Insured; FGIC, Prerefunded 10/1/2002) (b)............. 10,000,000 10,998,800
Volushia County Health Facilities Authority, Hospital Facilities Revenue
(Memorial Health System Project):
8.125%, 6/1/2008 (Prerefunded 6/1/2000) (b)........................... 1,970,000 2,280,019
8.25%, 6/1/2020 (Prerefunded 6/1/2000) (b)............................ 2,500,000 2,907,325
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
U.S. RELATED_4.9%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ $ 5,000,000 $ 5,063,200
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport
Project)
8.10%, 10/1/2005........................................................ 2,500,000 2,719,675
Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018 5,400,000 5,581,818
------------
TOTAL INVESTMENTS (cost $267,814,810)....................................... $274,333,134
============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ____ _________ __________
<S> <C> <S> <C>
AAA Aaa AAA 34.3%
AA Aa AA 15.4
A A A 13.3
BBB Baa BBB 21.8
BB Ba BB 1.5
Not Rated (e) Not Rated (e) Not Rated (e) 13.7
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in excrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(c) Non-income producing security; interest payment in default. The
valuation of these securities has been determined in good faith under the
direction of the Board of Trustees.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poors, 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.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $267,814,810)-see statement..................................... $274,333,134
Interest receivable..................................................... 4,216,905
Receivable for shares of Beneficial Interest subscribed................. 180,323
Prepaid expenses........................................................ 7,731
-----------
278,738,093
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $126,390
Due to Distributor...................................................... 68,248
Due to Custodian........................................................ 58,657
Payable for shares of Beneficial Interest redeemed...................... 732,097
Accrued expenses........................................................ 64,610 1,050,002
-------- ------------
NET ASSETS ................................................................ $277,688,091
============
Paid-in capital......................................................... $268,303,949
Accumulated undistributed net realized gain on investments.............. 2,865,818
Accumulated net unrealized appreciation on investments-Note 3(b)........ 6,518,324
------------
NET ASSETS at value......................................................... $277,688,091
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 17,390,524
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,742,539
=========
NET ASSET VALUE per share:
Class A Shares
($252,406,357 / 17,390,524 shares).................................... $14.51
======
Class B Shares
($25,281,734 / 1,742,539 shares)...................................... $14.51
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $19,094,594
EXPENSES:
Management fee-Note 2(a).............................................. $1,599,553
Shareholder servicing costs-Note 2(c)................................. 911,108
Distribution fees (Class B shares)-Note 2(b).......................... 118,848
Professional fees..................................................... 39,749
Custodian fees........................................................ 32,107
Prospectus and shareholders' reports.................................. 23,243
Trustees' fees and expenses-Note 2(d)................................. 3,592
Registration fees..................................................... 2,406
Miscellaneous......................................................... 22,740
---------
2,753,346
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 27,718
---------
TOTAL EXPENSES.................................................. 2,725,628
----------
INVESTMENT INCOME-NET........................................... 16,368,966
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3(a).............................. $4,399,552
Net realized gain on financial futures-Note 3(a)........................ 11,431
----------
NET REALIZED GAIN..................................................... 4,410,983
Net unrealized (depreciation) on investments............................ (2,782,324)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,628,659
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $17,997,625
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-------------------
1994 1995
------- -------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 18,361,672 $ 16,368,966
Net realized gain on investments........................................ 322,634 4,410,983
Net unrealized (depreciation) on investments for the year............... (12,210,827) (2,782,324)
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,473,479 17,997,625
---------- ----------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (17,572,099) (15,149,356)
Class B shares........................................................ (789,573) (1,219,610)
From net realized gain on investments:
Class A shares........................................................ (884,752) (716,166)
Class B shares........................................................ (51,557) (65,057)
In excess of net realized gain on investments:
Class A shares........................................................ (721,877) --
Class B shares........................................................ (42,065) --
---------- ----------
TOTAL DIVIDENDS................................................... (20,061,923) (17,150,189)
---------- ----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 43,755,340 12,537,474
Class B shares........................................................ 18,173,895 5,009,096
Dividends reinvested:
Class A shares........................................................ 6,943,770 5,971,345
Class B shares........................................................ 401,953 509,461
Cost of shares redeemed:
Class A shares........................................................ (48,253,346) (56,564,392)
Class B shares........................................................ (856,937) (2,889,736)
---------- -----------
Increase (Decrease) In Net Assets From
Beneficial Interest Transactions................................ 20,164,675 (35,426,752)
---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 6,576,231 (34,579,316)
NET ASSETS:
Beginning of year....................................................... 305,691,176 312,267,407
------------ ------------
End of year............................................................. $312,267,407 $277,688,091
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
CLASS A CLASS B
________________ ________________
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
________________ ________________
1994 1995 1994 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 2,866,976 877,487 1,194,240 350,773
Shares issued for dividends reinvested. 457,470 419,064 26,554 35,744
Shares redeemed........................ (3,200,998) (3,988,619) (56,660) (202,194)
_______ _______ _______ _______
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... 123,448 (2,692,068) 1,164,134 184,323
======= ======== ======== ========
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 11 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Florida Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discount 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.
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $27,718 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $10,581 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $15,723
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributing the Series' Class B shares. Dreyfus Service Corporation made
payments to one or more Service Agents based on the value of the Series'
Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $82,256 was charged to the Series
pursuant to the Class B Distribution Plan and $36,592 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to Serv
ice Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $224,083 and $18,296 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $443,562 and $41,128 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities
amounted to $254,116,519 and $288,649,689, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
The Series is engaged in trading financial futures contracts. The Series
is exposed to market risk as a result of changes in the value of the
underlying financial instruments. Investments in financial futures require
the Series to "mark to market" on a daily basis, which reflects the change in
the market value of the contract at the close of each day's trading.
Accordingly, variation margin payments are made or received to reflect daily
unrealized gains or losses. When the contracts are closed, the Series
recognizes a realized gain or loss. These investments require initial margin
deposits with a custodian, which consists of cash or cash equivalents, up to
approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded
and is subject to change. At April 30, 1995, there were no financial futures
contracts outstanding.
(B) At April 30, 1995, accumulated net unrealized appreciation on
investments was $6,518,324, consisting of $12,641,304 gross unrealized
appreciation and $6,122,980 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Florida Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Florida Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-93.0% AMOUNT VALUE
------- ------
<S> <C> <C>
GEORGIA-91.1%
Albany, Sewer System Revenue 6.50%, 7/1/2009 (Insured; MBIA)................ $ 100,000 $ 105,644
Albany-Dougherty Inner City Authority, Revenue, Refunding 6%, 2/1/2011...... 200,000 200,516
Athens-Clarke County Unified Government, Water and Sewer Revenue, Refunding
5.875%, 1/1/2008 (Insured; FGIC)........................................ 265,000 264,155
Atlanta:
Airport Facilities Revenue:
6.50%, 1/1/2013....................................................... 150,000 152,241
6%, 1/1/2014 (Insured; AMBAC)......................................... 1,000,000 976,870
COP (Atlanta Pretrial Detention Center Project) 6.25%, 12/1/2011 (Insured; MBIA) 300,000 307,806
GO 6.10%, 12/1/2019..................................................... 1,000,000 996,140
School Improvement:
5.60%, 12/1/2012...................................................... 1,000,000 969,500
5.60%, 12/1/2018...................................................... 1,000,000 934,870
Atlanta Downtown Development Authority, Revenue, Refunding
(Underground Atlanta Project) 6.25%, 10/1/2016.......................... 200,000 201,686
Bartow County, Water and Sewer Revenue, Refunding 6%, 9/1/2015
(Insured; AMBAC)........................................................ 450,000 444,748
Chatham County School District 6.25%, 8/1/2016.............................. 1,000,000 1,018,830
Cobb County Housing Authority, MFMR, Refunding (Garrison Plantation
Development)
5.75%, 7/1/2014 (Insured: FHA, FNMA)(a)................................. 1,070,000 1,011,728
Columbus, Water and Sewer Revenue, Refunding:
6.25%, 5/1/2011 (Insured; FGIC)......................................... 155,000 159,472
5.70%, 5/1/2020......................................................... 500,000 466,030
Columbus Hospital Authority, Revenue Certificates (Saint Francis Hospital)
6.20%, 1/1/2010 (Insured; MBIA)......................................... 200,000 203,886
Coweta County School System:
6.35%, 8/1/2012......................................................... 100,000 102,661
Refunding 5.75%, 2/1/2010 (Insured; FGIC)............................... 200,000 197,050
Dekalb County Development Authority, Revenue
(Wesley Homes, Inc-Budd Terrace Project) 6.75%, 10/1/2013
(LOC; Wachovia Bank of Georgia, N.A.) (b)............................... 200,000 205,738
Dekalb County Health Facilities, GO 5.50%, 1/1/2020......................... 1,000,000 915,550
Dekalb County School District, Refunding 5.60%, 7/1/2010.................... 500,000 488,965
Dekalb County Water and Sewer Authority, Revenue 5.125%, 10/1/2014.......... 1,000,000 894,040
Downtown Savannah Authority, Revenue, Refunding
(Chatham County Projects) 5%, 1/1/2011.................................. 1,000,000 912,500
Fayette County School District 6.125%, 3/1/2015............................. 500,000 506,070
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------- -------
GEORGIA (CONTINUED)
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Healthcare) 6.25%, 9/1/2013............................ $ 250,000 $ 231,983
Fulton County, Water and Sewer Revenue, Refunding
6.375%, 1/1/2014 (Insured; FGIC)........................................ 290,000 306,278
Fulton County Building Authority, Revenue, Refunding
(County Government and Health Facilities Project)
6.125%, 1/1/2011...................................................... 300,000 305,445
Fulton County Development Authority, Special Facilities Revenue, Refunding
(Delta Air Lines Inc. Project) 6.95%, 11/1/2012......................... 245,000 246,009
Fulton County Hospital Authority, Revenue Anticipation Certificates
(Northside Hospital Project)
6.625%, 10/1/2016 (Insured; MBIA) (Prerefunded 10/1/2002) (c)......... 200,000 220,222
Fulton Dekalb Hospital Authority, HR, Refunding Certificates
5.50%, 1/1/2012 (Insured; MBIA)......................................... 1,000,000 944,650
Gainesville and Hall County Hospital Authority, Revenue Anticipation
Certificates
(Northeast Healthcare Project) 6.25%, 10/1/2012 (Insured; MBIA)......... 100,000 101,630
Gainesville, Water and Sewer Revenue, Refunding 6%, 11/15/2012 (Insured; FGIC) 300,000 306,207
Georgia, GO:
6.30%, 3/1/2008......................................................... 100,000 108,056
6.65%, 3/1/2009......................................................... 1,000,000 1,110,320
5.65%, 3/1/2012 (d)..................................................... 1,000,000 992,400
Georgia Housing and Finance Authority, Revenue:
(Home Ownership Opportunity Program) 6.50%, 12/1/2011................... 180,000 184,631
Single Family Mortgage:
5.20%, 12/1/2013 (Insured; FHA)....................................... 990,000 863,795
6.50%, 12/1/2017 (Insured; FHA)....................................... 1,000,000 1,006,980
Georgia Municipal Electric Authority, Power Revenue, Refunding
6.125%, 1/1/2014 (Insured; FGIC)........................................ 300,000 297,171
Gwinnett County School District 6.25%, 2/1/2011............................. 500,000 511,560
Hancock County, Various Purpose Asset Guaranty 6.70%, 4/1/2015.............. 1,000,000 1,042,410
Henry County and Henry County Water and Sewer Authority, Revenue, Refunding
6.50%, 2/1/2011 (Insured; MBIA)......................................... 100,000 104,603
Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue,
Refunding
6.25%, 7/1/2020 (Insured; AMBAC)........................................ 300,000 309,249
Monroe County Development Authority, PCR (Oglethorpe Power Corp. Scherer
Project)
6.80%, 1/1/2011......................................................... 100,000 106,884
Municipal Electric Authority of Georgia, Special Obligation
(First Crossover-General Resolution) 6.50%, 1/1/2020.................... 100,000 104,143
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- ------
GEORGIA (CONTINUED)
Private Colleges and Universities Authority, Revenue:
(Agnes Scott College Projects) 5.50%, 6/1/2013.......................... $ 1,000,000 $ 941,000
Refunding (Spellman College Project) 6.20%, 6/1/2014 (Insured; FGIC).... 1,000,000 1,008,700
Roswell, GO 5.65%, 2/1/2011 (d)............................................. 1,000,000 986,570
Savannah Economic Development Authority, PCR, Refunding
(Union Camp Corp. Project) 6.80%, 2/1/2012.............................. 200,000 207,034
Savannah Hospital Authority, Revenue, Refunding (Saint Joseph's Hospital
Project)
6.20%, 7/1/2023......................................................... 1,000,000 933,320
Sugar Hill Public Utility, Revenue, Refunding 5.90%, 1/1/2014 (Insured; FSA) 500,000 492,175
Wayne County Development Authority, PCR (ITT Rayonier Inc. Project)
6.10%, 11/1/2007........................................................ 750,000 752,775
U.S. RELATED-1.9%
Puerto Rico, GO, Refunding 6%, 7/1/2014..................................... 600,000 587,238
-----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $28,390,713).................... $27,950,134
===========
SHORT-TERM MUNICIPAL INVESTMENTS-7.0%
U.S. RELATED;
Puerto Rico Electric Power Authority, Power Revenue, VRDN
3.89%, 7/1/2023 (Insured; FSA) (e)
(cost $2,100,000)....................................................... $ 2,100,000 $ 2,100,000
============
TOTAL INVESTMENTS-100.0%
(cost $30,490,713)...................................................... $30,050,134
===========
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation HR Hospital Revenue
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
GO General Obligation VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ------ ------ -------------- -----------------
<S> <C> <S> <C>
AAA Aaa AAA 40.2%
AA Aa AA 46.2
A A A 10.3
BBB Baa BBB 2.5
BB Ba BB .8
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(b) Secured by letters of credit.
(c) Bonds which are prerefunded are collaterized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Purchased on delayed delivery basis.
(e) Securites payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $30,490,713)-see statement...................................... $30,050,134
Interest receivable..................................................... 540,330
Receivable for shares of Beneficial Interest subscribed................. 22,989
Prepaid expenses........................................................ 10,911
Due from The Dreyfus Corporation........................................ 1,151
----------
30,625,515
LIABILITIES:
Due to Distributor...................................................... $ 13,904
Due to Custodian........................................................ 142,645
Payable for investment securities purchased............................. 2,015,538
Accrued expenses and other liabilities.................................. 39,705 2,211,792
--------- -----------
NET ASSETS.................................................................. $28,413,723
===========
REPRESENTED BY:
Paid-in capital......................................................... $29,382,983
Accumulated net realized (loss) on investments.......................... (528,681)
Accumulated net unrealized (depreciation) on investments-Note 3......... (440,579)
-----------
NET ASSETS at value......................................................... $28,413,723
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 701,962
=======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,517,320
=========
NET ASSET VALUE per share:
Class A Shares
($8,984,991 / 701,962 shares)......................................... $12.80
======
Class B Shares
($19,428,732 / 1,517,320 shares)...................................... $12.80
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 1,634,792
EXPENSES:
Management fee-Note 2(a).............................................. $ 149,119
Shareholder servicing costs-Note 2(c)................................. 95,657
Distribution fees (Class B shares)-Note 2(b).......................... 88,285
Prospectus and shareholders' reports.................................. 8,500
Professional fees..................................................... 7,586
Custodian fees........................................................ 3,185
Registration fees..................................................... 1,304
Trustees' fees and expenses-Note 2(d)................................. 262
Miscellaneous......................................................... 16,479
-------
370,377
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 214,310
-------
TOTAL EXPENSES.................................................. 156,067
---------
INVESTMENT INCOME-NET........................................... 1,478,725
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(508,036)
Net unrealized appreciation on investments.............................. 667,389
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 159,353
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,638,078
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------
1994 1995
------- ------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,112,595 $ 1,478,725
Net realized (loss) on investments...................................... (5,970) (508,036)
Net unrealized appreciation (depreciation) on investments for the year.. (1,498,005) 667,389
---------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (391,380) 1,638,078
-------- ---------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (503,813) (548,712)
Class B shares........................................................ (608,782) (930,013)
--------- ---------
TOTAL DIVIDENDS................................................... (1,112,595) (1,478,725)
--------- ---------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 4,256,182 698,373
Class B shares........................................................ 11,270,678 4,788,621
Dividends reinvested:
Class A shares........................................................ 363,383 386,985
Class B shares........................................................ 335,961 479,506
Cost of shares redeemed:
Class A shares........................................................ (1,324,053) (2,172,832)
Class B shares........................................................ (720,668) (2,227,045)
---------- ---------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 14,181,483 1,953,608
---------- ---------
TOTAL INCREASE IN NET ASSETS.................................... 12,677,508 2,112,961
NET ASSETS:
Beginning of year....................................................... 13,623,254 26,300,762
----------- -----------
End of year............................................................. $26,300,762 $28,413,723
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------------------------------------------------------------
CLASS A CLASS B
---------------------------------- -----------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------------------------- -----------------------
1994 1995 1994 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 314,626 56,480 832,134 380,245
Shares issued for dividends reinvested. 26,952 30,950 24,944 38,336
Shares redeemed........................ (99,638) (178,009) (53,747) (180,856)
-------- -------- -------- -------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... 241,940 (90,579) 803,331 237,725
======= ======== ======= =======
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 12 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Georgia Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $381,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $14,625 of the carryover
expires in fiscal 2002 and $366,375 of the carryover expires in 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The Manager has
undertaken from May 1, 1994 through June 30, 1995 or until such time as the
net assets of the Series exceed $50 million, regardless of whether they
remain at that level, to reimburse all fees and expenses of the Series
(excluding 12b-1 distribution plan fees, Shareholder Services Plan fees, and
certain expenses as described above). The expense reimbursement, pursuant to
the undertaking, amounted to $214,310 for the year ended April 30, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $864 during the year ended April 30,
1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $12,961
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 of the Act. Pursuant to the Class
B Distribution Plan, effective August 24, 1994, the Fund pays the Distributor
for distributing the Series' Class B shares at an annual rate of .50 of 1% of
the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B
shares average daily net assets, for the costs and expenses in connection
with advertising, marketing and
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributing the Series' Class B shares.
Dreyfus Service Corporation made payments to one or more Service Agents based
on the value of the Series' Class B shares owned by clients of the Service
Agent.
During the year ended April 30, 1995, $61,066 was charged to the Series
pursuant to the Class B Distribution Plan and $27,219 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $7,959 and $13,610 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $15,680 and $30,533 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $30,749,706 and $26,857,025, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized depreciation on investments
was $440,579, consisting of $299,791 gross unrealized appreciation and
$740,370 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Georgia Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Georgia Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS APRIL 30 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.8% AMOUNT VALUE
-------------- ------------
<S> <C> <C>
MARYLAND--90.9%
Anne Arundel County:
Consolidated Water and Sewer 7.75%, 3/15/2008........................... $ 1,000,000 $ 1,094,510
PCR (Baltimore Gas and Electric Co. Project) 6%, 4/1/2024............... 4,375,000 4,263,481
Baltimore:
7%, 10/15/2007 (Insured; MBIA).......................................... 1,500,000 1,696,650
7.15%, 10/15/2008....................................................... 1,275,000 1,433,011
PCR (General Motors Corp.) 5.35%, 4/1/2008.............................. 6,000,000 5,555,760
Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010...... 6,240,000 6,482,736
Baltimore City Housing Corp., MFHR, Refunding
7.25%, 7/1/2023 (Collateralized; FNMA).................................. 3,270,000 3,407,994
Baltimore County:
Mortgage Revenue:
(First Mortgage - Pickersgill) 7.70%, 1/1/2021........................ 3,000,000 3,122,520
(Refunding - Tindeco Wharf Project) 6.50%, 12/20/2012 (Collateralized; GNMA) 1,500,000 1,536,510
PCR, Refunding (Bethlehem Steel Corp. Project):
7.50%, 6/1/2015....................................................... 3,500,000 3,536,330
7.55%, 6/1/2017....................................................... 2,500,000 2,512,750
(Refunding - County Pension Funding) 5.20%, 4/1/2009.................... 3,500,000 3,333,155
Calvert County, PCR, Refunding
(Baltimore Gas and Electric Co. Project) 5.55%, 7/15/2014............... 4,000,000 3,741,880
Gaithersburg, EDR, Refunding (First Mortgage - Asbury Methodist)
5.75%, 1/1/2011......................................................... 3,000,000 2,811,300
Howard County:
COP 8.15%, 2/15/2020.................................................... 605,000 816,429
Consolidated Public Improvement, Refunding 5.25%, 8/15/2012............. 1,500,000 1,401,210
EDR, Refunding (M.O.R. XIV Associates Project) 7.75%, 6/1/2012.......... 2,500,000 2,700,750
Howard County Metropolitan District 6.125%, 5/15/2023....................... 2,000,000 2,011,080
Kent County, College Revenue, Refunding (Washington College Project)
7.70%, 7/1/2018......................................................... 1,750,000 1,872,815
Maryland Community Development Administration,
Department of Housing and Community Development:
MFHR:
5.45%, 5/15/2013 (Insured; FHA)................................... 1,750,000 1,605,012
5.95%, 5/15/2013.................................................. 12,200,000 11,692,236
6.50%, 5/15/2013.................................................. 5,000,000 5,114,450
8.875%, 5/15/2021................................................. 525,000 538,902
7.30%, 5/15/2023.................................................. 2,205,000 2,305,658
Zero Coupon, 5/15/2032............................................ 11,550,000 679,833
6.85%, 5/15/2033.................................................. 5,000,000 5,090,700
6.70%, 5/15/2036 (Insured: FHA) (a)............................... 5,415,000 5,340,219
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MARYLAND (CONTINUED)
Maryland Community Development Administration,
Department of Housing and Community Development (continued):
Single Family Program:
7.40%, 4/1/2009................................................. .. $ 1,000,000 $ 1,059,060
6.95%, 4/1/2011................................................... 6,435,000 6,739,118
7.70%, 4/1/2015................................................... 1,680,000 1,780,178
6.55%, 4/1/2026................................................... 7,500,000 7,460,100
6.75%, 4/1/2026................................................... 3,650,000 3,689,055
7.375%, 4/1/2026.................................................. 2,000,000 2,076,820
Zero Coupon, 4/1/2029............................................. 85,075,000 5,888,041
7.625%, 4/1/2029.................................................. 7,890,000 8,221,932
7.45%, 4/1/2032................................................... 6,410,000 6,737,551
Maryland Department of Transportation, Consolidated Transportation
6.375%, 9/1/2006........................................................ 5,000,000 5,312,750
Maryland Economic Development Corp., Revenue
(Health and Mental Hygiene Providers Facilities Acquisition Program):
8.375%, 3/1/2013...................................................... 4,520,000 4,708,077
8.75%, 3/1/2017....................................................... 5,255,000 5,497,045
Maryland Health and Higher Educational Facilities Authority, Revenue:
(Anne Arundel Medical Center) 5.25%, 7/1/2013 (Insured; AMBAC).......... 3,530,000 3,217,277
(Bon Secours Hospital) 7.375%, 9/1/2017 (Prerefunded 7/1/2000) (b)...... 2,575,000 2,906,196
(Francis Scott Key Medical Center):
5%, 7/1/2018.......................................................... 5,000,000 4,316,350
7%, 7/1/2025 (Prerefunded 7/1/2000) (b,c)............................. 6,500,000 7,224,165
(Good Samaritan Hospital) 5.70%, 7/1/2009............................... 3,140,000 3,076,980
(Greater Baltimore Medical Center) 6.75%, 7/1/2019 (Prerefunded 7/1/2001) (b) 4,250,000 4,708,022
(Refunding - Johns Hopkins Hospital) 5%, 7/1/2023....................... 2,000,000 1,675,060
(Refunding - Memorial Hospital of Cumberland) 6.50%, 7/1/2017 (Insured; MBIA) 1,000,000 1,005,360
(Refunding - Peninsula Regional Medical Project) 5%, 7/1/2023 (Insured; MBIA) 8,220,000 6,961,107
(Refunding - Roland Park Project) 7.75%, 7/1/2012....................... 2,230,000 2,333,918
(Union Hospital of Cecil County) 6.70%, 7/1/2009........................ 2,320,000 2,338,722
(University of Maryland Medical Systems):
7%, 7/1/2022 (Insured; FGIC) ......................................... 4,500,000 5,092,425
Refunding:
5.40%, 7/1/2008 (Insured; FGIC)................................... 2,625,000 2,531,288
5.375%, 7/1/2013 (Insured; FGIC).................................. 4,500,000 4,148,820
Maryland Industrial Development Financing Authority, EDR
(Holy Cross Health Systems Corp.) 5.50%, 12/1/2015...................... 10,630,000 9,554,138
(Medical Waste Association) 8.75%, 11/15/2010........................... 775,000 775,000
Maryland Local Government Insurance Trust, Capitalization Program, COP
7.125%, 8/1/2009........................................................ 3,250,000 3,490,468
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MARYLAND (CONTINUED)
Maryland Stadium Authority, Sports Facility LR 7.60%, 12/15/2019............ $ 5,250,000 $ 5,691,158
Maryland Transportation Authority, Transportation Facilities Project Revenue:
9%, 7/1/2015 (Prerefunded 7/1/1995) (b)................................. 1,790,000 1,840,675
Refunding 5.70%, 7/1/2005............................................... 3,700,000 3,774,074
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue:
7.25%, 9/1/2011......................................................... 2,250,000 2,465,753
7.25%, 9/1/2012......................................................... 5,500,000 6,027,395
6.70%, 9/1/2013......................................................... 1,200,000 1,278,660
7.10%, 9/1/2013......................................................... 600,000 659,256
Montgomery County Housing Opportunities Commission, Revenue:
Multi-Family Mortgage:
7.05%, 7/1/2032....................................................... 2,485,000 2,553,835
7.375%, 7/1/2032...................................................... 4,630,000 4,817,700
Single Family Mortgage 7.375%, 7/1/2017................................. 1,875,000 1,962,919
Montgomery County Revenue Authority, LR
(Olney Indoor Swim Center Project)
6.30%, 7/15/2012 (Prerefunded 7/15/2000) (b)............................ 2,110,000 2,272,998
Northeast Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery Project) 6.20%, 7/1/2010 .......... 5,000,000 4,941,400
Prince Georges County:
Consolidated Public Improvement, Refunding:
6.75%, 7/1/2001....................................................... 830,000 917,573
6.75%, 7/1/2010 (Prerefunded 7/1/2001) (b)........................... 1,170,000 1,243,769
5.25%, 10/1/2010...................................................... 1,000,000 932,790
EDR, Refunding (Capitol View II) 9%, 9/1/2002 (d)....................... 7,506,000 6,380,100
PCR, Refunding (Potomac Electric Project) 6%, 9/1/2022.................. 3,750,000 3,661,088
Revenue Project, Refunding (Dimensions Health Corp.):
5.375%, 7/1/2014 ..................................................... 3,000,000 2,620,860
5.30%, 7/1/2024 ...................................................... 6,000,000 4,968,600
Solid Waste Management System Revenue 5.25%, 6/15/2013.................. 3,800,000 3,243,984
Stormwater Management 5.50%, 3/15/2013.................................. 2,780,000 2,643,224
Prince Georges County Housing Authority:
Mortgage Revenue, Refunding:
(New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA & MBIA) 4,300,000 4,441,470
(Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA) 3,000,000 3,008,250
(Timber Ridge/Cypress Creek) 5.625%, 12/20/2013 (Collateralized; GNMA) 5,355,000 5,016,939
SFMR 6.60%, 12/1/2025 (Collateralized: FNMA & GNMA)..................... 5,000,000 5,042,600
University of Maryland, System Auxiliary Facility and Tuition Revenue:
6.50%, 10/1/2002........................................................ 1,420,000 1,562,923
5.375%, 4/1/2009........................................................ 3,500,000 3,352,580
Refunding 5%, 10/1/2010................................................. 3,000,000 2,700,720
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- ------------
MARYLAND (CONTINUED)
Washington D.C. Metropolitan Transit Authority, Gross Revenue, Refunding
5.25%, 7/1/2014 (Insured: FGIC)......................................... $ 1,000,000 $ 903,540
Washington Suburban Sanitary District, General Construction
6.50%, 11/1/2014 (Prerefunded 11/1/2001) (b)............................ 2,690,000 2,947,648
U. S. RELATED-7.9%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ . 4,000,000 4,050,560
Guam Power Authority, Revenue 6.30%, 10/1/2012.............................. 3,400,000 3,346,858
Puerto Rico Commonwealth 5.85%, 7/1/2009 ................................... 5,000,000 4,970,950
Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue 5.40%, 7/1/2006 ........................................ . 11,000,000 10,493,670
Puerto Rico Public Buildings Authority, Revenue, Refunding 5.70%, 7/1/2009 3,500,000 3,439,625
--------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $324,814,120)................... $330,399,048
=============
SHORT-TERM MUNICIPAL INVESTMENTS-1.2%
MARYLAND;
Maryland Energy Financing Administration, Obligation Revenue, VRDN
(Baltimore Ferst Project) 4.10% (cost $4,000,000) (e)................... $ 4,000,000 $ 4,000,000
============
TOTAL INVESTMENTS-100.0%
(cost $328,814,120)..................................................... $334,399,048
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue Insurance Corporation
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FHA Federal Housing Administration SFMR Single Family Mortgage Revenue
GNMA Government National Mortgage Association VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 23.4%
AA Aa AA 40.1
A A A 21.6
BBB Baa BBB 5.1
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 1.2
Not Rated(g) Not Rated(g) Not Rated(g) 8.6
-------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Purchased on a delayed delivery basis.
(b) 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.
(c) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(d) Non-income producing security; interest payment in default.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(h) At April 30, 1995, the Fund had $107,807,082 (32% of net assets) and
$84,818,231 (25.2% of net assets) invested in securities whose payment of
principal and interest is dependent upon revenues generated from housing
projects and health care projects, respectively.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30,1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $328,814,120) see statement..................................... $334,399,048
Cash.................................................................... 434,719
Interest receivable..................................................... 5,882,272
Receivable for shares of Beneficial Interest subscribed................. 1,663,731
Receivable for investment securities sold............................... 501,250
Prepaid expenses........................................................ 9,833
-------------
342,890,853
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 152,805
Due to Distributor...................................................... 83,840
Payable for investment securities purchased............................. 5,448,257
Payable for shares of Beneficial Interest redeemed...................... 206,732
Accrued expenses........................................................ 75,491 5,967,125
----------- ------------
NET ASSETS ................................................................ $336,923,728
=============
REPRESENTED BY:
Paid-in capital......................................................... $330,700,472
Accumulated undistributed net realized gain on investments.............. 638,328
Accumulated net unrealized appreciation on investments-Note 3........... 5,584,928
-------------
NET ASSETS at value......................................................... $336,923,728
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 24,072,403
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,798,533
==============
NET ASSET VALUE per share:
Class A Shares
($301,833,626 / 24,072,403 shares).................................... $12.54
=======
Class B Shares
($35,090,102 / 2,798,533 shares)...................................... $12.54
=======
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $22,777,401
EXPENSES:
Management fee-Note 2(a).............................................. . $1,901,194
Shareholder servicing costs-Note 2(c)................................. 1,117,864
Distribution fees (Class B shares)-Note 2(b).......................... 162,359
Professional fees..................................................... 43,186
Custodian fees........................................................ 36,791
Prospectus and shareholders' reports.................................. 25,114
Registration fees..................................................... 4,811
Trustees' fees and expenses-Note 2(d)................................. 2,678
Miscellaneous......................................................... 28,721
----------
3,322,718
Less-reduction in management fee due to
undertakings-Note 2(a).................................... ........ 32,614
----------
TOTAL EXPENSES.................................................. 3,290,104
-------------
INVESTMENT INCOME-NET........................................... 19,487,297
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 874,479
Net unrealized appreciation on investments.............................. 276,297
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,150,776
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $20,638,073
=============
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------------------
1994 1995
-------------- ------------
OPERATIONS:
Investment income-net................................................... $ 20,691,632 $ 19,487,297
Net realized gain (loss) on investments................................. (231,661) 874,479
Net unrealized appreciation (depreciation) on investments for the year.. (16,463,923) 276,297
-------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 3,996,048 20,638,073
------------- ------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (19,640,636) (17,819,972)
Class B shares........................................................ (1,050,996) (1,667,325)
From net realized gain on investments:
Class A shares........................................................ (741,468) ---
Class B shares........................................................ (53,530) ---
In excess of net realized gain on investments:
Class A shares........................................................ (4,187) ---
Class B shares........................................................ (302) ---
------------- ------------
TOTAL DIVIDENDS................................................... (21,491,119) (19,487,297)
------------ ----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 44,119,678 15,871,084
Class B shares........................................................ 27,026,693 7,200,284
Dividends reinvested:
Class A shares........................................................ 12,863,992 11,260,663
Class B shares........................................................ 759,890 1,087,620
Cost of shares redeemed:
Class A shares........................................................ (43,091,205) (61,788,292)
Class B shares........................................................ (1,376,544) (3,903,364)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 40,302,504 (30,272,005)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 22,807,433 (29,121,229)
NET ASSETS:
Beginning of year....................................................... 343,237,524 366,044,957
-------------- -------------
End of year............................................................. $366,044,957 $336,923,728
============== =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- ---------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------- --------------------------------
1994 1995 1994 1995
--------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 3,339,080 1,283,464 2,042,409 582,210
Shares issued for dividends reinvested 978,190 913,405 57,973 88,247
Shares redeemed........................ (3,303,860) (5,049,171) (106,081) (321,839)
-------------- -------------- -------------- -----------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING.... 1,013,410 (2,852,302) 1,994,301 348,618
============== =============== =============== ==========
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 13 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Maryland Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such
dividends are paid monthly. Dividends from net realized capital gain are
normally declared and paid annually, but the Series may make distributions on
a more frequent basis to comply with the distribution requirements of the
Internal Revenue Code. To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the Series not
to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expense as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $32,614 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $10,085 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $14,513
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $112,582 was charged to the Series
pursuant to the Class B Distribution Plan and $49,777 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $260,906 and $24,888 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $522,094 and $56,291 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $200,447,897 and $226,481,040, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $5,584,928, consisting of $11,272,899 gross unrealized appreciation and
$5,687,971 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Maryland Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Maryland Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young LLP (Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
--------- -------
<S> <C> <C>
MASSACHUSETTS-86.8%
Boston Industrial Development Financing Authority, Sewer Facility Revenue
(Harbor Electric Energy Co. Project) 7.375%, 5/15/2015.................. $ 2,500,000 $ 2,595,650
Boston Water and Sewer Commission, Revenue:
7.875%, 11/1/1996....................................................... 295,000 315,638
7.875%, 11/1/2013....................................................... 605,000 643,018
7.10%, 11/1/2019 (Insured; MBIA, Prerefunded 11/1/1999) (a)............. 1,000,000 1,104,100
Leominster 7.50%, 4/1/2009 (Insured; MBIA, Prerefunded 4/1/2000) (a)........ 1,275,000 1,428,982
Lynn Water and Sewer Commission, General Revenue
7.25%, 12/1/2010 (Insured; MBIA, Prerefunded 12/1/2000) (a)............. 1,000,000 1,125,250
Massachusetts Bay Transportation Authority:
6.204%, 3/1/2021 (Insured; MBIA) (b,c).................................. 2,300,000 1,992,375
7%, 3/1/2021............................................................ 1,000,000 1,110,600
Massachusetts College Building Authority, Project Revenue
7.80%, 5/1/2016 (Insured; MBIA, Prerefunded 5/1/1998) (a)............... 1,000,000 1,101,030
Massachusetts Commonwealth:
7.25%, 3/1/2000 (Insured; FGIC)......................................... 650,000 723,860
7.25%, 3/1/2009 (Insured; FGIC, Prerefunded 3/1/2000) (a)............... 350,000 389,452
7%, 8/1/2012............................................................ 1,850,000 1,991,784
Massachusetts Education Loan Authority, Education Loan Revenue
7.75%, 1/1/2008 (Insured; MBIA)......................................... 1,310,000 1,414,158
Massachusetts Health and Educational Facilities Authority, Revenue:
(Berkshire Health Systems):
7.50%, 10/1/2008 (Insured; MBIA)...................................... 1,000,000 1,100,950
6.75%, 10/1/2019 (Insured; MBIA)...................................... 1,750,000 1,813,473
(Capital Asset Program) 7.30%, 10/1/2018 (Insured; MBIA)................ 3,750,000 4,066,162
(Medical Center of Central Massachusetts) 7.10%, 7/1/2021 .............. 1,000,000 1,027,260
(New England Deaconess Hospital) 6.875%, 4/1/2022....................... 6,000,000 6,093,360
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 2,050,000 2,196,493
(Salem Hospital) 7.25%, 7/1/2009 (Insured; MBIA)........................ 370,000 387,693
(South Shore Hospital) 7.50%, 7/1/2020
(Insured; MBIA, Prerefunded 7/1/2000) (a)............................. 2,000,000 2,258,240
(University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)................... 2,750,000 2,992,440
Multi-Family Residential 7.80%, 8/1/2022 (Insured; FHA)................. 1,500,000 1,562,790
Residential:
8.50%, 8/1/2020....................................................... 15,000 15,752
8.40%, 8/1/2021....................................................... 260,000 275,642
Single Family:
7.80%, 12/1/2005...................................................... 930,000 962,550
7.90%, 6/1/2014....................................................... 980,000 1,039,153
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
----------- ----------
Massachusetts Housing Finance Agency, Housing Revenue:
MASSACHUSETTS (CONTINUED)
Single Family (continued):
8.10%, 12/1/2021...................................................... $ 2,400,000 $ 2,543,328
7.95%, 6/1/2023....................................................... 2,000,000 2,125,860
Massachusetts Industrial Finance Agency, Revenue:
(Brooks School) 5.95%, 7/1/2023......................................... 1,000,000 968,080
(Leonard Morse Hospital) 8%, 10/15/2014 (Prerefunded 10/15/1999) (a).... 1,000,000 1,141,620
(Provider Lease Program) 8.75%, 7/15/2009............................... 695,000 723,474
(Refunding - Harvard Community Health) 8.125%, 10/1/2017................ 750,000 820,643
Massachusetts Municipal Wholesale Electric Co.,
Power Supply Systems Revenue:
5.20%, 7/1/1998....................................................... 2,000,000 2,005,060
8.75%, 7/1/2018 (d)................................................... 3,410,000 3,771,783
6.125%, 7/1/2019...................................................... 1,200,000 1,153,848
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt) 10%, 3/1/2026........................................ 3,000,000 3,247,290
Massachusetts Water Resources Authority
7.625%, 4/1/2014 (Prerefunded 4/1/2000) (a)............................. 750,000 847,072
New England Education Loan Marketing Corp., Refunding (Student Loan):
5%, 6/1/1998............................................................ 3,400,000 3,322,888
5.70%, 7/1/2005......................................................... 1,000,000 978,790
Somerville Housing Development Corp., Multi-Family Revenue, Refunding
7.50%, 1/1/2024 (Collateralized; FNMA).................................. 1,000,000 1,050,570
University of Lowell Building Authority 7.60%, 11/1/2010 (Insured; FSA)..... 750,000 812,385
U. S. RELATED-13.2%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 1,500,000 1,518,960
Puerto Rico Commonwealth:
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a).............................. 1,000,000 1,112,710
5.375%, 7/1/2022 (Insured; MBIA) (e).................................... 2,500,000 2,291,575
Refunding 6%, 7/1/2014.................................................. 2,000,000 1,957,460
Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue:
6.136%, 7/1/2009 (b).................................................. 1,000,000 873,750
6.236%, 7/1/2010 (b).................................................. 1,000,000 868,750
Puerto Rico Electric Power Authority, Power Revenue
8%, 7/1/2008 (Prerefunded 7/1/1998) (a)................................. 500,000 558,750
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018........................................................ 1,000,000 1,033,670
-----------
TOTAL INVESTMENTS (cost $74,096,213)........................................ $77,456,171
===========
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
FGIC Financial Guaranty Insurance Company FSA Financial Security Assurance
FHA Federal Housing Administration MBIA Municipal Bond Investors Assurance
FNMA Federal National Mortgage Association Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- -------- ------------------ ---------------------
<S> <C> <S> <C>
AAA Aaa AAA 44.3%
AA Aa AA 8.6
A A A 33.9
BBB Baa BBB 5.3
Not Rated (g) Not Rated (g) Not Rated (g) 7.9
-------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Security 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,
1995, this security amounted to $1,992,375 or 2.6% of net assets.
(d) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(e) Purchased on delayed delivery basis.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(h) At April 30, 1995, the Fund had $22,871,073 (29.7%) of net assets
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
(i) At April 30, 1995, 32.8% of the Fund's net assets are insured by
MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $74,096,213)-see statement...................................... $77,456,171
Cash.................................................................... 425,860
Interest receivable..................................................... 1,394,556
Receivable for shares of Beneficial Interest subscribed................. 191,595
Prepaid expenses........................................................ 4,628
===========
79,472,810
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 34,915
Due to Distributor...................................................... 17,578
Payable for investment securities purchased............................. 2,354,992
Payable for shares of Beneficial Interest redeemed...................... 84,388
Accrued expenses........................................................ 29,511 2,521,384
---------- -----------
NET ASSETS ................................................................ $76,951,426
===========
REPRESENTED BY:
Paid-in capital......................................................... $74,086,484
Accumulated net realized capital losses and distribution in excess
of net realized gain on investments-Note 1(c)......................... (495,016)
Accumulated net unrealized appreciation on investments-Note 3........... 3,359,958
-----------
NET ASSETS at value......................................................... $76,951,426
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 6,307,679
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 366,391
===========
NET ASSET VALUE per share:
Class A Shares
($72,731,047 / 6,307,679 shares)...................................... $11.53
======
Class B Shares
($4,220,379 / 366,391 shares)......................................... $11.52
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,411,347
EXPENSES:
Management fee-Note 2(a).............................................. $ 426,673
Shareholder servicing costs-Note 2(c)................................. 253,821
Distribution fees (Class B shares)-Note 2(b).......................... 19,533
Prospectus and shareholders' reports.................................. 15,517
Professional fees..................................................... 9,588
Custodian fees........................................................ 8,025
Registration fees..................................................... 3,326
Trustees' fees and expenses-Note 2(d)................................. 669
Miscellaneous......................................................... 15,635
---------
752,787
Less-reduction in management fee due to
undertakings-Note 2(a).................................... ........ 7,190
---------
TOTAL EXPENSES.................................................. 745,597
----------
INVESTMENT INCOME-NET........................................... 4,665,750
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(120,750)
Net unrealized (depreciation) on investments........................... (311,459)
---------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (432,209)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $4,233,541
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-------------------------------
1994 1995
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 4,904,107 $ 4,665,750
Net realized gain (loss) on investments................................. 38,609 (120,750)
Net unrealized (depreciation) on investments for the year............... (3,301,993) (311,459)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,640,723 4,233,541
------------- -------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (4,768,195) (4,451,783)
Class B shares........................................................ (135,912) (213,967)
From net realized gain on investments:
Class A shares........................................................ (303,176) ---
Class B shares........................................................ (11,985) ---
In excess of net realized gain on investments:
Class A shares........................................................ (12,471) (343,505)
Class B shares........................................................ (493) (17,797)
------------- -------------
TOTAL DIVIDENDS................................................... (5,232,232) (5,027,052)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 6,515,438 4,730,079
Class B shares........................................................ 2,835,004 1,042,859
Dividends reinvested:
Class A shares........................................................ 2,622,716 2,596,861
Class B shares........................................................ 68,991 123,653
Cost of shares redeemed:
Class A shares........................................................ (8,594,165) (10,711,882)
Class B shares........................................................ (56,768) (603,243)
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 3,391,216 (2,821,673)
-------------- ------------
TOTAL (DECREASE) IN NET ASSETS.................................. (200,293) (3,615,184)
NET ASSETS:
Beginning of year....................................................... 80,766,903 80,566,610
-------------- --------------
End of year............................................................. $80,566,610 $76,951,426
============= =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------------------
CLASS A CLASS B
------------------------------- -------------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------- -------------------------------
1994 1995 1994 1995
-------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 531,050 413,848 229,412 90,978
Shares issued for dividends reinvested. 214,378 228,208 5,666 10,873
Shares redeemed........................ (710,422) (939,699) (4,659) (53,757)
-------------- ------------ ------------- -----------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING............... 35,006 (297,643) 230,419 48,094
============== ============ ============= ==========
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 14 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Massachusetts Series (the "Series").
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
Dividends in excess of net realized gains on investment for financial
statement purposes result primarily from losses from securities transactions
during the year ended April 30, 1995 which are treated for Federal income tax
purposes as arising in Fiscal 1996.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $7,190 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $3,502 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $620 from
contingent deferred sales charges imposed upon redemptions of the Series'
Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, the Distribution Plan ("prior Class B Distribution
Plan") provided that the Series pay Dreyfus Service Corporation at an annual
rate of .50 of 1% of the value of the Series' Class B shares average daily net
assets, for the costs and expenses in connection with advertising, marketing
and distributing the Series' Class B shares. Dreyfus Service Corporation made
payments to one or more Service Agents based on the value of the Series' Class
B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $13,418 was charged to the Series
pursuant to the Class B Distribution Plan and $6,115 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to Serv
ice Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $60,131 and $3,058 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $124,045 and $6,708 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $13,572,300 and $18,625,062, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $3,359,958, consisting of $4,251,127 gross unrealized appreciation and
$891,169 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Massachusetts Series (one of the series constituting the Premier State
Municipal Bond Fund) as of April 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Massachusetts Series at April
30, 1995, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernest & Young LLP Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.4% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
MICHIGAN-96.7%
Allendale Public School District 5.875%, 5/1/2014 (Insured; MBIA)........... $ 1,000,000 $ 977,070
Breitung Township School District, Refunding 5.50%, 5/1/2012 (Insured; AMBAC) 2,500,000 2,380,650
Brighton Area School District, Refunding:
Zero Coupon, 5/1/2014 (Insured; AMBAC).................................. 8,000,000 2,492,480
6%, 5/1/2020 (Insured; AMBAC)........................................... 1,750,000 1,718,868
Capital Region Airport Authority, Airport Revenue
6.70%, 7/1/2021 (Insured; MBIA)......................................... 2,500,000 2,596,800
Central Michigan University, Refunding 6%, 10/1/2013 (Insured; MBIA)........ 1,965,000 1,949,752
Chippewa Valley Schools 7%, 5/1/2010 (Prerefunded 5/1/2001) (a)............. 1,275,000 1,420,656
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010................................ 4,150,000 4,385,346
Sewer Disposal System Revenue:
7.125%, 7/1/2019 (Prerefunded 7/1/1999) (a)........................... 2,735,000 2,998,216
5.70%, 7/1/2023 (Insured; FGIC)....................................... 10,000,000 9,464,100
(Unlimited Tax) 6.35%, 4/1/2014......................................... 3,410,000 3,275,748
Water Supply Systems Revenue, Refunding
8.217%, 7/1/2022 (Insured; FGIC) (b).................................. 1,500,000 1,541,250
Detroit School District (School Building and Site)
(Wayne County) 6.25%, 5/1/2012.......................................... 1,750,000 1,757,630
East Lansing Building Authority, Refunding 6.90%, 10/1/2011................. 1,375,000 1,445,194
Flint Michigan Refunding Tax Increment Finance Authority 5.75%, 6/1/2002.... 3,000,000 3,044,100
Garden City Building Authority, Refunding 5.75%, 11/1/2017 (Insured; AMBAC). 1,120,000 1,074,987
Grand Ledge Public School District 6.60%, 5/1/2024 (Insured; MBIA).......... 2,750,000 2,879,250
Grand Rapids Community College 5.90%, 5/1/2022 (Insured; MBIA).............. 4,650,000 4,533,564
Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding
7.625%, 9/1/2023 (Collateralized; FNMA)................................. 1,000,000 1,064,750
Greater Detroit Resource Recovery Authority, Revenue 9.25%, 12/13/2008...... 1,250,000 1,314,675
Huron Valley School District, Refunding 6.125%, 5/1/2020 (Insured; FGIC).... 1,735,000 1,703,423
Kent Hospital Finance Authority, Hospital Facility Revenue (Butterworth
Hospital)
7.25%, 1/15/2012 (Prerefunded 1/15/2000) (a)............................ 1,000,000 1,109,190
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020 (Prerefunded 2/1/2000) (a) 2,000,000 2,334,080
Livonia Public Schools, School District Refunding 5.125%, 5/1/2022 (Insured; FGIC) 2,000,000 1,737,460
Michigan Building Authority, Revenue:
6.75%, 10/1/2007 (Insured; AMBAC)....................................... 1,600,000 1,724,096
6.75%, 10/1/2011........................................................ 2,000,000 2,118,260
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MICHIGAN (CONTINUED)
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)...................................... $ 2,250,000 $ 2,388,532
6%, 9/1/2008............................................................ 2,000,000 2,004,040
7.55%, 10/1/2008 (Insured; MBIA)........................................ 1,625,000 1,776,287
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007................................... 2,250,000 2,341,418
(Daughters of Charity National Health Systems-Providence Hospital) 7%, 11/1/2021 2,700,000 2,815,776
(McLaren Obligation Group) 7.50%, 9/15/2021 (Prerefunded 9/15/2001) (a). 1,250,000 1,431,150
(Mercy Mount Clemens Corp.) 6.25%, 5/15/2011............................ 2,000,000 2,009,940
Refunding:
(Detroit Medical Center) 8.125%, 8/15/2012............................ 220,000 240,920
(Genesys Health Systems) 8.125%, 10/1/2021............................ 5,000,000 5,171,550
(Middle Michigan Obligation Group) 6.625%, 6/1/2010................... 2,000,000 2,018,260
(Oakwood Obligation Group) 5.625%, 11/1/2018.......................... 2,500,000 2,305,925
(Pontiac Osteopathic Hospital) 6%, 2/1/2014........................... 5,250,000 4,510,170
(Sisters of Mercy Health Corp.) 6.25%, 2/15/2009 (Insured; FSA)....... 1,065,000 1,084,330
(Sisters of Mercy Health Corp.) 7.50%, 2/15/2018 (Prerefunded 2/15/2001) (a) 2,250,000 2,555,077
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012............................. 2,150,000 2,246,750
MFHR 8.375%, 7/1/2019 (Insured; FGIC)................................... 1,550,000 1,658,763
Rental Housing Revenue:
6.50%, 4/1/2006....................................................... 2,000,000 2,039,360
7.70%, 4/1/2023 (Insured; FSA)........................................ 4,185,000 4,425,596
SFMR:
7.55%, 12/1/2014...................................................... 210,000 222,776
7.50%, 6/1/2015....................................................... 2,355,000 2,493,757
8%, 6/1/2018.......................................................... 290,000 306,098
7.75%, 12/1/2019...................................................... 2,480,000 2,619,178
6.95%, 12/1/2020...................................................... 1,750,000 1,802,238
Michigan Job Development Authority, PCR
(Chrysler Corp. Project) 5.70%, 11/1/1999............................... 1,000,000 999,200
Michigan Municipal Bond Authority, Revenue (State Revolving Fund):
6.50%, 10/1/2014........................................................ 2,500,000 2,591,675
6.50%, 10/1/2017........................................................ 3,500,000 3,596,355
Michigan Strategic Fund:
Ltd. Obligation Revenue:
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009..... 1,555,000 1,594,264
Refunding (Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.)..... 3,075,000 3,093,665
(WMX Technologies Inc. Project) 6%, 12/1/2013......................... 4,000,000 3,848,200
Solid Waste Disposal Revenue Refunding
(Genesee Power Station Project) 7.50%, 1/1/2021....................... 3,000,000 2,932,770
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
MICHIGAN (CONTINUED)
Monroe County:
PCR (Detroit Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)..................................... $ 4,650,000 $ 5,077,521
7.875%, 12/1/2019..................................................... 2,720,000 2,946,250
7.65%, 9/1/2020 (Insured; FGIC)....................................... 2,250,000 2,470,658
6.55%, 6/1/2024 (Insured; MBIA)....................................... 1,700,000 1,732,521
Water Supply Systems (Frenchtown Charter Township Water Treatment
and Distribution Systems) 6.50%, 5/1/2013............................. 2,500,000 2,539,100
Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)............ 2,000,000 2,247,700
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006.............. 1,685,000 1,853,989
Northwestern Michigan College, Community College Improvement Revenue,
Refunding
7%, 7/1/2011............................................................ 1,800,000 1,885,176
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020 (Prerefunded 1/1/2000) (a) 1,680,000 2,023,678
Rockford Public Schools, Refunding (Kent County School Building and Site)
7.375%, 5/1/2019 (Prerefunded 5/1/2000) (a)............................. 2,000,000 2,225,640
Romulus Community Schools, Capital Appreciation Refunding
Zero Coupon, 5/1/2019 .................................................. 2,390,000 539,064
Romulus Economic Development Corp., Ltd. Obligation EDR
Refunding (Romulus Hir Ltd. Partnership Project)
7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.).............. 3,700,000 3,874,529
Royal Oak Michigan Finance Authority, Revenue, Refunding 5.25%, 11/15/2019.. 3,625,000 3,172,890
Saginaw-Midland Municipal Water Supply Corp. 5.25%, 9/1/2016................ 1,000,000 887,230
Wayne Charter County, Airport Revenue (Detroit Metropolitan Wayne County
Airport):
5.25%, 12/1/2013 (Insured; MBIA)........................................ 4,000,000 3,641,320
5.25%, 12/1/2021 (Insured; MBIA)........................................ 1,000,000 876,920
West Ottawa Public School District, Refunding 6%, 5/1/2020 (Insured; FGIC).. 3,115,000 3,059,584
Western Michigan University, Revenue 6.125%, 11/15/2022 (Insured; FGIC)..... 6,970,000 6,837,918
White Cloud Public Schools, Refunding 5.50%, 5/1/2020....................... 2,000,000 1,844,620
Wyoming Public Schools, Refunding 5.90%, 5/1/2022........................... 1,000,000 962,170
U.S. RELATED-1.7%
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (c).................. 2,510,000 2,636,579
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport
Project)
8.10%, 10/1/2005........................................................ 500,000 543,935
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $179,583,731)..................................................... $186,044,607
============
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS-1.6% AMOUNT VALUE
-------------- --------------
MICHIGAN:
Michigan Housing Development Authority, Rental Housing Revenue VRDN
4.65% (LOC; Credit Suisse) (c,d)................................ ... $ 2,000,000 $ 2,000,000
Michigan Strategic Fund, LTD. Obligation Revenue VRDN
(Coil Center Project) 5.37% (LOC; Tokai Bank) (c,d)..................... 1,000,000 1,000,000
-----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $3,000,000)....................................................... $ 3,000,000
============
TOTAL INVESTMENTS-100.0%
(cost $182,583,731)..................................................... $189,044,607
============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue Insurance Corporation
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortage Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ------- -------- ------------------ ------------------
<S> <C> <S> <C>
AAA Aaa AAA 40.2%
AAA Aa AA 23.1
A A A 16.7
BBB Baa BBB 13.2
F1 MIG1 SP1 1.6
Not Rated(f) Not Rated(f) Not Rated(f) 5.2
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds at the earliest
refunding date.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Secured by letters of credit.
(d) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $182,583,731)-see statement..................................... $189,044,607
Cash.................................................................... 133,417
Interest receivable..................................................... 3,806,150
Receivable for shares of Beneficial Interest subscribed................. 267,533
Prepaid expenses........................................................ 7,684
-----------
193,259,391
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $88,043
Due to Distributor...................................................... 46,822
Payable for shares of Beneficial Interest redeemed...................... 9,261
Accrued expenses........................................................ 40,564 184,690
------- ------------
NET ASSETS ................................................................ $193,074,701
============
REPRESENTED BY:
Paid-in capital......................................................... $185,926,409
Accumulated undistributed net realized gain on investments.............. 687,416
Accumulated net unrealized appreciation on investments-Note 3........... 6,460,876
------------
NET ASSETS at value......................................................... $193,074,701
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 11,667,982
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,088,416
============
NET ASSET VALUE per share:
Class A Shares
($176,603,546 / 11,667,982 shares).................................... $15.14
======
($16,471,155 / 1,088,416 shares)...................................... $15.13
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF OPERATIONS APRIL 30,1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $12,845,609
EXPENSES:
Management fee-Note 2(a).............................................. $1,074,186
Shareholder servicing costs-Note 2(c)................................. 646,502
Distribution fees (Class B shares)-Note 2(b).......................... 76,730
Professional fees..................................................... 25,821
Custodian fees........................................................ 21,807
Prospectus and shareholders' reports.................................. 18,133
Registration fees..................................................... 4,495
Trustees' fees and expenses-Note 2(d)................................. 1,733
Miscellaneous......................................................... 25,021
------------
1,894,428
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 18,112
------------
TOTAL EXPENSES.................................................. 1,876,316
-----------
INVESTMENT INCOME-NET........................................... 10,969,293
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,828,821
Net unrealized (depreciation) on investments............................ (818,115)
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,010,706
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $11,979,999
===========
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------------------
1994 1995
-------------- --------------
OPERATIONS:
Investment income-net................................................... $ 11,313,866 $ 10,969,293
Net realized gain on investments........................................ 2,315,880 1,828,821
Net unrealized (depreciation) on investments for the year............... (6,895,275) (818,115)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,734,471 11,979,999
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (10,845,933) (10,186,162)
Class B shares........................................................ (467,933) (783,131)
Net realized gain on investments:
Class A shares........................................................ (956,415) (2,793,660)
Class B shares........................................................ (54,414) (239,175)
-------------- --------------
TOTAL DIVIDENDS................................................... (12,324,695) (14,002,128)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 24,628,252 10,587,097
Class B shares........................................................ 11,297,694 4,942,392
Dividends reinvested:
Class A shares........................................................ 6,427,971 7,582,697
Class B shares........................................................ 347,542 656,238
Cost of shares redeemed:
Class A shares........................................................ (22,803,586) (27,084,772)
Class B shares........................................................ (760,491) (2,852,874)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS................................ 19,137,382 (6,169,222)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,547,158 (8,191,351)
NET ASSETS:
Beginning of year....................................................... 187,718,894 201,266,052
-------------- --------------
End of year............................................................. $201,266,052 $193,074,701
============== =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- -------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------- -------------------------
1994 1995 1994 1995
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold........................... 1,535,330 701,669 706,062 327,697
Shares issued for dividends reinvested. 401,916 511,163 21,767 44,292
Shares redeemed........................ (1,430,077) (1,819,806) (48,928) (191,401)
----------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING............. 507,169 (606,974) 678,901 180,588
========== =========== ========== =========
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 15 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Michigan Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service, are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discount 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.
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $18,112 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $7,854 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $17,687
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, the Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B
shares average daily net assets, for the costs and expenses in connection
with advertising, marketing and
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
distributing the Series' Class B shares.
Dreyfus Service Corporation made payments to one or more Service Agents based
on the value of the Series' Class B shares owned by clients of the Service
Agent.
During the year ended April 30 1995, $52,967 was charged to the Series
pursuant to the Class B Distribution Plan and $23,763 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $147,668 and $11,774 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $302,233 and $26,591 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $164,401,933 and $173,322,699, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $6,460,876, consisting of $8,177,217 gross unrealized appreciation and
$1,716,341 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Michigan Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Michigan Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-92.1% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
MINNESOTA-85.2%
Anoka County:
Resources Recovery Revenue (Northern States Power Co.) 7.15%, 12/1/2008. $ 1,150,000 $ 1,226,521
Solid Waste Disposal Revenue (United Power Association Project)
6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative
Finance Corp.).............................................................. 3,825,000 4,012,922
Burnsville, MFHR Refunding (Coventry Court Apartments)
7.50%, 9/1/2027 (Insured; FHA).......................................... 2,250,000 2,360,362
Dakota County Housing and Redevelopment Authority, South-Saint Paul Revenue
Refunding (Single Family-GNMA Program) 8.10%, 9/1/2012.................. 185,000 194,191
Duluth Economic Development Authority, Health Care Facilities Revenue
(Benedictine Health-Saint Mary's Project)
8.375%, 2/15/2020 (Prerefunded 2/15/2000) (a)........................... 2,500,000 2,899,750
Eagan, MFHR Refunding (Forest Ridge Apartments) 7.50%, 9/1/2017 (Insured; FHA) 1,000,000 1,054,880
Eden Prairie, MFHR Refunding:
(Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA)............... 500,000 523,870
(Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA).................. 2,895,000 3,098,316
Edina:
Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006........... 1,000,000 1,054,990
Housing Development Revenue Refunding (Edina Park Plaza Project)
7.70%, 12/1/2028 (Insured; FHA)....................................... 2,500,000 2,624,450
Hubbard County, Solid Waste Disposal Revenue (Potlatch Corp. Project)
7.375%, 8/1/2013........................................................ 1,000,000 1,059,820
Minneapolis:
Home Ownership and Renovation Program 5.60%, 12/1/2014.................. 1,755,000 1,699,156
Home Ownership Program 7.10%, 6/1/2021.................................. 755,000 780,693
HR:
(Lifespan Inc.-Abbot Hospital) 7%, 12/1/2014 (Prerefunded 12/1/1999) (a) 1,500,000 1,653,345
(Lifespan Inc.-Minneapolis Children's Medical Center Project):
8.125%, 8/1/2017.................................................. 1,500,000 1,662,780
7%, 12/1/2020..................................................... 5,650,000 6,121,606
MFHR Refunding (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FHA) 4,000,000 4,135,480
MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA).. 2,350,000 2,463,411
Minneapolis Community Development Agency, Ltd. Tax Support Development
Revenue:
8.375%, 6/1/2007........................................................ 2,500,000 2,784,700
8%, 12/1/2009........................................................... 300,000 313,986
7.75%, 12/1/2019........................................................ 2,890,000 3,109,929
7.40%, 12/1/2021........................................................ 2,000,000 2,123,660
Minneapolis-Saint Paul Housing and Redevelopment Authority,
Health Care Systems Revenue:
8%, 8/15/2014 (Prerefunded 8/15/2000) (a)............................. 3,000,000 3,461,670
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
MINNESOTA (CONTINUED) -------------- --------------
Minneapolis-Saint Paul Housing and Redevelopment Authority (continued):
Health Care Systems Revenue (continued):
(Group Health Plan Inc., Project) 6.75%, 12/1/2013.................... $ 2,750,000 $ 2,816,000
(Healthspan):
5%, 11/15/2013 (Insured; AMBAC)................................... 7,500,000 6,621,375
4.75%, 11/15/2018 (Insured; AMBAC)................................ 4,000,000 3,308,000
Minneapolis-Saint Paul Housing Finance Board, SFMR:
8.875%, 11/1/2018 (Collateralized; GNMA)................................ 145,000 153,952
8.30%, 8/1/2021 (Collateralized; GNMA).................................. 410,000 438,196
7.30%, 8/1/2031 (Collateralized; GNMA).................................. 6,475,000 6,759,058
Minneapolis-Saint Paul Metropolitan Apartments Community, 7.80%, 1/1/2014... 3,000,000 3,319,980
Minnesota Agricultural and Economic Development Board,
Minnesota Small Business Development Loan Revenue:
9%, Series B, 8/1/2008................................................ 75,000 78,341
9%, Series C, 8/1/2008................................................ 245,000 255,915
8.125%, Lot 1, 8/1/2009............................................... 765,000 795,164
8.125%, Lot 2, 8/1/2009............................................... 500,000 519,715
8.125%, Lot 3, 8/1/2009............................................... 815,000 847,135
8.20%, 8/1/2009....................................................... 655,000 688,680
8.375%, 8/1/2010...................................................... 1,385,000 1,458,627
Minnesota Higher Education Facilities Authority,
Mortgage Revenue (University of Saint Thomas)
7.125%, 9/1/2014 (Prerefunded 9/1/2000) (a)............................. 2,095,000 2,317,342
Minnesota Housing Finance Agency:
Rental Housing 6.10%, 8/1/2009.......................................... 2,585,000 2,595,262
Single Family Mortgage:
7.35%, 7/1/2016....................................................... 1,930,000 2,031,093
7.30%, 1/1/2017....................................................... 1,140,000 1,198,619
7.90%, 7/1/2019....................................................... 1,745,000 1,849,299
7.45%, 7/1/2022....................................................... 2,830,000 2,990,065
7.95%, 7/1/2022....................................................... 1,830,000 1,935,975
6.15%, 1/1/2026....................................................... 1,730,000 1,658,586
6.95%, 7/1/2026....................................................... 3,000,000 3,104,700
8%, 7/1/2029.......................................................... 115,000 119,612
Minnesota Public Facilities Authority, Water Pollution Control Revenue:
7.10%, 3/1/2012......................................................... 2,350,000 2,534,452
6.95%, 3/1/2013......................................................... 3,000,000 3,227,010
6.50%, 3/1/2014......................................................... 5,200,000 5,455,840
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
MINNESOTA (CONTINUED) --------------- --------------
Northern Municipal Power Agency, Electric System Refunding Revenue
7.25%, 1/1/2016......................................................... $ 3,500,000 $ 3,767,960
City of Red Wing, Health Care Facilities Refunding Revenue (River Region
Obligation Group)
6.50%, 9/1/2022......................................................... 3,445,000 3,284,222
Saint Cloud, Hospital Facilities Revenue (Saint Cloud Hospital)
7%, 7/1/2020 (Insured; AMBAC)........................................... 1,000,000 1,110,180
Saint Louis Park, Health Care Facilities Revenue (Health Systems Obligated
Group)
5.20%, 7/1/2016 (Insured; AMBAC)........................................ 3,285,000 2,953,806
Saint Paul Housing and Redevelopment Authority:
HR (Saint Paul Ramsey Medical Center Project) 5.50%, 5/15/2013 (Insured; AMBAC) 2,000,000 1,882,200
SFMR Refunding 6.90%, 12/1/2021......................................... 2,940,000 3,019,527
Saint Paul Port Authority:
First Lien Tax Increment Refunding (Energy Park Project) 5%, 2/1/2008
(Insured; AGIC)............................................................. 5,495,000 5,000,285
IDR Refunding (Hampden Building Project) 9.25%, 6/1/2011................ 1,065,000 1,095,661
Sartell, PCR Refunding (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,187,500
Seaway Port Authority of Duluth,
Industrial Development Dock and Wharf Revenues Refunding (Cargill Inc.
Project)
6.80%, 5/1/2012......................................................... 3,000,000 3,190,860
Southern Minnesota Municipal Power Agency, Power Supply System Revenue
5%, 1/1/2013............................................................ 2,000,000 1,757,960
U.S. RELATED-6.9%
Commonwealth of Puerto Rico, 5.875%, 7/1/2018 (Insured; AMBAC)............. 4,000,000 3,952,280
Puerto Rico Highway and Transportation Authority, Highway Revenue 5.55%, 7/1/2010 6,900,000 6,449,844
Puerto Rico Industrial Tourist and Environmental Educational Medical Control
Facilities
Financing Authority, HR 6.25%, 7/1/2024 (Insured; MBIA)................. 1,000,000 1,024,880
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $147,216,373)..................................................... $153,175,646
============
SHORT-TERM MUNICIPAL INVESTMENTS-7.9%
MINNESOTA-5.0%
Cloquet, PCR, VRDN (Potlatch Corp. Project) 4.70% (LOC; Credit Suisse) (b,c) $ 5,900,000 $ 5,900,000
Golden Valley, IDR Refunding, VRDN (Graco Inc. Project) 4.95% (LOC; Fuji Bank)(b,c) 2,380,000 2,380,000
U.S. RELATED-2.9%
Puerto Rico Electric Power Authority, Revenue, VRDN 3.89% (c)............... 4,850,000 4,850,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $13,130,000)...................................................... $ 13,130,000
=============
TOTAL INVESTMENTS-100.0%
(cost $160,346,373)..................................................... $166,305,646
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AGIC Asset Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
AMBAC American Municipal Bond Assurance Corporation Insurance Corporation
FHA Federal Housing Administration MFHR Multi Family Housing Revenue
GNMA Government National Mortgage Association MFMR Multi-Family Mortgage Revenue
HR Hospital Revenue PCR Pollution Control Revenue
IDR Industrial Development Revenue SFMR Single Family Mortgage Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 45.1%
AA Aa AA 23.7
A A A 14.8
BBB Baa BBB 10.1
F1 MIG1 SP1 1.4
Not Rated(e) Not Rated(e) Not Rated(e) 4.9
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
(f) At April 30, 1995, the Series had $44,308,903 (26.3% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from housing projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $160,346,373)-see statement..................................... $166,305,646
Interest receivable..................................................... 3,160,573
Receivable for shares of Beneficial Interest subscribed................. 89,155
Prepaid expenses........................................................ 5,013
------------
169,560,387
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 76,950
Due to Distributor...................................................... 44,470
Due to Custodian........................................................ 153,042
Payable for shares of Beneficial Interest redeemed...................... 594,335
Accrued expenses........................................................ 30,343 899,140
--------- ------------
NET ASSETS ................................................................ $168,661,247
============
REPRESENTED BY:
Paid-in capital......................................................... $164,236,597
Accumulated net realized (loss) on investments.......................... (1,534,623)
Accumulated net unrealized appreciation on investments-Note 3........... 5,959,273
------------
NET ASSETS at value......................................................... $168,661,247
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 9,760,988
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,555,569
============
NET ASSET VALUE per share:
Class A Shares
($145,444,496 / 9,760,988 shares)..................................... $14.90
======
Class B Shares
($23,216,751 / 1,555,569 shares)...................................... $14.92
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $11,286,344
EXPENSES:
Management fee-Note 2(a).............................................. $ 943,548
Shareholder servicing costs-Note 2(c)................................. 544,144
Distribution fees (Class B shares)-Note 2(b).......................... 109,771
Professional fees..................................................... 22,297
Custodian fees........................................................ 19,410
Prospectus and shareholders' reports.................................. 15,136
Trustees' fees and expenses-Note 2(d)................................. 1,555
Registration fees..................................................... 707
Miscellaneous......................................................... 25,877
------------
1,682,445
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 15,888
------------
TOTAL EXPENSES.................................................. 1,666,557
-----------
INVESTMENT INCOME-NET........................................... 9,619,787
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (1,533,666)
Net unrealized appreciation on investments.............................. 3,390,900
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,857,234
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $11,477,021
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
1994 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 9,612,891 $ 9,619,787
Net realized gain (loss) on investments................................. 328,294 (1,533,666)
Net unrealized appreciation (depreciation) on investments for the year.. (7,418,754) 3,390,900
------------ -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 2,522,431 11,477,021
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (8,924,857) (8,494,472)
Class B shares........................................................ (688,034) (1,125,315)
Net realized gain on investments:
Class A shares........................................................ (612,621) (40,522)
Class B shares........................................................ (63,215) (6,066)
------------ -------------
TOTAL DIVIDENDS................................................... (10,288,727) (9,666,375)
------------ -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 21,498,686 5,767,528
Class B shares........................................................ 17,944,220 3,173,322
Dividends reinvested:
Class A shares........................................................ 6,412,443 5,693,880
Class B shares........................................................ 538,255 758,030
Cost of shares redeemed:
Class A shares........................................................ (14,422,611) (23,226,166)
Class B shares........................................................ (941,707) (1,976,764)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 31,029,286 (9,810,170)
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 23,262,990 (7,999,524)
NET ASSETS:
Beginning of year....................................................... 153,397,781 176,660,771
------------ -------------
End of year............................................................. $176,660,771 $168,661,247
============ =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- -------------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------- -------------------------------
1994 1995 1994 1995
------------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 1,381,812 395,165 1,148,723 215,707
Shares issued for dividends reinvested. 413,858 389,703 34,815 51,805
Shares redeemed........................ (937,234) (1,600,971) (61,204) (136,616)
---------- ----------- --------- -------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... 858,436 (816,103) 1,122,334 130,896
========== =========== ========= =======
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 16 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Minnesota Series (the "Series").
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the ability of issuers within the state to pay interest on, or repay principal
of, municipal obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $1,306,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $15,888 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $2,908 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $8,131
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $75,643 was charged to the Series
pursuant to the Class B Distribution Plan and $34,128 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $122,540 and $17,064 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $251,460 and $37,821 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $139,604,184 and $144,792,223, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $5,959,273, consisting of $7,287,608 gross unrealized appreciation and
$1,328,335 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Minnesota Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Minnesota Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.4% AMOUNT VALUE
------------ ------------
<S> <C> <C>
NORTH CAROLINA-73.2%
Asheville, COP, Refunding 6.50%, 2/1/2008................................... $ 500,000 $ 527,575
Board of Governors of the University of North Carolina, Revenue
(University of North Carolina Hospital - Chapel Hill) 6%, 2/15/2024..... 3,000,000 2,823,990
Buncombe County Metropolitan Sewage District, Sewage System Revenue:
6.75%, 7/1/2022 (Prerefunded; 7/1/2002) (a)............................. 500,000 556,610
Refunding 5.50%, 7/1/2022 (Insured; FGIC)............................... 1,125,000 1,047,105
Charlotte, COP (Convention Facility Project):
6.75%, 12/1/2021 (Prerefunded; 12/1/2001) (Insured; AMBAC) (a)......... 1,000,000 1,111,620
Refunding 5.25%, 12/1/2020 (Insured; AMBAC)............................. 4,000,000 3,581,120
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue:
5.75%, 1/1/2012......................................................... 1,285,000 1,256,602
6.25%, 1/1/2020......................................................... 500,000 503,935
Cleveland County, Sanitary District, Water 6.75%, 3/1/2015 (Insured; FGIC).. 290,000 308,351
Coastal Regional Solid Waste Management Authority, Solid Waste Disposal
System Revenue 6.50%, 6/1/2008.......................................... 1,000,000 1,046,690
Craven County Industrial Facilities and Pollution Control Financing
Authority, PCR
Refunding (Weyerhaeuser Co. Project) 6.35%, 1/1/2010.................... 2,000,000 2,022,800
Dare County, COP 6.60%, 5/1/2006 (Insured; MBIA)............................ 400,000 431,256
Durham County, COP (Jail Facilities and Computer Equipment Project)
6.625%, 5/1/2014........................................................ 850,000 876,580
Fayetteville Public Works Commission, Revenue, Refunding
6.50%, 3/1/2014 (Prerefunded; 3/1/2000) (Insured; FGIC) (a)............ 350,000 378,595
Forsyth County, COP (1991 Allied Health Technologies Building Project)
6.50%, 6/1/2012......................................................... 300,000 312,798
Greensboro, COP (1991 Greensboro Coliseum Arena Expansion Project)
6.25%, 12/1/2011........................................................ 500,000 515,705
Haywood County, Industrial Facilities and PCR, Refunding
(Champion International Corp. Project) 6.85%, 5/1/2014.................. 500,000 512,025
Martin County Industrial Facilities and Pollution Control Financing
Authority, Revenue
(Solid Waste Disposal - Weyerhaeuser Project):
7.25%, 9/1/2014....................................................... 400,000 420,424
6.80%, 5/1/2024....................................................... 2,000,000 2,059,300
New Hanover County Industrial Facilities and Pollution Control Financing
Authority,
Solid Waste Disposal Revenue (Occidental Petroleum) 6.50%, 8/1/2014..... 1,000,000 984,770
North Carolina Eastern Municipal Power Agency, Power System Revenue
5.75%, 12/1/2016........................................................ 1,865,000 1,666,098
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NORTH CAROLINA (CONTINUED)
North Carolina Eastern Municipal Power Agency, Power System Revenue
(continued):
Refunding:
5.875%, 1/1/2013...................................................... $ 5,000,000 $ 4,604,950
6%, 1/1/2013.......................................................... 2,500,000 2,349,525
6.50%, 1/1/2017....................................................... 1,000,000 985,040
North Carolina Educational Facilities Finance Agency, Revenue
(Duke University Project) 6.75%, 10/1/2021.............................. 500,000 521,800
North Carolina Housing Finance Agency:
Multi-Family Revenue, Refunding 6.90%, 7/1/2024 (Insured: FHA).......... 485,000 496,839
Single Family Revenue:
7.05%, 9/1/2020....................................................... 1,465,000 1,513,389
6.10%, 9/1/2025 (Insured; FHA)........................................ 4,000,000 4,081,640
6.70%, 9/1/2026....................................................... 2,250,000 2,272,162
North Carolina Medical Care Commission, HR:
(Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021................. 4,500,000 4,565,655
(Duke University Hospital Project) 7%, 6/1/2021 (Prerefunded; 6/1/2001) (a) 3,000,000 3,349,260
(Presbyterian Hospital Project) 7.375%, 10/1/2020 (Prerefunded; 10/1/2000) (a) 250,000 282,100
Refunding:
(Carolina Medicorp Project) 5.50%, 5/1/2015........................... 500,000 465,595
(Mercy Hospital Project) 6.50%, 8/1/2015.............................. 1,000,000 996,520
(North Carolina Baptist Hospital Project) 6%, 6/1/2022................ 1,000,000 981,560
(Southeastern General Hospital Project) Zero Coupon, 6/1/2006 (Insured; FSA) 1,000,000 541,940
North Carolina Municipal Power Agency, Number 1 Catawba Electric Revenue:
7%, 1/1/1996............................................................ 200,000 205,372
5%, 1/1/2015............................................................ 1,000,000 834,690
5.75%, 1/1/2015......................................................... 6,250,000 5,733,000
5.75%, 1/1/2020 (Insured; MBIA)......................................... 2,000,000 1,903,760
Pitt County, Revenue (Pitt County Memorial Hospital) 6.90%, 12/1/2021....... 540,000 566,676
Surry County Northern Hospital District, Health Care Facilities Revenue,
Refunding
7.875%, 10/1/2021....................................................... 1,000,000 1,032,450
Wake County, Hospital System Revenue, Refunding:
Zero Coupon, 10/1/2010 (Insured; MBIA).................................. 2,200,000 885,192
5.125%, 10/1/2026 (Insured; MBIA)....................................... 3,250,000 2,821,130
Wake County Industrial Facilities and Pollution Control Financing Authority,
Revenue
(Carolina Power and Light) 6.90%, 4/1/2009.............................. 2,000,000 2,088,980
U.S. RELATED-26.2%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,025,280
Guam Government 5.40%, 11/15/2018........................................... 2,000,000 1,698,240
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
U.S. RELATED (CONTINUED)
Commonwealth of Puerto Rico:
Public Improvement:
7.70%, 7/1/2020 (Prerefunded; 7/1/2000) (a)........................... $ 1,000,000 $ 1,143,080
6.80%, 7/1/2021 (Prerefunded; 7/1/2002) (a)........................... 600,000 667,626
Refunding 5.50%, 7/1/2013............................................... 2,000,000 1,852,540
Puerto Rico Highway Authority, Revenue, Refunding
8%, 7/1/2003 (Prerefunded; 7/1/1998) (a)................................ 2,000,000 2,229,380
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. 3,600,000 3,968,280
Puerto Rico Port Authority, Special Facilities Revenue
(American Airlines, Inc. Project) 6.30%, 6/1/2023....................... 1,500,000 1,418,970
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health
Facilities, Refunding:
6%, 7/1/2012.......................................................... 850,000 832,974
5.75%, 7/1/2015....................................................... 7,000,000 6,616,330
Virgin Islands Public Finance Authority, Revenue, Refunding,
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 1,500,000 1,550,505
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $92,201,710)...................................................... $91,026,379
=============
SHORT-TERM MUNICIPAL INVESTMENT-.6%
NORTH CAROLINA;
North Carolina Educational Facilities Finance Agency , Revenue, VRDN
(Bowman Grey School Medical Project) 4.60% (LOC; Wachovia Bank) (b,c)
(cost $500,000)......................................................... $ 500,000 $ 500,000
=============
TOTAL INVESTMENTS-100.0%
(cost $92,701,710)...................................................... $91,526,379
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
HR Hospital Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- -------- ------------------ -------------------
<S> <C> <S> <C>
AAA Aaa AAA 27.8%
AA Aa AA 18.8
A A A 37.8
BBB Baa BBB 13.4
F1 MIG1 SP1 .5
Not Rated (e) Not Rated (e) Not Rated (e) 1.7
-------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard and
Poor's, have been determined by the Manager to be of comparable quality
to those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $92,701,710)-see statement...................................... $91,526,379
Interest receivable..................................................... 1,687,856
Receivable for shares of Beneficial Interest subscribed................. 54,021
Prepaid expenses........................................................ 7,108
-----------
93,275,364
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 22,973
Due to Distributor...................................................... 36,898
Due to Custodian........................................................ 589,674
Payable for shares of Beneficial Interest redeemed...................... 63,957
Accrued expenses........................................................ 47,104 760,606
---------- -----------
NET ASSETS ................................................................ $92,514,758
===========
REPRESENTED BY:
Paid-in capital......................................................... $96,294,013
Accumulated net realized (loss) on investments.......................... (2,603,924)
Accumulated net unrealized (depreciation) on investments-Note 3(b)...... (1,175,331)
-----------
NET ASSETS at value......................................................... $92,514,758
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,945,385
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,327,642
===========
NET ASSET VALUE per share:
Class A Shares
($50,204,678 / 3,945,385 shares)...................................... $12.72
======
Class B Shares
($42,310,080 / 3,327,642 shares)...................................... $12.71
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 6,103,845
EXPENSES:
Management fee-Note 2(a).............................................. $ 535,236
Shareholder servicing costs-Note 2(c)................................. 319,198
Distribution fees (Class B shares)-Note 2(b).......................... 199,899
Custodian fees........................................................ 14,145
Professional fees..................................................... 13,948
Prospectus and shareholders' reports.................................. 12,560
Registration fees..................................................... 961
Trustees' fees and expenses-Note 2(d)................................. 826
Miscellaneous......................................................... 45,664
-----------
1,142,437
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 297,996
-----------
TOTAL EXPENSES.................................................. 844,441
-----------
INVESTMENT INCOME-NET........................................... 5,259,404
-----------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments (including options transactions)-Note 3(a) $(2,391,318)
Net realized gain on financial futures-Note 3(a)........................ 48,742
-----------
NET REALIZED (LOSS)................................................... (2,342,576)
Net unrealized appreciation on investments.............................. 2,019,925
-----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (322,651)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,936,753
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------------------
1994 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 5,023,340 $ 5,259,404
Net realized (loss) on investments...................................... (259,519) (2,342,576)
Net unrealized appreciation (depreciation) on investments for the year.. (6,321,383) 2,019,925
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (1,557,562) 4,936,753
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (3,507,400) (3,229,769)
Class B shares........................................................ (1,515,940) (2,029,635)
-------------- --------------
TOTAL DIVIDENDS................................................... (5,023,340) (5,259,404)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 23,248,700 3,792,421
Class B shares........................................................ 28,953,805 5,258,725
Dividends reinvested:
Class A shares........................................................ 1,920,032 1,700,541
Class B shares........................................................ 941,663 1,251,870
Cost of shares redeemed:
Class A shares........................................................ (9,403,883) (23,036,441)
Class B shares........................................................ (1,465,324) (3,172,359)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS................................ 44,194,993 (14,205,243)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 37,614,091 (14,527,894)
NET ASSETS:
Beginning of year....................................................... 69,428,561 107,042,652
-------------- --------------
End of year............................................................. $107,042,652 $ 92,514,758
============== ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- --------------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
--------------------------------- --------------------------------
1994 1995 1994 1995
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 1,697,042 302,337 2,120,383 420,696
Shares issued for dividends reinvested. 141,385 135,607 69,404 100,207
Shares redeemed........................ (691,793) (1,840,173) (108,062) (256,909)
--------------- -------------- -------------- --------------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... 1,146,634 (1,402,229) 2,081,725 263,994
=============== ============== ============== ==============
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 17 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the North Carolina Series (the "Series").
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issued discounts
on investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $1,533,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $225,000 of the
carryover expires in fiscal 2002 and $1,308,000 of the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .20
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken through April 30, 1995 to
reduce the management fee paid by the Series, to the extent that the Series'
aggregate expenses (excluding certain expenses as described above) exceeded
specified annual percentages of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to
$297,996 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $5,095 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $13,979
during the year ended April 30, 1995 from contingent deferred sales charges
imposed upon redemptions of the Series' Class B shares.
(B) On August 3, 1994, Series shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pays Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agents.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended April 30, 1995, $136,431 was charged to the Series
pursuant to the Class B Distribution Plan and $63,468 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Service Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The service
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Series and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. From May 1, 1994 through August 23, 1994, $52,956 and $31,456 were
charged to Class A and Class B shares, respectively, by Dreyfus Service Corpor
ation. From August 24, 1994 through April 30, 1995, $90,383 and $68,494 were
charged to Class A and Class B shares, respectively, by the Distributor
pursuant to the Shareholder Services Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding options transactions, amounted to $20,683,385 and $31,587,918,
respectively, for the year ended April 30, 1995, and consisted entirely of
long-term and short-term municipal investments.
In addition, the following table summarizes the Series' call/put options
written transactions for the year ended April 30, 1995:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
--------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding April 30, 1994........ - -
Contracts written........................... 250 $ 172,627
----------- -----------
250 172,627
Contracts Terminated;
Expired................................... 250 172,627 - $172,627
----------- ----------- ----------- -----------
Total contracts terminated................ 250 $ 172,627 $172,627
----------- ----------- ----------- -----------
Contracts outstanding April 30, 1995........ - -
=========== ===========
</TABLE>
As a writer of call options, the Series receives a premium at the outset
and then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. Generally, the Series
would incur a gain, to the extent of the premium, if the price of the
underlying financial instrument decreases between the date the option is
written and the date on which the option is terminated.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Generally, the Series would realize a loss, if the price of the financial
instrument increases between those dates. At April 30, 1995, there were no
call options written outstanding.
As a writer of put options, the Series receives a premium at the outset
and then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. Generally, the Series would incur
a gain, to the extent of the premium, if the price of the underlying
financial instrument increases between the date the option is written and the
date on which the option is terminated. Generally, the Series would realize a
loss, if the price of the financial instrument declines between those dates.
At April 30, 1995, there were no put options written outstanding.
The Series engages in trading financial futures contracts. The Series is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the Series to
"mark to market" on a daily basis, which reflects the change in the market
value of the contract at the close of each day's trading. Accordingly,
variation margin payments are received to reflect daily unrealized gains or
losses. When the contracts are closed, the Series recognizes a realized gain
or loss. These investments require initial margin deposits with a custodian,
which consist of cash or cash equivalents, up to approximately 10% of the
contract amount. The amount of these deposits is determined by the exchange
or Board of Trade on which the contract is traded and is subject to change.
At April 30, 1995, there were no financial futures contracts outstanding.
(B) At April 30, 1995, accumulated net unrealized depreciation on
investments was $1,175,331, consisting of $1,842,605 gross unrealized
appreciation and $3,017,936 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
North Carolina Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, North Carolina Series at April
30, 1995, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.7% AMOUNT VALUE
-------- -------
<S> <C> <C>
OHIO-90.2%
Akron, Waterworks System Mortgage Improvement Revenue 6%, 3/1/2014 (Insured; FGIC) $ 1,000,000 $ 999,900
Akron Bath Copley Joint Township Hospital District, Revenue
(Summa Health Systems) 5.75% 11/15/2008................................. 5,000,000 4,903,150
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue
7.90%, 8/1/2003 (Insured; FHA).......................................... 1,805,000 2,137,932
Allen County, Industrial First Mortgage Revenue, Refunding
6.75%, 11/15/2008 (Guaranteed; K-Mart Corp.)............................ 1,280,000 1,268,749
City of Barberton, Hospital Facilities Revenue
(The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012........... 2,400,000 2,520,840
Butler County, Hospital Facilities Revenue, Refunding and Improvement
(Fort Hamilton Hughes Hospital) 7.25%, 1/1/2001......................... 4,000,000 4,037,360
City of Cambridge, HR Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006........................................................... 2,000,000 2,124,640
Canton 7.875%, 12/1/2008 (Prerefunded 12/1/1998) (a)........................ 1,000,000 1,125,220
Clermont County, Hospital Facilities Revenue, Refunding (Mercy Health
Systems):
6%, 9/1/2019 (Insured; AMBAC)........................................... 2,000,000 1,962,180
7.50%, 9/1/2019 (Prerefunded 9/1/1999) (Insured; AMBAC) (a)............. 820,000 916,366
7.50%, 9/1/2019 (Prerefunded 9/1/2001) (Insured; AMBAC) (a)............. 180,000 203,764
City of Cleveland:
Airport System Improvement Revenue 6%, 1/1/2024 (Insured; FGIC)......... 7,000,000 6,758,150
COP (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 2,000,000 2,087,940
Parking Facility Improvement Revenue 8%, 9/15/2012...................... 5,000,000 5,216,900
School District 8%, 12/1/2001........................................... 1,675,000 1,951,040
Waterworks First Mortgage Revenue 6.25%, 1/1/2015 (Insured; AMBAC)...... 1,000,000 1,016,610
Cuyahoga County:
Health Care Facilities Revenue (Judson Retirement Community) 8.875%, 11/15/2019 3,500,000 3,789,870
HR:
(Fairview General Hospital) 7.375%, 8/1/2019 (Prerefunded 8/1/1999) (a) 4,000,000 4,444,280
(Meridia Health Systems) 7%, 8/15/2023................................ 1,750,000 1,801,800
Refunding:
(Deaconess Hospital) 7.45%, 10/1/2018 (Prerefunded 10/1/2000) (a). 5,000,000 5,697,950
(Meridia Health Systems) 7.25%, 8/15/2019......................... 4,715,000 4,947,921
Jail Facilities 7%, 10/1/2013 (Prerefunded 10/1/2001) (a)............... 6,125,000 6,876,354
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015....................... 1,000,000 1,073,320
(Mount Sinai Medical Center) 8.125%, 11/15/2014................... 1,000,000 1,083,450
Eaton, IDR Refunding (Baxter International Inc. Project) 6.50%, 12/1/2012... 1,500,000 1,489,020
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
OHIO (CONTINUED)
Euclid City School District 7.10%, 12/1/2011................................ $ 1,000,000 $ 1,076,030
Village of Evendale, IDR Refunding (Ashland Oil Inc. Project) 6.90%, 11/1/2010 2,000,000 2,059,360
Fairfield City School District, School Improvement Unlimited Tax:
7.20%, 12/1/2011 (Insured; FGIC)........................................ 1,000,000 1,132,790
7.20%, 12/1/2012 (Insured; FGIC)........................................ 1,250,000 1,415,987
Fairlawn, Health Care Facilities Revenue (Village at Saint Edward Project)
8.75%, 10/1/2019........................................................ 2,420,000 2,591,360
Franklin County:
Hospital Improvement Revenue (The Children's Hospital Project) 6.60%, 11/1/2011 1,500,000 1,538,190
HR:
(Holy Cross Health Systems Corp.-Mount Carmel Health) 6.75%, 6/1/2019 2,500,000 2,530,225
Refunding Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013................. 4,000,000 4,079,080
(Riverside United Hospital) 7.60%, 5/15/2020 (Prerefunded 5/15/2000) (a) 5,300,000 5,992,922
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015................................................ 840,000 905,260
7.80%, 2/1/2017 (Insured; FHA).................................. 5,690,000 6,223,210
Gallia County, Local School District 7.375%, 12/1/2004...................... 570,000 651,538
Greater Cleveland Gateway Economic Development Corp.:
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA).......... 1,500,000 1,637,880
Stadium Revenue 7.50%, 9/1/2005......................................... 5,675,000 6,100,511
Hamilton City, Electric Systems Mortgage Revenue, Refunding:
6%, 10/15/2023 (Insured; FGIC).......................................... 1,500,000 1,467,915
6.30% 10/15/2025 (Insured; FGIC)........................................ 2,000,000 2,021,220
Hamilton County:
Hospital Facilities Improvement Revenue, Refunding (Deaconess Hospital)
7%, 1/1/2012.......................................................... 2,570,000 2,696,058
Hospital Facilities Refunding Revenue (Episcopal Retirement Homes, Inc.)
6.80%, 1/1/2008 (LOC; The Fifth Third Bank) (b)....................... 2,450,000 2,578,086
Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Insured; FHA).... 3,970,000 4,249,885
Sewer Systems Improvement Revenue, Refunding
6.70%, 12/1/2013 (Prerefunded 6/1/2001) (a)........................... 2,000,000 2,206,140
Hilliard School District, School Improvement 5.75%, 12/1/2019 (Insured; FGIC) 4,500,000 4,328,055
Kirtland Local School District 7.50%, 12/1/2009............................. 760,000 839,253
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007................... 1,000,000 1,217,530
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006......................................................... 1,300,000 1,373,034
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
OHIO (CONTINUED)
Mahoning County, Health Care Facilities Revenue
(Youngstown Osteopathic Hospital Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (b).......................... $ 3,775,000 $ 4,142,949
Marion County, Health Care Facilities Revenue (United Church Homes Inc.):
8.875%, 12/1/2012 (Prerefunded 12/1/1999) (a)........................... 2,305,000 2,733,914
Refunding and Improvement 6.375%, 11/15/2010............................ 3,000,000 2,805,060
Miami County, Hospital Facilities Revenue, Refunding
(Upper Valley Medical Center) 8.375%, 5/1/2013.......................... 525,000 566,601
Montgomery County, Water Revenue (Greater Moraine-Beavercreek)
6.25%, 11/15/2012 (Insured; FGIC)....................................... 1,500,000 1,536,735
Moraine, Solid Waste Disposal Revenue (General Motors Corp. Project)
6.75%, 7/1/2014......................................................... 5,000,000 5,102,150
Muskingum County, Revenue, Refunding (Franciscan Health Advisory Services)
7.50%, 3/1/2012......................................................... 3,185,000 3,281,537
North Royalton City School District 6.10%, 12/1/2019 (Insured; MBIA)........ 2,000,000 1,999,860
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011....... 885,000 922,285
(Sponge Inc. Project) 8.375%, 6/1/2014................................ 1,675,000 1,850,657
Higher Educational Facility Revenue (University of Dayton Project)
5.80%, 12/1/2014 (Insured; FGIC)...................................... 1,000,000 973,700
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project)
8.15%, 8/1/2017 (Insured; FHA)........................................ 350,000 382,064
PCR (Standard Oil Co. Project)
6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.)........... 1,350,000 1,506,371
Ohio Air Quality Development Authority, Revenue:
(Columbus and Southern Power Co. Project)
6.375%, 12/1/2020 (Insured; FGIC)..................................... 2,000,000 2,040,800
Pollution Control:
(Cincinnati Gas and Electric) 10.125%, 12/1/2015...................... 900,000 947,178
(Pennsylvania Power Co. Project):
5.90%, 5/1/2018 (Insured; AMBAC).................................. 2,240,000 2,171,501
8.10%, 9/1/2018................................................... 1,000,000 1,054,890
Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023..... 5,250,000 4,700,167
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC)..................... 3,500,000 3,827,600
Refunding:
(JMG Funding Limited Partnership Project) 6.375%, 4/1/2029 (Insured; AMBAC) 2,500,000 2,543,475
(Ohio Power Co. Project) 7.40%, 8/1/2009.............................. 1,500,000 1,551,960
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- -------
OHIO (CONTINUED)
Ohio Building Authority
State Facilities:
(Columbus State Building Project)
7.35%, 10/1/2005 (Prerefunded 10/1/1999) (a)...................... $ 1,795,000 $ 2,013,326
(Juvenile Correctional Projects) 6.60%, 10/1/2014 (Insured; AMBAC).... 1,660,000 1,761,160
Refunding (James Rhodes) 6.375%, 6/1/2008............................. 1,670,000 1,736,666
Ohio Capital Corp. for Housing, MFHR Refunding
7.60%, 11/1/2023 (Collateralized; FNMA)................................. 1,250,000 1,317,025
Ohio Higher Educational Facility Community, Revenue
(Case Western Reserve Project):
7.70%, 10/1/2018 (Prerefunded 10/1/1997) (a).......................... 485,000 526,385
7.70%, 10/1/2018...................................................... 15,000 16,280
6%, 10/1/2022......................................................... 1,000,000 981,480
Ohio Housing Finance Agency:
Mortgage Revenue (Saint Francis Court Apartment Project)
8%, 10/1/2026 (Insured; FHA).......................................... 695,000 736,165
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019 .................................................... 185,000 195,273
8.125%, 3/1/2020 ..................................................... 455,000 478,355
Zero Coupon, 9/1/2021................................................. 18,820,000 2,506,448
7.85%, 9/1/2021 ...................................................... 2,150,000 2,264,530
7.65%, 3/1/2029 ...................................................... 5,425,000 5,655,780
7.80%, 3/1/2030 ...................................................... 3,495,000 3,679,291
Ohio Public Facilities Community, Higher Education Facilities 7.25%, 5/1/2004 1,300,000 1,427,868
Ohio Turnpike Commission, Turnpike Revenue 5.75%, 2/15/2024................. 1,500,000 1,440,795
Ohio Water Development Authority:
Pollution Control Facilities Revenue:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023............... 5,800,000 6,120,334
(Ohio Edison) 8.10%, 10/1/2023........................................ 3,700,000 3,864,206
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018...................... 2,000,000 2,117,840
Refunding:
(Ohio Edison) 7.625%, 7/1/2023.................................... 9,390,000 9,542,681
(Toledo Edison Co.):
7.55%, 6/1/2023 ................................................ 2,000,000 2,009,800
8%, 10/1/2023 .................................................. 3,635,000 3,694,614
Revenue (Fresh Water) 5.90%, 12/1/2015 (Insured; AMBAC)................. 3,000,000 2,950,680
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC).... 1,000,000 1,094,600
Shelby County, Hospital Facilities Revenue, Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018....... 2,500,000 2,581,850
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------- --------
OHIO (CONTINUED)
South Euclid, Recreation Facilities 7%, 12/1/2011........................... $ 2,285,000 $ 2,447,555
Southwest Regional Water District, Water Revenue:
6%, 12/1/2015 (Insured; MBIA)........................................... 1,600,000 1,584,960
6%, 12/1/2020 (Insured; MBIA)........................................... 1,250,000 1,225,888
Springdale, Hospital Facilities First Mortgage Revenue,
(Southwestern Seniors Services, Inc.):
5.875%, 11/1/2012..................................................... 3,000,000 2,707,080
6%, 11/1/2018......................................................... 1,250,000 1,079,888
Stark County, Refunding 5.70%, 11/15/2017 (Insured; AMBAC).................. 1,675,000 1,615,270
Student Loan Funding Corp.:
Student Loan Revenue, Refunding 7.20%, 8/1/2003......................... 3,150,000 3,237,035
Student Loan Senior Subordinated Revenue 6.15%, 8/1/2010................ 6,775,000 6,668,971
University of Cincinnati
COP 6.75%, 12/1/2009 (Insured; MBIA).................................... 750,000 806,933
University of Ohio, General Receipts:
5%, 12/1/2018 (Insured; FGIC)........................................... 1,250,000 1,091,813
Revenue 7.15%, 12/1/2009 (Prerefunded 12/1/1998) (a).................... 6,000,000 6,556,740
Warren 7.75%, 11/1/2010 (Prerefunded 11/1/2000) (a)......................... 2,785,000 3,195,119
Washington, Water Systems Mortgage Revenue 5.30%, 12/1/2013 (Insured; AMBAC) 1,000,000 927,420
U.S. RELATED-8.5%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 3,000,000 3,037,920
Puerto Rico Highway and Transportation Authority, Highway Revenue
5.45%, 7/1/2007......................................................... 15,500,000 14,744,685
Virgin Islands Public Finance Authority, Revenue, Refunding
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 4,200,000 4,341,414
Virgin Islands Water and Power Authority, Electric Systems Revenue 7.40%, 7/1/2011 3,450,000 3,599,627
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $285,172,015)..................................................... $297,569,429
============
SHORT-TERM MUNICIPAL INVESTMENTS-1.3%
OHIO:
City of Columbus, Sewer Revenue, Refunding VRDN 4.65% (c)................... $ 3,000,000 $ 3,000,000
Montgomery County, IDR (Modern Industrial Plastics Project)
VRDN 5.07% (LOC; Industrial Bank of Japan) (b,c)........................ 1,000,000 1,000,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $4,000,000)....................................................... $ 4,000,000
============
TOTAL INVESTMENTS-100.0%
(cost $289,172,015)..................................................... $301,569,429
===========
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ----- ----- ------------ ------------
<S> <C> <S> <C>
AAA Aaa AAA 29.9%
AA Aa AA 6.8
A A A 25.9
BBB Baa BBB 23.5
B B B 6.7
F1 MIG1 SP1 1.3
Not Rated (e) Not Rated (e) Not Rated (e) 5.9
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letters of credit.
(c) Security payable on demand. The interest rate, which is subject to
change, is based upon prime rates or an index of market interest rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poors, have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
(f) At April 30 1995, the Fund had $93,172,110 (30.4% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $289,172,015)-see statement..................................... $301,569,429
Cash.................................................................... 3,326,600
Interest receivable..................................................... 5,600,300
Receivable for shares of Beneficial Interest subscribed................. 598,719
Prepaid expenses........................................................ 11,039
-----------
311,106,087
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 139,336
Due to Distributor...................................................... 76,690
Payable for investment securities purchased............................. 4,421,760
Payable for shares of Beneficial Interest redeemed...................... 388,493
Accrued expenses........................................................ 58,209 5,084,488
---------- ------------
NET ASSETS ................................................................ $306,021,599
============
REPRESENTED BY:
Paid-in capital......................................................... $293,858,896
Accumulated net realized (loss) on investments.......................... (234,711)
Accumulated net unrealized appreciation on investments-Note 3........... 12,397,414
------------
NET ASSETS at value......................................................... $306,021,599
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 21,645,959
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,596,941
=========
NET ASSET VALUE per share:
Class A Shares
($273,224,593 / 21,645,959 shares).................................... $12.62
======
Class B Shares
($32,797,006 / 2,596,941 shares)...................................... $12.63
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $20,981,909
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,707,720
Shareholder servicing costs-Note 2(c)................................. 983,675
Distribution fees (Class B shares)-Note 2(b).......................... 149,342
Professional fees..................................................... 88,216
Custodian fees........................................................ 33,703
Prospectus and shareholders' reports.................................. 24,676
Trustees' fees and expenses-Note 2(d)................................. 2,738
Registration fees..................................................... 2,492
Miscellaneous......................................................... 42,098
---------
3,034,660
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 28,783
-------
TOTAL EXPENSES.................................................. 3,005,877
----------
INVESTMENT INCOME-NET........................................... 17,976,032
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (231,734)
Net unrealized (depreciation) on investments............................ (1,447,408)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (1,679,142)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $16,296,890
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-------------------
1994 1995
------- -------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 18,204,926 $17,976,032
Net realized gain (loss) on investments................................. 1,272,432 (231,734)
Net unrealized (depreciation) on investments for the year............... (10,949,018) (1,447,408)
_______ _______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 8,528,340 16,296,890
_______ _______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (17,203,535) (16,395,897)
Class B shares........................................................ (1,001,391) (1,580,135)
Net realized gain on investments:
Class A shares........................................................ (616,962) (737,090)
Class B shares........................................................ (46,746) (80,832)
_______ _______
TOTAL DIVIDENDS................................................... (18,868,634) (18,793,954)
_______ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 29,869,777 14,075,586
Class B shares........................................................ 21,032,260 7,880,402
Dividends reinvested:
Class A shares........................................................ 11,652,834 11,395,733
Class B shares........................................................ 757,951 1,146,894
Cost of shares redeemed:
Class A shares........................................................ (34,259,537) (43,645,693)
Class B shares........................................................ (1,396,011) (3,696,758)
_______ _______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 27,657,274 (12,843,836)
_______ _______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 17,316,980 (15,340,900)
NET ASSETS:
Beginning of year....................................................... 304,045,519 321,362,499
_______ _______
End of year............................................................. $ 321,362,499 $306,021,599
========= ==========
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------ ------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------ ------------------
1994 1995 1994 1995
------- -------- -------- --------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 2,243,350 1,122,269 1,576,802 625,670
Shares issued for dividends reinvested. 877,259 911,859 57,130 91,754
Shares redeemed........................ (2,588,901) (3,506,799) (106,127) (296,186)
--------- --------- ------- ---------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING............ 531,708 (1,472,671) 1,527,805 421,238
======== ========== ========= =======
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 18 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Ohio Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-
owned subsidiary of FDI Distribution Services, Inc., a provider of mutual
fund administration services, which in turn is a wholly-owned subsidiary of
FDI Holdings, Inc., the parent company of which is Boston Institutional
Group, Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery basis
may be settled a month or more after the trade date.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $232,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. If not
applied, the carryover expires in fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994, to waive receipt of
the management fee payable to it by the Series in excess of an annual rate of
.50 of 1% (excluding certain expenses as described above) of the Series'
average daily net assets and thereafter, had undertaken from July 1, 1994
through July 7, 1994 to reduce the management fee paid by the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $28,783 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $10,740 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $23,606
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service agent.
During the year ended April 30, 1995, $104,049 was charged to the Series
pursuant to the Class B Distribution Plan and $45,293 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $229,922 and $22,647 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $471,643 and $52,024 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $203,531,636 and $214,491,868, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $12,397,414, consisting of $14,625,697 gross unrealized appreciation and
$2,228,283 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Ohio Series (one of the Series constituting the Premier State Municipal Bond
Fund) as of April 30, 1995, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Premier State Municipal Bond Fund, Ohio Series at April 30, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
STATEMENT OF INVESTMENTS APRIL 30,1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-86.5% AMOUNT VALUE
------------ ------------
<S> <C> <C>
OREGON-75.2%
Beaverton, Water Revenue 6.125%, 6/1/2014 (Insured; FSA).................... $ 200,000 $ 201,346
Clackamas County School District 6.15%, 6/1/2014 (Insured; AMBAC)........... 200,000 203,200
Douglas County Hospital Facility Authority, Revenue, Refunding
(Health Facilities-Catholic Health) 6%, 11/15/2015 (Insured; MBIA)...... 200,000 199,758
Eugene, Electric Utility Revenue 5.80%, 8/1/2019............................ 200,000 195,400
Multnomah County, Revenue 6.10%, 10/1/2014.................................. 200,000 203,138
State of Oregon, Department of Transportation, Revenue, Regional Light Rail
Fund (Westside Project) 6.25%, 6/1/2009 (Insured; MBIA)..................... 200,000 208,104
State of Oregon, Elderly and Disabled Housing 6.10%, 8/1/2015............... 200,000 203,564
Oregon Health, Housing, Educational and Cultural Facilities Authority,
Refunding (Lewis and Clark College Project) 6.125%, 10/1/2024 (Insured; MBIA) 200,000 200,558
Oregon Higher Education Building 6%, 12/1/2015.............................. 200,000 202,170
Oregon Housing and Community Services Department, SFMR 6.875%, 7/1/2028..... 200,000 205,514
Portland Sewer System, Revenue 6.25%, 6/1/2015.............................. 300,000 306,477
Salem, GO 5.70%, 8/1/2009 (Insured; MBIA)................................... 200,000 198,056
Salem-Keitzer School District 6%, 6/1/2014 (Insured; FGIC).................. 200,000 201,378
Tualatin Valley Water District, Water Revenue 6%, 6/1/2013.................. 200,000 203,716
Umatilla County School District 6%, 7/1/2014 (Insured; AMBAC)............... 200,000 201,274
Washington County School District - Beaverton 6%, 6/1/2012.................. 200,000 202,218
U.S. RELATED-11.3%
Puerto Rico Electric Power Authority, Power Revenue
6%, 7/1/2014 (Insured; FSA)............................................. 500,000 503,590
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $3,778,638)..................... $3,839,461
============
SHORT-TERM MUNICIPAL INVESTMENTS-13.5%
OREGON-9.0%
State of Oregon, Economic Development Revenue, VRDN (Jae Oregon, Inc.
Project) 5.075%, 3/1/1999 (LOC; The Bank of Tokyo, LTD.) (a)................ $ 400,000 $ 400,000
U.S. RELATED-4.5%
Puerto Rico Electric Power Authority, Power Revenue 3.89%, 7/1/2023 (b)..... 200,000 200,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $600,000)...................... $ 600,000
============
TOTAL INVESTMENTS-100.0%
(cost $4,378,638)....................................................... $4,439,461
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
GO General Obligation VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- -------- ------------------ --------------------
<S> <C> <S> <C>
AAA Aaa AAA 47.7%
AA Aa AA 27.3
A A A 16.0
F-1 MIG1 SP1 9.0
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letter of credit. Securities payable on demand. The
interest rate, which is subject to change, is based upon bank prime rates
or an index of market rates.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30,1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $4,378,638)-see statement....................................... $4,439,461
Interest receivable..................................................... 83,952
Receivable for shares of Beneficial Interest subscribed................. 39,479
Prepaid expenses-Note 1(e).............................................. 22,599
Due from The Dreyfus Corporation........................................ 1,695
----------
4,587,186
LIABILITIES:
Due to Distributor...................................................... $ 1,491
Due to Custodian........................................................ 195,475
Payable for shares of Beneficial Interest redeemed...................... 18,460
Accrued expenses and other liabilities.................................. 37,157 252,583
------------ ----------
NET ASSETS ................................................................ $4,334,603
==========
REPRESENTED BY:
Paid-in capital......................................................... $4,273,780
Accumulated net unrealized appreciation on investments-Note 3........... 60,823
----------
NET ASSETS at value......................................................... $4,334,603
==========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 220,224
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 114,490
==========
NET ASSET VALUE per share:
Class A Shares
($2,851,704 / 220,224 shares)......................................... $12.95
======
Class B Shares
($1,482,899 / 114,490 shares)......................................... $12.95
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
STATEMENT OF OPERATIONS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $164,596
EXPENSES:
Management fee-Note 2(a).............................................. $15,174
Shareholder servicing costs-Note 2(c)................................. 14,592
Organization expenses-Note 1(e)....................................... 5,511
Distribution fees (Class B shares)-Note 2(b).......................... 5,333
Prospectus and shareholders' reports.................................. 3,472
Registration fees..................................................... 1,564
Custodian fees........................................................ 557
Professional fees..................................................... 529
Trustees' fees and expenses-Note 2(d)................................. 28
Miscellaneous......................................................... 2,860
-------
49,620
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 44,131
-------
TOTAL EXPENSES.................................................... 5,489
--------
INVESTMENT INCOME-NET....................................................... 159,107
NET UNREALIZED APPRECIATION ON INVESTMENTS.................................. 60,823
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $219,930
========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
OPERATIONS:
<S> <C>
Investment income-net....................................................................... $ 159,107
Net unrealized appreciation on investments for the period................................... 60,823
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. 219,930
------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares............................................................................ (100,688)
Class B shares............................................................................ (58,419)
------------
TOTAL DIVIDENDS...................................................................... (159,107)
------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares............................................................................ 4,457,134
Class B shares............................................................................ 2,868,459
Dividends reinvested:
Class A shares............................................................................ 86,034
Class B shares............................................................................ 53,564
Cost of shares redeemed:
Class A shares............................................................................ (1,725,732)
Class B shares............................................................................ (1,465,679)
------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.......................... 4,273,780
------------
TOTAL INCREASE IN NET ASSETS........................................................ 4,334,603
NET ASSETS:
Beginning of period......................................................................... -
===========
End of period............................................................................... $ 4,334,603
============
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------
CLASS A CLASS B
------------ ------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................... 352,683 227,550
Shares issued for dividends reinvested........................................ 6,837 4,254
Shares redeemed............................................................... (139,296) (117,314)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING...................................... 220,224 114,490
============ ============
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 19 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Oregon Series (the "Series") which
commenced operations on May 6, 1994. Dreyfus Service Corporation, until
August 24, 1994, acted as the distributor of the Fund's shares. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation ("
Manager"). Effective August 24, 1994, the Manager became a direct subsidiary
of Mellon Bank, N.A.
As of April 30, 1995 Major Trading Corporation, a subsidiary of Mellon
Bank Investments Corporation, held 103,036 shares of Class A and 77,729
shares of Class B. Mellon Bank Investments Corporation is a subsidiary of
Mellon Bank.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
on investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 6, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At April 30, 1995, the
unamortized balance of such expenses amounted to $22,046.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 6, 1994 through April 2, 1995, to reimburse all fees
and expenses of the Series (excluding 12b-1 distribution plan fees and
certain expenses as described above), and thereafter through April 30, 1995,
to reduce the shareholder services plan fee paid by and reimburse such excess
expenses of the Series, to the extent that the Series' aggregate expenses
(excluding certain expenses as described above) exceeded specified annual
percentages of the Series' average daily net assets. The expense
reimbursement, pursuant to the undertakings, amounted to $44,131 for the
period ended April 30, 1995.
The Manager has currently undertaken through June 30, 1995 or until such
time as the net assets of the Series exceed $50 million, regardless of
whether they remain at that level, to reimburse all fees and expenses of the
Series (excluding 12b-1 distribution plan fees, shareholder services plan
fees and certain expenses as described above).
The undertaking may be modified by the Manger from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the Agreement.
(B) On August 3, 1994, the Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Distribution Plan, effective August 24, 1994, the Fund pays the Distributor
for distributing the Series' Class B shares at an annual rate of .50 of 1% of
the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $4,598 was charged to the Series
pursuant to the Class B Distribution Plan and $735 was charged to the Series
pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to Serv
ice Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 6, 1994 through August 23,
1994, $527 and $368 were charged to Class A and Class B shares, respectively,
by Dreyfus Service Corporation. From August 24, 1994 through April 30, 1995,
$3,703 and $2,299 were charged to Class A and Class B shares, respectively,
by the Distributor pursuant to the Shareholder Services Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $5,078,626 and $700,000, respectively, for the period ended April
30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $60,823, consisting of $62,836 gross unrealized appreciation and $2,013
gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, OREGON SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Oregon Series (one of the series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statements of operations and
changes in net assets and financial highlights for the period from May 6,
1994 (commencement of operations) to April 30, 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Oregon Series at April 30,
1995, and the results of its operations, the changes in its net assets and
the financial highlights for the period from May 6, 1994 to April 30, 1995,
in conformity with generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS APRIL 30,1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.6% AMOUNT VALUE
-------------- -----------
<S> <C> <C>
PENNSYLVANIA-86.4%
Allegheny County, Airport Revenue, Refunding
(Pittsburgh International Airport)
5.75%, 1/1/2008 (Insured; FSA).......................................... $ 2,005,000 $ 1,971,196
Allegheny County Hospital Development Authority, Revenue
(Magee-Womens Hospital) 5.625%, 10/1/2020 (Insured; FGIC) (a).......... 6,000,000 5,553,780
Allegheny County Industrial Development Authority, Revenue:
Commercial Development, Refunding
(Kaufmann Medical Office Building) 6.80%, 3/1/2015 (Insured; FHA) (a). 3,500,000 3,709,265
Medical Center, Refunding (Presbyterian Medical Center of
Oakmont Pennsylvania, Inc.) 6.75%, 2/1/2026 (Insured; FHA)............ 2,000,000 2,012,000
Specialized Enterprise
(Baldwin Health Center) 8.35%, 2/1/2016 (Insured; FHA)................ 4,610,000 4,883,880
Allegheny County Residential Finance Authority, SFMR:
7.40%, 12/1/2022........................................................ 1,945,000 2,048,630
7.95%, 6/1/2023......................................................... 1,195,000 1,260,856
Allentown, Refunding 5.65%, 7/15/2010 (Insured: AMBAC)...................... 1,000,000 983,880
Beaver County Industrial Development Authority, PCR, Refunding
(Ohio Edison Project) 7.75%, 9/1/2024................................... 3,150,000 3,252,627
(Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021.......... 3,000,000 3,021,360
Berks County:
Zero Coupon, 5/15/2013 (Insured: FGIC).................................. 3,105,000 1,029,742
Zero Coupon, 5/15/2014 (Insured; FGIC).................................. 3,345,000 1,039,693
Berks County Municipal Authority:
HR (Reading Hospital Medical Center Project) 5.50%, 10/1/2008 (Insured; MBIA) 3,500,000 3,415,545
Revenue (Phoebe Berks Village, Inc. Project) 8.25%, 5/15/2022........... 2,445,000 2,529,695
Blair County Hospital Authority, Revenue (Altoona Hospital Project)
6.375%, 7/1/2013 (Insured; AMBAC)....................................... 5,000,000 5,094,950
Bradford County Industrial Development Authority, SWDR
(International Paper Company Projects) 6.60%, 3/1/2019.................. 3,250,000 3,257,540
Butler County Hospital Authority, Revenue, Refunding:
Health Center (Saint Francis Health Care Project) 6%, 5/1/2008.......... 1,860,000 1,839,335
Hospital (Butler Memorial Hospital) 8%, 7/1/2016........................ 2,000,000 2,109,880
Cambria County Industrial Development Authority, RRR
(Cambria Cogen Project):
7.75%, 9/1/2019, Series F-1 (LOC; Fuji Bank) (b)...................... 1,750,000 1,838,043
7.75%, 9/1/2019, Series F-2 (LOC; Fuji Bank) (b)...................... 2,750,000 2,903,643
Dauphin County General Authority, HR (Hapsco - Western Pennsylvania
Hospital Project) 5.50%, 7/1/2023 (Insured; MBIA)....................... 2,300,000 2,097,945
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
PENNSYLVANIA (CONTINUED)
Delaware County Authority:
HR (Crozer - Chester Medical Center) 5.30%, 12/15/2011 (Insured; MBIA).. $ 2,750,000 $ 2,582,003
Revenue (Elwyn Inc. Project) 8.35%, 6/1/2015............................ 4,300,000 4,695,987
Doylestown Hospital Authority, HR, Refunding
5.20%, 7/1/2008 (Insured; AMBAC)........................................ 2,255,000 2,131,358
Erie Higher Educational Building Authority, College Revenue
(Mercyhurst College Project) 7.85%, 9/15/2019 (Prerefunded 9/15/1999) (c) 1,000,000 1,115,370
Lancaster County Solid Waste Management Authority,
Resource Recovery System Revenue 8.50%, 12/15/2010...................... 1,145,000 1,208,857
Langhorne Manor Borough Higher Educational and Health Authority, HR
(Lower Bucks Hospital) 7%, 7/1/2005..................................... 2,375,000 2,369,941
Lehigh County General Purpose Authority, Revenue (Wiley House):
8.75%, 11/1/2014 (LOC; Northeastern Bank of Pennsylvania) (b)........... 3,785,000 3,763,955
9.50%, 11/1/2016........................................................ 2,000,000 2,073,520
Lehigh County Industrial Development Authority, PCR, Refunding
(Pennsylvania Power and Light Company Project)
5.50%, 2/15/2027 (Insured; MBIA)........................................ 12,235,000 11,128,956
Luzerne County Industrial Development Authority, Exempt Facilities Revenue,
Refunding (Pennsylvania Gas and Water Company Project) 7.125%, 12/1/2022.... 4,000,000 4,031,360
Montgomery County Higher Educational and Health Authority:
HR (Abington Memorial Hospital) 5.125%, 6/1/2014 (Insured; AMBAC)....... 3,000,000 2,685,000
Revenue:
First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020........... 3,000,000 3,213,990
(Northwestern Corporation) 8.375%, 6/1/2009........................... 2,685,000 2,792,695
Montgomery County Industrial Development Authority,
RRR 7.50%, 1/1/2012 (LOC; Banque Paribas) (b)........................... 5,000,000 5,269,950
Northampton County Industrial Development Authority, Refunding, Revenue:
(Moravian Hall Square Project) 7.45%, 6/1/2014 (LOC; Meridian Bank) (b). 1,800,000 1,880,136
Pollution Control (Bethlehem Steel) 7.55%, 6/1/2017..................... 5,700,000 5,746,170
Pennsylvania Economic Development Financing Authority:
Exempt Facilities Revenue (Macmillan Ltd. Partnership Project) 7.60%, 12/1/2020 3,500,000 3,697,540
RRR (Northampton Generating Project):
6.40%, 1/1/2009....................................................... 2,500,000 2,398,700
6.50%, 1/1/2013....................................................... 6,500,000 6,035,965
Wastewater Treatment Revenue (Sun Co. Inc. - R and M Project) 7.60%, 12/1/2024 4,240,000 4,482,443
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue,
7.05%, 10/1/2016 (Insured; AMBAC)....................................... 2,500,000 2,624,275
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
PENNSYLVANIA (CONTINUED)
Pennsylvania Higher Educational Facilities Authority, Revenue:
College and University (Temple University) 5.75%, 4/1/2031 (Insured; MBIA) $ 3,100,000 $ 2,891,494
Refunding (Drexel University) 6.375%, 5/1/2017.......................... 6,820,000 6,635,383
(Thomas Jefferson University)
6%, 7/1/2019.......................................................... 3,555,000 3,518,846
Pennsylvania Housing Finance Agency:
6.057%, 4/1/2025........................................................ 6,000,000 5,688,060
Single Family Mortgage:
7.875%, 10/1/2020..................................................... 1,435,000 1,519,407
8.15%, 10/1/2021...................................................... 1,475,000 1,573,412
8.15%, 4/1/2024....................................................... 585,000 612,524
6.90%, 4/1/2025....................................................... 6,250,000 6,413,438
Pennsylvania Intergovernmental Cooperative Authority,
Special Tax Revenue:
(City of Philadelphia Funding Program) 5.625%, 6/15/2023 (Insured; MBIA) 3,000,000 2,809,230
Refunding 5%, 6/15/2013 (Insured; MBIA)............................... 2,000,000 1,784,700
Refunding 5%, 6/15/2022 (Insured; MBIA)............................... 10,875,000 9,297,255
Philadelphia, Water and Wastewater Revenue:
Refunding 5.625%, 6/15/2008 (Insured; FSA).............................. 5,000,000 4,956,150
6.25%, 8/1/2010 (Insured; MBIA) (d)..................................... 2,730,000 2,855,798
5.60%, 8/1/2018 (Insured; MBIA) (d)..................................... 4,645,000 4,363,374
Refunding 5.25%, 6/15/2023 (Insured; MBIA).............................. 11,405,000 10,108,023
Philadelphia Hospital and Higher Education Facilities Authority:
HR:
(Albert Einstein Medical Center) 7%, 10/1/2021........................ 1,500,000 1,508,400
(Graduate Health System Obligation) 7.25%, 7/1/2018................... 5,250,000 5,284,073
Refunding (Children's Hospital Philadelphia):
5.375%, 2/15/2014................................................. 3,060,000 2,765,995
5%, 2/15/2021..................................................... 9,805,000 8,254,928
Revenue:
(Northwestern Corporation) 8.375%, 6/1/2009........................... 1,885,000 1,994,349
Refunding (Philadelphia MR Project) 5.875%, 8/1/2007.................. 4,620,000 4,370,566
Philadelphia Industrial Development Authority, IDR, Refunding
(Ashland Oil Inc. Project) 5.70%, 6/1/2005.............................. 2,500,000 2,480,875
Philadelphia Municipal Authority,
LR, Refunding 5.60%, 11/15/2009 (Insured; FGIC)......................... 2,100,000 2,040,969
Pittsburgh School District, Refunding 5.50%, 9/1/2013 (Insured; FGIC)....... 3,000,000 2,850,240
Pittsburgh Urban Redevelopment Authority:
Mortgage Revenue 7.05%, 4/1/2023........................................ 1,785,000 1,825,734
Single Family Mortgage 7.40%, 4/1/2024................................. 860,000 897,556
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
PENNSYLVANIA (CONTINUED)
Schuylkill County Industrial Development Authority, Refunding
First Mortgage Revenue (Valley Health Concerns) 8.75%, 3/1/2012......... $ 1,000,000 $ 1,039,080
RRR (Schuylkill Energy Resources Inc.) 6.50%, 1/1/2010.................. 7,330,000 7,002,642
Sewickley Valley Hospital Authority, Revenue
(Allegheny County-Sewickley Valley Hospital Project)
7.50%, 10/1/2014........................................................ 850,000 939,174
Southeastern Transportation Authority, Special Revenue 5.75%, 3/1/2020
(Insured; FGIC)......................................................... 5,500,000 5,254,810
Washington County Industrial Development Authority, Revenue, Refunding
(Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA)........... 3,000,000 3,050,970
York County Hospital Authority, Revenue
(Health Center - Village at Sprenkle Drive) 7.75%, 4/1/2022............. 1,205,000 1,261,695
U.S. RELATED-13.2%
Commonwealth of Puerto Rico, Refunding 5%, 7/1/2021......................... 11,730,000 9,864,695
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 4,500,000 4,556,880
Guam Government 5.375%, 11/15/2013.......................................... 4,000,000 3,483,920
Puerto Rico Highway and Transportation Authority,
Highway Revenue:
5.40%, 7/1/2006....................................................... 10,000,000 9,539,700
5.25%, 7/1/2020....................................................... 6,600,000 5,760,082
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health
Facilities, Refunding 5.70%, 7/1/2009................................... 5,000,000 4,913,750
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $285,003,923)................... $287,749,833
============
SHORT-TERM MUNICIPAL INVESTMENTS-.4%
PENNSYLVANIA:
Allegheny County Hospital Development Authority, Revenue, VRDN
(Presbyterian Health Center) 4.70% (Insured; MBIA) (e).................. $ 900,000 $ 900,000
Bucks County Industrial Development Authority, VRDN
(Oxford Falls Housing Finance Corp.) 5.20% (e).......................... 300,000 300,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,200,000).................... $ 1,200,000
============
TOTAL INVESTMENTS-100.0%
(cost $286,203,923)..................................................... $288,949,833
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resources Recovery Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LR Lease Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- -------- ------------------ --------------------
<S> <C> <S> <C>
AAA Aaa AAA 36.3%
AA Aa AA 12.2
A A A 18.5
BBB Baa BBB 20.9
BB Ba BB .8
F1 MIG1/P1 SP1/A1 .4
Not Rated(g) Not Rated(g) Not Rated(g) 10.9
------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by custodian as collateral for delayed delivery
security.
(b) Secured by letters of credit.
(c) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(d) Purchased on a delayed delivery basis.
(e) Securities payable on demand. The interest rate, which is subject
to change, is based upon bank prime rates or an index of market interest
rates.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
(h) At April 30, 1995, the Series had $81,681,861 (28.2% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenue generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $286,203,923)-see statement..................................... $288,949,833
Cash.................................................................... 1,043,021
Interest receivable..................................................... 5,428,845
Receivable for investment securities sold............................... 2,117,410
Receivable for shares of Beneficial Interest subscribed................. 385,597
Prepaid expenses........................................ 8,768
------------
297,933,474
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 132,481
Due to Distributor...................................................... 89,385
Payable for investment securities purchased............................. 7,393,085
Payable for shares of Beneficial Interest redeemed...................... 259,179
Accrued expenses ....................................................... 47,796 7,921,926
----------
NET ASSETS ................................................................ $290,011,548
============
REPRESENTED BY:
Paid-in capital......................................................... $284,243,046
Accumulated net realized gain on investments............................ 3,022,592
Accumulated net unrealized appreciation on investments-Note 3........... 2,745,910
-------------
NET ASSETS at value......................................................... $290,011,548
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 13,646,390
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 4,348,530
=============
NET ASSET VALUE per share:
Class A Shares
($219,949,295 / 13,646,390 shares).................................... $16.12
======
Class B Shares
($70,062,253 / 4,348,530 shares)...................................... $16.11
======
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $19,301,632
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,589,232
Shareholder servicing costs-Note 2(c)................................. 980,796
Distribution fees (Class B shares)-Note 2(b).......................... 325,145
Professional fees..................................................... 42,272
Custodian fees........................................................ 32,086
Prospectus and shareholders' reports.................................. 23,653
Registration fees..................................................... 5,902
Trustees' fees and expenses-Note 2(d)................................. 2,585
Miscellaneous......................................................... 23,310
-----------
3,024,981
Less--reduction in management fee due to
undertakings-Note 2(a)............................................ 26,631
-----------
TOTAL EXPENSES.................................................. 2,998,350
-----------
INVESTMENT INCOME-NET........................................... 16,303,282
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 3,749,748
Net unrealized (depreciation) on investments............................ (2,373,737)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,376,011
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $17,679,293
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
---------------------------
1994 1995
-------------- ------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 15,490,843 $ 16,303,282
Net realized gain (loss) on investments................................. (638,867) 3,749,748
Net unrealized (depreciation) on investments for the year............... (11,269,771) (2,373,737)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 3,582,205 17,679,293
-------------- --------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (13,483,408) (12,907,659)
Class B shares........................................................ (2,007,435) (3,395,623)
From net realized gain on investments:
Class A shares........................................................ (420,030) ---
Class B shares........................................................ (79,933) ---
In excess of net realized gain on investments:
Class A shares........................................................ (74,174) ---
Class B shares........................................................ (14,115) ---
-------------- --------------
TOTAL DIVIDENDS................................................... (16,079,095) (16,303,282)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 41,975,312 14,323,499
Class B shares........................................................ 47,612,555 13,962,833
Dividends reinvested:
Class A shares........................................................ 7,051,281 6,652,944
Class B shares........................................................ 1,277,978 2,024,872
Cost of shares redeemed:
Class A shares........................................................ (24,912,768) (37,539,324)
Class B shares........................................................ (1,382,027) (5,465,675)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 71,622,331 (6,040,851)
--------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 59,125,441 (4,664,840)
NET ASSETS:
Beginning of year....................................................... 235,550,947 294,676,388
-------------- --------------
End of year............................................................. $294,676,388 $290,011,548
============= ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------------------------------------------------------------------
CLASS A CLASS B
--------------------- --------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------- ---------------------------
1994 1995 1994 1995
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 2,482,244 900,647 2,815,030 881,375
Shares issued for dividends reinvested. 418,362 421,108 76,056 128,216
Shares redeemed........................ (1,489,929) (2,389,230) (83,242) (350,112)
----------- ----------- ---------- ---------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING.......... 1,410,677 (1,067,475) 2,807,844 659,479
============ =========== =========== =========
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 20 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Pennsylvania Series (the "Series").
Dreyfus Service Corporation, until August 24, 1994, acted as the distributor
of the Fund's shares. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distributions Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $26,631 for the year ended April 30, 1995.
Dreyfus Service Corporation retained $9,316 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $27,522
during the year ended April 30, 1995 from contingent deferred sales charges
imposed upon redemptions of the Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pay Dreyfus Service Corporation at
an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $226,769 was charged to the Series
pursuant to the Class B Distribution Plan and $98,376 was charged to the
Series pursuant to the prior Class B Distribution Plan.
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $184,959 and $49,188 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $374,846 and $113,385 were charged to the Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $248,986,025 and $255,289,378, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $2,745,910, consisting of $6,610,872 gross unrealized appreciation and
$3,864,962 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Pennsylvania Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Pennsylvania Series at April
30, 1995, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young LLP Singature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-97.6% AMOUNT VALUE
------------- -------------
<S> <C> <C>
TEXAS--96.3%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc., Project):
7%, 12/1/2011......................................................... $ 1,550,000 $ 1,546,838
7.50%, 12/1/2029...................................................... 3,800,000 3,882,042
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
6.562%, 1/3/2022 (Insured; FSA)......................................... 4,500,000 4,621,950
Austin, Utility Systems Revenue, Refunding
5.75%, 5/15/2024 (Insured; FGIC)........................................ 5,000,000 4,724,100
Bexar County:
(Detention Facilities) 5.25%, 6/15/2013................................. 1,975,000 1,786,190
Refunding, Limited Tax 5%, 6/15/2010.................................... 8,000,000 7,270,400
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding:
5.70%, 6/1/2004......................................................... 3,500,000 3,492,405
6.80%, 12/1/2004........................................................ 850,000 893,920
Brazos River Authority, PCR (Texas Utilities Electric Company)
7.875%, 3/1/2021........................................................ 500,000 543,350
Burleson Independent School District (Johnson and Tarrant Counties)
Unlimited Tax School Building and Refunding, Zero Coupon, 8/1/2014...... 1,515,000 458,787
Clear Creek Independent School District,
Unlimited Tax Schoolhouse 5.50%, 2/1/2015............................... 1,300,000 1,211,002
Clint Independent School District, Refunding
7%, 3/1/2015............................................................ 750,000 788,670
Coastal Bend Health Facilities Development Corp.,
(Incarnate Word Health Service) 6%, 11/15/2022.......................... 2,500,000 2,399,250
Coppell Independent School District (Dallas County)
Unlimited Tax School Building and Refunding, Zero Coupon, 8/15/2025..... 2,000,000 294,820
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC)....................................... 1,250,000 1,279,988
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................... 2,510,000 2,507,440
Grapevine-Colleyville Independent School District,
Refunding 5.125%, 8/15/2022............................................. 2,235,000 1,933,566
Gulf Coast Waste Disposal Authority, SWDR
(Champion International Corp. Project) 7.25%, 4/1/2017.................. 1,000,000 1,040,480
Harris County, Toll Road Revenue, Senior Lien
5.30%, 8/15/2013 (Insured; AMBAC)....................................... 2,000,000 1,845,580
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021.................................... 1,000,000 1,060,860
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009.......... 750,000 811,365
Lewisville Independent School District 5.35%, 8/15/2014..................... 2,750,000 2,538,140
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019............ 500,000 528,265
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- -------------
TEXAS (CONTINUED)
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014..................... $ 585,000 $ 625,973
North Central Health Facility Development Corp., Revenue
(Presbyterian Health Care) 5.90%, 6/1/2021 ............................. 2,300,000 2,152,110
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)........................................ 1,000,000 1,076,370
Red River Authority, PCR
(Hoechst Celanese Corp. Project) 6.875%, 4/1/2017....................... 2,600,000 2,665,052
Sabine River Authority, PCR
(Texas Utility Co. Project) 7.75%, 4/1/2016............................. 500,000 515,680
San Antonio:
Electric and Gas Revenue 5.75%, 2/1/2011................................ 2,000,000 1,983,440
Refunding 5.75%, 8/1/2013............................................... 3,000,000 2,917,140
Water Revenue (Prior Lien) 7.125%, 5/1/2016 (Prerefunded 5/1/1999) (a).. 750,000 822,195
Texas (Veterans Housing Assistance) 6.80%, 12/1/2023........................ 3,200,000 3,252,800
Texas City Independent School District:
5%, 8/15/2011........................................................... 1,030,000 905,205
5%, 8/15/2012........................................................... 940,000 819,445
Texas Health Facilities Development Corp., HR, Refunding
(All Saints Episcopal Hospitals) 6.25%, 8/15/2022 (Insured; MBIA)....... 2,000,000 1,997,160
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003........................................................ 800,000 827,856
Texas Housing Agency, Single Family Mortgage Revenue
9.375%, 9/1/2016 (Insured; FHA)......................................... 480,000 493,632
Texas Municipal Power Agency, Refunding 5.75%, 9/1/2012 (Insured; MBIA)
(Prerefunded 9/1/2002) (a).............................................. 775,000 806,907
Texas National Research Laboratory Commission, Financing Corp., LR
(Superconducting Super Collider) 7.10%, 12/1/2021....................... 1,000,000 1,015,000
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011 (Prerefunded 9/1/2001) (a) 560,000 679,347
Texas Water Resources Finance Authority, Revenue 7.625%, 8/15/2008.......... 400,000 430,508
Tomball Hospital Authority, Revenue, Refunding 6%, 7/1/2013................. 5,000,000 4,466,100
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........... 1,885,000 1,784,737
West Side Calhoun County Navigation District, SWDR:
(Union Carbide Chemical and Plastics)
8.20%, 3/15/2021...................................................... 500,000 539,395
(Union Carbide Chemicals Project)
6.40%, 5/1/2023....................................................... 2,000,000 1,895,640
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
U.S. RELATED-1.3%
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities 6.875%, 7/1/2012 (Prerefunded 7/1/2002)(a)............ $ 1,000,000 $ 1,117,169
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $80,255,009)...................................................... $81,248,269
=============
SHORT-TERM MUNICIPAL INVESTMENTS-2.4%
TEXAS:
Port Development Corp. of Texas, IDR, VRDN (Pasadena Terminal Co. Inc.)
4.95% (LOC; ABN-AMRO Bank)(b,c)......................................... $ 1,000,000 $ 1,000,000
Trinity River Industrial Development Authority, IDR, VRDN
(Toys 'R' Us Project) 4.50% (LOC; Bankers Trust) (b,c).................. 1,000,000 1,000,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $2,000,000)....................................................... $ 2,000,000
=============
TOTAL INVESTMENTS-100.0%
(cost $82,255,009)...................................................... $83,248,269
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LR Lease Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 38.9%
AA Aa AA 32.6
A A A 7.4
BBB Baa BBB 19.5
Not Rated (e) Not Rated (e) Not Rated (e) 1.6
--------
100.0%
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letters of credit.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
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.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $82,255,009)-see statement...................................... $83,248,269
Cash.................................................................... 110,481
Interest receivable..................................................... 1,662,233
Receivable for shares of Beneficial Interest subscribed................. 30,406
Prepaid expenses........................................................ 1,396
-----------
85,052,785
LIABILITIES:
Due to Distributor...................................................... $24,634
Payable for shares of Beneficial Interest redeemed...................... 86,423
Accrued expenses........................................................ 20,536 131,593
-------- -------------
NET ASSETS ................................................................ $84,921,192
=============
REPRESENTED BY:
Paid-in capital......................................................... $83,738,170
Accumulated undistributed net realized gain on investments.............. 189,762
Accumulated net unrealized appreciation on investments-Note 3........... 993,260
-------------
NET ASSETS at value......................................................... $84,921,192
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,291,402
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 812,923
=============
NET ASSET VALUE per share:
Class A Shares
($68,103,304 / 3,291,402 shares)...................................... $20.69
=======
Class B Shares
($16,817,888 / 812,923 shares)........................................ $20.69
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,624,146
EXPENSES:
Management fee-Note 2(a).............................................. $485,593
Shareholder servicing costs-Note 2(c)................................. 269,470
Distribution fees (Class B shares)-Note 2(b).......................... 82,303
Professional fees..................................................... 13,196
Prospectus and shareholders' reports.................................. 10,896
Custodian fees........................................................ 10,805
Registration fees..................................................... 10,468
Trustees' fees and expenses-Note 2(d)................................. 793
Miscellaneous......................................................... 12,861
----------
896,385
Less--Management fee waived due to
undertaking-Note 2(a)............................................. 485,593
----------
TOTAL EXPENSES.................................................. 410,792
------------
INVESTMENT INCOME-NET........................................... 5,213,354
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $336,502
Net unrealized appreciation on investments.............................. 460,699
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 797,201
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,010,555
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-------------------------------
1994 1995
---------- ------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 5,213,286 $ 5,213,354
Net realized gain (loss) on investments................................. (9,624) 336,502
Net unrealized appreciation (depreciation) on investments for the year.. (3,426,202) 460,699
---------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,777,460 6,010,555
---------- ------------
DIVIDENDS TO SHAREHOLDERS:
From investment income--net:
Class A shares........................................................ (4,588,600) (4,315,213)
Class B shares........................................................ (624,686) (898,141)
From net realized gain on investments:
Class A shares........................................................ (484,938) -
Class B shares........................................................ (80,902) -
In excess of net realized gain on investments:
Class A shares........................................................ (117,512) -
Class B shares........................................................ (19,605) -
---------- ------------
TOTAL DIVIDENDS................................................... (5,916,243) (5,213,354)
----------- ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 15,134,395 1,872,238
Class B shares........................................................ 10,828,176 1,960,522
Dividends reinvested:
Class A shares........................................................ 2,405,249 1,978,459
Class B shares........................................................ 427,887 498,663
Cost of shares redeemed:
Class A shares........................................................ (10,038,595) (12,622,094)
Class B shares........................................................ (873,440) (1,719,028)
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 17,883,672 (8,031,240)
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,744,889 (7,234,039)
NET ASSETS:
Beginning of year....................................................... 78,410,342 92,155,231
----------- -------------
End of year............................................................. $92,155,231 $84,921,192
============= ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------
CLASS A CLASS B
--------------------- --------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------------- --------------------
1994 1995 1994 1995
--------- ---------- --------- -------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 699,480 92,136 498,740 96,542
Shares issued for dividends reinvested. 111,346 97,778 19,835 24,656
Shares redeemed........................ (466,348) (636,330) (40,687) (86,401)
---------- ------------ ------------- -------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING............. 344,478 (446,416) 477,888 34,797
============== ============ ============= =============
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 21 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Texas Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgement of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery basis
may be settled a month or more after the trade date.
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The Manager has
undertaken from May 1, 1994 to waive receipt of the management fee payable to
it by the Series until such time as the net assets of the Series exceed $100
million, regardless of whether they remain at that level. The management fee
waived, pursuant to the undertaking, amounted to $485,593 for the year ended
April 30, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $128 during the year ended April 30,
1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $4,981
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B Shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pays Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agents.
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended April 30, 1995 $56,193 was charged to the Series
pursuant to the Class B Distribution Plan and $26,110 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Service Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The service
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Series and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. From May 1, 1994 through August 23, 1994, $60,108 and $13,056 were
charged to Class A and Class B shares, respectively, by Dreyfus Service Corpor
ation. From August 24, 1994 through April 30, 1995, $119,464 and $28,096 were
charged to Class A and Class B shares, respectively, by the Distributor
pursuant to the Shareholder Services Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $55,510,096 and $62,782,827, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $993,260, consisting of $2,094,802 gross unrealized appreciation and
$1,101,542 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Texas Series (one of the series constituting the Premier State Municipal Bond
Fund) as of April 30, 1995, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Texas Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernest & Young LLP Signature Logo)
New York, New York
June 6, 1995
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
----------- ---------------
<S> <C> <C>
VIRGINIA-90.9%
Alexandria Redevelopment and Housing Authority,
MFHR, (United Dominion - Parkwood Court) 6.625%, 5/1/2006............... $ 3,000,000 $ 3,103,020
Arlington County Industrial Development Authority,
Hospital Facility Revenue (Arlington Hospital)
7.125%, 9/1/2021 (Prerefunded 9/1/2001)(a).............................. 200,000 225,410
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021 (Prerefunded 9/1/2001)(a). 2,750,000 3,068,203
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012....... 1,000,000 1,033,350
Chesapeake Bay Bridge and Tunnel Commission District, Revenue,
Refunding-General Resolution 6.375%, 7/1/2022 (Insured; MBIA)........... 1,500,000 1,518,375
Chesapeake Hospital Authority, Hospital Facility Revenue, Refunding
(Chesapeake General Hospital) 5.25%, 7/1/2018 (Insured; MBIA)........... 1,000,000 888,390
Community Housing Finance Corp. Arlington County,
Collateralized Mortgage Revenue, Refunding (Colonial Village Project):
6.125%, 12/1/2016 (Insured; FHA)...................................... 900,000 877,338
6.25%, 6/1/2022 (Insured; FHA)........................................ 1,000,000 970,730
Covington-Alleghany County Industrial Development Authority,
Hospital Facility Revenue (Alleghany Regional Hospital) 6.875%, 4/1/2022 1,000,000 1,031,850
Fairfax County Park Authority, Park Facilities Revenue
6.625%, 7/15/2020....................................................... 2,665,000 2,640,455
Fairfax County Water Authority, Water Revenue:
5%, 4/1/2016............................................................ 2,000,000 1,731,200
6.125%, 1/1/2029 (Prerefunded 1/1/2000)(a).............................. 2,000,000 2,099,380
6.697%, 4/1/2029 (b,c).................................................. 2,000,000 1,760,000
Franklin 6.40%, 1/15/2012................................................... 1,000,000 1,032,880
Fredericksburg Industrial Development Authority, Hospital Facility Revenue,
Refunding
(MWH Medicorp Obligation Group) 6.70%, 8/15/2009 (Insured; FGIC)........ 195,000 206,934
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022....................................................... 1,500,000 1,501,455
Hampton Roads Medical College, General Revenue, Refunding 6.875%, 11/15/2016 500,000 517,420
Harrisonburg Redevelopment and Housing Authority,
MFHR, Refunding:
(Battery Heights Project) 7.375%, 11/20/2028.......................... 500,000 525,230
(Hanover Crossing Apartments Project) 6.35%, 3/1/2023................. 2,000,000 1,941,380
Henrico County 6.90%, 10/1/2009 (Prerefunded 10/1/1998)(a).................. 300,000 324,666
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- ------------
VIRGINIA (CONTINUED)
Industrial Development Authority of Albermarle County,
HR, Refunding (Martha Jefferson Hospital):
5.875%, 10/1/2013..................................................... $ 2,360,000 $ 2,217,196
5.50%, 10/1/2020...................................................... 1,500,000 1,288,035
Industrial Development Authority of the City of Lynchburg,
Educational Facilities Revenue (Randolph-Macon Woman's College)
5.875%, 9/1/2013........................................................ 500,000 488,710
Industrial Development Authority of the City of Williamsburg,
Hospital Facility Revenue (Williamsburg Community Hospital) 5.75%, 10/1/2022 2,000,000 1,771,920
Industrial Development Authority of the County of Prince William:
Hospital Facility Revenue (Potomac Hospital Corp. of Prince William)
6.85%, 10/1/2025...................................................... 1,000,000 1,029,450
HR, Refunding (Prince William Hospital)
5.625%, 4/1/2012...................................................... 1,000,000 907,110
Industrial Development Authority of the Town of West Point,
SWDR (Chesapeake Corp. Project) 6.375%, 3/1/2019........................ 2,500,000 2,375,175
Mecklenburg County Industrial Development Authority, Revenue
(Exempt Facility-Mecklenburg Cogeneration) 7.35%, 5/1/2008 (LOC; Fuji Bank) (d) 500,000 523,030
Nelson County Service Authority, Water and Sewer Revenue, Refunding
5.50%, 7/1/2018 (Insured; FGIC)......................................... 1,750,000 1,626,590
Newport News Redevelopment and Housing Authority, Mortgage Revenue, Refunding
(FHA-West Apartments-Section 8) 6.55%, 7/1/2024 (Insured; MBIA)......... 1,500,000 1,520,550
Peninsula Ports Authority, Health System Revenue, Refunding
(Riverside Health System Project) 6.625%, 7/1/2018...................... 500,000 507,310
Prince William County Park Authority, Revenue
6.875%, 10/15/2016...................................................... 3,000,000 3,094,710
Rector and Visitors of the University of Virginia, General Revenue Pledge
5.375%, 6/1/2020........................................................ 4,370,000 3,949,781
Richmond Industrial Development Authority, HR (Retreat Hospital)
7.35%, 7/1/2021......................................................... 1,900,000 1,904,313
Richmond Metropolitan Authority, Expressway Revenue, Refunding
6.375%, 7/15/2016 (Insured; FGIC)....................................... 1,500,000 1,533,870
South Boston Industrial Development Authority, HR
(Halifax Community Hospital Inc. Project) 7.375%, 9/1/2011.............. 500,000 530,075
Southeastern Public Service Authority, Revenue:
5.125%, 7/1/2013 (Insured; MBIA)........................................ 7,850,000 7,095,380
(Regional Solid Waste System):
10.50%, 7/1/2015 (Prerefunded 7/1/1995) (a)........................... 250,000 257,705
6%, 7/1/2017.......................................................... 1,750,000 1,601,828
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
----------- -----------
VIRGINIA (CONTINUED)
Upper Occoquan Sewer Authority, Regional Sewer Revenue
6.50%, 7/1/2017 (Insured; MBIA) (Prerefunded 7/1/2001)(a)............... $ 1,000,000 $ 1,091,820
Virginia, Higher Educational Institution 6.60%, 6/1/2009 (Prerefunded 6/1/1998) (a) 300,000 320,598
Virginia Beach Development Authority:
Hospital Facility Revenue (Sentara Bayside Hospital) 6.30%, 11/1/2021... 2,000,000 1,992,320
Nursing Home Revenue (Sentara Life Care Corp.) 7.75%, 11/1/2021......... 1,000,000 1,086,990
Virginia College Building Authority, Educational Facilities, Revenue:
(Hampton University Project) 6.50%, 4/1/2008............................ 350,000 364,633
(Randolph - Macon College Project) 6.625%, 5/1/2013..................... 1,000,000 1,028,990
(Refunding - Washington and Lee University Project) 6.40%, 1/1/2012..... 500,000 516,045
Virginia Housing Development Authority:
Commonwealth Mortgage:
6.95%, 1/1/2010....................................................... 2,500,000 2,572,075
6.85%, 1/1/2027....................................................... 2,000,000 2,027,100
Multi-Family Refunding 5.90%, 11/1/2017................................. 2,000,000 1,886,100
Virginia Public Building Authority, Building Revenue 5.75%, 8/1/2012........ 1,000,000 982,730
Virginia Resources Authority, Water and Sewer System Revenue:
(Lot 7-Rapidan Service Authority) 7.125%, 10/1/2016..................... 250,000 264,250
(Lot 9-Frederick County) 6%, 10/1/2012.................................. 500,000 503,905
Virginia Transportation Board, Transportation Contract Revenue, Refunding
(United States Route 58 Corridor Program) 5.25%, 5/15/2012.............. 250,000 229,150
Washington County Industrial Development Authority,
Hospital Facility Revenue (First Mortgage - Johnston Memorial Hospital)
7%, 7/1/2022................................................................ 750,000 773,422
Winchester Industrial Development Authority, HR
2.12%, 1/1/1998 (Insured; AMBAC) (b).................................... 3,400,000 3,104,030
York County, COP 6.625%, 3/1/2012........................................... 500,000 522,350
U. S. RELATED-9.1%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,025,280
Puerto Rico (Public Improvement):
7.70%, 7/1/2020 (Prerefunded 7/1/2000) (a).............................. 1,000,000 1,143,080
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a).............................. 1,000,000 1,112,710
Puerto Rico Highway and Transportation Authority,
Highway Revenue 6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............. 2,000,000 2,204,600
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund
Loan Notes
7.25%, 10/1/2018........................................................ 1,500,000 1,550,505
-------------
TOTAL INVESTMENTS (cost $88,486,910)........................................ $88,523,087
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 32.4%
AA Aa AA 26.4
A A A 25.8
BBB Baa BBB 13.6
Not Rated (f) Not Rated (f) Not Rated (f) 1.8
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse Floater Security - the interest rate is subject to change
periodically.
(c) Security 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,
1995, this security amounted to $1,760,000 or 1.9% of net assets.
(d) Secured by letters of credit.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
(g) At April 30, 1995, the Fund had $23,050,378 (25.3% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $88,486,910)-see statement...................................... $88,523,087
Cash.................................................................... 1,221,322
Interest receivable..................................................... 1,553,168
Receivable for shares of Beneficial Interest subscribed................. 245,395
Prepaid expenses........................................................ 5,819
-------------
91,548,791
LIABILITIES:
Due to Distributor...................................................... $ 30,831
Payable for shares of Beneficial Interest redeemed...................... 231,080
Accrued expenses........................................................ 46,183 308,094
-------------
NET ASSETS ................................................................ $91,240,697
=============
REPRESENTED BY:
Paid-in capital......................................................... $93,233,506
Accumulated net realized capital losses and distributions in
excess of net realized gain on investments-Note 1(c).................. (2,028,986)
Accumulated net unrealized appreciation on investments-Note 3(b)........ 36,177
-------------
NET ASSETS at value......................................................... $91,240,697
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,893,298
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,797,143
=============
NET ASSET VALUE per share:
Class A Shares
($62,427,641 / 3,893,298 shares)...................................... $16.03
=======
Class B Shares
($28,813,056 / 1,797,143 shares)...................................... $16.03
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,706,766
EXPENSES:
Management fee-Note 2(a).............................................. $ 496,788
Shareholder servicing costs-Note 2(c)................................. 301,541
Distribution fees (Class B shares)-Note 2(b).......................... 134,882
Professional fees..................................................... 12,877
Custodian fees........................................................ 9,551
Prospectus and shareholders' reports.................................. 7,018
Registration fees..................................................... 2,292
Trustees' fees and expenses-Note 2(d)................................. 814
Miscellaneous......................................................... 18,432
------------
984,195
Less-management fee waived due to
undertaking-Note 2(a)............................................. 496,788
------------
TOTAL EXPENSES.................................................. 487,407
------------
INVESTMENT INCOME-NET........................................... 5,219,359
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments (including options transactions)-Note 3(a) $(1,700,519)
Net realized gain on financial futures-Note 3(a)........................ 48,742
------------
NET REALIZED (LOSS)................................................... (1,651,777)
Net unrealized appreciation on investments.............................. 1,713,847
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 62,070
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $5,281,429
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-------------------------------
1994 1995
--------------- -----------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 4,642,019 $ 5,219,359
Net realized (loss) on investments...................................... (105,697) (1,651,777)
Net unrealized appreciation (depreciation) on investments for the year.. (4,819,942) 1,713,847
--------------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (283,620) 5,281,429
--------------- -----------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (3,641,582) (3,761,772)
Class B shares........................................................ (1,000,437) (1,457,587)
From net realized gain on investments:
Class A shares........................................................ (48,263) ---
Class B shares........................................................ (16,560) ---
In excess of net realized gain on investments:
Class A shares........................................................ (72,239) (120,788)
Class B shares........................................................ (24,785) (53,700)
--------------- -----------
TOTAL DIVIDENDS................................................... (4,803,866) (5,393,847)
--------------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 17,318,650 7,081,776
Class B shares........................................................ 18,814,589 5,599,985
Dividends reinvested:
Class A shares........................................................ 2,089,707 2,086,577
Class B shares........................................................ 582,077 818,920
Cost of shares redeemed:
Class A shares........................................................ (6,302,664) (11,840,016)
Class B shares........................................................ (911,833) (2,926,642)
--------------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 31,590,526 820,600
--------------- -----------
TOTAL INCREASE IN NET ASSETS.................................... 26,503,040 708,182
NET ASSETS:
Beginning of year....................................................... 64,029,475 90,532,515
--------------- -----------
End of year............................................................. $90,532,515 $ 91,240,697
=============== ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------------------
CLASS A CLASS B
------------------------------- ---------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------- ---------------------------
1994 1995 1994 1995
------------ --------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 1,010,771 447,976 1,095,592 356,143
Shares issued for dividends reinvested. 122,266 132,774 34,099 52,168
Shares redeemed........................ (370,731) (761,303) (53,790) (187,333)
------------ ------------- ------------- ------------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING......... 762,306 (180,553) 1,075,901 220,978
============ ============ -============== ============
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
FINANCIAL HIGHLIGHTS
Reference is made to page 22 of the Fund's Prospectus dated
August 14, 1995.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Virginia Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
Dividends in excess of net realized gains on investment for financial
statement purposes result primarily from losses from securities transactions
during the year ended April 30, 1995 which are treated for Federal income tax
purposes as arising in Fiscal 1996.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $681,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
has undertaken from May 1, 1994 to waive receipt of the management fee
payable to it by the Series until such time as the net assets of the Series
exceed $100 million, regardless of whether they remain at that level. The
management fee waived, pursuant to the undertaking, amounted to $496,788 for
the year ended April 30, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $3,688 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $18,356
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
shares average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the year ended April 30, 1995, $93,928 was charged to the Series
pursuant to the Class B Distribution Plan and $40,954 was charged to the
Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to Serv
ice Agents in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. From May 1, 1994 through August 23,
1994, $51,924 and $20,477 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $106,447 and $46,965 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding options transactions, amounted to $38,001,237 and $37,871,346,
respectively, for the year ended April 30, 1995, and consisted entirely of
long-term and short-term municipal investments.
In addition, the following table summarizes the Series' call/put options
written transactions for the year ended April 30, 1995:
<TABLE>
<CAPTION>
OPTIONS TERMINATED
----------------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
--------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding April 30, 1994........ -- --
Contracts written........................... 250 $ 172,627
---------- -----------
250 172,627
Contracts terminated;
Expired................................... 250 172,627 -- $172,627
--------- ----------- --------- -----------
Total contracts terminated 250 $172,627 -- $172,627
--------- ------------ --------- --------
Contracts outstanding April 30, 1995........ -- --
=========== ==========
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As a writer of call options, the Series receives a premium at the
outset and then bears the market risk of unfavorable
changes in the price of the financial instrument underlying the option.
Generally, the Series would incur a gain, to the extent of the premium, if
the price of the underlying financial instrument decreases between the date
the option is written and the date on which the option is terminated.
Generally, the Series would realize a loss, if the price of the financial
instrument increases between those dates. At April 30, 1995, there were no
call options written outstanding.
As a writer of put options, the Series receives a premium at the outset
and then bears the market risk of unfavorable changes in the price of the
financial instrument underlying the option. Generally, the Series would incur
a gain, to the extent of the premium, if the price of the underlying
financial instrument increases between the date the option is written and the
date on which the option is terminated. Generally, the Series would realize a
loss, if the price of the financial instrument declines between those dates.
At April 30, 1995, there were no put options written outstanding.
The Series engages in trading financial futures contracts. The Series is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the Series to
"mark to market" on a daily basis, which reflects the change in the market
value of the contract at the close of each day's trading. Accordingly,
variation margin payments are made or received to reflect daily unrealized
gains or losses. When the contracts are closed, the Series recognizes a
realized gain or loss. These investments require initial margin deposits with
a custodian, which consist of cash or cash equivalents, up to approximately
10% of the contract amount. The amount of these deposits is determined by the
exchange or Board of Trade on which the contract is traded and is subject to
change. At April 30, 1995, there were no financial futures contracts
outstanding.
(B) At April 30, 1995, accumulated net unrealized appreciation on
investments was $36,177, consisting of $2,250,130 gross unrealized
appreciation and $2,213,953 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Virginia Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Virginia Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
June 6, 1995
PREMIER STATE MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from May 28,
1987 (commencement of operations for the Connecticut Series,
Florida Series, Maryland Series, Massachusetts Series,
Michigan Series, Minnesota Series, Ohio Series and Texas
Series, except the Pennsylvania Series (which commenced
operations on July 30, 1987)) to April 30, 1988 and for each
of the seven years ended April 30, 1995 for such Series; for
the North Carolina Series and Virginia Series for the period
from August 1, 1991 (commencement of operations) to April
30, 1992 and for each of the three years ended April 30,
1995; for the Arizona Series and Georgia Series for the
period from September 3, 1992 (commencement of operations) to
April 30, 1993 and for the two years ended April 30, 1995;
and for the Colorado Series and Oregon Series for the period
from May 6, 1994 (commencement of operations) to the year
ended April 30, 1995.
Included in Part B of the Registration Statement:
Statement of Investments-- April 30, 1995
Statement of Assets and Liabilities-- April 30, 1995
Statement of Operations--year ended April 30, 1995
Statement of Changes in Net Assets--for each of the
years ended April 30, 1994 and 1995 for all series
except the Colorado Series and Oregon Series; and for
the Colorado Series and Oregon Series for the period
from May 6, 1994 (commencement of operations) to April
30, 1995.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
June 6, 1995.
All schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration of
Trust.
(2) Registrant's By-Laws, as amended.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(6)(b) Forms of Shareholder Services Plan Agreements.
(6)(c) Forms of Distribution Plan Agreements.
(8)(a) Custody Agreement.
(8)(b) Sub-Custodian Agreements are incorporated by reference to Exhibit
(8)(b) of Post-Effective Amendment No. 20 to the Registration
Statement on From N-1A, filed on August 18, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit (16) of Post-Effective Amendment No. 20 to
the Registration Statement on Form N-1A, filed on August 18, 1994.
(17) Financial Data Schedules
(18) Registrant's Rule 18f-3 Plan.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and officers.
(b) Certificate of Assistant Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of July 17, 1995
______________ _____________________________
Shares of
beneficial interest,
par value $.001 per share Class A Class B Class C
Arizona Series- 281 268 -0-
Colorado Series- 29 109 -0-
Connecticut Series- 7,297 1,246 -0-
Florida Series- 5,716 618 -0-
Georgia Series- 241 522 -0-
Maryland Series- 7,221 1,532 -0-
Massachusetts Series- 1,855 130 -0-
Michigan Series- 5,167 583 -0-
Minnesota Series- 3,378 899 -0-
North Carolina Series- 1,310 1,366 -0-
Ohio Series- 6,698 1,275 -0-
Number of Record
Title of Class Holders as of July 17, 1995
______________ _____________________________
Shares of
beneficial interest,
par value of $.001 per share Class A Class B Class C
Oregon Series- 57 44 -0-
Pennsylvania Series- 7,198 2,855 -0-
Texas Series- 1,213 469 -0-
Virginia Series- 1,729 985 -0-
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a trustee, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of Part C of
Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A, filed on July 16, 1987.
Reference is also made to the Distribution Agreement attached
hereto as Exhibit (6)(a).
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser and manager for sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves
primarily as a registered broker-dealer of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
DAVID B. TRUMAN Former Director:
(cont'd) Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation*;
Operating Officer, Former Executive Vice President:
and a Director Prudential Investment Corporation
751 Board Street
Newark, New Jersey 07102
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*;
and a Director
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++'
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company+++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization*;
The Truepenny Corporation*;
PHILIP L. TOIA Formerly, Senior Vice President:
(cont'd) The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals*;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President-Corporate The Boston Company Advisors, Inc.
Development 53 State Street
Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+;
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus/Laurel Funds, Inc.
36) The Dreyfus/Laurel Funds Trust
37) The Dreyfus/Laurel Tax-Free Municipal Funds
38) The Dreyfus/Laurel Investment Series
39) The Dreyfus Leverage Fund, Inc.
40) Dreyfus Life and Annuity Index Fund, Inc.
41) Dreyfus LifeTime Portfolios, Inc.
42) Dreyfus Liquid Assets, Inc.
43) Dreyfus Massachusetts Intermediate Municipal Bond Fund
44) Dreyfus Massachusetts Municipal Money Market Fund
45) Dreyfus Massachusetts Tax Exempt Bond Fund
46) Dreyfus Michigan Municipal Money Market Fund, Inc.
47) Dreyfus Money Market Instruments, Inc.
48) Dreyfus Municipal Bond Fund, Inc.
49) Dreyfus Municipal Cash Management Plus
50) Dreyfus Municipal Money Market Fund, Inc.
51) Dreyfus New Jersey Intermediate Municipal Bond Fund
52) Dreyfus New Jersey Municipal Bond Fund, Inc.
53) Dreyfus New Jersey Municipal Money Market Fund, Inc.
54) Dreyfus New Leaders Fund, Inc.
55) Dreyfus New York Insured Tax Exempt Bond Fund
56) Dreyfus New York Municipal Cash Management
57) Dreyfus New York Tax Exempt Bond Fund, Inc.
58) Dreyfus New York Tax Exempt Intermediate Bond Fund
59) Dreyfus New York Tax Exempt Money Market Fund
60) Dreyfus Ohio Municipal Money Market Fund, Inc.
61) Dreyfus 100% U.S. Treasury Intermediate Term Fund
62) Dreyfus 100% U.S. Treasury Long Term Fund
63) Dreyfus 100% U.S. Treasury Money Market Fund
64) Dreyfus 100% U.S. Treasury Short Term Fund
65) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
66) Dreyfus Pennsylvania Municipal Money Market Fund
67) Dreyfus Short-Intermediate Government Fund
68) Dreyfus Short-Intermediate Municipal Bond Fund
69) Dreyfus Short-Term Income Fund, Inc.
70) The Dreyfus Socially Responsible Growth Fund, Inc.
71) Dreyfus Strategic Growth, L.P.
72) Dreyfus Strategic Income
73) Dreyfus Strategic Investing
74) Dreyfus Tax Exempt Cash Management
75) The Dreyfus Third Century Fund, Inc.
76) Dreyfus Treasury Cash Management
77) Dreyfus Treasury Prime Cash Management
78) Dreyfus Variable Investment Fund
79) Dreyfus-Wilshire Target Funds, Inc.
80) Dreyfus Worldwide Dollar Money Market Fund, Inc.
81) General California Municipal Bond Fund, Inc.
82) General California Municipal Money Market Fund
83) General Government Securities Money Market Fund, Inc.
84) General Money Market Fund, Inc.
85) General Municipal Bond Fund, Inc.
86) General Municipal Money Market Fund, Inc.
87) General New York Municipal Bond Fund, Inc.
88) General New York Municipal Money Market Fund
89) Pacifica Funds Trust -
Pacific American Money Market Portfolio
Pacific American U.S. Treasury Portfolio
90) Peoples Index Fund, Inc.
91) Peoples S&P MidCap Index Fund, Inc.
92) Premier Insured Municipal Bond Fund
93) Premier California Municipal Bond Fund
94) Premier Global Investing, Inc.
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal Bond Fund
99) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
---------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 11th day of August, 1995.
PREMIER STATE MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
-------------------------------------
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ _______________________________ ________
/s/Marie E. Connolly* President, (Principal Executive 08/11/95
- ------------------------------ Officer)
Marie E. Connolly
/s/Joseph F. Tower, III* Assistant Treasurer 08/11/95
- ------------------------------ (Principal Accounting and
Joseph F. Tower, III Financial Officer)
/s/Clifford L. Alexander, Jr.* Trustee 08/11/95
- -------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Trustee 08/11/95
- -------------------------------
Peggy C. Davis
/s/Joseph S. DiMartino* Chairman of the Board of 08/11/95
- ------------------------------- Trustees
Joseph S. DiMartino
/s/Ernest Kafka* Trustee 08/11/95
- -------------------------------
Ernest Kafka
/s/Saul B. Klaman* Trustee 08/11/95
- -------------------------------
Saul B. Klaman
/s/Nathan Leventhal* Trustee 08/11/95
- -------------------------------
Nathan Leventhal
*BY: /s/ Eric B. Fischman
__________________________
Eric B. Fischman,
Attorney-in-Fact
PREMIER STATE MUNICIPAL BOND FUND
INDEX OF EXHIBITS
Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration of
Trust
(2) Registrant's By-Laws, as amended
(5) Management Agreement
(6)(a) Distribution Agreement
(6)(b) Forms of Shareholder Services Plans Agreements
(6)(c) Forms of Distribution Plan Agreements
(8)(a) Custody Agreement
(9) Shareholder Services Plan
(10) Opinion and Consent of Registrant's Counsel
(11) Consent of Independent Auditors
(15) Distribution Plan
(17) Financial Data Schedules
(18) Registrant's Rule 18f-3 Plan
Other Exhibits
(a) Powers of Attorney of the Trustees and Officers
(b) Certificate of Assistant Secretary
PREMIER STATE MUNICIPAL BOND FUND
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF
TRUST, made this 18th day of September, 1992, hereby amends and
restates in its entirety the Agreement and Declaration of Trust
made at Boston, Massachusetts, dated October 29, 1986, by the
Trustee hereunder (hereinafter with any additional and successor
trustees referred to as the "Trustees") and by the holders of
shares of beneficial interest to be issued hereunder as
hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all
property coming into their hands as trustees of a Massachusetts
business trust in accordance with the provisions hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby declare that they
will hold all cash, securities and other assets, which they may
from time to time acquire in any manner as Trustees hereunder IN
TRUST to manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as
"Premier State Municipal Bond Fund."
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The term "Commission" shall have the meaning
provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business
trust established by this Agreement and Declaration of Trust, as
amended from time to time;
(c) "Shareholder" means a record owner of Shares of
the Trust;
(d) "Shares" means the equal proportionate
transferable units of interest into which the beneficial interest
in the Trust shall be divided from time to time or, if more than
one series or class of Shares is authorized by the Trustees, the
equal proportionate transferable units into which each series or
class of Shares shall be divided from time to time, and includes
a fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company
Act of 1940, and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The term "Manager" is defined in Article IV, Sec-
tion 5;
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other
enterprise;
(h) "Declaration of Trust" shall mean this Agreement
and Declaration of Trust as amended or restated from time to
time;
(i) "Bylaws" shall mean the Bylaws of the Trust as
amended from time to time;
(j) The term "series" or "series of Shares" refers to
the one or more separate investment portfolios of the Trust into
which the assets and liabilities of the Trust may be divided and
the Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to
the division of Shares representing any series into two or more
classes as provided in Article III, Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or
purposes:
(a) to conduct, operate and carry on the business of
an investment company;
(b) to subscribe for, invest in, reinvest in,
purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, lend, write options on, exchange, distribute or
otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without
limitation of the generality of the foregoing, all types of
stocks, shares, futures contracts, bonds, debentures, notes,
bills and other negotiable or non-negotiable instruments,
obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences
of ownership, guarantees, warrants, options or evidences of
indebtedness issued or created by or guaranteed as to principal
and interest by any state or local government or any agency or
instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession
thereof, by any foreign government or any agency,
instrumentality, territory, district or possession thereof, by
any corporation organized under the laws of any state, the United
States or any territory or possession thereof or under the laws
of any foreign country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper; to pay for
the same in cash or by the issue of stock, including treasury
stock, bonds or notes of the Trust or otherwise; and to exercise
any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting
as security the assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares including Shares in fractional
denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or
other assets of the appropriate series or class of Shares,
whether capital or surplus or otherwise, to the full extent now
or hereafter permitted by the laws of The Commonwealth of
Massachu-setts;
(e) to conduct its business, promote its purposes,
and carry on its operations in any and all of its branches and
maintain offices both within and without The Commonwealth of
Massachusetts, in any and all States of the United States of
America, in the District of Columbia, and in any other parts of
the world; and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion, and attainment
of any of the businesses and purposes herein specified or which
at any time may be incidental thereto or may appear conducive to
or expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust
organized under the Massachusetts General Laws, and to have and
exercise all of the powers conferred by the laws of The Common-
wealth of Massachusetts upon a Massachusetts business trust.
The foregoing provisions of this Article II shall be
construed both as purposes and powers and each as an independent
purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares
of the Trust shall be issued in one or more series as the
Trustees may, without Shareholder approval, authorize. Each
series shall be preferred over all other series in respect of the
assets allocated to that series and shall represent a separate
investment portfolio of the Trust. The beneficial interest in
each series at all times shall be divided into Shares, with or
without par value as the Trustees may from time to time
determine, each of which shall, except as provided in the
following sentence, represent an equal proportionate interest in
the series with each other Share of the same series, none having
priority or preference over another. The Trustees may, without
Shareholder approval, divide Shares of any series into two or
more classes, Shares of each such class having such preferences
and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine. The
number of Shares authorized shall be unlimited, and the Shares so
authorized may be represented in part by fractional shares. From
time to time, the Trustees may divide or combine the Shares of
any series or class into a greater or lesser number without
thereby changing the proportionate beneficial interests in the
series or class.
Section 2. Ownership of Shares. The ownership of
Shares will be recorded in the books of the Trust or a transfer
agent. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders
of Shares of each series and class and as to the number of Shares
of each series and class held from time to time by each. No
certificates certifying the ownership of Shares need be issued
except as the Trustees may otherwise determine from time to
time.
Section 3. Issuance of Shares. The Trustees are
authorized, from time to time, to issue or authorize the
issuance of Shares at not less than the par value thereof, if
any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or
personal, tangible or intangible, as from time to time they may
determine) or minimum consideration for such Shares. Anything
herein to the contrary notwithstanding, the Trustees may issue
Shares pro rata to the Shareholders of a series at any time as a
stock dividend, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of that series, and any stock
dividend to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them.
All consideration received by the Trust for the issue
or sale of Shares of each series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall belong irrevocably to the
series of Shares with respect to which the same were received by
the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of
the Trust and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to
the same extent as whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of whole
Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to
participate upon liquidation of the Trust or of a particular
series of Shares.
Section 4. No Preemptive Rights. Shareholders shall
have no preemptive or other right to subscribe for any additional
Shares or other securities issued by the Trust.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder
by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same
nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against
the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind any Shareholder or Trustee
personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the
Shareholder at any time personally may agree to pay by way of
subscription for any Shares or otherwise. Every note, bond,
contract or other undertaking issued by or on behalf of the Trust
shall include a recitation limiting the obligation represented
thereby to the Trust and its assets or the assets of a particular
series (but the omission of such a recitation shall not operate
to bind any Share- holder or Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either
by the Trustees or the Shareholders. The Trustees named herein
shall serve until the first meeting of the Shareholders or until
the election and qualification of their successors. Prior to
the first meeting of Shareholders the initial Trustees hereunder
may elect additional Trustees to serve until such meeting and
until their successors are elected and qualified. The Trustees
also at any time may elect Trustees to fill vacancies in the
number of Trustees. The number of Trustees shall be fixed from
time to time by the Trustees and, at or after the commencement of
the business of the Trust, shall be not less than three. Each
Trustee, whether named above or hereafter becoming a Trustee,
shall serve as a Trustee during the lifetime of this Trust, until
such Trustee dies, resigns, retires, or is removed, or, if
sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and the election and qualification
of his successor. Subject to Section 16(a) of the 1940 Act, the
Trustees may elect their own successors and, pursuant to this
Section, may appoint Trustees to fill vacancies.
Section 2. Powers. The Trustees shall have all
powers necessary or desirable to carry out the purposes of the
Trust, including, without limitation, the powers referred to in
Article II hereof. Without limiting the generality of the
foregoing, the Trustees may adopt By-Laws not inconsistent with
this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent
that they do not reserve that right to the Shareholders; they may
fill vacancies in their number, including vacancies resulting
from increases in their own number, and may elect and remove such
officers and employ, appoint and terminate such employees or
agents as they consider appropriate; they may appoint from their
own number and terminate any one or more committees; they may
employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the
central handling of securities, retain a transfer agent and a
Shareholder servicing agent, or both, provide for the
distribution of Shares through a principal underwriter or
otherwise, set record dates, and in general delegate such
authority as they consider desirable (including, without
limitation, the authority to purchase and sell securities and to
invest funds, to determine the net income of the Trust for any
period, the value of the total assets of the Trust and the net
asset value of each Share, and to execute such deeds, agreements
or other instruments either in the name of the Trust or the names
of the Trustees or as their attorney or attorneys or otherwise as
the Trustees from time to time may deem expedient) to any officer
of the Trust, committee of the Trustees, any such employee,
agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the
Trustees shall have full power and authority:
(a) To invest and reinvest cash and to hold cash
uninvested;
(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation
to securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not
indicating any trust whether in bearer, unregistered or other
negotiable form or in the name of the Trust or a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent
to any contract, lease, mortgage, purchase or sale of property by
such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting
through a committee, depositary, voting trustee or otherwise, and
in that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including, but not limited to, claims for taxes;
(g) Subject to the provisions of Article III, Section
3, to allocate assets, liabilities, income and expenses of the
Trust to a particular series of Shares or to apportion the same
among two or more series, provided that any liabilities or
expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series; and to the
extent necessary or appropriate to give effect to the preferences
and special or relative rights and privileges of any classes of
Shares, to allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of that
series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate
for the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and payment
of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or Managers, principal
underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have
been taken or omitted by any such person as Shareholder, Trustee,
officer, employee, agent, investment adviser or Manager,
principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Further, without limiting the generality of the
foregoing, the Trustees shall have full power and authority to
incur and pay out of the principal or income of the Trust such
expenses and liabilities as may be deemed by the Trustees to be
necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred by or
arising in connection with a particular series of Shares, as
determined by the Trustees, shall be payable solely out of the
assets of that series.
Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the authority
granted by the Trustees, as to the amount of the assets, debts,
obligations or liabilities of the Trust or a particular series
or class of Shares; the amount of any reserves or charges set up
and the propriety thereof; the time of or purpose for creating
such reserves or charges; the use, alteration or cancellation of
any reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged); the price or
closing bid or asked price of any investment owned or held by
the Trust or a particular series; the market value of any
investment or fair value of any other asset of the Trust or a
particular series; the number of Shares outstanding; the
estimated expense to the Trust or a particular series in
connection with purchases of its Shares; the ability to liquidate
investments in an orderly fashion; and the extent to which it is
practicable to deliver a cross-section of the portfolio of the
Trust or a particular series in payment for any such Shares, or
as to any other matters relating to the issue, sale, purchase
and/or other acquisition or disposition of investments or Shares
of the Trust or a particular series, shall be final and
conclusive, and shall be binding upon the Trust or such series
and its Shareholders, past, present and future, and Shares are
issued and sold on the condition and understanding that any and
all such determinations shall be binding as aforesaid.
Section 3. Pennsylvania Series. Notwithstanding the
provisions of Article IV, Section 2, the Pennsylvania Series of
the Trust may only vary its separate portfolio investments to:
(a) eliminate unsafe investments and investments not
consistent with the preservation of capital or the tax status of
the investments of the Pennsylvania Series;
(b) honor redemption orders, meet anticipated
redemption requirements and negate gains from discount
purchases;
(c) reinvest the earnings from securities in like
securities; or
(d) defray normal administrative expenses.
Section 4. Meetings. At any meeting of the Trustees,a
majority of the Trustees then in office shall constitute a
quorum. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned
without further notice.
When a quorum is present at any meeting, a majority of
the Trustees present may take any action, except when a larger
vote is required by this Declaration of Trust, the By-Laws or
the 1940 Act.
Any action required or permitted to be taken at any
meeting of the Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed
by a majority of the Trustees or members of any such committee
then in office, as the case may be, and such written consent is
filed with the minutes of proceedings of the Trustees or any
such committee.
The Trustees or any committee designated by the
Trustees may participate in a meeting of the Trustees or such
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in
person at a meeting.
Section 5. Ownership of Assets of the Trust. Title
to all of the assets of each series of Shares of the Trust at all
times shall be considered as vested in the Trustees.
Section 6. Investment Advice and Management Services.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. The Trustees from time to time may enter into a
written contract or contracts with any person or persons (herein
called the "Manager"), including any firm, corporation, trust or
association in which any Trustee or Shareholder may be
interested, to act as investment advisers and/or managers of the
Trust and to provide such investment advice and/or management as
the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. Any
such contract shall be subject to the requirements of the 1940
Act with respect to its continuance in effect, its termination
and the method of authorization and approval of such contract, or
any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee
may be associated also may act as broker for the Trust in making
purchases and sales of securities for or to the Trust for its
investment portfolio, and may charge and receive from the Trust
the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as
broker for the Trust shall be responsible only for the proper
execution of transactions in accordance with the instructions of
the Trust and shall be subject to no further liability of any
sort whatever.
The Manager, or any affiliate thereof, also may be a
distributor for the sale of Shares by separate contract or may
be a person controlled by or affiliated with any Trustee or any
distributor or a person in which any Trustee or any distributor
is interested financially, subject only to applicable provisions
of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving
compensation for services rendered as such distributor.
Section 7. Removal and Resignation of Trustees. The
Trustees or the Shareholders (by vote of 66-2/3% of the
outstanding Shares entitled to vote thereon) may remove at any
time any Trustee with or without cause, and any Trustee may
resign at any time as Trustee, without penalty by written notice
to the Trust; provided that sixty days' advance written notice
shall be given in the event that there are only three or fewer
Trustees at the time a notice of resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall
have power to vote only (i) for the election of Trustees as
provided in Article IV, Section 1, of this Declaration of Trust;
provided, however, that no meeting of Shareholders is required to
be called for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees have been
elected by the Shareholders, (ii) for the removal of Trustees as
provided in Article IV, Section 7, (iii) with respect to any
Manager as pro-vided in Article IV, Section 6, (iv) with respect
to any amendment of this Declaration of Trust as provided in
Article IX, Section 8, (v) with respect to the termination of the
Trust or a series of Shares as provided in Article IX, Section 5,
and (vi) with respect to such additional matters relating to the
Trust as may be required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any registration of the Trust with
the Commission or any state, or as the Trustees may consider
desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote (except that in the
election of Trustees said vote may be cast for as many persons as
there are Trustees to be elected), and each fractional Share
shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust,
on any matter submitted to a vote of Shareholders, all Shares of
the Trust then entitled to vote shall be voted in the aggregate
as a single class without regard to series or classes of Shares,
except (i) when required by the 1940 Act or when the Trustees
shall have determined that the matter affects one or more series
or classes differently Shares shall be voted by individual series
or class and (ii) when the Trustees have determined that the
matter affects only the interests of one or more series or
classes then only Shareholders of such series or classes shall be
entitled to vote thereon. There shall be no cumulative voting in
the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect
to Shares held in the name of two or more persons shall be valid
if executed by any one of them, unless at or prior to exercise
of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Whenever no Shares of
any series or class are issued and outstanding, the Trustees may
exercise with respect to such series or class all rights of
Share- holders and may take any action required by law, this
Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
Section 2. Meetings. Meetings of the Shareholders
may be called by the Trustees or such other person or persons as
may be specified in the By-Laws and shall be called by the
Trustees upon the written request of Shareholders owning at least
30% of the outstanding Shares entitled to vote. Shareholders
shall be entitled to at least ten days' prior notice of any
meeting.
Section 3. Quorum and Required Vote. Thirty percent
(30%) of the outstanding Shares shall be a quorum for the
transaction of business at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust
permits or requires that holders of any series or class shall
vote as a series or class, then thirty percent (30%) of the
aggregate number of Shares of that series or class entitled to
vote shall be necessary to constitute a quorum for the
transaction of business by that series or class. Any lesser
number, however, shall be sufficient for adjournment and any
adjourned session or sessions may be held within 90 days after
the date set for the original meeting without the necessity of
further notice. Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws of the
Trust and subject to any applicable requirements of law, a
majority of the Shares voted shall decide any question and a
plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or
requires that the holders of any series or class shall vote
as a series or class, then a majority of the Shares of that
series or class voted on the matter (or a plurality with respect
to the election of a Trustee) shall decide that matter insofar as
that series or class is concerned.
Section 4. Action by Written Consent. Any action
required or permitted to be taken at any meeting may be taken
without a meeting if a consent in writing, setting forth such
action, is signed by a majority of Shareholders entitled to vote
on the subject matter thereof (or such larger proportion thereof
as shall be required by any express provision of this Declaration
of Trust) and such consent is filed with the records of the
Trust.
Section 5. Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall
distribute periodically to the Shareholders of each series of
Shares an amount approximately equal to the net income of that
series, determined by the Trustees or as they may authorize and
as herein provided. Distributions of income may be made in one
or more payments, which shall be in Shares, cash or otherwise,
and on a date or dates and as of a record date or dates
determined by the Trustees. At any time and from time to time in
their discretion, the Trustees also may cause to be distributed
to the Shareholders of any one or more series as of a record date
or dates determined by the Trustees, in Shares, cash or
otherwise, all or part of any gains realized on the sale or
disposition of the assets of the series or all or part of any
other principal of the Trust attributable to the series. Each
distribution pursuant to this Section 1 shall be made ratably
according to the number of Shares of the series held by the
several Shareholders on the record date for such distribution,
except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any
classes of Shares of that series, and any distribution to the
Shareholders of a particular class of Shares shall be made to
such Shareholders pro rata in proportion to the number of Shares
of such class held by each of them. No distribution need be made
on Shares purchased pursuant to orders received, or for which
payment is made, after such time or times as the Trustees may
determine.
Section 2. Determination of Net Income. In
determining the net income of each series or class of Shares for
any period, there shall be deducted from income for that period
(a) such portion of all charges, taxes, expenses and liabilities
due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier
period and (b) whatever reasonable reserves the Trustees shall
consider advisable for possible future charges, taxes, expenses
and liabilities which the Trustees shall consider properly
chargeable and fairly applicable to income for that period or any
earlier period. The net income of each series or class for any
period may be adjusted for amounts included on account of net
income in the net asset value of Shares issued or redeemed or
repurchased during that period. In determining the net income of
a series or class for a period ending on a date other than the
end of its fiscal year, income may be estimated as the Trustees
shall deem fair. Gains on the sale or disposition of assets
shall not be treated as income, and losses shall not be charged
against income unless appropriate under applicable accounting
principles, except in the exercise of the discretionary powers of
the Trustees. Any amount contributed to the Trust which is
received as income pursuant to a decree of any court of competent
jurisdiction shall be applied as required by the said decree.
Section 3. Redemptions. Any Shareholder shall be
entitled to require the Trust to redeem and the Trust shall be
obligated to redeem at the option of such Shareholder all or any
part of the Shares owned by said Shareholder, at the redemption
price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be
presented for redemption in proper form for transfer to the
Trust or the agent of the Trust appointed for such purpose, and
these shall be presented with a written request that the Trust
redeem all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net
asset value per Share when next determined by the Trust at such
time or times as the Trustees shall designate, following the
time of presentation of certificates for Shares, if issued, and
an appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the
1940 Act, or any rule or regulation made or adopted by any
securities association registered under the Securities Exchange
Act of 1934, as determined by the Trustees, less any applicable
charge or fee imposed from time to time as determined by the
Trustees.
(c) Net asset value of each series or class of Shares
(for the purpose of issuance of Shares as well as redemptions
thereof) shall be determined by dividing:
(i) the total value of the assets of such series
or class determined as provided in paragraph (d) below
less, to the extent determined by or pursuant to the
direction of the Trustees in accordance with generally
accepted accounting principles, all debts, obligations
and liabilities of such series or class (which debts,
obligations and liabilities shall include, without
limitation of the generality of the foregoing, any and
all debts, obligations, liabilities, or claims, of any
and every kind and nature, fixed, accrued and
otherwise, including the estimated accrued expenses of
management and supervision, administration and
distribution and any reserves or charges for any or all
of the foregoing, whether for taxes, expenses, or
otherwise, and the price of Shares redeemed but not
paid for) but excluding the Trust's liability upon its
Shares and its surplus, by
(ii) the total number of Shares of such series or
class outstanding.
The Trustees are empowered, in their absolute
discretion, to establish other methods for determining such net
asset value whenever such other methods are deemed by them to be
necessary to enable the Trust to comply with applicable law, or
are deemed by them to be desirable, provided they are not
inconsistent with any provision of the 1940 Act.
(d) In determining for the purposes of this
Declaration of Trust the total value of the assets of each series
or class of Shares at any time, investments and any other assets
of such series or class shall be valued in such manner as may be
determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may
be made either in cash or in securities or other assets at the
time owned by the Trust or partly in cash and partly in
securities or other assets at the time owned by the Trust. The
value of any part of such payment to be made in securities or
other assets of the Trust shall be the value employed in
determining the redemption price. Payment of the redemption
price shall be made on or before the seventh day following the
day on which the Shares are properly presented for redemption
hereunder, except that delivery of any securities included in any
such payment shall be made as promptly as any necessary transfers
on the books of the issuers whose securities are to be delivered
may be made and, except as postponement of the date of payment
may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may
deduct from the payment made for any Shares redeemed a
liquidating charge not in excess of one percent (1%) of the
redemption price of the Shares so redeemed, and the Trustees may
alter or suspend any such liquidating charge from time to time.
(f) The right of any holder of Shares redeemed by the
Trust as provided in this Article VI to receive dividends or
distributions thereon and all other rights of such Shareholder
with respect to such Shares shall terminate at the time as of
which the redemption price of such Shares is determined, except
the right of such Shareholder to receive (i) the redemption
price of such Shares from the Trust in accordance with the
provisions hereof, and (ii) any dividend or distribution to which
such Share- holder previously had become entitled as the record
holder of such Shares on the record date for such dividend or
distribution.
(g) Redemption of Shares by the Trust is conditional
upon the Trust having funds or other assets legally available
therefor.
(h) The Trust, either directly or through an agent,
may repurchase its Shares, out of funds legally available
therefor, upon such terms and conditions and for such
consideration as the Trustees shall deem advisable, by agreement
with the owner at a price not exceeding the net asset value per
Share as determined by or pursuant to the order of the Trustees
at such time or times as the Trustees shall designate, less any
applicable charge, if and as fixed by the Trustees from time to
time, and to take all other steps deemed necessary or advisable
in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be
cancelled or held by the Trust for reissue, as the Trustees from
time to time may determine.
(j) The obligations set forth in this Article VI may
be suspended or postponed, (1) for any period (i) during which
the New York Stock Exchange is closed other than for customary
weekend and holiday closings, or (ii) during which trading on the
New York Stock Exchange is restricted, (2) for any period during
which an emergency exists as a result of which (i) the disposal
by the Trust of investments owned by it is not reasonably
practicable, or (ii) it is not reasonably practicable for the
Trust fairly to determine the value of its net assets, or (3) for
such other periods as the Commission or any successor
governmental authority by order may permit.
Notwithstanding any other provision of this Section 3
of Article VI, if certificates representing such Shares have been
issued, the redemption or repurchase price need not be paid by
the Trust until such certificates are presented in proper form
for transfer to the Trust or the agent of the Trust appointed for
such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees,
regardless of whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust.
The Trust shall have the right at its option and at any time to
redeem Shares of any Shareholder at the net asset value thereof
as determined in accordance with Section 3 of Article VI of this
Declaration of Trust: (i) if at such time such Shareholder owns
fewer Shares than, or Shares having an aggregate net asset value
of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns
Shares of a particular series or class of Shares equal to or in
excess of a percentage of the outstanding Shares of that series
or class determined from time to time by the Trustees; or (iii)
to the extent that such Shareholder owns Shares of the Trust
representing a percentage equal to or in excess of such
percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined
from time to time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust
or of any series) with respect to, nor any redemption or
repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be
entitled to reasonable compensation from the Trust and may fix
the amount of their compensation.
Section 2. Limitation of Liability. The Trustees
shall not be responsible or liable in any event for any neglect
or wrongdoing of any officer, agent, employee or Manager of the
Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained
shall protect any Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Every note, bond, contract, instrument, certificate,
share, or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust, shall be deemed
conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers,
Employees and Agents. Each person who is or was a Trustee,
officer, employee or agent of the Trust or who serves or has
served at the Trust's request as a director, officer or trustee
of another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to
indemnification out of the assets of the Trust to the extent
provided in, and subject to the provisions of, the By-Laws,
provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of
this Article VIII references to "the Trust" include any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or
agents as well as the resulting or surviving entity; so that any
person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee, director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VIII with respect
to the resulting or surviving entity as he would have with
respect to such a constituent corporation if its separate
existence had continued.
Section 3. Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely
by reason of his being or having been a Shareholder and not
because of his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the particular
series of Shares of which he is or was a Shareholder to be held
harmless from and indemnified against all losses and expenses
arising from such liability. Upon request, the Trust shall cause
its counsel to assume the defense of any claim which, if
successful, would result in an obligation of the Trust to
indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby
expressly declared that a trust and not a partnership is created
hereby. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind
personally either the Trust's Trustees or officers or any Share-
holders. All persons extending credit to, contracting with or
having any claim against the Trust or a particular series of
Shares shall look only to the assets of the Trust or the assets
of that particular series for payment under such credit, contract
or claim; and neither the Shareholders nor the Trustees, nor any
of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Nothing
in this Declaration of Trust shall protect any Trustee against
any liability to which such Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety. The exercise by the Trustees of their
powers and discretion hereunder under the circumstances then
prevailing, shall be binding upon everyone interested. A Trustee
shall be liable for his or her own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes
of fact or law.
The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of
Trust, and subject to the provisions of Section 1 of this Article
IX shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with
Trustees. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made
or to be made by the Trustees pursuant hereto or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not
Personally Liable; Notice. All persons extending credit to,
contracting with or having any claim against the Trust or a
particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares for
payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be
personally liable therefor.
Section 5. Consolidation, Merger, Sale of Assets.
The Trust may, in accordance with the provisions of this Section:
(1) Consolidate with one or more corporations or
trusts to form a new consolidated corporation or trust; or
(2) Merge into a corporation or trust, or have merged
into it one or more corporations or trusts; or
(3) Sell, lease, exchange or transfer all, or
substantially all, its property and assets, including its good
will and franchises.
Any such consolidation, merger, sale, lease, exchange
or other transfer of all or substantially all of the property and
assets of the Trust may be made only upon substantially the
terms and conditions set forth in a proposed form of articles of
consolidation, articles of merger or articles of sale, lease,
exchange or transfer, as the case may be, which are approved by
votes of the Trustees and Shareholders holding a majority of the
Shares entitled to vote thereon, provided that in the case of a
merger in which the Trust is the surviving entity which effects
no reclassification or change of any outstanding shares of the
Trust or other amendment of this Declaration of Trust, no vote of
the Shareholders shall be necessary (and in lieu thereof, the
proposed articles of merger shall be approved by a majority of
the Trustees) if the number of Shares, if any, of the Trust to be
issued or delivered in the merger does not exceed fifteen
percent of the number of Shares outstanding (before giving effect
to the merger) on the effective date of the merger. Any articles
of consolidation, merger, sale, lease, exchange or transfer shall
constitute a supplemental Declaration of Trust, copies of which
shall be filed as specified in Section 7 of this Article IX.
Section 6. Termination of Trust. Unless terminated
as provided herein, the Trust shall continue without limitation
of time. The Trust may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of each
series entitled to vote or by the Trustees by written notice to
the Shareholders. Any series of Shares may be terminated at any
time by vote of Shareholders holding at least a majority of the
Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more
series of Shares, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued
or anticipated as may be determined by the Trustees, the Trust
shall reduce, in accordance with such procedures as the Trustees
consider appropriate, the remaining assets to distributable form
in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the
series involved, ratably according to the number of Shares of
such series held by the several Shareholders of such series on
the date of termination, except to the extent otherwise required
or permitted by the preferences and special or relative rights
and privileges of any classes of Shares of that series, provided
that any distribution to the Shareholders of a particular class
of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of
them.
Section 7. Filing of Copies, References, Headings.
The original or a copy of this instrument and of each amendment
hereto and of each Declaration of Trust supplemental hereto shall
be kept at the office of the Trust where it may be inspected by
any Share- holder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall be filed by
the Trust with the Secretary of State of The Commonwealth of
Massachusetts and the Boston City Clerk, as well as any other
governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any
such amendments or supplemental Declarations of Trust have been
made and as to matters in connection with the Trust hereunder;
and, with the same effect as if it were the original, may rely on
a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendment or supplemental Declaration
of Trust. In this instrument or in any such amendment or
supplemental Declaration of Trust, references to this instrument,
and all expressions like "herein," "hereof," and "hereunder,"
shall be deemed to refer to this instrument as amended or
affected by any such amendment or supplemental Declaration of
Trust. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be
deemed an original.
Section 8. Applicable Law. The Trust set forth in
this instrument is made in The Commonwealth of Massachusetts, and
it is created under and is to be governed by and construed and
administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by
such a trust.
Section 9. Amendments. This Declaration of Trust may
be amended at any time by an instrument in writing signed by a
majority of the then Trustees when authorized so to do by a vote
of Shareholders holding a majority of the Shares outstanding and
entitled to vote, except that an amendment which shall affect
the holders of one or more series or class of Shares but not the
holders of all outstanding series or classes of Shares shall be
authorized by vote of the Shareholders holding a majority of the
Shares entitled to vote of the series or classes affected and no
vote of Shareholders of a series or class not affected shall be
required. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned Trustees have
hereunto set their hands as of the day and year first above
written.
/s/Clifford L. Alexander, Jr.
Clifford L. Alexander, Jr.
/s/Peggy C. Davis
Peggy C. Davis
/s/Ernest Kafka
Ernest Kafka
/s/Saul B. Klaman
Saul B. Klaman
/s/Nathan Leventhal
Nathan Leventhal
/s/Richard J. Moynihan
Richard J. Moynihan
BY-LAWS
OF
PREMIER STATE TAX EXEMPT BOND FUND
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These
By-Laws shall be subject to the Agreement and Declaration of
Trust, as from time to time in effect (the "Declaration of
Trust"), of the above-captioned Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal
office of the Trust shall be located in New York, New York.
Its resident agent in Massachusetts shall be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts, or such other
person as the Trustees from time to time may select.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the
Trustees may be held without call or notice at such places and
at such times as the Trustees from time to time may determine,
provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the
Trustees may be held at any time and at any place designated in
the call of the meeting when called by the President or the
Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice of Special Meetings. It shall be
sufficient notice to a Trustee of a special meeting to send
notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the
Trustee at his or her usual or last known business or residence
address or to give notice to him or her in person or by
telephone at least twenty-four hours before the meeting. Notice
of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto
or at its commencement the lack of notice to him or her.
Neither notice of a meeting nor a waiver of a notice need
specify the purposes of the meeting.
2.4 Notice of Certain Actions by Consent. If in
accordance with the provisions of the Declaration of Trust any
action is taken by the Trustees by a written consent of less
than all of the Trustees, then prompt notice of any such action
shall be furnished to each Trustee who did not execute such
written consent, provided that the effectiveness of such action
shall not be impaired by any delay or failure to furnish such
notice.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the
Trust shall be a President, a Treasurer, a Secretary, and such
other officers, if any, as the Trustees from time to time may in
their discretion elect. The Trust also may have such agents as
the Trustees from time to time may in their discretion appoint.
Officers may be but need not be a Trustee or shareholder. Any
two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the
Secretary shall be elected by the Trustees upon the occurrence
of any vacancy in any such office. Other officers, if any, may
be elected or appointed by the Trustees at any time. Vacancies
in any such other office may be filled at any time.
3.3 Tenure. The President, Treasurer and Secretary
shall hold office in each case until he or she sooner dies,
resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the
pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as commonly are incident to the office
occupied by him or her as if the Trust were organized as a
Massachusetts business corporation or such other duties and
powers as the Trustees may from time to time designate.
3.5 President. Unless the Trustees otherwise
provide, the President shall preside at all meetings of the
shareholders and of the Trustees. Unless the Trustees otherwise
provide, the President shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and, subject to
the provisions of the Declaration of Trust and to any
arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or
similar agent, shall be in charge of the valuable papers, books
of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to
time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be
kept therefor, which books or a copy thereof shall be kept at
the principal office of the Trust. In the absence of the
Secretary from any meeting of the shareholders or Trustees, an
Assistant Secretary, or if there be none or if he or she is
absent, a temporary Secretary chosen at such meeting shall
record the proceedings thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or
officer may resign at any time by written instrument signed by
him or her and delivered to the President or Secretary or to a
meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with
or without cause. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 Appointment. The Trustees may appoint from their
number an executive committee and other committees. Except as
the Trustees otherwise may determine, any such committee may
make rules for conduct of its business.
4.2 Quorum; Voting. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or
any applicable law. Officers and Committees shall render such
additional reports as they may deem desirable or as may from
time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
Except as from time to time otherwise provided by the
Trustees, the fiscal year of the Trust shall end on November
30th in each year.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced
die with the word "Massachusetts," together with the name of the
Trust and the year of its organization cut or engraved thereon
but, unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on, and in its absence shall not
impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular
cases may authorize the execution thereof in some other manner,
all deeds, leases, contracts, notes and other obligations made
by the Trustees shall be signed by the President, any Vice
President, or by the Treasurer and need not bear the seal of the
Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Sale of Shares. Except as otherwise determined
by the Trustees, the Trust will issue and sell for cash or
securities from time to time, full and fractional shares of its
shares of beneficial interest, such shares to be issued and sold
at a price of not less than net asset value per share as from
time to time determined in accordance with the Declaration of
Trust and these By-Laws and, in the case of fractional shares,
at a proportionate reduction in such price. In the case of
shares sold for securities, such securities shall be valued in
accordance with the provisions for determining value of assets
of the Trust as stated in the Declaration of Trust and these
By-Laws. The officers of the Trust are severally authorized to
take all such actions as may be necessary or desirable to carry
out this Section 9.1.
9.2 Share Certificates. In lieu of issuing
certificates for shares, the Trustees or the transfer agent
either may issue receipts therefor or may keep accounts upon the
books of the Trust for the record holders of such shares, who
shall in either case, for all purposes hereunder, be deemed to
be the holders of certificates for such shares as if they had
accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by
him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or Vice President and by the Treasurer or Assistant Treasurer.
Such signatures may be facsimile if the certificate is signed by
a transfer agent, or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has
signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the
same effect as if he or she were such officer at the time of its
issue.
9.3 Loss of Certificates. The Trust, or if any
transfer agent is appointed for the Trust, the transfer agent
with the approval of any two officers of the Trust, is
authorized to issue and countersign replacement certificates for
the shares of the Trust which have been lost, stolen or
destroyed subject to the deposit of a bond or other indemnity in
such form and with such security, if any, as the Trustees may
require.
9.4 Discontinuance of Issuance of Certificates. The
Trustees at any time may discontinue the issuance of share
certificates and by written notice to each shareholder, may
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
Indemnification
10.1 Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise) (hereinafter
referred to as a "Covered Person") against all liabilities and
expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered
Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, except with respect to
any matter as to which such Covered Person shall have been
finally adjudicated in a decision on the merits in any such
action, suit or other proceeding not to have acted in good faith
in the reasonable belief that such Covered Person's action was
in the best interests of the Trust and except that no Covered
Person shall be indemnified against any liability to the Trust
or its Shareholders to which such Covered Person would otherwise
be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including
counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to
time by the Trust in advance of the final disposition or any
such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such Covered Person to repay amounts so paid
to the Trust if it is ultimately determined that indemnification
of such expenses is not authorized under this Article, provided
that (a) such Covered Person shall provide security for his
undertaking, (b) the Trust shall be insured against losses
arising by reason of such Covered Person's failure to fulfill
his undertaking, or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons (as
that term is defined in the Investment Company Act of 1940)
(provided that a majority of such Trustees then in office act on
the matter), or independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts
(but not a full trial-type inquiry), that there is reason to
believe such Covered Person ultimately will be entitled to
indemnification.
10.2 Compromise Payment. As to any matter disposed
of (whether by a compromise payment, pursuant to a consent
decree or otherwise) without an adjudication in a decision on
the merits by a court, or by any other body before which the
proceeding was brought, that such Covered Person either (a) did
not act in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust or (b) is
liable to the Trust or its Shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's
office, indemnification shall be provided if (a) approved as in
the best interest of the Trust, after notice that it involves
such indemnification, by at least a majority of the Trustees who
are disinterested persons and are not Interested Persons
(provided that a majority of such Trustees then in office act on
the matter), upon a determination, based upon a review of
readily available facts (but not a full trial-type inquiry) that
such Covered Person acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of
the Trust and is not liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a
review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have
acted in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust and that
such indemnification would not protect such Covered Person
against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Any approval pursuant to
this Section shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction
not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust or to have been liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office.
10.3 Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which any such Covered Person may be
entitled. As used in this Article 10, the term "Covered Person"
shall include such person's heirs, executors and administrators,
and a "disinterested person" is a person against whom none of
the actions, suits or other proceedings in question or another
action, suit, or other proceeding on the same or similar grounds
is then or has been pending. Nothing contained in this article
shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons
may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance
on behalf of such person.
10.4 Limitation. Notwithstanding any provisions in
the Declaration of Trust and these By-Laws pertaining to
indemnification, all such provisions are limited by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is
asserted by a Trustee, officer or controlling person
of the Trust in connection with the registered
securities of the Trust, the Trust will not make such
indemnification unless (i) the Trust has submitted,
before a court or other body, the question of whether
the person to be indemnified was liable by reason of
wilful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final
decision on the merits that such person was not liable
by reason of such conduct or (ii) in the absence of
such decision, the Trust shall have obtained a
reasonable determination, based upon a review of the
facts, that such person was not liable by virtue of
such conduct, by (a) the vote of a majority of
Trustees who are neither interested persons as such
term is defined in the Investment Company Act of 1940,
nor parties to the proceeding or (b) an independent
legal counsel in a written opinion.
The Trust will not advance attorneys' fees or
other expenses incurred by the person to be
indemnified unless the Trust shall have (i) received
an undertaking by or on behalf of such person to repay
the advance unless it is ultimately determined that
such person is entitled to indemnification and one of
the following conditions shall have occurred: (x) such
person shall provide security for his undertaking, (y)
the Trust shall be insured against losses arising by
reason of any lawful advances or (z) a majority of the
disinterested, non-party Trustees of the Trust, or an
independent legal counsel in a written opinion, shall
have determined that based on a review of readily
available facts there is reason to believe that such
person ultimately will be found entitled to
indemnification.
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders shall
be called by the Secretary whenever ordered by the Trustees, or
requested in writing by the holder or holders of at least 10% of
the outstanding shares entitled to vote at such meeting. If the
meeting is a meeting of the shareholders of one or more series
of shares, but not a meeting of all shareholders of the Trust,
then only the shareholders of such one or more series shall be
entitled to notice of and to vote at the meeting. If the
Secretary, when so ordered or requested, refuses or neglects for
more than five days to call such meeting, the Trustees, or the
shareholders so requesting may, in the name of the Secretary,
call the meeting by giving notice thereof in the manner required
when notice is given by the Secretary.
11.2 Access to Shareholder List. Shareholders of
record may apply to the Trustees for assistance in communicating
with other shareholders for the purpose of calling a meeting in
order to vote upon the question of removal of a Trustee. When
ten or more shareholders of record who have been such for at
least six months preceding the date of application and who hold
in the aggregate shares having a net asset value of at least
$25,000 or at least l% of the outstanding shares, whichever is
less, so apply, the Trustees shall within five business days
either:
(i) afford to such applicants access to a list
of names and addresses of all shareholders as recorded on the
books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate cost of
mailing material to them and, within a reasonable time
thereafter, mail, at the applicants' expense, materials
submitted by the applicants, to all such shareholders of record.
The Trustees shall not be obligated to mail materials which they
believe to be misleading or in violation of applicable law.
11.3 Record Dates. For the purpose of determining
the shareholders of any series who are entitled to vote or act
at any meeting or any adjournment thereof, or who are entitled
to receive payment of any dividend or of any other distribution,
the Trustees from time to time may fix a time, which shall be
not more than 90 days before the date of any meeting of
shareholders or the date of payment of any dividend or of any
other distribution, as the record date for determining the
shareholders of such series having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right
notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or
transfer books for all or part of such period.
11.4 Place of Meetings. All meetings of the
shareholders shall be held at the principal office of the Trust
or at such other place within the United States as shall be
designated by the Trustees or the President of the Trust.
11.5 Notice of Meetings. A written notice of each
meeting of shareholders, stating the place, date and hour and
the purposes of the meeting, shall be given at least ten days
before the meeting to each shareholder entitled to vote thereat
by leaving such notice with him or at his residence or usual
place of business or by mailing it, postage prepaid, and
addressed to such shareholder at his address as it appears in
the records of the Trust. Such notice shall be given by the
Secretary or an Assistant Secretary or by an officer designated
by the Trustees. No notice of any meeting of shareholders need
be given to a shareholder if a written waiver of notice,
executed before or after the meeting by such shareholder or his
attorney thereunto duly authorized, is filed with the records of
the meeting.
11.6 Ballots. No ballot shall be required for any
election unless requested by a shareholder present or
represented at the meeting and entitled to vote in the election.
11.7 Proxies. Shareholders entitled to vote may vote
either in person or by proxy in writing dated not more than six
months before the meeting named therein, which proxies shall be
filed with the Secretary or other person responsible to record
the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies
shall entitle the holders thereof to vote at any adjournment of
such meeting but shall not be valid after the final adjournment
of such meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or
in part, by a majority of the Trustees then in office at any
meeting of the Trustees, or by one or more writings signed by
such a majority.
Dated: November 21, 1986
MANAGEMENT AGREEMENT
PREMIER STATE MUNICIPAL BOND FUND
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting any Series' portfolio and shall expect you, on your
own initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series'
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series'
shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to
engage other entities to assist you in performing some or all of
the obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or
purport to protect you against any liability to the Fund or a
Series or to its security holders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series'
name on Schedule 1 hereto. Net asset value shall be computed on
such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information.
Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you,
the value of each Series' net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting
securities, Securities and Exchange Commission fees and state
Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing
services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess expense to the extent required by state law. Your
obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one
or more Series or the size of the position obtainable for or
disposed of by one or more Series.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director,
partner, employee or agent or one under your control or
direction even though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940) of such Series' outstanding voting securities,
provided that in either event its continuance also is approved
by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this
Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board or by vote of holders of a majority of such
Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or investor
of the Fund individually and no Board member, officer or
investor of the Fund shall be individually liable for any of
said obligations.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PREMIER STATE MUNICIPAL
BOND FUND
By:_______________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Arizona Series .55 of 1% September 5, 1994 September 5th
Colorado Series .55 of 1% September 5, 1995 September 5th
Connecticut Series .55 of 1% September 5, 1994 September 5th
Florida Series .55 of 1% September 5, 1994 September 5th
Georgia Series .55 of 1% September 5, 1994 September 5th
Maryland Series .55 of 1% September 5, 1994 September 5th
Massachusetts Series .55 of 1% September 5, 1994 September 5th
Michigan Series .55 of 1% September 5, 1994 September 5th
Minnesota Series .55 of 1% September 5, 1994 September 5th
North Carolina Series .55 of 1% September 5, 1994 September 5th
Ohio Series .55 of 1% September 5, 1994 September 5th
Oregon Series .55 of 1% September 5, 1995 September 5th
Pennsylvania Series .55 of 1% September 5, 1994 September 5th
Texas Series .55 of 1% September 5, 1994 September 5th
Virginia Series .55 of 1% September 5, 1994 September 5th
DISTRIBUTION AGREEMENT
PREMIER STATE MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
PREMIER STATE MUNICIPAL BOND FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Arizona Series September 5, 1995 September 5th
Colorado Series September 5, 1995 September 5th
Connecticut Series September 5, 1995 September 5th
Florida Series September 5, 1995 September 5th
Georgia Series September 5, 1995 September 5th
Maryland Series September 5, 1995 September 5th
Massachusetts Series September 5, 1995 September 5th
Michigan Series September 5, 1995 September 5th
Minnesota Series September 5, 1995 September 5th
North Carolina Series September 5, 1995 September 5th
Ohio Series September 5, 1995 September 5th
Oregon Series September 5, 1995 September 5th
Pennsylvania Series September 5, 1995 September 5th
Texas Series September 5, 1995 September 5th
Virginia Series September 5, 1995 September 5th
EXHIBIT 6(b)
BANK AFFILIATED BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We are a broker-dealer registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). We desire to make available to our customers shares of
beneficial interest or common stock of open-end registered investment
companies managed, advised or administered by The Dreyfus Corporation
or its subsidiaries or affiliates (hereinafter referred to individually as a
"Fund" and collectively as the "Funds"). You are the principal underwriter
(as such term is defined in the Investment Company Act of 1940, as
amended) of the offering of shares of the Funds and the exclusive agent
for the continuous distribution of such shares pursuant to the terms of a
Distribution Agreement between you and each Fund. Unless the context
otherwise requires, as used herein the term "Prospectus" shall mean the
prospectus and related statement of additional information (the
"Statement of Additional Information") incorporated therein by reference
(as amended or supplemented) of each of the respective Funds included in
the then currently effective registration statement (or post-effective
amendment thereto) of each such Fund, as filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended
(the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund
pursuant to this Agreement, it is understood and agreed in each case that:
(a) we shall be acting solely as agent for the account of our customer; (b)
each transaction shall be initiated solely upon the order of our customer;
(c) you shall execute transactions only upon receiving instructions from
us acting as agent for our customer; (d) as between us and our customer,
our customer will have full beneficial ownership of all Fund shares; and
(e) each transaction shall be for the account of our customer and not for
our account. We represent and warrant to you that we will have full right,
power and authority to effect transactions (including, without limitation,
any purchases, exchanges and redemptions) in Fund shares on behalf of all
customer accounts provided by us to you or to any transfer agent as such
term is defined in the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not make shares of any Fund available to our customers
except in compliance with all applicable federal and state laws, and the
rules, regulations, requirements and conditions of all applicable
regulatory and self-regulatory agencies or authorities. We agree that we
shall not purchase any Fund shares, as agent for any customer, unless we
deliver or cause to be delivered to such customer, at or prior to the time
of such purchase, a copy of the Prospectus of such Fund, or unless such
customer has acknowledged receipt of the Prospectus of such Fund. We
further agree to obtain from each customer for whom we act as agent for
the purchase of Fund shares any taxpayer identification number
certification and such other information as may be required from time to
time under the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder, and to provide you or your
designee with timely written notice of any failure to obtain such taxpayer
identification number certification or other information in order to enable
the implementation of any required withholding. We will be responsible
for the proper instruction and training of all sales personnel employed by
us. Unless otherwise mutually agreed in writing, you shall deliver or
cause to be delivered to each of the customers who purchases shares of
any of the Funds through us pursuant to this Agreement copies of all
annual and interim reports, proxy solicitation materials and any other
information and materials relating to such Funds and prepared by or on
behalf of you, the Fund or its investment adviser, custodian, Transfer
Agent or dividend disbursing agent for distribution to each such customer.
You agree to supply us with copies of the Prospectus, Statement of
Additional Information, annual reports, interim reports, proxy solicitation
materials and any such other information and materials relating to each
Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you. In making Fund shares
available to our customers hereunder, or in providing investment advice
regarding such shares to our customers, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided.
5. In determining the amount of any reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in the sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such a case, our reallowance will be paid based upon
the reduced sales charge, but an adjustment to the reallowance will be
made in accordance with the Prospectus of the applicable Fund to reflect
actual purchases of the customer if such customer's Letter of Intent is
not fulfilled. The sales charge and/or reallowance may be changed at any
time in your sole discretion upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the Transfer Agent
sufficient information to permit your confirmation of qualification for a
reduced sales charge, and acceptance of the purchase order is subject to
such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all
purchases of Fund shares made by us, as agent for our customers,
qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each relevant Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be
the total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or other
similar plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B or C (or such other form as may be
approved from time to time by the board of directors, or trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. (a) We agree to remit on behalf of our customers the purchase price
for purchase orders of any Fund shares placed by us in accordance with the
terms of the Prospectus of the applicable Fund. On or before the
settlement date of each purchase order for shares of any Fund, we shall
either (i) remit to an account designated by you with the Transfer Agent
an amount equal to the then current public offering price of the shares of
such Fund being purchased less our reallowance, if any, with respect to
such purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, or (ii) remit to an account designated by
you with the Transfer Agent an amount equal to the then current public
offering price of the shares of such Fund being purchased without
deduction for our reallowance, if any, with respect to such purchase order
as determined by you in accordance with the terms of the applicable Fund
Prospectus, in which case our reallowance, if any, shall be payable to us
by you on at least a monthly basis. If payment for any purchase order is
not received in accordance with the terms of the applicable Fund
Prospectus, you reserve the right, without notice, to cancel the sale and
to hold us responsible for any loss sustained as a result thereof.
(b) If any shares sold to us as agent for our customers under the
terms of this Agreement are sold with a sales charge and are redeemed
for the account of the Fund or are tendered for redemption within seven
(7) business days after the date of purchase: (i) we shall forthwith refund
to you the full reallowance received by us on the sale; and (ii) you shall
forthwith pay to the Fund your portion of the sales charge on the sale
which had been retained by you and shall also pay to the Fund the amount
refunded by us.
10. Certificates for shares sold to us as agent for our customers
hereunder shall only be issued in accordance with the terms of each Fund's
Prospectus upon our customers' specific request and, upon such request,
shall be promptly delivered to our customers by the Transfer Agent unless
other arrangements are made by us. However, in making delivery of such
share certificates to our customers, the Transfer Agent shall have
adequate time to clear any checks drawn for the payment of Fund shares.
11. Each party hereby represents and warrants to the other party that:
(a) it is a corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in
which it was organized; (b) it is duly registered as a broker-dealer with
the Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all applicable
federal and state laws, and the rules, regulations, requirements and
conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its
compliance with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to make shares of any Funds available to our customers in any
jurisdiction. We agree to notify you immediately in the event of (a) our
expulsion or suspension from the NASD, or (b) our violation of any
applicable federal or state law, rule, regulation, requirement or condition
arising out of or in connection with this Agreement, or which may
otherwise affect in any material way our ability to act in accordance with
the terms of this Agreement. Our expulsion from the NASD will
automatically terminate this Agreement immediately without notice. Our
suspension from the NASD for violation of any applicable federal or state
law, rule, regulation, requirement or condition will terminate this
Agreement effective immediately upon your written notice of termination
to us.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, and any controlling persons named as
defendants in such suit, for the fees and expenses of any counsel retained
by us and/or them. Your indemnification agreement contained in this
Paragraph 13(a) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any such controlling person, as aforesaid,
is expressly conditioned upon our being notified of any action brought
against any person or entity entitled to indemnification hereunder, such
notification to be given by letter or by telecopier, telex, telegram or
similar means of same day delivery received by us at our address as
specified in Paragraph 18 of this Agreement within seven (7) days after
the summons or other first legal process shall have been served. The
failure so to notify us of any such action shall not relieve us from any
liability which we may have to you or your officers and directors, or to
the Fund or its officers and directors or trustees or managing general
partners, or to any such controlling person, by reason of any such breach,
failure or untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of our indemnity agreement contained
in this Paragraph 13(b). We will be entitled to assume the defense of any
suit brought to enforce any such claim, demand, liability or expense. In the
event that we elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we
do not elect to assume the defense of any such suit, we will reimburse you
and your officers and directors, and the Fund and its officers and directors
or trustees or managing general partners, and any controlling persons
named as defendants in such suit, for the fees and expenses of any counsel
retained by you and/or them. Our indemnification agreements contained in
Paragraph 8 above, Paragraph 16 below and this Paragraph 13(b) shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to Paragraph 8 above, Paragraph 16 below or this
Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent or to provide distribution
assistance, in accordance with the terms of the Form of Service
Agreement annexed hereto as Appendix A, Form of Shareholder Services
Agreement annexed hereto as Appendix B, and/or Form of Distribution Plan
Agreement annexed hereto as Appendix C, as applicable, for all of our
customers who purchase shares of any and all Funds whose Prospectuses
provide therefor. By executing this Agreement, each of the parties hereto
agrees to be bound by all terms, conditions, rights and obligations set
forth in the forms of agreement annexed hereto and further agrees that
such forms of agreement supersede any and all prior service agreements
or other similar agreements between the parties hereto relating to any
Fund or Funds. It is recognized that certain parties may not be permitted
to collect distribution fees under the Form of Distribution Plan Agreement
annexed hereto, and if we are such a party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the transfer
agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties
hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attention: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement,
including the Appendices hereto, may be amended by you upon 15 days'
prior written notice to us, and such amendment shall be deemed accepted
by us upon the placement of any order for the purchase of Fund shares or
the acceptance of a fee payable under this Agreement, including the
Appendices hereto, after the effective date of any such amendment. This
Agreement may not be assigned by us without your prior written consent.
This Agreement constitutes the entire agreement and understanding
between the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements between the parties hereto
relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX B
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. In this
regard, if we are a subsidiary or affiliate of a federally chartered and
supervised bank or other banking organization, you recognize that we may
be subject to the provisions of the Glass-Steagall Act and other laws,
rules, regulations or requirements governing, among other things, the
conduct of our activities. As such, we are restricted in the activities we
may undertake and for which we may be paid and, therefore, intend to
perform only those activities as are consistent with our statutory and
regulatory obligations. We represent and warrant to, and agree with you,
that the compensation payable to us hereunder, together with any other
compensation payable to us by clients in connection with the investment
of their assets in shares of the Funds, will be properly disclosed by us to
our clients, will be authorized by our clients and will not result in an
excessive or unauthorized fee to us.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a subsidiary or an affiliate of a federally supervised
bank or thrift institution, we agree that in providing services hereunder
we shall at all times act in compliance with the Interagency Statement on
Retail Sales of Nondeposit Investment Products issued by The Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, and the Office
of Thrift Supervision (February 15, 1994) or any successor interagency
requirements as in force at the time such services are provided. We shall
have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
beneficial interest or common stock of open-end registered investment
companies managed, advised or administered by The Dreyfus Corporation
or its subsidiaries or affiliates (hereinafter referred to individually as a
"Fund" and collectively as the "Funds"), for which you are the principal
underwriter, as such term is defined in the Investment Company Act of
1940, as amended, and for which you are the exclusive agent for the
continuous distribution of shares pursuant to the terms of a Distribution
Agreement between you and each Fund. Unless the context otherwise
requires, as used herein the term "Prospectus" shall mean the prospectus
and related statement of additional information (the "Statement of
Additional Information") incorporated therein by reference (as amended or
supplemented) of each of the respective Funds included in the then
currently effective registration statement (or post-effective amendment
thereto) of each such Fund, as filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the
"Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. In all sales of Fund shares to the public, we shall act as dealer for
our own account and in no transaction shall we have any authority to act
as agent for any Fund, for you or for any other dealer.
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share, less the applicable deferred sales charge, redemption fee, or
similar charge or fee, if any, in each case as described in the Prospectus
of such Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not offer or sell shares of any Fund except in compliance
with all applicable federal and state securities laws, and the rules,
regulations, requirements and conditions of all applicable regulatory and
self-regulatory agencies or authorities. In connection with offers to sell
and sales of shares of each Fund, we agree to deliver or cause to be
delivered to each person to whom any such offer or sale is made, at or
prior to the time of such offer or sale, a copy of the Prospectus and, upon
request, the Statement of Additional Information of such Fund. We further
agree to obtain from each customer to whom we sell Fund shares any
taxpayer identification number certification and such other information
as may be required from time to time under the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated
thereunder, and to provide you or your designee with timely written notice
of any failure to obtain such taxpayer identification number certification
or other information in order to enable the implementation of any required
withholding. We will be responsible for the proper instruction and training
of all sales personnel employed by us. Unless otherwise mutually agreed
in writing, you shall deliver or cause to be delivered to each of the
customers who purchases shares of any of the Funds from or through us
pursuant to this Agreement copies of all annual and interim reports, proxy
solicitation materials and any other information and materials relating to
such Funds and prepared by or on behalf of you, the Fund or its investment
adviser, custodian, transfer agent or dividend disbursing agent for
distribution to each such customer. You agree to supply us with copies of
the Prospectus, Statement of Additional Information, annual reports,
interim reports, proxy solicitation materials and any such other
information and materials relating to each Fund in reasonable quantities
upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you.
5. In determining the amount of any dealer reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in the sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such a case, our dealer reallowance will be paid based
upon the reduced sales charge, but an adjustment to the dealer
reallowance will be made in accordance with the Prospectus of the
applicable Fund to reflect actual purchases of the customer if such
customer's Letter of Intent is not fulfilled. The sales charge and/or dealer
reallowance may be changed at any time in your sole discretion upon
written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the transfer agent,
as such term is defined in the Prospectus of each Fund (the "Transfer
Agent"), sufficient information to permit your confirmation of
qualification for a reduced sales charge, and acceptance of the purchase
order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all sales by
us to the public qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each relevant Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be
the total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or similar
plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B or C (or such other form as may be
approved from time to time by the board of directors, trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise. We agree that: (a) we shall not effect any
transactions (including, without limitation, any purchases, exchanges and
redemptions) in any Fund shares registered in the name of, or beneficially
owned by, any customer unless such customer has granted us full right,
power and authority to effect such transactions on such customer's
behalf, and (b) you, each Fund, the Transfer Agent and your and their
respective officers, directors, trustees, managing general partners,
agents, employees and affiliates shall not be liable for, and shall be fully
indemnified and held harmless by us from and against, any and all claims,
demands, liabilities and expenses (including, without limitation,
reasonable attorneys' fees) which may be incurred by you or any of the
foregoing persons entitled to indemnification from us hereunder arising
out of or in connection with the execution of any transactions in Fund
shares registered in the name of, or beneficially owned by, any customer
in reliance upon any oral or written instructions reasonably believed to be
genuine and to have been given by or on behalf of us.
9. (a) We agree to pay for purchase orders for Fund shares placed by us
in accordance with the terms of the Prospectus of the applicable Fund. On
or before the settlement date of each purchase order for shares of any
Fund, we shall either (i) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price
of the shares of such Fund being purchased less our dealer reallowance, if
any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, or (ii) remit
to an account designated by you with the Transfer Agent an amount equal
to the then current public offering price of the shares of such Fund being
purchased without deduction for our dealer reallowance, if any, with
respect to such purchase order as determined by you in accordance with
the terms of the applicable Fund Prospectus, in which case our dealer
reallowance, if any, shall be payable to us on at least a monthly basis. If
payment for any purchase order is not received in accordance with the
terms of the applicable Fund Prospectus, you reserve the right, without
notice, to cancel the sale and to hold us responsible for any loss sustained
as a result thereof.
(b) If any shares sold to us under the terms of this Agreement are
sold with a sales charge and are redeemed for the account of the Fund or
are tendered for redemption within seven (7) business days after the date
of purchase: (i) we shall forthwith refund to you the full dealer
reallowance received by us on the sale; and (ii) you shall forthwith pay to
the Fund your portion of the sales charge on the sale which had been
retained by you and shall also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us hereunder shall only be issued in
accordance with the terms of each Fund's Prospectus upon our customer's
specific request and, upon such request, shall be promptly delivered to us
by the Transfer Agent unless other arrangements are made by us.
However, in making delivery of such share certificates to us, the Transfer
Agent shall have adequate time to clear any checks drawn for the payment
of Fund shares.
11. Each party hereby represents and warrants to the other party that:
(a) it is a corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in
which it was organized; (b) it is duly registered as a broker-dealer with
the Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all applicable
federal and state laws, and the rules, regulations, requirements and
conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its
compliance with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to sell shares in any jurisdiction. We agree to notify you
immediately in the event of (a) our expulsion or suspension from the
NASD, or (b) our violation of any applicable federal or state law, rule,
regulation, requirement or condition arising out of or in connection with
this Agreement, or which may otherwise affect in any material way our
ability to act as a dealer in accordance with the terms of this Agreement.
Our expulsion from the NASD will automatically terminate this Agreement
immediately without notice. Our suspension from the NASD for violation
of any applicable federal or state law, rule, regulation, requirement or
condition will terminate this Agreement effective immediately upon your
written notice of termination to us.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, and any controlling persons named as
defendants in such suit, for the fees and expenses of any counsel retained
by us and/or them. Your indemnification agreement contained in this
Paragraph 13(a) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any such controlling person, as aforesaid,
is expressly conditioned upon our being notified of any action brought
against any person or entity entitled to indemnification hereunder, such
notification to be given by letter or by telecopier, telex, telegram or
similar means of same day delivery received by us at our address as
specified in Paragraph 18 of this Agreement within seven (7) days after
the summons or other first legal process shall have been served. The
failure so to notify us of any such action shall not relieve us from any
liability which we may have to you or your officers and directors, or to
the Fund or its officers and directors or trustees or managing general
partners, or to any such controlling person, by reason or any such breach,
failure or untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of our indemnity agreement contained
in this Paragraph 13(b). We shall be entitled to assume the defense of any
suit brought to enforce any such claim, demand, liability or expense. In the
event that we elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we
do not elect to assume the defense of any such suit, we will reimburse you
and your officers and directors, and the Fund and its officers and directors
or trustees or managing general partners, and any controlling persons
named as defendants in such suit, for the fees and expenses of any counsel
retained by you and/or them. Our indemnification agreements contained in
Paragraph 8 above, Paragraph 16 below and this Paragraph 13(b) shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to Paragraph 8 above, Paragraph 16 below or this
Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent or to provide distribution
assistance, in accordance with the terms of the Form of Service
Agreement annexed hereto as Appendix A, Form of Shareholder Services
Agreement annexed hereto as Appendix B, and/or Form of Distribution Plan
Agreement annexed hereto as Appendix C, as applicable, for all of our
customers who purchase shares of any and all Funds whose Prospectuses
provide therefor. By executing this Agreement, each of the parties hereto
agrees to be bound by all terms, conditions, rights and obligations set
forth in the forms of agreement annexed hereto and further agrees that
such forms of agreement supersede any and all prior service agreements
or other similar agreements between the parties hereto relating to any
Fund or Funds. It is recognized that certain parties may not be permitted
to collect distribution fees under the Form of Distribution Plan Agreement
annexed hereto, and if we are such a party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the Transfer
Agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties
hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices, located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attn: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement,
including the Appendices hereto, may be amended by you upon 15 days'
prior written notice to us, and such amendment shall be deemed accepted
by us upon the placement of any order for the purchase of Fund shares or
the acceptance of a fee payable under this Agreement, including the
Appendices hereto, after the effective date of any such amendment. This
Agreement may not be assigned by us without your prior written consent.
This Agreement constitutes the entire agreement and understanding
between the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements between the parties hereto
relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Name of Broker or Dealer (Please Print
or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX B
TO BROKER-DEALER AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. We
represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to
us by clients in connection with the investment of their assets in shares
of the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or
unauthorized fee to us. We will act solely as agent for, upon the order of,
and for the account of, our clients.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our client's accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. We shall have no authority to act as agent for the Funds or for
you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telex, telecopier, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
BANK AGREEMENT
(Fully Disclosed Basis)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We are a "bank" (as such term is defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") ). We
desire to make available to our customers shares of beneficial interest or
common stock of open-end registered investment companies managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as a "Fund" and collectively
as the "Funds"). You are the principal underwriter (as such term is defined
in the Investment Company Act of 1940, as amended) of the offering of
shares of the Funds and the exclusive agent for the continuous distribution
of such shares pursuant to the terms of a Distribution Agreement between
you and each Fund. Unless the context otherwise requires, as used herein
the term "Prospectus" shall mean the prospectus and related statement of
additional information ("Statement of Additional Information")
incorporated therein by reference (as amended and supplemented) of each
of the respective Funds included in the then currently effective
registration statement (or post-effective amendment thereto) of each
such Fund, as filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund
pursuant to this Agreement, it is understood and agreed in each case that:
(a) we shall be acting solely as agent for the account of our customer; (b)
each transaction shall be initiated solely upon the order of our customer;
(c) you shall execute transactions only upon receiving instructions from
us acting as agent for our customer; (d) as between us and our customer,
our customer will have full beneficial ownership of all Fund shares; and
(e) each transaction shall be for the account of our customer and not for
our account. Each transaction shall be without recourse to us provided
that we act in accordance with the terms of this Agreement. We represent
and warrant to you that we will have full right, power and authority to
effect transactions (including, without limitation, any purchases,
exchanges and redemptions) in Fund shares on behalf of all customer
accounts provided by us to you or to any transfer agent as such term is
defined in the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not make shares of any Fund available to our customers
except in compliance with all applicable federal and state laws, and the
rules, regulations and requirements of applicable regulatory agencies or
authorities. We agree that we shall not purchase any Fund shares, as agent
for any customer, unless we deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy of the
Prospectus of such Fund, or unless such customer has acknowledged
receipt of the Prospectus of such Fund. We further agree to obtain from
each customer for whom we act as agent for the purchase of Fund shares
any taxpayer identification number certification and such other
information as may be required from time to time under the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder, and to provide you or your designee with timely
written notice of any failure to obtain such taxpayer identification
number certification or other information in order to enable the
implementation of any required withholding. We will be responsible for
the proper instruction and training of all sales personnel employed by us.
Unless otherwise mutually agreed in writing, you shall deliver or cause to
be delivered to each of the customers who purchases shares of any of the
Funds through us pursuant to this Agreement copies of all annual and
interim reports, proxy solicitation materials and any other information
and materials relating to such Funds and prepared by or on behalf of you,
the Fund or its investment adviser, custodian, Transfer Agent or dividend
disbursing agent for distribution to each such customer. You agree to
supply us with copies of the Prospectus, Statement of Additional
Information, annual reports, interim reports, proxy solicitation materials
and any such other information and materials relating to each Fund in
reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you. In making Fund shares
available to our customers hereunder, or in providing investment advice
regarding such shares to our customers, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided.
5. In determining the amount of any reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such case, our reallowance will be paid based upon the
reduced sales charge, but an adjustment will be made as described in the
Prospectus of the applicable Fund to reflect actual purchases of the
customer if he should fail to fulfill his Letter of Intent. The sales charge
and/or reallowance may be changed at any time in your sole discretion
upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the Transfer Agent
sufficient information to permit your confirmation of qualification for a
reduced sales charge, and acceptance of the purchase order is subject to
such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all
purchases of Fund shares made by us, as agent for our customers,
qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you to the
contrary, the shares ordered will be deemed to be the total holdings of the
specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or other
similar plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B, or C (or such other form as may be
approved from time to time by the board of directors or trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. (a) We agree to pay for purchase orders of any Fund shares placed by
us in accordance with the terms of the Prospectus of the applicable Fund.
On or before the settlement date of each purchase order for shares of any
Fund, we shall either (i) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price
of the shares of such Fund being purchased less our reallowance, if any,
with respect to such purchase order as determined by you in accordance
with the terms of the applicable Fund Prospectus, or (ii) remit to an
account designated by you with the Transfer Agent an amount equal to the
then current public offering price of the shares of such Fund being
purchased without deduction for our reallowance, if any, with respect to
such purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, in which case our reallowance, if any,
shall be payable to us by you on at least a monthly basis. If payment for
any purchase order is not received in accordance with the terms of the
applicable Fund Prospectus, you reserve the right, without notice, to
cancel the sale and to hold us responsible for any loss sustained as a
result thereof.
(b) If any shares sold to us as agent for our customers under the
terms of this Agreement are sold with a sales charge and are redeemed
for the account of the Fund or are tendered for redemption within seven
(7) days after the date of purchase: (i) we shall forthwith refund to you
the full reallowance received by us on the sale; and (ii) you shall
forthwith pay to the Fund your portion of the sales charge on the sale
which had been retained by you and shall also pay to the Fund the amount
refunded by us.
10. Certificates for shares sold to us as agent for our customers
hereunder shall only be issued in accordance with the terms of each Fund's
Prospectus upon our customers' specific request and, upon such request,
shall be promptly delivered to our customers by the Transfer Agent unless
other arrangements are made by us. However, in making delivery of such
share certificates to our customers, the Transfer Agent shall have
adequate time to clear any checks drawn for the payment of Fund shares.
11. We hereby represent and warrant to you that: (a) we are a "bank" as
such term is defined in Section 3(a)(6) of the Exchange Act; (b) we are a
duly organized and validly existing "bank" in good standing under the laws
of the jurisdiction in which we were organized; (c) all authorizations (if
any) required for our lawful execution of this Agreement and our
performance hereunder have been obtained; and (d) upon execution and
delivery by us, and assuming due and valid execution and delivery by you,
this Agreement will constitute a valid and binding agreement, enforceable
against us in accordance with its terms. We agree to give written notice
to you promptly in the event that we shall cease to be a "bank" as such
term is defined in Section 3(a)(6) of the Exchange Act. In such event, this
Agreement shall be automatically terminated upon such written notice.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to make shares of any Funds available to our customers in any
jurisdiction. We agree to comply with all applicable federal and state
laws, rules, regulations and requirements relating to the performance of
our duties and responsibilities hereunder.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, or any controlling persons named as defendants
in such suit, for the fees and expenses of any counsel retained by us or
them. Your indemnification agreement contained in this Paragraph 13(a)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees, and any
such controlling person, as aforesaid, is expressly conditioned upon our
being notified of any action brought against any person or entity entitled
to indemnification hereunder, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by us at our address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to you or your officers
and directors, or the Fund or its officers and directors or trustees or
managing general partners, or to any such controlling person, by reason of
any such breach, failure or untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of our indemnity
agreement contained in this Paragraph 13(b). Our indemnification
agreements contained in Paragraph 8 above, Paragraph 16 below and this
Paragraph 13(b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to Paragraph 8 above, Paragraph 16 below or
this Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent, in accordance with the terms
of the Form of Service Agreement annexed hereto as Appendix A, Form of
Shareholder Services Agreement annexed hereto as Appendix B, and/or
Form of Distribution Plan Agreement annexed hereto as Appendix C, as
applicable, for all of our customers who purchase shares of any and all
Funds whose Prospectuses provide therefor. By executing this Agreement,
each of the parties hereto agrees to be bound by all terms, conditions,
rights and obligations set forth in the forms of agreements annexed hereto
and further agrees that such forms of agreement supersede any and all
prior service agreements or other similar agreements between the parties
hereto, relating to any Fund or Funds. It is recognized that certain parties
may not be permitted to collect distribution fees under the Form of
Distribution Plan Agreement annexed hereto, and if we are such a party,
we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the Transfer
Agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation or requirement, and except pursuant to any promotional
programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices, located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attn: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement may
be amended by you upon 15 days' prior written notice to us, and such
amendment shall be deemed accepted by us upon the placement of any
order for the purchase of Fund shares or the acceptance of a fee payable
under this Agreement, including the Appendices hereto, after the effective
date of any such amendment. This Agreement may not be assigned by us
without your prior written consent. This Agreement constitutes the entire
agreement and understanding between the parties hereto relating to the
subject matter hereof and supersedes any and all prior agreements
between the parties hereto relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX B
TO BANK AGREEMENT
FORM OF SHAREHOLDER SERVICES AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you for servicing shareholders
of, and administering shareholder accounts in, certain mutual fund(s)
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide shareholder and administrative services for our
clients who own shares of the Funds ("clients"), which services may
include, without limitation: assisting clients in changing dividend options,
account designations and addresses; performing sub-accounting;
establishing and maintaining shareholder accounts and records; processing
purchase and redemption transactions; providing periodic statements
and/or reports showing a client's account balance and integrating such
statements with those of other transactions and balances in the client's
other accounts serviced by us; arranging for bank wires; and providing
such other information and services as you reasonably may request, to the
extent we are permitted by applicable statute, rule or regulation. In this
regard, if we are a federally chartered and supervised bank or other
banking organization, you recognize that we may be subject to the
provisions of the Glass-Steagall Act and other laws, rules, regulations, or
requirements governing, among other things, the conduct of our activities.
As such, we are restricted in the activities we may undertake and for
which we may be paid and, therefore, intend to perform only those
activities as are consistent with our statutory and regulatory obligations.
We represent and warrant to, and agree with you, that the compensation
payable to us hereunder, together with any other compensation payable to
us by clients in connection with the investment of their assets in shares
of the Funds, will be properly disclosed by us to our clients, will be
authorized by our clients and will not result in an excessive or
unauthorized fee to us.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to each Fund's shareholders, and to assist you in
servicing accounts of clients. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent. We agree that in the event an issue pertaining
to a Fund's Shareholder Services Plan is submitted for shareholder
approval, we will vote any Fund shares held for our own account in the
same proportion as the vote of those shares held for our clients' accounts.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a federally supervised bank or thrift institution, we
agree that, in providing services hereunder, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided. We shall have no authority to act
as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement. This Agreement is terminable without penalty
upon 15 days' notice by either party. In addition, you may terminate this
Agreement as to any or all Funds immediately, without penalty, if the
present investment adviser of such Fund(s) ceases to serve the Fund(s) in
such capacity, or if you cease to act as distributor of such Fund(s).
Notwithstanding anything contained herein, if we fail to perform the
shareholder servicing and administrative functions contemplated herein
by you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Shareholder Services Plan and
Prospectus and related Statement of Additional Information. We
understand that any payments pursuant to this Agreement shall be paid
only so long as this Agreement and such Plan are in effect. We agree that
no Director, officer or shareholder of the Fund shall be liable individually
for the performance of the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
EXHIBIT 6(c)
BANK AFFILIATED BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We are a broker-dealer registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). We desire to make available to our customers shares of
beneficial interest or common stock of open-end registered investment
companies managed, advised or administered by The Dreyfus Corporation
or its subsidiaries or affiliates (hereinafter referred to individually as a
"Fund" and collectively as the "Funds"). You are the principal underwriter
(as such term is defined in the Investment Company Act of 1940, as
amended) of the offering of shares of the Funds and the exclusive agent
for the continuous distribution of such shares pursuant to the terms of a
Distribution Agreement between you and each Fund. Unless the context
otherwise requires, as used herein the term "Prospectus" shall mean the
prospectus and related statement of additional information (the
"Statement of Additional Information") incorporated therein by reference
(as amended or supplemented) of each of the respective Funds included in
the then currently effective registration statement (or post-effective
amendment thereto) of each such Fund, as filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended
(the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund
pursuant to this Agreement, it is understood and agreed in each case that:
(a) we shall be acting solely as agent for the account of our customer; (b)
each transaction shall be initiated solely upon the order of our customer;
(c) you shall execute transactions only upon receiving instructions from
us acting as agent for our customer; (d) as between us and our customer,
our customer will have full beneficial ownership of all Fund shares; and
(e) each transaction shall be for the account of our customer and not for
our account. We represent and warrant to you that we will have full right,
power and authority to effect transactions (including, without limitation,
any purchases, exchanges and redemptions) in Fund shares on behalf of all
customer accounts provided by us to you or to any transfer agent as such
term is defined in the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not make shares of any Fund available to our customers
except in compliance with all applicable federal and state laws, and the
rules, regulations, requirements and conditions of all applicable
regulatory and self-regulatory agencies or authorities. We agree that we
shall not purchase any Fund shares, as agent for any customer, unless we
deliver or cause to be delivered to such customer, at or prior to the time
of such purchase, a copy of the Prospectus of such Fund, or unless such
customer has acknowledged receipt of the Prospectus of such Fund. We
further agree to obtain from each customer for whom we act as agent for
the purchase of Fund shares any taxpayer identification number
certification and such other information as may be required from time to
time under the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder, and to provide you or your
designee with timely written notice of any failure to obtain such taxpayer
identification number certification or other information in order to enable
the implementation of any required withholding. We will be responsible
for the proper instruction and training of all sales personnel employed by
us. Unless otherwise mutually agreed in writing, you shall deliver or
cause to be delivered to each of the customers who purchases shares of
any of the Funds through us pursuant to this Agreement copies of all
annual and interim reports, proxy solicitation materials and any other
information and materials relating to such Funds and prepared by or on
behalf of you, the Fund or its investment adviser, custodian, Transfer
Agent or dividend disbursing agent for distribution to each such customer.
You agree to supply us with copies of the Prospectus, Statement of
Additional Information, annual reports, interim reports, proxy solicitation
materials and any such other information and materials relating to each
Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you. In making Fund shares
available to our customers hereunder, or in providing investment advice
regarding such shares to our customers, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided.
5. In determining the amount of any reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in the sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such a case, our reallowance will be paid based upon
the reduced sales charge, but an adjustment to the reallowance will be
made in accordance with the Prospectus of the applicable Fund to reflect
actual purchases of the customer if such customer's Letter of Intent is
not fulfilled. The sales charge and/or reallowance may be changed at any
time in your sole discretion upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the Transfer Agent
sufficient information to permit your confirmation of qualification for a
reduced sales charge, and acceptance of the purchase order is subject to
such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all
purchases of Fund shares made by us, as agent for our customers,
qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each relevant Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be
the total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or other
similar plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B or C (or such other form as may be
approved from time to time by the board of directors, or trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. (a) We agree to remit on behalf of our customers the purchase price
for purchase orders of any Fund shares placed by us in accordance with the
terms of the Prospectus of the applicable Fund. On or before the
settlement date of each purchase order for shares of any Fund, we shall
either (i) remit to an account designated by you with the Transfer Agent
an amount equal to the then current public offering price of the shares of
such Fund being purchased less our reallowance, if any, with respect to
such purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, or (ii) remit to an account designated by
you with the Transfer Agent an amount equal to the then current public
offering price of the shares of such Fund being purchased without
deduction for our reallowance, if any, with respect to such purchase order
as determined by you in accordance with the terms of the applicable Fund
Prospectus, in which case our reallowance, if any, shall be payable to us
by you on at least a monthly basis. If payment for any purchase order is
not received in accordance with the terms of the applicable Fund
Prospectus, you reserve the right, without notice, to cancel the sale and
to hold us responsible for any loss sustained as a result thereof.
(b) If any shares sold to us as agent for our customers under the
terms of this Agreement are sold with a sales charge and are redeemed
for the account of the Fund or are tendered for redemption within seven
(7) business days after the date of purchase: (i) we shall forthwith refund
to you the full reallowance received by us on the sale; and (ii) you shall
forthwith pay to the Fund your portion of the sales charge on the sale
which had been retained by you and shall also pay to the Fund the amount
refunded by us.
10. Certificates for shares sold to us as agent for our customers
hereunder shall only be issued in accordance with the terms of each Fund's
Prospectus upon our customers' specific request and, upon such request,
shall be promptly delivered to our customers by the Transfer Agent unless
other arrangements are made by us. However, in making delivery of such
share certificates to our customers, the Transfer Agent shall have
adequate time to clear any checks drawn for the payment of Fund shares.
11. Each party hereby represents and warrants to the other party that:
(a) it is a corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in
which it was organized; (b) it is duly registered as a broker-dealer with
the Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all applicable
federal and state laws, and the rules, regulations, requirements and
conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its
compliance with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to make shares of any Funds available to our customers in any
jurisdiction. We agree to notify you immediately in the event of (a) our
expulsion or suspension from the NASD, or (b) our violation of any
applicable federal or state law, rule, regulation, requirement or condition
arising out of or in connection with this Agreement, or which may
otherwise affect in any material way our ability to act in accordance with
the terms of this Agreement. Our expulsion from the NASD will
automatically terminate this Agreement immediately without notice. Our
suspension from the NASD for violation of any applicable federal or state
law, rule, regulation, requirement or condition will terminate this
Agreement effective immediately upon your written notice of termination
to us.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, and any controlling persons named as
defendants in such suit, for the fees and expenses of any counsel retained
by us and/or them. Your indemnification agreement contained in this
Paragraph 13(a) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any such controlling person, as aforesaid,
is expressly conditioned upon our being notified of any action brought
against any person or entity entitled to indemnification hereunder, such
notification to be given by letter or by telecopier, telex, telegram or
similar means of same day delivery received by us at our address as
specified in Paragraph 18 of this Agreement within seven (7) days after
the summons or other first legal process shall have been served. The
failure so to notify us of any such action shall not relieve us from any
liability which we may have to you or your officers and directors, or to
the Fund or its officers and directors or trustees or managing general
partners, or to any such controlling person, by reason of any such breach,
failure or untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of our indemnity agreement contained
in this Paragraph 13(b). We will be entitled to assume the defense of any
suit brought to enforce any such claim, demand, liability or expense. In the
event that we elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we
do not elect to assume the defense of any such suit, we will reimburse you
and your officers and directors, and the Fund and its officers and directors
or trustees or managing general partners, and any controlling persons
named as defendants in such suit, for the fees and expenses of any counsel
retained by you and/or them. Our indemnification agreements contained in
Paragraph 8 above, Paragraph 16 below and this Paragraph 13(b) shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to Paragraph 8 above, Paragraph 16 below or this
Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent or to provide distribution
assistance, in accordance with the terms of the Form of Service
Agreement annexed hereto as Appendix A, Form of Shareholder Services
Agreement annexed hereto as Appendix B, and/or Form of Distribution Plan
Agreement annexed hereto as Appendix C, as applicable, for all of our
customers who purchase shares of any and all Funds whose Prospectuses
provide therefor. By executing this Agreement, each of the parties hereto
agrees to be bound by all terms, conditions, rights and obligations set
forth in the forms of agreement annexed hereto and further agrees that
such forms of agreement supersede any and all prior service agreements
or other similar agreements between the parties hereto relating to any
Fund or Funds. It is recognized that certain parties may not be permitted
to collect distribution fees under the Form of Distribution Plan Agreement
annexed hereto, and if we are such a party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the transfer
agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties
hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attention: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement,
including the Appendices hereto, may be amended by you upon 15 days'
prior written notice to us, and such amendment shall be deemed accepted
by us upon the placement of any order for the purchase of Fund shares or
the acceptance of a fee payable under this Agreement, including the
Appendices hereto, after the effective date of any such amendment. This
Agreement may not be assigned by us without your prior written consent.
This Agreement constitutes the entire agreement and understanding
between the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements between the parties hereto
relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX C
TO BANK AFFILIATED BROKER-DEALER AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you with respect to our
providing distribution assistance relating to shares of certain mutual
fund(s) managed, advised or administered by The Dreyfus Corporation or
its subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the
sale of shares of the Funds. In this regard, if we are a subsidiary or
affiliate of a federally chartered and supervised bank or other banking
organization, you recognize that we may be subject to the provisions of
the Glass-Steagall Act and other laws, rules, regulations or requirements
governing, among other things, the conduct of our activities. As such, we
are restricted in the activities we may undertake and for which we may be
paid and, therefore, intend to perform only those activities as are
consistent with our statutory and regulatory obligations. We represent and
warrant to, and agree with you, that the compensation payable to us
hereunder, together with any other compensation payable to us by clients
in connection with the investment of their assets in shares of the Funds,
will be properly disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
services hereunder. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a subsidiary or an affiliate of a federally supervised
bank or thrift institution, we agree that in providing services hereunder
we shall at all times act in compliance with the Interagency Statement on
Retail Sales of Nondeposit Investment Products issued by The Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, and the Office
of Thrift Supervision (February 15, 1994) or any successor interagency
requirements as in force at the time such services are provided. We shall
have no authority to act as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement or, upon not more than 60 days' written notice,
by vote of holders of a majority of the Fund's shares. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to act
as distributor of such Fund(s). Notwithstanding anything contained herein,
if we fail to perform the distribution functions contemplated herein by
you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related
Statement of Additional Information. We understand that any payments
pursuant to this Agreement shall be paid only so long as this Agreement
and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance of
the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
beneficial interest or common stock of open-end registered investment
companies managed, advised or administered by The Dreyfus Corporation
or its subsidiaries or affiliates (hereinafter referred to individually as a
"Fund" and collectively as the "Funds"), for which you are the principal
underwriter, as such term is defined in the Investment Company Act of
1940, as amended, and for which you are the exclusive agent for the
continuous distribution of shares pursuant to the terms of a Distribution
Agreement between you and each Fund. Unless the context otherwise
requires, as used herein the term "Prospectus" shall mean the prospectus
and related statement of additional information (the "Statement of
Additional Information") incorporated therein by reference (as amended or
supplemented) of each of the respective Funds included in the then
currently effective registration statement (or post-effective amendment
thereto) of each such Fund, as filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the
"Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. In all sales of Fund shares to the public, we shall act as dealer for
our own account and in no transaction shall we have any authority to act
as agent for any Fund, for you or for any other dealer.
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share, less the applicable deferred sales charge, redemption fee, or
similar charge or fee, if any, in each case as described in the Prospectus
of such Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not offer or sell shares of any Fund except in compliance
with all applicable federal and state securities laws, and the rules,
regulations, requirements and conditions of all applicable regulatory and
self-regulatory agencies or authorities. In connection with offers to sell
and sales of shares of each Fund, we agree to deliver or cause to be
delivered to each person to whom any such offer or sale is made, at or
prior to the time of such offer or sale, a copy of the Prospectus and, upon
request, the Statement of Additional Information of such Fund. We further
agree to obtain from each customer to whom we sell Fund shares any
taxpayer identification number certification and such other information
as may be required from time to time under the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated
thereunder, and to provide you or your designee with timely written notice
of any failure to obtain such taxpayer identification number certification
or other information in order to enable the implementation of any required
withholding. We will be responsible for the proper instruction and training
of all sales personnel employed by us. Unless otherwise mutually agreed
in writing, you shall deliver or cause to be delivered to each of the
customers who purchases shares of any of the Funds from or through us
pursuant to this Agreement copies of all annual and interim reports, proxy
solicitation materials and any other information and materials relating to
such Funds and prepared by or on behalf of you, the Fund or its investment
adviser, custodian, transfer agent or dividend disbursing agent for
distribution to each such customer. You agree to supply us with copies of
the Prospectus, Statement of Additional Information, annual reports,
interim reports, proxy solicitation materials and any such other
information and materials relating to each Fund in reasonable quantities
upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you.
5. In determining the amount of any dealer reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in the sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such a case, our dealer reallowance will be paid based
upon the reduced sales charge, but an adjustment to the dealer
reallowance will be made in accordance with the Prospectus of the
applicable Fund to reflect actual purchases of the customer if such
customer's Letter of Intent is not fulfilled. The sales charge and/or dealer
reallowance may be changed at any time in your sole discretion upon
written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the transfer agent,
as such term is defined in the Prospectus of each Fund (the "Transfer
Agent"), sufficient information to permit your confirmation of
qualification for a reduced sales charge, and acceptance of the purchase
order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all sales by
us to the public qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each relevant Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be
the total holdings of the specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or similar
plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B or C (or such other form as may be
approved from time to time by the board of directors, trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise. We agree that: (a) we shall not effect any
transactions (including, without limitation, any purchases, exchanges and
redemptions) in any Fund shares registered in the name of, or beneficially
owned by, any customer unless such customer has granted us full right,
power and authority to effect such transactions on such customer's
behalf, and (b) you, each Fund, the Transfer Agent and your and their
respective officers, directors, trustees, managing general partners,
agents, employees and affiliates shall not be liable for, and shall be fully
indemnified and held harmless by us from and against, any and all claims,
demands, liabilities and expenses (including, without limitation,
reasonable attorneys' fees) which may be incurred by you or any of the
foregoing persons entitled to indemnification from us hereunder arising
out of or in connection with the execution of any transactions in Fund
shares registered in the name of, or beneficially owned by, any customer
in reliance upon any oral or written instructions reasonably believed to be
genuine and to have been given by or on behalf of us.
9. (a) We agree to pay for purchase orders for Fund shares placed by us
in accordance with the terms of the Prospectus of the applicable Fund. On
or before the settlement date of each purchase order for shares of any
Fund, we shall either (i) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price
of the shares of such Fund being purchased less our dealer reallowance, if
any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, or (ii) remit
to an account designated by you with the Transfer Agent an amount equal
to the then current public offering price of the shares of such Fund being
purchased without deduction for our dealer reallowance, if any, with
respect to such purchase order as determined by you in accordance with
the terms of the applicable Fund Prospectus, in which case our dealer
reallowance, if any, shall be payable to us on at least a monthly basis. If
payment for any purchase order is not received in accordance with the
terms of the applicable Fund Prospectus, you reserve the right, without
notice, to cancel the sale and to hold us responsible for any loss sustained
as a result thereof.
(b) If any shares sold to us under the terms of this Agreement are
sold with a sales charge and are redeemed for the account of the Fund or
are tendered for redemption within seven (7) business days after the date
of purchase: (i) we shall forthwith refund to you the full dealer
reallowance received by us on the sale; and (ii) you shall forthwith pay to
the Fund your portion of the sales charge on the sale which had been
retained by you and shall also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us hereunder shall only be issued in
accordance with the terms of each Fund's Prospectus upon our customer's
specific request and, upon such request, shall be promptly delivered to us
by the Transfer Agent unless other arrangements are made by us.
However, in making delivery of such share certificates to us, the Transfer
Agent shall have adequate time to clear any checks drawn for the payment
of Fund shares.
11. Each party hereby represents and warrants to the other party that:
(a) it is a corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in
which it was organized; (b) it is duly registered as a broker-dealer with
the Securities and Exchange Commission and, to the extent required, with
applicable state agencies or authorities having jurisdiction over
securities matters, and it is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); (c) it will comply with all applicable
federal and state laws, and the rules, regulations, requirements and
conditions of all applicable regulatory and self-regulatory agencies or
authorities in the performance of its duties and responsibilities
hereunder; (d) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action, and all other authorizations and
approvals (if any) required for its lawful execution and delivery of this
Agreement and its performance hereunder have been obtained; and (e) upon
execution and delivery by it, and assuming due and valid execution and
delivery by the other party, this Agreement will constitute a valid and
binding agreement, enforceable in accordance with its terms. Each party
agrees to provide the other party with such information and access to
appropriate records as may be reasonably required to verify its
compliance with the provisions of this Agreement.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to sell shares in any jurisdiction. We agree to notify you
immediately in the event of (a) our expulsion or suspension from the
NASD, or (b) our violation of any applicable federal or state law, rule,
regulation, requirement or condition arising out of or in connection with
this Agreement, or which may otherwise affect in any material way our
ability to act as a dealer in accordance with the terms of this Agreement.
Our expulsion from the NASD will automatically terminate this Agreement
immediately without notice. Our suspension from the NASD for violation
of any applicable federal or state law, rule, regulation, requirement or
condition will terminate this Agreement effective immediately upon your
written notice of termination to us.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, and any controlling persons named as
defendants in such suit, for the fees and expenses of any counsel retained
by us and/or them. Your indemnification agreement contained in this
Paragraph 13(a) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees or
managing general partners, and any such controlling person, as aforesaid,
is expressly conditioned upon our being notified of any action brought
against any person or entity entitled to indemnification hereunder, such
notification to be given by letter or by telecopier, telex, telegram or
similar means of same day delivery received by us at our address as
specified in Paragraph 18 of this Agreement within seven (7) days after
the summons or other first legal process shall have been served. The
failure so to notify us of any such action shall not relieve us from any
liability which we may have to you or your officers and directors, or to
the Fund or its officers and directors or trustees or managing general
partners, or to any such controlling person, by reason or any such breach,
failure or untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of our indemnity agreement contained
in this Paragraph 13(b). We shall be entitled to assume the defense of any
suit brought to enforce any such claim, demand, liability or expense. In the
event that we elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we
do not elect to assume the defense of any such suit, we will reimburse you
and your officers and directors, and the Fund and its officers and directors
or trustees or managing general partners, and any controlling persons
named as defendants in such suit, for the fees and expenses of any counsel
retained by you and/or them. Our indemnification agreements contained in
Paragraph 8 above, Paragraph 16 below and this Paragraph 13(b) shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to Paragraph 8 above, Paragraph 16 below or this
Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent or to provide distribution
assistance, in accordance with the terms of the Form of Service
Agreement annexed hereto as Appendix A, Form of Shareholder Services
Agreement annexed hereto as Appendix B, and/or Form of Distribution Plan
Agreement annexed hereto as Appendix C, as applicable, for all of our
customers who purchase shares of any and all Funds whose Prospectuses
provide therefor. By executing this Agreement, each of the parties hereto
agrees to be bound by all terms, conditions, rights and obligations set
forth in the forms of agreement annexed hereto and further agrees that
such forms of agreement supersede any and all prior service agreements
or other similar agreements between the parties hereto relating to any
Fund or Funds. It is recognized that certain parties may not be permitted
to collect distribution fees under the Form of Distribution Plan Agreement
annexed hereto, and if we are such a party, we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the Transfer
Agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation, requirement or condition, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties
hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices, located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attn: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement,
including the Appendices hereto, may be amended by you upon 15 days'
prior written notice to us, and such amendment shall be deemed accepted
by us upon the placement of any order for the purchase of Fund shares or
the acceptance of a fee payable under this Agreement, including the
Appendices hereto, after the effective date of any such amendment. This
Agreement may not be assigned by us without your prior written consent.
This Agreement constitutes the entire agreement and understanding
between the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements between the parties hereto
relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Name of Broker or Dealer (Please Print
or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX C
TO BROKER-DEALER AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you with respect to our
providing distribution assistance relating to shares of certain mutual
fund(s) managed, advised or administered by The Dreyfus Corporation or
its subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the
sale of shares of the Funds. We represent and warrant to, and agree with
you, that the compensation payable to us hereunder, together with any
other compensation payable to us by clients in connection with the
investment of their assets in shares of the Funds, will be properly
disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
services hereunder. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. We shall have no authority to act as agent for the Funds or for
you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement, or upon not more than 60 days' written notice,
by vote of holders of a majority of the Fund's shares. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to act
as distributor of such Fund(s). Notwithstanding anything contained herein,
if we fail to perform the distribution functions contemplated herein by
you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related
Statement of Additional Information. We understand that any payments
pursuant to this Agreement shall be paid only so long as this Agreement
and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance of
the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
BANK AGREEMENT
(Fully Disclosed Basis)
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We are a "bank" (as such term is defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") ). We
desire to make available to our customers shares of beneficial interest or
common stock of open-end registered investment companies managed,
advised or administered by The Dreyfus Corporation or its subsidiaries or
affiliates (hereinafter referred to individually as a "Fund" and collectively
as the "Funds"). You are the principal underwriter (as such term is defined
in the Investment Company Act of 1940, as amended) of the offering of
shares of the Funds and the exclusive agent for the continuous distribution
of such shares pursuant to the terms of a Distribution Agreement between
you and each Fund. Unless the context otherwise requires, as used herein
the term "Prospectus" shall mean the prospectus and related statement of
additional information ("Statement of Additional Information")
incorporated therein by reference (as amended and supplemented) of each
of the respective Funds included in the then currently effective
registration statement (or post-effective amendment thereto) of each
such Fund, as filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Registration Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund
pursuant to this Agreement, it is understood and agreed in each case that:
(a) we shall be acting solely as agent for the account of our customer; (b)
each transaction shall be initiated solely upon the order of our customer;
(c) you shall execute transactions only upon receiving instructions from
us acting as agent for our customer; (d) as between us and our customer,
our customer will have full beneficial ownership of all Fund shares; and
(e) each transaction shall be for the account of our customer and not for
our account. Each transaction shall be without recourse to us provided
that we act in accordance with the terms of this Agreement. We represent
and warrant to you that we will have full right, power and authority to
effect transactions (including, without limitation, any purchases,
exchanges and redemptions) in Fund shares on behalf of all customer
accounts provided by us to you or to any transfer agent as such term is
defined in the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (i.e., the net asset value
per share plus the applicable sales charge, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share less the applicable deferred sales charge, redemption fee or similar
charge or fee, if any, in each case as described in the Prospectus of such
Fund. The minimum initial purchase order and minimum subsequent
purchase order shall be as set forth in the Prospectus of such Fund. All
orders are subject to acceptance or rejection by you at your sole
discretion. Unless otherwise mutually agreed in writing, each transaction
shall be promptly confirmed in writing directly to the customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of
shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We agree
that we shall not make shares of any Fund available to our customers
except in compliance with all applicable federal and state laws, and the
rules, regulations and requirements of applicable regulatory agencies or
authorities. We agree that we shall not purchase any Fund shares, as agent
for any customer, unless we deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy of the
Prospectus of such Fund, or unless such customer has acknowledged
receipt of the Prospectus of such Fund. We further agree to obtain from
each customer for whom we act as agent for the purchase of Fund shares
any taxpayer identification number certification and such other
information as may be required from time to time under the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder, and to provide you or your designee with timely
written notice of any failure to obtain such taxpayer identification
number certification or other information in order to enable the
implementation of any required withholding. We will be responsible for
the proper instruction and training of all sales personnel employed by us.
Unless otherwise mutually agreed in writing, you shall deliver or cause to
be delivered to each of the customers who purchases shares of any of the
Funds through us pursuant to this Agreement copies of all annual and
interim reports, proxy solicitation materials and any other information
and materials relating to such Funds and prepared by or on behalf of you,
the Fund or its investment adviser, custodian, Transfer Agent or dividend
disbursing agent for distribution to each such customer. You agree to
supply us with copies of the Prospectus, Statement of Additional
Information, annual reports, interim reports, proxy solicitation materials
and any such other information and materials relating to each Fund in
reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares
other than those contained in the Prospectus of such Fund or in any
promotional materials or sales literature furnished to us by you or the
Fund. We shall not furnish or cause to be furnished to any person or display
or publish any information or materials relating to any Fund (including,
without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters,
signs or other similar materials), except such information and materials
as may be furnished to us by you or the Fund, and such other information
and materials as may be approved in writing by you. In making Fund shares
available to our customers hereunder, or in providing investment advice
regarding such shares to our customers, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided.
5. In determining the amount of any reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable
Fund Prospectuses or the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales charge,
customers may be entitled to a reduction in sales charge on purchases
made under a letter of intent ("Letter of Intent") in accordance with the
Fund Prospectus. In such case, our reallowance will be paid based upon the
reduced sales charge, but an adjustment will be made as described in the
Prospectus of the applicable Fund to reflect actual purchases of the
customer if he should fail to fulfill his Letter of Intent. The sales charge
and/or reallowance may be changed at any time in your sole discretion
upon written notice to us.
(b) Subject to and in accordance with the terms of the Prospectus of
each Fund sold with a sales charge, a reduced sales charge may be
applicable with respect to customer accounts through a right of
accumulation under which customers are permitted to purchase shares of
a Fund at the then current public offering price per share applicable to the
total of (i) the dollar amount of shares then being purchased plus (ii) an
amount equal to the then current net asset value or public offering price
originally paid per share, whichever is higher, of the customer's combined
holdings of the shares of such Fund and of any other open-end registered
investment company as may be permitted by the applicable Fund
Prospectus. In such case, we agree to furnish to you or the Transfer Agent
sufficient information to permit your confirmation of qualification for a
reduced sales charge, and acceptance of the purchase order is subject to
such confirmation.
(c) With respect to Fund shares sold with a sales charge, we agree to
advise you promptly at your request as to amounts of any and all
purchases of Fund shares made by us, as agent for our customers,
qualifying for a reduced sales charge.
(d) Exchanges (i.e., the investment of the proceeds from the
liquidation of shares of one open-end registered investment company
managed, advised or administered by The Dreyfus Corporation or its
subsidiaries or affiliates in the shares of another open-end registered
investment company managed, advised or administered by The Dreyfus
Corporation or its subsidiaries or affiliates) shall, where available, be
made subject to and in accordance with the terms of each Fund's
Prospectus.
(e) Unless at the time of transmitting an order we advise you to the
contrary, the shares ordered will be deemed to be the total holdings of the
specified customer.
7. Subject to and in accordance with the terms of each Fund Prospectus
and Service Plan, Shareholder Services Plan, Distribution Plan or other
similar plan, if any, we understand that you may pay to certain financial
institutions, securities dealers and other industry professionals with
which you have entered into an agreement in substantially the form
annexed hereto as Appendix A, B, or C (or such other form as may be
approved from time to time by the board of directors or trustees or
managing general partners of the Fund) such fees as may be determined by
you in accordance with such agreement for shareholder, administrative or
distribution-related services as described therein.
8. The procedures relating to all orders and the handling thereof will
be subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be
accepted. We agree to place orders with you immediately for the same
number of shares and at the same price as any orders we receive from our
customers. We shall not withhold placing orders received from customers
so as to profit ourselves as a result of such withholding by a change in the
net asset value from that used in determining the offering price to such
customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation, any purchases, exchanges and redemptions)
in any Fund shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted us full right, power and
authority to effect such transactions on such customer's behalf, and (b)
you, each Fund, the Transfer Agent and your and their respective officers,
directors, trustees, managing general partners, agents, employees and
affiliates shall not be liable for, and shall be fully indemnified and held
harmless by us from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable attorneys' fees)
which may be incurred by you or any of the foregoing persons entitled to
indemnification from us hereunder arising out of or in connection with the
execution of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions reasonably believed to be genuine and to have been given by or
on behalf of us.
9. (a) We agree to pay for purchase orders of any Fund shares placed by
us in accordance with the terms of the Prospectus of the applicable Fund.
On or before the settlement date of each purchase order for shares of any
Fund, we shall either (i) remit to an account designated by you with the
Transfer Agent an amount equal to the then current public offering price
of the shares of such Fund being purchased less our reallowance, if any,
with respect to such purchase order as determined by you in accordance
with the terms of the applicable Fund Prospectus, or (ii) remit to an
account designated by you with the Transfer Agent an amount equal to the
then current public offering price of the shares of such Fund being
purchased without deduction for our reallowance, if any, with respect to
such purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, in which case our reallowance, if any,
shall be payable to us by you on at least a monthly basis. If payment for
any purchase order is not received in accordance with the terms of the
applicable Fund Prospectus, you reserve the right, without notice, to
cancel the sale and to hold us responsible for any loss sustained as a
result thereof.
(b) If any shares sold to us as agent for our customers under the
terms of this Agreement are sold with a sales charge and are redeemed
for the account of the Fund or are tendered for redemption within seven
(7) days after the date of purchase: (i) we shall forthwith refund to you
the full reallowance received by us on the sale; and (ii) you shall
forthwith pay to the Fund your portion of the sales charge on the sale
which had been retained by you and shall also pay to the Fund the amount
refunded by us.
10. Certificates for shares sold to us as agent for our customers
hereunder shall only be issued in accordance with the terms of each Fund's
Prospectus upon our customers' specific request and, upon such request,
shall be promptly delivered to our customers by the Transfer Agent unless
other arrangements are made by us. However, in making delivery of such
share certificates to our customers, the Transfer Agent shall have
adequate time to clear any checks drawn for the payment of Fund shares.
11. We hereby represent and warrant to you that: (a) we are a "bank" as
such term is defined in Section 3(a)(6) of the Exchange Act; (b) we are a
duly organized and validly existing "bank" in good standing under the laws
of the jurisdiction in which we were organized; (c) all authorizations (if
any) required for our lawful execution of this Agreement and our
performance hereunder have been obtained; and (d) upon execution and
delivery by us, and assuming due and valid execution and delivery by you,
this Agreement will constitute a valid and binding agreement, enforceable
against us in accordance with its terms. We agree to give written notice
to you promptly in the event that we shall cease to be a "bank" as such
term is defined in Section 3(a)(6) of the Exchange Act. In such event, this
Agreement shall be automatically terminated upon such written notice.
12. You agree to inform us, upon our request, as to the states in which
you believe the shares of the Funds have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of
such states, but you shall have no obligation or responsibility as to our
right to make shares of any Funds available to our customers in any
jurisdiction. We agree to comply with all applicable federal and state
laws, rules, regulations and requirements relating to the performance of
our duties and responsibilities hereunder.
13. (a) You agree to indemnify, defend and hold us, our several officers
and directors, and any person who controls us within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
we, our officers and directors, or any such controlling person, may incur
under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein, or (iii) any
untrue statement, or alleged untrue statement, of a material fact
contained in any Registration Statement or any Prospectus, or arising out
of or based upon any omission, or alleged omission, to state a material
fact required to be stated in either any Registration Statement or any
Prospectus, or necessary to make the statements in any thereof not
misleading; provided, however, that your agreement to indemnify us, our
officers and directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to you
or the Fund by us specifically for use in the preparation thereof. Your
agreement to indemnify us, our officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against our officers or directors, or any
such controlling person, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by you at your address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the person against
whom such action is brought by reason of any such breach, failure or
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
Paragraph 13(a). You will be entitled to assume the defense of any suit
brought to enforce any such claim, demand, liability or expense. In the
event that you elect to assume the defense of any such suit and retain
counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case you
do not elect to assume the defense of any such suit, you will reimburse us,
our officers and directors, or any controlling persons named as defendants
in such suit, for the fees and expenses of any counsel retained by us or
them. Your indemnification agreement contained in this Paragraph 13(a)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any person entitled to
indemnification pursuant to this Paragraph 13(a), and shall survive the
delivery of any Fund shares and termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of the
persons entitled to indemnification from you pursuant to this Agreement
and their respective estates, successors and assigns.
(b) We agree to indemnify, defend and hold you and your several
officers and directors, and each Fund and its several officers and
directors or trustees or managing general partners, and any person who
controls you and/or each Fund within the meaning of Section 15 of the
Securities Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost
of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you and your several
officers and directors, or the Fund and its officers and directors or
trustees or managing general partners, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, or (ii) any failure
by us to perform our obligations as set forth herein, or (iii) any untrue, or
alleged untrue, statement of a material fact contained in the information
furnished in writing by us to you or any Fund specifically for use in such
Fund's Registration Statement or Prospectus, or used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or arising out of or based upon any
omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by us to you or the Fund and required
to be stated in such answers or necessary to make such information not
misleading. Our agreement to indemnify you and your officers and
directors, and the Fund and its officers and directors or trustees, and any
such controlling person, as aforesaid, is expressly conditioned upon our
being notified of any action brought against any person or entity entitled
to indemnification hereunder, such notification to be given by letter or by
telecopier, telex, telegram or similar means of same day delivery received
by us at our address as specified in Paragraph 18 of this Agreement
within seven (7) days after the summons or other first legal process shall
have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to you or your officers
and directors, or the Fund or its officers and directors or trustees or
managing general partners, or to any such controlling person, by reason of
any such breach, failure or untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of our indemnity
agreement contained in this Paragraph 13(b). Our indemnification
agreements contained in Paragraph 8 above, Paragraph 16 below and this
Paragraph 13(b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any person entitled
to indemnification pursuant to Paragraph 8 above, Paragraph 16 below or
this Paragraph 13(b), and shall survive the delivery of any Fund shares and
termination of this Agreement. Such agreements of indemnity will inure
exclusively to the benefit of the persons entitled to indemnification
hereunder and their respective estates, successors and assigns.
14. The names and addresses and other information concerning our
customers are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for any
purpose except in connection with the performance of your duties and
responsibilities hereunder and except for servicing and informational
mailings relating to the Funds. Notwithstanding the foregoing, this
Paragraph 14 shall not prohibit you or any of your affiliates from utilizing
for any purpose the names, addresses or other information concerning any
of our customers if such names, addresses or other information are
obtained in any manner other than from us pursuant to this Agreement. The
provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. We agree to serve as a service agent, in accordance with the terms
of the Form of Service Agreement annexed hereto as Appendix A, Form of
Shareholder Services Agreement annexed hereto as Appendix B, and/or
Form of Distribution Plan Agreement annexed hereto as Appendix C, as
applicable, for all of our customers who purchase shares of any and all
Funds whose Prospectuses provide therefor. By executing this Agreement,
each of the parties hereto agrees to be bound by all terms, conditions,
rights and obligations set forth in the forms of agreements annexed hereto
and further agrees that such forms of agreement supersede any and all
prior service agreements or other similar agreements between the parties
hereto, relating to any Fund or Funds. It is recognized that certain parties
may not be permitted to collect distribution fees under the Form of
Distribution Plan Agreement annexed hereto, and if we are such a party,
we will not collect such fees.
16. By completing the Expedited Redemption Information Form annexed
hereto as Appendix D, we agree that you, each Fund with respect to which
you permit us to exercise an expedited redemption privilege, the Transfer
Agent of each such Fund, and your and their respective officers, directors
or trustees or managing general partners, agents, employees and affiliates
shall not be liable for and shall be fully indemnified and held harmless by
us from and against any and all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees) arising out of
or in connection with any expedited redemption payments made in reliance
upon the information set forth in such Appendix D.
17. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between you and us. Neither party hereto shall be, act as, or
represent itself as, the agent or representative of the other, nor shall
either party have the right or authority to assume, create or incur any
liability or any obligation of any kind, express or implied, against or in the
name of, or on behalf of, the other party. This Agreement is not intended
to, and shall not, create any rights against either party hereto by any third
party solely on account of this Agreement. Neither party hereto shall use
the name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule, regulation or requirement, and except pursuant to any promotional
programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices
required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telecopier, telex, telegram or similar means of same day
delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to you shall be given or sent to
you at your offices, located at One Exchange Place, Tenth Floor, Boston, MA
02109, Attn: President (with a copy to the same address, Attention:
General Counsel), and all notices to us shall be given or sent to us at our
address shown below.
19. This Agreement shall become effective only when accepted and
signed by you, and may be terminated at any time by either party hereto
upon 15 days' prior written notice to the other party. This Agreement may
be amended by you upon 15 days' prior written notice to us, and such
amendment shall be deemed accepted by us upon the placement of any
order for the purchase of Fund shares or the acceptance of a fee payable
under this Agreement, including the Appendices hereto, after the effective
date of any such amendment. This Agreement may not be assigned by us
without your prior written consent. This Agreement constitutes the entire
agreement and understanding between the parties hereto relating to the
subject matter hereof and supersedes any and all prior agreements
between the parties hereto relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
Very truly yours,
- ------------------------------------------------------------------------------
Bank Name (Please Print or Type)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address
Date: --------------------------------- By:----------------------------------
Authorized Signature
NOTE: Please sign and return both copies of this Agreement to Premier
Mutual Fund Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
Date: --------------------------------- By:----------------------------------
Authorized Signature
APPENDIX C
TO BANK AGREEMENT
FORM OF DISTRIBUTION PLAN AGREEMENT
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, MA 02109
Gentlemen:
We wish to enter into an Agreement with you with respect to our
providing distribution assistance relating to shares of certain mutual
fund(s) managed, advised or administered by The Dreyfus Corporation or
its subsidiaries or affiliates (hereinafter referred to individually as the
"Fund" and collectively as the "Funds"). You are the principal underwriter
as defined in the Investment Company Act of 1940, as amended (the "Act"),
and the exclusive agent for the continuous distribution of shares of the
Funds.
The terms and conditions of this Agreement are as follows:
1. We agree to provide distribution assistance in connection with the
sale of the shares of the Funds. In this regard, if we are a federally
chartered and supervised bank or other banking organization, you recognize
that we may be subject to the provisions of the Glass-Steagall Act and
other laws, rules, regulations or requirements governing, among other
things, the conduct of our activities. As such, we are restricted in the
activities we may undertake and for which we may be paid and, therefore,
intend to perform only those activities as are consistent with our
statutory and regulatory obligations. We represent and warrant to, and
agree with you, that the compensation payable to us hereunder, together
with any other compensation payable to us by clients in connection with
the investment of their assets in shares of the Funds, will be properly
disclosed by us to our clients.
2. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space,
equipment and facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
services hereunder. We shall transmit promptly to clients all
communications sent to us for transmittal to clients by or on behalf of
you, any Fund, or any Fund's investment adviser, custodian or transfer or
dividend disbursing agent.
3. We agree that neither we nor any of our employees or agents are
authorized to make any representation concerning shares of any Fund,
except those contained in the then current Prospectus for such Fund,
copies of which will be supplied by you to us in reasonable quantities upon
request. If we are a federally supervised bank or thrift institution, we
agree that, in providing services hereunder, we shall at all times act in
compliance with the Interagency Statement on Retail Sales of Nondeposit
Investment Products issued by The Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Office of
the Comptroller of the Currency, and the Office of Thrift Supervision
(February 15, 1994) or any successor interagency requirements as in force
at the time such services are provided. We shall have no authority to act
as agent for the Funds or for you.
4. You reserve the right, at your discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of any or all of
the Funds.
5. We acknowledge that this Agreement shall become effective for a
Fund only when approved by vote of a majority of (i) the Fund's Board of
Directors or Trustees or Managing General Partners, as the case may be
(collectively "Directors," individually "Director"), and (ii) Directors who
are not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
6. This Agreement shall continue until the last day of the calendar year
next following the date of execution, and thereafter shall continue
automatically for successive annual periods ending on the last day of each
calendar year. Such continuance must be approved specifically at least
annually by a vote of a majority of (i) the Fund's Board of Directors and
(ii) Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty, at
any time, by a majority of the Fund's Directors who are not "interested
persons" (as defined in the Act) and have no direct or indirect financial
interest in this Agreement or, upon not more than 60 days' written notice,
by vote of holders of a majority of the Fund's shares. This Agreement is
terminable without penalty upon 15 days' notice by either party. In
addition, you may terminate this Agreement as to any or all Funds
immediately, without penalty, if the present investment adviser of such
Fund(s) ceases to serve the Fund(s) in such capacity, or if you cease to act
as distributor of such Fund(s). Notwithstanding anything contained herein,
if we fail to perform the distribution functions contemplated herein by
you as to any or all of the Funds, this Agreement shall be terminable
effective upon receipt of notice thereof by us. This Agreement also shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. In consideration of the services and facilities described herein, we
shall be entitled to receive from you, and you agree to pay to us, the fees
described as payable to us in each Fund's Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, and Prospectus and related
Statement of Additional Information. We understand that any payments
pursuant to this Agreement shall be paid only so long as this Agreement
and such Plan are in effect. We agree that no Director, officer or
shareholder of the Fund shall be liable individually for the performance of
the obligations hereunder or for any such payments.
8. We agree to provide to you and each applicable Fund such information
relating to our services hereunder as may be required to be maintained by
you and/or such Fund under applicable federal or state laws, and the rules,
regulations, requirements or conditions of applicable regulatory and self-
regulatory agencies or authorities.
9. This Agreement shall not constitute either party the legal
representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the
other party.
10. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal delivery or
by postage prepaid, registered or certified United States first class mail,
return receipt requested, or by telecopier, telex, telegram or similar
means of same day delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to you shall be
given or sent to you at One Exchange Place, Tenth Floor, Boston, MA 02109,
Attention: President (with a copy to the same address, Attention: General
Counsel), and all notices to us shall be given or sent to us at our address
which shall be furnished to you in writing on or before the effective date
of this Agreement.
11. This Agreement shall be construed in accordance with the internal
laws of the State of New York, without giving effect to principles of
conflict of laws.
CUSTODY AGREEMENT
Custody Agreement made as of January 17, 1990 between
PREMIER STATE TAX EXEMPT BOND FUND, a business trust organized
and existing under the laws of the Commonwealth of
Massachusetts, having its principal office and place of business
at 666 Old Country Road, Garden City, New York 11530
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New
York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have
the following meanings:
1. "Authorized Person" shall be deemed to include
the Treasurer, the Controller or any other person, whether or
not any such person is an Officer or employee of the Fund, duly
authorized by the Trustees of the Fund to give Oral Instructions
and Written Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to
time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds
held in the Fund's custody account(s) at The Bank of New York,
or its successors, as of the close of such day or, if such day
is not a business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party
such party's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or
instituting or having instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or the entry of an order
for relief under the Federal bankruptcy law or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or if a petition is presented for
the winding up or liquidation of the party or a resolution is
passed for its winding up or liquidation, or it seeks, or
becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to approval
of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federal
agency securities, its successor or successors and its nominee
or nominees.
5. "Call Option" shall mean an exchange traded
option with respect to Securities other than Stock Index
Options, Futures Contracts and Futures Contract Options
entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the
writer thereof the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by
any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and
a member of a national securities exchange qualified to act as a
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.
8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as security
for, and in consideration of, the Custodian's issuance of (a)
any Put Option guarantee letter or similar document described in
paragraph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban consumers, U.S.
city average 1982-84 equals 100, as first published without
seasonal adjustment by the Bureau of Labor Statistics, the
Department of Labor, without regard to subsequent revisions or
corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to purchase
from the writer thereof the specified Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of the Fund's Trustees
specifically approving deposits in DTC. The term "Depository"
shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of
the Fund's Trustees specifically approving deposits therein by
the Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.15 (519) and
applicable to such day and each succeeding day which is not a
business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option
with respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account
in the name of a broker, dealer, futures commission merchant or
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant or Clearing Member,
or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant
or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund
may from time to time determine. Securities held in the
Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and
records.
19. "Merger" shall mean (a) with respect to the Fund,
the consolidation or amalgamation with, merger into, or transfer
of all or substantially all of its assets to, another entity,
where the Fund is not the surviving entity, and (b) with respect
to the Custodian, any consolidation or amalgamation with, merger
into, or transfer of all or substantially all of its assets to,
another entity, except for any such consolidation, amalgamation,
merger or transfer of assets between the Custodian and The Bank
of New York Company, Inc. or any subsidiary thereof, or the
Irving Bank Corporation or any subsidiary thereof, provided that
the surviving entity agrees to be bound by the terms of this
Agreement.
20. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to principal and interest by the government of the
United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers'
acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase
and sale of such securities normally requires settlement in
Federal funds on the same date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation,
a clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.
22. "Officers" shall be deemed to include the
President, any Vice president, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or
any other person or persons duly authorized by the Fund's
Trustees to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time.
23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal
instructions actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
to repurchase such Securities at a described or specified date
and price.
27. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public
authorities (including, without limitation, general obligation
bonds, revenue bonds and industrial bonds and industrial
development bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase, sell or
subscribe for the same, or evidencing or representing any other
rights or interest therein, or any property or assets.
28. "Segregated Security Account" shall mean an
account maintained under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the
custody account in which certain Securities and/or other assets
of the Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to
time determine.
29. "Series" shall mean the series of the Fund
specified on Appendix D hereto, or, where the context requires,
each such series.
30. "Shares" shall mean the shares of beneficial
interest of any Series of the Fund, each of which is allocated
to a particular Series.
31. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take
or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the value of a
particular stock index at the close of the last business day of
the contract and the price at which the futures contract is
originally struck.
32. "Stock Index Option" shall mean an exchange
traded option entitling the holder, upon timely exercise, to
receive an amount of cash determined by reference to the
difference between the exercise price and the value of the index
on the date of exercise.
33. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the period of this Agreement,
except that (a) if the Custodian fails to provide for the
custody of any of the Fund's Securities and moneys located or to
be located outside the United States in a manner satisfactory to
the Fund, the Fund shall be permitted to arrange for the custody
of such Securities and moneys located or to be located outside
the United States other than through the Custodian at rates to
be negotiated and borne by the Fund and (b) if the Custodian
fails to continue any existing sub-custodial or similar
arrangements on substantially the same terms as exist on the
date of this Agreement, the Fund shall be permitted to arrange
for such or similar services other than through the Custodian at
rates to be negotiated and borne by the Fund. The Custodian
shall not charge the Fund for any such terminated services after
the date of such termination.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver or cause
to be delivered to the Custodian all Securities and all moneys
owned by any Series, including cash received for the issuance of
such Series' shares, at any time during the period of this
Agreement and shall specify the Series to which the same are to
be specifically allocated. The Custodian will not be
responsible for such Securities and such moneys until actually
received by it. The Custodian will be entitled to reverse any
credits made on a Series' behalf where such credits have been
previously made and moneys are not finally collected. The Fund
shall deliver to the Custodian a certified resolution of the
Fund's Trustees approving, authorizing and instructing the
Custodian on a continuous and ongoing basis to deposit in the
Book-Entry System all Securities eligible for deposit therein
and to utilize the Book-Entry System to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of
Securities of a Series in the Depository the Fund shall deliver
to the Custodian a certified resolution of the Fund's Trustees
approving, authorizing and instructing the Custodian on a
continuous and on-going basis until instructed to the contrary
by a Certificate actually received by the Custodian to deposit
in the Depository all Securities eligible for deposit therein
and to utilize the Depository to the extent possible in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Securities and moneys of such
Series deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only
assets held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a fiduciary
or representative capacity. Prior to the Custodian's accepting,
utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options as
provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees approving,
authorizing and instructing the Custodian on a continuous and
on-going basis, until instructed to the contrary by a
Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as
provided in this Agreement.
2. The Custodian shall credit to a separate account
in the name of the Fund for each Series all moneys received by
it for the account of the Fund, with respect to such Series.
Money credited to the separate account for a Series shall be
disbursed by the Custodian only:
(a) In payment for Securities purchased, as provided
in Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes, as
provided in Article XII hereof;
(d) In payment for the Series' Shares redeemed by it,
as provided in Article XII hereof;
(e) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made, the
Series account from which payment is to be made and the purpose
for which payment is to be made; or
(f) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian, as provided in
Article XV hereof.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of each Series
during said day. Where Securities are transferred to the
account of a Series, the Custodian shall also by book-entry or
otherwise identify as belonging to such Series a quantity of
Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held for each Series under this
Agreement.
4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held for a
Series, which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities held
for a Series may be registered in the name of such Series, in
the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or
in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund
agrees to furnish to the Custodian appropriate instruments to
enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or the Depository, any
Securities which it may hold for the account of a Series and
which may from time to time be registered in the name of such
Series. The Custodian shall hold all such Securities which are
not held in the Book-Entry System or in the Depository in a
separate account in the name of such Series physically
segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this Agreement
and unless otherwise instructed to the contrary by a
Certificate, the Custodian by itself, or through the use of the
Book-Entry System or the Depository with respect to Securities
therein deposited, shall with respect to all Securities held for
each Series in accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last 90 days, the Custodian will
provide a conditional payment of income within 60 days from the
date the Custodian received such notice, unless the Custodian
reasonably concludes that such income was not due or payable to
the Fund, provided that the Custodian may reverse any such
conditional payment upon its reasonably concluding that all or
any portion of such income was not due or payable, and provided
further that the Custodian shall not be liable for failing to
collect on a timely basis the full amount of income due or
payable in respect of a "floating rate instrument" or "variable
rate instrument" (as such terms are defined under Rule 2a-7
under the Investment Company Act of 1940, as amended) if it has
acted in good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount
payable upon such Securities which are called, but only if
either (i) the Custodian receives a written notice of such call,
or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited,
for the account of each Series all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority
of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Series
specified in such Certificate in exchange for other Securities
or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any
conversion privilege;
(c) Deliver any Securities held for the Series
specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of
the Series specified in such Certificate and take such other
steps as shall be stated in said Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph
5(b) of this Article which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, Option or Futures Contract Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options or Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or futures commission
merchants with respect to such Futures Contracts, Options or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the
name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that payments to or
deliveries from the Margin Account shall be made in accordance
with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement
to the contrary, make payment for any Futures Contract, Option
or Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the
Custodian of such instrument or such certificate, and deliver
any Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject
to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract,
Futures Contract Option or Reverse Repurchase Agreement, the
Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase:
(a) the Series to which the Securities purchased are to be
specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the
person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the
name of the broker to which payment is to be made. The
Custodian shall, upon receipt of Securities purchased by or for
such Series, pay out of the moneys held for the account of such
Series the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the
same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the Series to
which such Securities sold were specifically allocated; (b) the
name of the issuer and the title of the Security; (c) the number
of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale; (e) the sale price per unit; (f) the
total amount payable to the Fund for the account of such Series
upon such sale; (g) the name of the broker through whom or the
person to whom the sale was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the
Securities upon receipt of the total amount payable to the Fund
for the account of such Series upon such sale, provided that the
same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject
to the foregoing, the Custodian may accept payment in such form
as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the
Series to which the Option purchased is to be specifically
allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index
Options purchased; (d) the expiration date; (e) the exercise
price; (f) the dates of purchase and settlement; (g) the total
amount payable by the Fund for the account of such Series in
connection with such purchase; (h) the name of the Clearing
Member through which such Option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian
shall pay, upon receipt of a Clearing Member's statement
confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed
and registered nominee of the Custodian) as custodian for the
Fund, out of moneys held for the account of such Series, the
total amount payable upon such purchase to the Clearing Member
through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such
Certificate.
Promptly after the sale of any Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) the Series to which the Option sold was
specifically allocated; (b) the type of Option (put or call);
(c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of
Stock Index Options sold; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable
to the Fund for the account of such Series upon such sale; and
(h) the name of the Clearing Member through which the sale was
made. The Custodian shall consent to the delivery of the Option
sold by the Clearing Member which previously supplied the
confirmation described in preceding paragraph 1 of this Article
with respect to such Option against payment to the Custodian of
the total amount payable to the Fund for the account of such
Series, provided that the same conforms to the total amount
payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Call Option: (a) the Series to
which the Call Option exercised was specifically allocated; (b)
the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the
date of exercise and settlement; (e) the exercise price per
share; (f) the total amount to be paid by the Fund for the
account of such Series upon such exercise; and (g) the name of
the Clearing Member through which such Call Option was
exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the
moneys held for the account of such Series the total amount
payable to the Clearing Member through whom the Call Option was
exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any
Put Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which the
Put Option exercised was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the Put
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund for the account of such Series
upon such exercise; and (g) the name of the Clearing Member
through which such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of
the Put Option, deliver or direct the Depository to deliver the
Securities, provided the same conforms to the amount payable to
the Fund for the account of such Series as set forth in such
Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which the Stock Index Option exercised was
specifically allocated; (b) the type of Stock Index Option (put
or call); (c) the number of Options being exercised; (d) the
stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be
received by the Fund for the account of such Series in
connection with such exercise; and (h) the Clearing Member from
which such payment is to be received.
6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series to which the Covered Call Option written is to be
specifically allocated; (b) the name of the issuer and the title
and number of shares for which the Covered Call Option was
written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the
Fund for the account of such Series; (f) the date such Covered
Call Option was written; and (g) the name of the Clearing Member
through which the premium is to be received. The Custodian
shall deliver or cause to be delivered, in exchange for receipt
of the premium specified in the Certificate with respect to such
Covered Call Option, such receipts as are required in accordance
with the customs prevailing among Clearing Members dealing in
Covered Call Options and shall impose, or direct the Depository
to impose, upon the underlying Securities specified in the
Certificate such restrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time
to refuse to issue any receipts for Securities in the possession
of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the
Fund and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the Series to which the
Covered Call Option exercised was specifically allocated; (b)
the name of the issuer and the title and number of shares
subject to the Covered Call Option; (c) the Clearing Member to
whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund for the account of such Series
upon such delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to paragraph 6 of this Article, the
Custodian shall deliver, or direct the Depository to deliver,
the underlying Securities as specified in the Certificate for
the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which the
Put Option written is to be specifically allocated; (b) the name
of the issuer and the title and number of shares for which the
Put Option is written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be
received by the Fund for the account of such Series; (f) the
date such Put Option is written; (g) the name of the Clearing
Member through which the premium is to be received and to whom a
Put Option guarantee letter is to be delivered; (h) the amount
of cash, and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; and (i) the amount
of cash and/or the amount and kind of Securities to be deposited
into the Collateral Account. The Custodian shall, after making
the deposits into the Collateral Account specified in the
Certificate, issue a Put Option guarantee letter substantially
in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall
be under no obligation to issue any Put Option guarantee letter
or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which the Put Option exercised
was specifically allocated; (b) the name of the issuer and title
and number of shares subject to the Put Option; (c) the Clearing
Member from which the underlying Securities are to be received;
(d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities to
be withdrawn from the Collateral Account; and (f) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account. Upon the return
and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such
Put Option, the Custodian shall pay out of the moneys held for
the account of such Series the total amount payable to the
Clearing Member specified in the Certificate as set forth in
such Certificate, and shall make the withdrawals specified in
such Certificate.
10. Whenever the Fund writes a Stock Index Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which the Stock Index Option written is to be
specifically allocated; (b) whether such Stock Index Option is a
put or a call; (c) the number of Options written; (d) the stock
index to which such Option relates; (e) the expiration date; (f)
the exercise price; (g) the Clearing Member through which such
Option was written; (h) the premium to be received by the Fund
for the account of such Series; (i) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in
the Segregated Security Account; (j) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in
the Collateral Account; and (k) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a
Margin Account, and the name in which such account is to be or
has been established. The Custodian shall, upon receipt of the
premium specified in the Certificate, make the deposits, if any,
into the Segregated Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which
the Custodian has specifically agreed to issue, which are in
accordance with the customs prevailing among Clearing Members in
Stock Index Options and make the deposits into the Collateral
Account specified in the Certificate, or (2) make the deposits
into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series to which the Stock Index Option exercised was
specifically allocated; (b) such information as may be necessary
to identify the Stock Index Option being exercised; (c) the
Clearing Member through which such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and
whether such amount is to be paid by or to the Fund for the
account of such Series; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article,
the Custodian shall pay to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical
to a previously written Option described in paragraphs 6, 8 or
10 of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its
position as a writer of an Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect
to the Option being purchased: (a) the Series to which the
Option purchased is to be specifically allocated; (b) that the
transaction is a Closing Purchase Transaction; (c) the name of
the issuer and the title and number of shares subject to the
Option, or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Options held; (d)
the exercise price; (e) the premium to be paid by the Fund for
the account of such Series; (f) the expiration date; (g) the
type of Option (put or call); (h) the date of such purchase; (i)
the name of the Clearing Member to which the premium is to be
paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account,
a specified Margin Account or the Segregated Security Account.
Upon the Custodian's payment of the premium and the return
and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the
previously imposed restrictions on the Securities underlying the
Call Option.
13. Upon the expiration or exercise of, or
consummation of a Closing Purchase Transaction with respect to,
any Option purchased or written by the Fund and described in
this Article, the Custodian shall delete such Option from the
statements delivered to the Fund for the account of a Series
pursuant to paragraph 3 of Article III herein, and upon the
return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral
Account, the Margin Account and/or the Segregated Security
Account as may be specified in a Certificate received in
connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contrast, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract (or with
respect to any number of identical Futures Contract(s)): (a)
the Series to which the Futures Contract entered into is to be
specifically allocated; (b) the category of Futures Contract
(the name of the underlying stock index or financial
instrument); (c) the number of identical Futures Contracts
entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were)
entered into and the maturity date; (f) whether the Fund is
buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in the Segregated
Security Account; (h) the name of the broker, dealer or futures
commission merchant through which the Futures Contract was
entered into; and (i) the amount of fee or commission, if any,
to be paid and the name of the broker, dealer or futures
commission merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the Margin Account
in accordance with the terms and conditions of the Margin
Account Agreement. The Custodian shall make payment of the fee
or commission, if any, specified in the Certificate and deposit
in the Segregated Security Account the amount of cash and/or the
amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar
payment required to be made by the Fund for the account of a
Series to a broker, dealer or futures commission merchant with
respect to an outstanding Futures Contract shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
(b) Any variation margin payment or similar
payment from a broker, dealer or futures commission merchant to
the Fund with respect to an outstanding Futures Contract shall
be received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series to which the
Futures Contract retained is to be specifically allocated; (b)
the Futures Contract; (c) with respect to a Stock Index Futures
Contract, the total cash settlement amount to be paid or
received, and with respect to a Financial Futures Contract, the
Securities and/or amount of cash to be delivered or received;
(d) the broker, dealer or futures commission merchant to or from
which payment or delivery is to be made or received; and (e) the
amount of cash and/or Securities to be withdrawn from the
Segregated Security Account. The Custodian shall make the
payment or delivery specified in the Certificate and delete such
Futures Contract from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the Series to which the offsetting Futures
Contract is to be specifically allocated; (b) the items of
information required in a Certificate described in paragraph 1
of this Article, and (c) the Futures Contract being offset. The
Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract
being offset from the statements delivered to the Fund for the
account of such Series pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Segregated Security
Account as may be specified in such Certificate. The
withdrawals, if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the Series to which the Futures Contract
Option purchased is to be specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of
Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract
Option purchased; (d) the expiration date; (e) the exercise
price; (f) the dates of purchase and settlement; (g) the amount
of premium to be paid by the Fund for the account of such Series
upon such purchase; (h) the name of the broker or futures
commission merchant through which such option was purchased; and
(i) the name of the broker or futures commission merchant to
whom payment is to be made. The Custodian shall pay the total
amount to be paid upon such purchase to the broker or futures
commission merchant through whom the purchase was made, provided
that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to
which the Futures Contract Option sold was specifically
allocated; (b) the type of Futures Contract Option (put or
call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale;
(e) the sale price; (f) the date of settlement; (g) the total
amount payable to the Fund for the account of such Series upon
such sale; and (h) the name of the broker or futures commission
merchant through which the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund for the account of such Series, provided the
game conforms to the total amount payable as set forth in such
Certificate.
3. Whenever a Futures Contract Option purchased by
the Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which the Futures Contract Option
exercised was specifically allocated; (b) the particular Futures
Contract Option (put or call) being exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures
commission merchant through which the Futures Contract Option is
exercised; (f) the net total amount, if any, payable by the
Fund; (g) the amount, if any, to be received by the Fund; and
(h) the amount of cash and/or the amount and kind of Securities
to be deposited in the Segregated Security Account. The
Custodian shall make the payments, if any, and the deposits, if
any, into the Segregated Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract
Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the Series to which the Futures Contract Option
written is to be specifically allocated; (b) the type of Futures
Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d) the
expiration date; (e) the exercise price; (f) the premium to be
received by the Fund for the account of such Series; (g) the
name of the broker or futures commission merchant through which
the premium is to be received; and (h) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in
the Segregated Security Account. The Custodian shall, upon
receipt of the premium specified in the Certificate, make the
deposits into the Segregated Security Account, if any, as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
Series to which the Futures Contract Option exercised was
specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying
the Futures Contract Option; (d) the name of the broker or
futures commission merchant through which such Futures Contract
Option was exercised; (e) the net total amount, if any, payable
to the Fund for the account of such Series upon such exercise;
(f) the net total amount, if any, payable by the Fund for the
account of such Series upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited in
the Segregated Security Account. The Custodian shall, upon its
receipt of the net total amount payable to the Fund for the
account of such Series, if any, specified in such Certificate
make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is exercised, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which the Futures Contract Option
exercised was specifically allocated; (b) the particular Futures
Contract Option exercised; (c) the type of Futures Contract
underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through which such Futures
Contract Option is exercised; (e) the net total amount, if any,
payable to the Fund for the account of such Series upon such
exercise; (f) the net total amount, if any, payable by the Fund
for the account of such Series upon such exercise; and (g) the
amount and kind of Securities and/or cash to be withdrawn from
or deposited in the Segregated Security Account, if any. The
Custodian shall, upon its receipt of the net total amount
payable to the Fund for the account of such Series, if any,
specified in the Certificate, make the payments, if any, and the
deposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as
a writer of such Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased: (a) the
Series to which the Futures Contract Option purchased is to be
specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the exercise price;
(e) the premium to be paid by the Fund for the account of such
series; (f) the expiration date; (g) the name of the broker or
futures commission merchant to which the premium is to be paid;
and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account. The Custodian shall effect the withdrawals from the
Segregated Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or
consummation of a closing transaction with respect to, any
Futures Contract Option written or purchased by the Fund and
described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein, and (b) make
such withdrawals from, and/or, in the case of an exercise, such
deposits into, the Segregated Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin
Account Agreement.
9. Futures Contracts acquired by the Fund through
the exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the
Series to which the short sale is to be specifically allocated;
(b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued
interest or dividends, if any; (d) the dates of the sale and
settlement; (e) the sale price per unit; (f) the total amount
credited to the Fund for the account of such Series upon such
sales, if any; (g) the amount of cash and/or the amount and kind
of Securities, if any, which are to be deposited in a Margin
Account and the name in which such Margin Account has been or is
to be established; (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in a Segregated
Security Account; and (i) the name of the broker through which
such short sale was made. The Custodian shall upon its receipt
of a statement from such broker confirming such sale and that
the total amount credited to the Fund upon such sale, if any, as
specified in the Certificate is held by such broker for the
account of the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or make the deposits into
the Margin Account and the Segregated Security Account specified
in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing-out:
(a) the Series to which the short sale being closed-out was
specifically allocated; (b) the name of the issuer and the title
of the Security; (c) the number of shares or the principal
amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the
dates of the closing-out and settlement; (e) the purchase price
per unit; (f) the net total amount payable to the Fund for the
account of such Series upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the
amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account; and (j) the name
of the broker through which the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total
amount payable to the Fund for the account of such Series upon
such closing-out and the return and/or cancellation of the
receipts, if any, issued by the custodian with respect to the
short sale being closed-out, pay out of the moneys held for the
account of the Series to the broker the net total amount payable
to the broker, and make the withdrawals from the Margin Account
and the Segregated Security Account, as the same are specified
in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf of a Series,
enters into a Reverse Repurchase Agreement with respect to
Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate or in the event
such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions
specifying: (a) the Series to which the Reverse Repurchase
Agreement is to be specifically allocated; (b) the total amount
payable to the Fund for the account of such Series in connection
with such Reverse Repurchase Agreement; (c) the broker or dealer
through or with which the Reverse Repurchase Agreement is
entered; (d) the amount and kind of Securities to be delivered
by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in a
Segregated Security Account in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the
total amount payable to the Fund specified in the Certificate,
Oral Instructions or Written Instructions make the delivery to
the broker or dealer, and the deposits, if any, to the
Segregated Security Account, specified in such Certificate, Oral
Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the Fund
shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the
Custodian specifying: (a) the Series to which the Reverse
Repurchase Agreement terminated was specifically allocated;
(b) the Reverse Repurchase Agreement being terminated; (c) the
total amount payable by the Fund for the account of such Series
in connection with such termination; (d) the amount and kind of
Securities to be received by the Fund for the account of such
Series in connection with such termination; (e) the date of
termination; (f) the name of the broker or dealer with or
through which the Reverse Repurchase Agreement is to be
terminated; and (g) the amount of cash and/or the amount and
kind of Securities to be withdrawn from the Segregated Security
Account. The Custodian shall, upon receipt of the amount and
kind of Securities to be received by the Fund specified in the
Certificate, Oral Instructions or Written Instructions, make the
payment to the broker or dealer, and the withdrawals, if any,
from the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account
as specified in a Certificate received by the Custodian. Such
Certificate shall specify the amount of cash and/or the amount
and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund
fails to specify in a Certificate the designated Series, the
name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by
the Custodian into, or withdrawn from, a Segregated Securities
Account, the Custodian shall be under no obligation to make any
such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its
lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee
letter or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed
the Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
Statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions
specifying the then market value of the securities described in
such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option, guarantee letter or
similar document, the Fund shall promptly specify in a
Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such
deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to the
Custodian a copy of the resolution of the Trustees, certified by
the Secretary or any Assistant Secretary, either (i) setting
forth the date of the declaration of a dividend or distribution,
the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date
and the total amount payable to the Dividend Agent of the Fund
on the payment date, or (ii) authorizing the declaration of
dividends and distributions on a daily basis and authorizing the
Custodian to rely on Oral Instructions, Written Instructions or
a Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per share to the shareholders
of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions, Written Instructions or
Certificate, as the case may be, the Custodian shall pay out of
the moneys held for the account of the Series the total amount
payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF BENEFICIAL INTEREST
1. Whenever a Series shall sell any of its Shares,
the Fund shall deliver to the Custodian a Certificate duly
specifying:
(a) The number of Shares of such Series sold, trade
date, and price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the account of
such Series.
3. Upon issuance of any of such Series' Shares in
accordance with the foregoing provisions of this Article, the
Custodian shall pay, out of the money held for the account of
such Series, all original issue or other taxes required to be
paid by the Fund for the account of such series in connection
with such issuance upon the receipt of a Certificate specifying
the amount to be paid.
4. Except as provided hereinafter, whenever a Series
shall hereafter redeem any of its Shares, it shall furnish to
the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of Shares of a Series received by the
Transfer Agent for redemption and that such Shares are valid and
in good form for redemption, the Custodian shall make payment to
the Transfer Agent out of the moneys held for the account of
such Series of the total amount specified in the Certificate
issued pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding
the redemption of any Series' Shares, whenever its Shares are
redeemed pursuant to any check redemption privilege which may
from time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of
such check redemption privilege out of the money held in the
account of such Series for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of a Series which results in an
overdraft because the moneys held by the Custodian for the
account of such Series shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a
Certificate or Oral Instructions issued pursuant to Article IV,
or which results in an overdraft in the account for such Series
for some other reason, or if a Series is for any other reason
indebted to the Custodian (except a borrowing for investment or
for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the
provisions of paragraph 2 of this Article XIII), such overdraft
or indebtedness shall be deemed to be a loan made by the
Custodian to such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to
the Federal Funds Rate plus 1/2%, such rate to be adjusted on
the effective date of any change in such Federal Funds Rate but
in no event to be less than 6% per annum, except that any
overdraft resulting from an error by the Custodian shall bear no
interest. Any such overdraft or indebtedness shall be reduced
by an amount equal to the total of all amounts due such Series
which have not been collected by the Custodian on behalf of such
Series when due because of the failure of the Custodian to make
timely demand or presentment for payment. In addition, the Fund
hereby agrees that the Custodian shall have a continuing lien
and security interest in and to any property at any time held by
it for the benefit of such Series or in which such Series may
have an interest which is then in the Custodian's possession or
control or in possession or control of any third party acting in
the Custodian's behalf. The Fund authorizes the Custodian, in
its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any
balance of account standing to such Series' credit on the
Custodian's books. For purposes of this Section 1 of Article
XIII, "overdraft" shall mean a negative Available Balance.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant
to a separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities in a Series' portfolio as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such borrowing:
(a) the Series to which the borrowing relates; (b) the name of
the bank; (c) the amount and terms of the borrowing, which may
be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement; (d) the time and date, if known, on which the loan is
to be entered into; (e) the date on which the loan becomes due
and payable; (f) the total amount payable to the Fund for the
account of such Series on the borrowing date; (g) the market
value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of
shares or the principal amount of any particular Securities; and
(h) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note
or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and
the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the
title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
Agreement and Declaration of Trust and as disclosed in its most
recent and currently effective prospectus to lend the portfolio
Securities of a Series, within 24 hours after each loan of
portfolio Securities the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan: (a) the Series to which the Securities to be
loaned are specifically allocated; (b) the name of the issuer
and the title of the Securities; (c) the number of shares or the
principal amount loaned; (d) the date of loan and delivery;
(e) the total amount to be delivered to the Custodian against
the loan of the Securities, including the amount of cash
collateral and the premium, if any, separately identified; and
(f) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total
amount designated as to be delivered against the loan of
Securities. The Custodian may accept payment in connection with
a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's
check payable to the order of the Fund or the Custodian drawn on
New York Clearing House funds and may deliver Securities in
accordance with the customs prevailing among dealers in
securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the Securities to be returned are to be
specifically allocated; (b) the name of the issuer and the title
of the Securities to be returned; (c) the number of shares or
the principal amount to be returned; (d) the date of
termination; (e) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities
minus any offsetting credits as described in said Certificate);
and (f) the name of the broker, dealer or financial institution
from which the Securities will be returned. The Custodian shall
receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and
upon receipt thereof shall pay, out of the moneys held for the
account of the Series specified in the Certificate, the total
amount payable upon such return of Securities as set forth in
the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. The
Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting
from the use of the Book-Entry System or any Depository arising
by reason of any negligence, misfeasance or willful misconduct
on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;
(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received
therefor;
(c) The legality of the redemption of any of the
Fund's Shares, or the propriety of the amount to be paid
therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the
Custodian be under any duty or obligation to see to it that any
cash collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan
of portfolio Securities of the Fund is adequate collateral for
the Fund against any loss it might sustain as a result of such
loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check
or notify the Fund that the amount of such cash collateral held
by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the
Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent
pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the
account of the applicable Series of the Fund during the period
of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in
the event that such dividends or interest are not paid and
received when due; or
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see
that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund of
the Custodian's receipt or nonreceipt of any such payment;
provided however that the Custodian, upon the Fund's written
request, shall, as Custodian, demand from any broker, dealer,
futures commission merchant or Clearing Member identified by the
Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant
to the terms of a Margin Account Agreement or otherwise from
such broker, dealer, futures commission merchant or Clearing
Member.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls,
conversions, exchange, offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in
the Depository which may mature or be redeemed, retired, called
or otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities
held in the Depository, the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian
shall not be under any obligation to appear in, prosecute or
defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion may
involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be
furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction
of reimbursement of its costs and expenses in connection with
any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions
approved in a Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the
Fund's Board of Trustees adopted in accordance with Rule 17f-5
under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of its
Agreement and Declaration of Trust.
9. (a) The Custodian shall be entitled to receive
and the Fund agrees to pay to the Custodian all reasonable
out-of-pocket expenses and such compensation and fees as are
specified on Schedule A hereto. The Custodian shall not deem
amounts payable in respect of foreign custodial services to be
out-of-pocket expenses, it being the parties' intention that all
fees for such services shall be as set forth on Schedule B
hereto and shall be provided for the term of this Agreement
without any automatic or unilateral increase. The Custodian
shall have the right to unilaterally increase the figures on
Schedule A on or after March 1, 1991 and on or after each
succeeding March 1 thereafter by an amount equal to 50% of the
increase in the Consumer Price Index for the calendar year
ending on the December 31 immediately preceding the calendar
year in which such March 1 occurs, provided, however, that
during each such annual period commencing on a March 1, the
aggregate increase during such period shall not be in excess of
10%. Any increase by the Custodian shall be specified in a
written notice delivered to the Fund at least thirty days prior
to the effective date of the increase. The Custodian may charge
such compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to such agreement against
any money held by it for the account of the Fund. The Custodian
shall also be entitled to charge against any money held by it
for the account of the Fund the amount of any loss, damage,
liability or expense, including counsel fees, for which it shall
be entitled to reimbursement under the provisions of this
Agreement. The expenses which the Custodian may charge against
the account of the Fund include, but are not limited to, the
expenses of Sub-Custodians and foreign branches of the Custodian
incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund.
(b) The Fund shall receive a credit for each calendar
month against such compensation and fees of the Custodian as may
be payable by the Fund with respect to such calendar month in an
amount equal to the aggregate of its Earnings Credit for such
calendar month. In no event may any Earnings Credits be carried
forward to any fiscal year other than the fiscal year in which
it was earned, or, unless permitted by applicable law,
transferred to, or utilized by, any other person or entity,
provided that any such transferred Earnings Credit can be used
only to offset compensation and fees of the Custodian for
services rendered to such transferee and cannot be used to pay
the Custodian's out-of-pocket expenses. For purposes of this
subsection (b), the Fund is permitted to transfer Earnings
Credits only to The Dreyfus Corporation, its affiliates and/or
any investment company now or in the future sponsored by The
Dreyfus Corporation or any of its affiliates or for which The
Dreyfus Corporation or any of its affiliates acts as the sole
investment adviser or as the principal distributor, and Daiwa
Money Fund Inc. For purposes of this sub-section (b), a fiscal
year shall mean the twelve-month period commencing on the
effective date of this Agreement and on each anniversary
thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or XI hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are
given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided
such instructions reasonably appear to have been received from
an Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund
which are in the possession of the Custodian shall be the
property of the Fund. Such books and records shall be prepared
and maintained as required by the Investment Company Act of
1940, as amended, and other applicable securities laws and rules
and regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund or the
Fund's authorized representative at the Fund's expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository,
or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.
14. The Fund agrees to indemnify the Custodian
against and save the Custodian harmless from all liability,
claims, losses and demands whatsoever, including attorney's
fees, howsoever arising or incurred because of or in connection
with the Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article XII as part of any check redemption
privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own
negligence or willful misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Except as provided in subparagraphs (b), (c)
and (d) herein, neither party may terminate this Agreement until
the earlier of the following: (i) August 31, 1993, and (ii) the
third anniversary of the earliest date on which none of the
companies listed on Schedule C hereto is a transfer agency
customer of the Custodian. Any such termination may be effected
only by the terminating party giving to the other party a notice
in writing specifying the date of such termination, which shall
be not less than two hundred seventy (270) days after the date
of giving of such notice.
(b) The Fund may at any time terminate this Agreement
if the Custodian has materially breached its obligations under
this Agreement and such breach has remained uncured for a period
of thirty days after the Custodian's receipt from the Fund of
written notice specifying such breach.
(c) Either party, immediately upon written notice to
the other party, may terminate this Agreement upon the Merger or
Bankruptcy of the other party.
(d) The Fund may at any time terminate this Agreement
if the Custodian has materially breached its obligations under
the "Amendment to Transfer Agency Agreements" dated August 18,
1989 and has not cured such breach as promptly as practicable
and in any event within seven days of its receipt of written
notice of such breach, provided that the Custodian shall not be
permitted to cure any such material breach arising from the
willful misconduct of the Custodian.
In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution of the
Fund's Trustees, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating
a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event notice of
termination is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of
a resolution of its Trustees, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth
in such notice, this Agreement shall terminate and the Custodian
shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and
held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall
then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall, upon the date specified in the notice
of termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot
be delivered to the Fund, to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
setting forth the names of the present Authorized Persons. The
Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed.
Until such new Certificate shall be received, the Custodian
shall be fully protected in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the present
Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund, setting forth
the names of the present Officers of the Fund. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in
the event any such present Officer ceases to be an Officer of
the Fund, or in the event that other or additional Officers are
elected or appointed. Until such new Certificate shall be
received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon the signatures of the
Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other
place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund, shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at 666 Old Country Road,
Garden City, New York 11530, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement and approved
by a resolution of the Fund's Trustees.
6. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its
Trustees.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. This Agreement has been executed on behalf of the
Fund by the undersigned Officer of the Fund in his capacity as
an Officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, Officer or shareholder of
the Fund individually.
10. This Agreement shall not be effective on the date
hereof and instead shall become effective on January 18, 1990.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective Officers,
thereunto duly authorized, as of the day and year first above
written.
PREMIER STATE TAX EXEMPT
BOND FUND
By: _____________________________
Attest:
_______________________
THE BANK OF NEW YORK
By: _____________________________
Attest:
_______________________
Appendix
A
PREMIER STATE TAX EXEMPT BOND FUND
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
John Bale, Michael Condon, Jeffrey Nachman Lawrence
Greene
Frank Greene, Steven Powanda John Pyburn Julian
Smerling
and Richard Cassaro Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as
Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert
Dubuss, Alan Eisner, Lawrence Greene, Julian Smerling,
Michael Condon, Paul Disdier, Gregory Gruber, Steven
Powanda, Richard Cassaro, Alan Brown, Linda
Raffinello,
Ann Weintraub, Michael Charash, Theresa Viviano and Al
Fulgieri. PREMIER STATE TAX EXEMPT BOND FUND
CUSTODY AGREEMENT
APPENDIX B
The undersigned Officers of the Fund do hereby certify
that the following individuals, whose specimen signatures are on
file with The Bank of New York, have been duly elected or
appointed by the Fund's Board to the position set forth opposite
their names and have qualified therefor:
Name Position
Richard J. Moynihan President and Investment Officer
A. Paul Disdier Vice President and Investment Officer
Karen M. Hand Vice President and Investment Officer
Stephen C. Kris Vice President and Investment Officer
L. Lawrence Troutman Vice President and Investment Officer
Samuel J. Weinstock Vice President and Investment Officer
Monica S. Wieboldt Vice President and Investment Officer
Daniel C. Maclean Vice President
John J. Pyburn Treasurer
Mark N. Jacobs Secretary
Steven F. Newman Assistant Secretary
Christine Pavalos Assistant Secretary
Jeffrey N. Nachman Controller
______________________ ___________________________
Title: Title:
CUSTODY AGREEMENT
APPENDIX C
The following are designated publications for purposes
of paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
PREMIER STATE MUNICIPAL BOND FUND
CUSTODY AGREEMENT
APPENDIX D
I, Richard J. Moynihan, President, and I, Mark N.
Jacobs, Secretary of PREMIER STATE MUNICIPAL BOND FUND, a
business trust organized and existing under the laws of the
Commonwealth of Massachusetts (the "Fund"), do hereby certify
that the only series of shares of the Fund issued and/or
authorized by the Fund as of the date hereof are shares of
beneficial interest, $.001 par value, of the following:
Connecticut Series
Florida Series
Maryland Series
Massachusetts Series
Michigan Series
Minnesota Series
North Carolina Series
Ohio Series
Pennsylvania Series
Texas Series
Virginia Series
_______________________________ ____________________________
Richard J. Moynihan, Mark N. Jacobs, Secretary
President
Dated: As of May 29, 1991 Schedule A
The fees payable to the Custodian with respect to
securities held in domestic custody are annexed hereto.
PREMIER STATE TAX EXEMPT BOND FUND
CONNECTICUT SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
FLORIDA SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement ad safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
MARYLAND SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
MASSACHUSETTS SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
MICHIGAN SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
MINNESOTA SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
OHIO SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
PENNSYLVANIA SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund.
PREMIER STATE TAX EXEMPT BOND FUND
TEXAS SERIES
Domestic Custody Fees
Basic Fee: 1/100th of 1% of the first $500,000,000, and
1/200th of 1% of the excess over $500,000,000 per
annum of the total market value of domestic
securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of securities
(excluding Euro Dollar CDs).
$20.00 for physical, same day Fed Funds, physical puts
and/or sub-custodian book entry.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
All out-of-pocket expenses incurred will be billed
directly to the Fund. Schedule B
The fees payable to the Custodian with respect to
securities held in foreign custody are as set forth in a letter
dated January 4, 1990 from Masao Yamaguchi of The Bank of New
York to Mr. Jeffrey Nachman, Vice President of The Dreyfus
Corporation, a copy of which is annexed hereto.
The above foreign custody fees apply to the following
Global Custody Network countries:
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malaysia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
[THE BANK OF NEW YORK LETTERHEAD]
January 4, 1990
Mr. Jeffrey Nachman
Vice President
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Re: Global Custodian Fees
Dear Jeff:
This letter is to confirm our discussion regarding our
Global Custody fee schedule. The fees will be calculated on a
relationship basis with no annual minimum.
- Safekeeping/Income Collection/Capital Changes/Tax
Reclamation/Daily Reporting/Monthly Summary
16 basis points per annum on the market value of securities
held for all of your funds in our sub-custodian network, up
to $250 MM.
15 basis points on the next $250 MM.
14 basis points on the next $250 MM.
12 basis points on the excess.
- Securities Settlements
$35 per transaction - includes our processing and the
sub-custodians.
- Out-of-Pocket Expense
Telex, swift, telephone, securities registration, etc., are
in addition to the above.
- We can provide centralized foreign exchange services.
Mr. Jeffrey Nachman January 4, 1990
Vice President Page 2
The above fee schedule is applicable to the 22 countries
listed on Attachment I. Please note that expansion into other
more emerging markets/countries is possible, but would be
covered under a separate agreement.
If you are in agreement with this fee schedule, please sign
and return the enclosed copy of this letter.
Sincerely,
/s/Masao Yamaguchi
Masao Yamaguchi
Approved by: ____________________ Date: ____________
Jeffrey Nachman,
Vice President
MY:to
cc: The Bank of New York
F. Ricciardi
Stroock & Stroock
D. Stephens
Dreyfus
S. Newman
THE BANK OF NEW YORK
GLOBAL NETWORK PROGRAM
Supported by Citibank, N.A.
Attachment
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malaysia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
Schedule C
Daiwa Money Fund Inc.
Dreyfus A Bonds Plus, Inc.
Dreyfus California Tax Exempt Bond Fund, Inc.
Dreyfus California Tax Exempt Money Market Fund
Dreyfus Cash Management
Dreyfus Cash Management Plus, Inc.
The Dreyfus Convertible Securities Fund, Inc.
The Dreyfus Fund Incorporated
Dreyfus Dollar International Fund, Inc.
Dreyfus GNMA Fund, Inc.
Dreyfus Government Cash Management
Dreyfus Government Cash Management Plus, Inc.
Dreyfus Growth Opportunity Fund, Inc.
Dreyfus Index Fund
Dreyfus Institutional Money Market Fund
Dreyfus Insured Tax Exempt Bond Fund, Inc.
The Dreyfus Intercontinental Investment Fund N.V.
Dreyfus Intermediate Tax Exempt Bond Fund, Inc.
Dreyfus Life and Annuity Index Fund, Inc.
Dreyfus Liquid Assets, Inc.
Dreyfus Massachusetts Tax Exempt Bond Fund
Dreyfus Money Market Instruments, Inc.
Dreyfus New Jersey Tax Exempt Bond Fund, Inc.
Dreyfus New Jersey Tax Exempt Money Market Fund, Inc.
Dreyfus New Leaders Fund, Inc.
Dreyfus New York Insured Tax Exempt Bond Fund
Dreyfus New York Tax Exempt Bond Fund, Inc.
Dreyfus New York Tax Exempt Intermediate Bond Fund
Dreyfus New York Tax Exempt Money Market Fund
Dreyfus Short-Intermediate Government Fund
Dreyfus Short-Intermediate Tax Exempt Bond Fund
Dreyfus Tax Exempt Bond Fund, Inc.
Dreyfus Tax Exempt Cash Management
Dreyfus Tax Exempt Money Market Fund, Inc.
The Dreyfus Third Century Fund, Inc.
Dreyfus Treasury Cash Management
Dreyfus Treasury Prime Cash Management
Dreyfus Worldwide Dollar Money Market Fund, Inc.
First Prairie Diversified Asset Fund
First Prairie Money Market Fund
First Prairie Tax Exempt Bond Fund, Inc.
First Prairie Tax Exempt Money Market Fund
FN Network Tax Free Money Market Fund, Inc.
General Aggressive Growth Fund, Inc.
General California Municipal Bond Fund, Inc.
General California Tax Exempt Money Market Fund
General Government Securities Money Market Fund, Inc.
General Money Market Fund, Inc.
General New York Municipal Bond Fund, Inc. (formerly, General
New York Tax Exempt Intermediate Bond Fund, Inc.)
General New York Tax Exempt Money Market Fund
General Tax Exempt Bond Fund, Inc.
General Tax Exempt Money Market Fund, Inc.
The Westwood Fund
PREMIER STATE MUNICIPAL BOND FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan under which the Fund would pay the Fund's
distributor (the "Distributor") for providing services to (a)
shareholders of each series of the Fund or class of Fund shares
set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Distributor would
be permitted to pay certain financial institutions, securities
dealers and other industry professionals (collectively, "Service
Agents") in respect of these services. The Plan is not to be
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "Act"), and the fee under the Plan is
intended to be a "service fee" as defined in Article III,
Section 26, of the NASD Rules of Fair Practice.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be implemented
and has considered such pertinent factors as it deemed necessary to
form the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a plan,
the Board has concluded, in the exercise of its reasonable business
judgment and in light of applicable fiduciary duties, that there is
a reasonable likelihood that the plan set forth below will benefit
the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at
the annual rate set forth on Exhibit A in respect of the provision
of personal services to shareholders and/or the maintenance of
shareholder accounts. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such
payments will be made. Payments to a Service Agent are subject
to compliance by the Service Agent with the terms of any related
Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, as applicable, shall be computed in the
manner specified in the Fund's charter documents for the
computation of net asset value.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a majority
of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered
into in connection with this Plan, pursuant to a vote cast in
person at a meeting called for the purpose of voting on the
approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in paragraph
4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and property
of the Fund or the affected series or class, as the case may be,
and shall not be binding upon any Board member, officer or
shareholder of the Fund individually
Dated: October 19, 1992
Amended: January 26, 1994
As Revised: April 12, 1995 EXHIBIT A
Fee as a percentage of
Name of Series and Classes average daily net
assets
Arizona Series
Class A .25
Class B .25
Class C .25
Colorado Series
Class A .25
Class B .25
Class C .25
Connecticut Series
Class A .25
Class B .25
Class C .25
Florida Series
Class A .25
Class B .25
Class C .25
Georgia Series
Class A .25
Class B .25
Class C .25
Maryland Series
Class A .25
Class B .25
Class C .25
Massachusetts Series
Class A .25
Class B .25
Class C .25
Michigan Series
Class A .25
Class B .25
Class C .25
Minnesota Series
Class A .25
Class B .25
Class C .25
North Carolina Series
Class A .25
Class B .25
Class C .25
Ohio Series
Class A .25
Class B .25
Class C .25
Oregon Series
Class A .25
Class B .25
Class C .25
Pennsylvania Series
Class A .25
Class B .25
Class C .25
Texas Series
Class A .25
Class B .25
Class C .25
Virginia Series
Class A .25
Class B .25
Class C .25
[STROOCK & STROOCK & LAVAN LETTERHEAD]
July 10, 1987
Premier State Tax Exempt Bond Fund
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Premier State Tax Exempt Bond Fund
(the "Fund") in connection with the preparation of a
Registration Statement on Form N-1A, Registration No. 33-10238
(the "Registration Statement"), covering shares of beneficial
interest (the "Shares") of the Fund.
We have examined copies of the Amended and Restated Declaration
of Trust, as revised, and By-Laws of the Fund, the Registration
Statement and such other documents, records, papers, statutes
and authorities as we deemed necessary to form a basis for the
opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to
us. As to various questions of fact material to such opinion,
we have relied upon statements and certificates of officers and
representatives of the Fund and others.
Attorneys involved in the preparation of this opinion are
admitted only to the bar of the State of New York. As to
various questions arising under the laws of the Commonwealth of
Massachusetts, we have relied on the opinion of Messrs. Ropes &
Gray, a copy of which is attached hereto. Qualifications set
forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the shares
of the Fund to be issued in accordance with the terms of the
offering as set forth in the Prospectus included as part of the
Registration Statement, when so issued and paid for, will
constitute validly authorized and issued Shares, fully paid and
non-assessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by
or on behalf of the Fund or any Distributor or dealer in
connection with the registration and qualification of the Fund
or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
[ROPES & GRAY LETTERHEAD]
July 10, 1987
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with the
proposed offer and sale from time to time by Premier State Tax
Exempt Bond Fund, a Massachusetts business trust (the "Trust"),
of an indefinite number of shares of beneficial interest (the
"Shares") of the Trust pursuant to the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933.
We are familiar with the action taken by the Trustees of
the Trust to authorize the issuance of the Shares. We have
examined the Trust's records of Trustee action, its By-Laws and
its Agreement and Declaration of Trust, as amended to date, on
file at the Office of the Secretary of State of The Commonwealth
of Massachusetts. We have examined copies of such Registration
Statement in the form filed with the Securities and Exchange
Commission, and such other documents as we deem necessary for
the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust will
receive the net asset value thereof. We also assume that, in
connection with any offer and sale of the Shares, the Trust will
take proper steps to effect compliance with applicable federal
and state laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that the
Trust is authorized to issue an unlimited number of Shares, and
that, when the Shares are issued and sold and the authorized
consideration therefor is received by the Trust, they will be
validly issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Trust. However,
the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of the Trust property for all
loss and expense of any shareholder held personally liable for
the obligations of the Trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be
unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to
the aforesaid Registration Statement.
Very truly yours,
Ropes & Gray
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our reports
dated June 6, 1995, in this Registration Statement (Form N-1A 33-10238)
of Premier State Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
August 11, 1995
PREMIER STATE MUNICIPAL BOND FUND
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Distribution
Plan (the "Plan") in accordance with Rule 12b-1, promulgated
under the Investment Company Act of 1940, as amended (the
"Act"). The Plan would pertain to each class set forth on
Exhibit A hereto, as such Exhibit may be revised from time to
time (each, a "Class"). Under the Plan, the Fund would pay the
Fund's distributor (the "Distributor") for distributing shares
of each Class. If this proposal is to be implemented, the Act
and said Rule 12b-1 require that a written plan describing all
material aspects of the proposed financing be adopted by the
Fund.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be implemented
and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use assets attributable to
each Class for such purposes.
In voting to approve the implementation of such a plan,
the Board members have concluded, in the exercise of their
reasonable business judgment and in light of their respective
fiduciary duties, that there is a reasonable likelihood that the
plan set forth below will benefit the Fund and shareholders of
each Class.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor for
distribution a fee in respect of each Class at the annual rate
set forth on Exhibit A.
2. For the purposes of determining the fees payable
under this Plan, the value of the Fund's net assets attributable
to each Class shall be computed in the manner specified in the
Fund's charter documents as then in effect for the computation
of the value of the Fund's net assets attributable to such
Class.
3. The Fund's Board shall be provided, at least
quarterly, with a written report of all amounts expended
pursuant to this Plan. The report shall state the purpose for
which the amounts were expended.
4. As to each Class, this Plan will become effective
upon approval by (a) holders of a majority of the outstanding
shares of such Class, and (b) a majority of the Board members,
including a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4(b)
hereof.
6. As to each Class, this Plan may be amended at any
time by the Fund's Board, provided that (a) any amendment to
increase materially the costs which such Class may bear pursuant
to this Plan shall be effective only upon approval by a vote of
the holders of a majority of the outstanding shares of such
Class, and (b) any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4(b) hereof.
7. As to each Class, this Plan is terminable without
penalty at any time by (a) vote of a majority of the Board
members who are not "interested persons" (as defined in the Act)
of the Fund and have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in
connection with this Plan, or (b) vote of the holders of a
majority of the outstanding shares of such Class.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Board
member, officer or shareholder of the Fund individually.
Dated: May 26, 1994
Revised: April 12, 1995
EXHIBIT A
Fee as a Percentage of
Name of Class Average Daily Net Assets
Arizona Series
Class B .50 of 1%
Class C .75 of 1%
Colorado Series
Class B .50 of 1%
Class C .75 of 1%
Connecticut Series
Class B .50 of 1%
Class C .75 of 1%
Florida Series
Class B .50 of 1%
Class C .75 of 1%
Georgia Series
Class B .50 of 1%
Class C .75 of 1%
Maryland Series
Class B .50 of 1%
Class C .75 of 1%
Massachusetts Series
Class B .50 of 1%
Class C .75 of 1%
Michigan Series
Class B .50 of 1%
Class C .75 of 1%
Minnesota Series
Class B .50 of 1%
Class C .75 of 1%
North Carolina Series
Class B .50 of 1%
Class C .75 of 1%
Ohio Series
Class B .50 of 1%
Class C .75 of 1%
Oregon Series
Class B .50 of 1%
Class C .75 of 1%
Pennsylvania Series
Class B .50 of 1%
Class C .75 of 1%
Texas Series
Class B .50 of 1%
Class C .75 of 1%
Virginia Series
Class B .50 of 1%
Class C .75 of 1%
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<NAME> PREMIER STATE MUNICIPAL BOND FUND
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<EXPENSES-NET> 38
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<NET-CHANGE-FROM-OPS> 1394
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<NAME> COLORADO SERIES-CLASS A
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<PAYABLE-FOR-SECURITIES> 200
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<OTHER-ITEMS-LIABILITIES> 39
<TOTAL-LIABILITIES> 239
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<PAID-IN-CAPITAL-COMMON> 4193
<SHARES-COMMON-STOCK> 81
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 1004
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 182
<OTHER-INCOME> 0
<EXPENSES-NET> 11
<NET-INVESTMENT-INCOME> 171
<REALIZED-GAINS-CURRENT> (30)
<APPREC-INCREASE-CURRENT> 39
<NET-CHANGE-FROM-OPS> 180
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 46
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 197
<NUMBER-OF-SHARES-REDEEMED> (118)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 4203
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 16
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 70
<AVERAGE-NET-ASSETS> 755
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> .76
<PER-SHARE-GAIN-APPREC> (.07)
<PER-SHARE-DIVIDEND> (.76)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.43
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<NUMBER> 003
<NAME> CONNECTICUT SERIES-CLASS A
<MULTIPLIER> 1000
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<INVESTMENTS-AT-COST> 351814
<INVESTMENTS-AT-VALUE> 363275
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 371829
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 440
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 362106
<SHARES-COMMON-STOCK> 28568
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<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (2178)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11461
<NET-ASSETS> 335964
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 25195
<OTHER-INCOME> 0
<EXPENSES-NET> 3539
<NET-INVESTMENT-INCOME> 21656
<REALIZED-GAINS-CURRENT> (1974)
<APPREC-INCREASE-CURRENT> (288)
<NET-CHANGE-FROM-OPS> 19394
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 19882
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1373
<NUMBER-OF-SHARES-REDEEMED> (4637)
<SHARES-REINVESTED> 983
<NET-CHANGE-IN-ASSETS> (25039)
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<ACCUMULATED-GAINS-PRIOR> (205)
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<GROSS-EXPENSE> 3574
<AVERAGE-NET-ASSETS> 344667
<PER-SHARE-NAV-BEGIN> 11.81
<PER-SHARE-NII> .67
<PER-SHARE-GAIN-APPREC> (.05)
<PER-SHARE-DIVIDEND> (.67)
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<PER-SHARE-NAV-END> 11.76
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<AVG-DEBT-OUTSTANDING> 0
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<INTEREST-INCOME> 19095
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<EXPENSES-NET> 2726
<NET-INVESTMENT-INCOME> 16369
<REALIZED-GAINS-CURRENT> 4411
<APPREC-INCREASE-CURRENT> (2782)
<NET-CHANGE-FROM-OPS> 17998
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15149
<DISTRIBUTIONS-OF-GAINS> 716
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 878
<NUMBER-OF-SHARES-REDEEMED> 3989
<SHARES-REINVESTED> 419
<NET-CHANGE-IN-ASSETS> 34579
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (764)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1600
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2753
<AVERAGE-NET-ASSETS> 267058
<PER-SHARE-NAV-BEGIN> 14.43
<PER-SHARE-NII> .81
<PER-SHARE-GAIN-APPREC> .12
<PER-SHARE-DIVIDEND> .81
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<PER-SHARE-NAV-END> 14.51
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
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<SERIES>
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 328814
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<PAYABLE-FOR-SECURITIES> 5448
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 5967
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<PAID-IN-CAPITAL-COMMON> 330701
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<SHARES-COMMON-PRIOR> 26925
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<ACCUMULATED-NET-GAINS> 638
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5585
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22777
<OTHER-INCOME> 0
<EXPENSES-NET> 3290
<NET-INVESTMENT-INCOME> 19487
<REALIZED-GAINS-CURRENT> 875
<APPREC-INCREASE-CURRENT> 276
<NET-CHANGE-FROM-OPS> 20638
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17820
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1283
<NUMBER-OF-SHARES-REDEEMED> (5049)
<SHARES-REINVESTED> 913
<NET-CHANGE-IN-ASSETS> (29121)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (236)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1901
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3323
<AVERAGE-NET-ASSETS> 313200
<PER-SHARE-NAV-BEGIN> 12.46
<PER-SHARE-NII> .70
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> (.70)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 12.54
<EXPENSE-RATIO> .009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<SERIES>
<NUMBER> 007
<NAME> MASSACHUSETTS SERIES-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 74096
<INVESTMENTS-AT-VALUE> 77456
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<TABLE> <S> <C>
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<NAME> PREMIER STATE MUNICIPAL BOND FUND
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<TABLE> <S> <C>
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THE DREYFUS FAMILY OF FUNDS
(Premier Family of Fixed-Income Funds)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), requires that the Board of an
investment company desiring to offer multiple classes pursuant
to said Rule adopt a plan setting forth the separate arrangement
and expense allocation of each class, and any related conversion
features or exchange privileges.
The Board, including a majority of the non-interested
Board members, of each of the investment companies, or series
thereof, listed on Schedule A attached hereto (each, a "Fund")
which desires to offer multiple classes has determined that the
following plan is in the best interests of each class
individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided
into Class A, Class B and Class C.
2. Differences in Services: The services offered to
shareholders of each Class shall be substantially the same,
except that Right of Accumulation, Letter of Intent,
Reinvestment Privilege and Checkwriting services shall be
available only to holders of Class A shares.
3. Differences in Distribution Arrangements: Class
A shares shall be offered with a front-end sales charge, as such
term is defined in Article III, Section 26(b), of the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., and a deferred sales charge (a "CDSC"), as such term is
defined in said Section 26(b), may be assessed on certain
redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more. The
amount of the sales charge and the amount of and provisions
relating to the CDSC pertaining to the Class A shares are set
forth on Schedule B hereto.
Class B shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class B
shares, are set forth on Schedule C hereto.
Class C shares shall not be subject to a front-end
sales charge, but shall be subject to a CDSC and shall be
charged an annual distribution fee under a Distribution Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount
of and provisions relating to the CDSC, and the amount of the
fees under the Distribution Plan pertaining to the Class C
shares, are set forth on Schedule D hereto.
Each Class of shares shall be subject to an annual
service fee at the rate of .25% of the value of the average
daily net assets of such Class pursuant to a Shareholder
Services Plan.
4. Expense Allocation. The following expenses
shall be allocated, to the extent practicable, on a Class-by-
Class basis: (a) fees under the Distribution Plan and
Shareholder Services Plan; (b) printing and postage expenses
related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current
shareholders of a specific Class; (c) Securities and Exchange
Commission and Blue Sky registration fees incurred by a specific
Class; (d) the expense of administrative personnel and services
as required to support the shareholders of a specific Class; (e)
litigation or other legal expenses relating solely to a specific
Class; (f) transfer agent fees identified by the Fund's transfer
agent as being attributable to a specific Class; and (g) Board
members' fees incurred as a result of issues relating to a
specific Class.
5. Conversion Features. Class B shares shall
automatically convert to Class A shares after a specified period
of time after the date of purchase, based on the relative net
asset value of each such Class without the imposition of any
sales charge, fee or other charge, as set forth on Schedule E
hereto. No other Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges. Shares of a Class shall be
exchangeable only for (a) shares of the same Class of other
investment companies managed or administered by The Dreyfus
Corporation and (b) shares of certain other investment companies
specified from time to time.
Dated: April 12, 1995
SCHEDULE A
Premier California Municipal Bond Fund
Premier GNMA Fund
Premier Insured Municipal Bond Fund
Premier Municipal Bond Fund
Premier New York Municipal Bond Fund
Premier State Municipal Bond Fund
SCHEDULE B
Front-End Sales Charge--Class A Shares--The public offering
price for Class A shares shall be the net asset value per share
of that Class plus a sales load as shown below:
Total Sales Load Amount of Transaction As a % of
offering
price per
share As a % of
net asset
value per
share Less than $50,000. . . . . . 4.50 4.70 $50,000 to less
than $100,000 4.00 4.20 $100,000 to less than $250,000 3.00
3.10 $250,000 to less than $500,000 2.50 2.60 $500,000 to less
than $1,000,000 2.00 2.00 $1,000,000 or more -0- -0-Contingent
Deferred Sales Charge--Class A Shares--A CDSC of 1%
shall be assessed at the time of redemption of Class A shares
purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within two years
after purchase. The terms contained in Schedule C pertaining to
the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the
provisions for waiving the CDSC, shall be applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation shall apply to such purchases of Class A shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable
to the Fund's Distributor shall be imposed on any redemption of
Class B shares which reduces the current net asset value of such
Class B shares to an amount which is lower than the dollar
amount of all payments by the redeeming shareholder for the
purchase of Class B shares of the Fund held by such shareholder
at the time of redemption. No CDSC shall be imposed to the
extent that the net asset value of the Class B shares redeemed
does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital
gain distributions, plus (ii) increases in the net asset value
of the shareholder's Class B shares above the dollar amount of
all payments for the purchase of Class B shares of the Fund held
by such shareholder at the time of redemption.
If the aggregate value of the Class B shares redeemed
has declined below their original cost as a result of the Fund's
performance, a CDSC may be applied to the then-current net asset
value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount
of the charge shall depend on the number of years from the time
the shareholder purchased the Class B shares until the time of
redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the
purchase of Class B shares, all payments during a month shall be
aggregated and deemed to have been made on the first day of the
month. The following table sets forth the rates of the CDSC:
Year Since
Purchase Payment
Was Made CDSC as a % of
Amount Invested
or Redemption
Proceeds First. . . . 3.00 Second 3.00 Third
2.00 Fourth 2.00 Fifth 1.00 Sixth 0.00
In determining whether a CDSC is applicable to a
redemption, the calculation shall be made in a manner that
results in the lowest possible rate. Therefore, it shall be
assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the
increase in net asset value of Class B shares above the total
amount of payments for the purchase of Class B shares made
during the preceding five years; then of amounts representing
the cost of shares purchased five years prior to the redemption;
and finally, of amounts representing the cost of shares held for
the longest period of time within the applicable five-year
period.
Waiver of CDSC--The CDSC shall be waived in connection with (a)
redemptions made within one year after the death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended (the "Code"), of the shareholder,
(b) redemptions by employees participating in qualified or non-
qualified employee benefit plans or other programs where (i) the
employers or affiliated employers maintaining such plans or
programs have a minimum of 250 employees eligible for
participation in such plans or programs, or (ii) such plan's or
program's aggregate investment in the Dreyfus Family of Funds or
certain other products made available by the Fund's Distributor
exceeds one million dollars, (c) redemptions as a result of a
combination of any investment company with the Fund by merger,
acquisition of assets or otherwise, and (d) a distribution
following retirement under a tax-deferred retirement plan or
upon attaining age 70-1/2 in the case of an IRA or Keogh plan or
custodial account pursuant to Section 403(b) of the Code. Any
Fund shares subject to a CDSC which were purchased prior to the
termination of such waiver shall have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of
such shares.
Amount of Distribution Plan Fees--Class B Shares--.50 of 1% of
the value of the average daily net assets of Class B.
SCHEDULE D
Contingent Deferred Sales Charge--Class C Shares--A CDSC of
1.00% payable to the Fund's Distributor shall be imposed on any
redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such
CDSC shall be the method used in calculating the CDSC for Class
B shares. In addition, the provisions for waiving the CDSC
shall be those set forth for Class B shares.
Amount of Distribution Plan Fees--Class C Shares--.75 of 1% of
the value of the average daily net assets of Class C.
SCHEDULE E
Conversion of Class B Shares--Approximately six years after the
date of purchase, Class B shares automatically shall convert to
Class A shares, based on the relative net asset values for
shares of each such Class, and shall no longer be subject to the
distribution fee. At that time, Class B shares that have been
acquired through the reinvestment of dividends and distributions
("Dividend Shares") shall be converted in the proportion that a
shareholder's Class B shares (other than Dividend Shares)
converting to Class A shares bears to the total Class B shares
then held by the shareholder which were not acquired through the
reinvestment of dividends and distributions.
Other Exhibits (a)
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John E. Pelletier and each of them, with
full power to act without the other, his or her true and lawful attorney-in-
fact and in his or her name, place and stead, in any and all capacities
(until revoked in writing) to sign any and all amendments to the Registration
Statement for each Fund listed on Schedule A attached hereto (including post-
effective amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Marie E. Connolly
Marie E. Connolly, President and Treasurer
SCHEDULE A
GROUPS IV & V
Dreyfus Appreciation Fund, Inc.
General California Municipal Bond Fund, Inc.
General California Municipal Money Market Fund
General Government Securities Money Market Fund, Inc.
General Money Market Fund, Inc.
General Municipal Bond Fund, Inc.
General Municipal Money Market Fund, Inc.
General New York Municipal Bond Fund, Inc.
General New York Municipal Money Market Fund
Premier California Municipal Bond Fund
Premier GNMA Fund
Premier Growth Fund, Inc.
Premier Insured Municipal Bond Fund
Premier Municipal Bond Fund
Premier New York Municipal Bond Fund
Premier State Municipal Bond Fund
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Frederick C. Dey, Eric B.
Fischman, Ruth D. Leibert and John E. Pelletier and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the Registration
Statement for each Fund listed on Schedule A attached hereto (including post-
effective amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Clifford L. Alexander, Jr.
Clifford L. Alexander, Jr., Board Member
/s/ Peggy C. Davis
Peggy C. Davis, Board Member
/s/Ernest Kafka
Ernest Kafka, Board Member
/s/Saul B. Klaman
Saul B. Klaman, Board Member
/s/Nathan Leventhal
Nathan Leventhal, Board Member
Dated August 30, 1994
SCHEDULE A
GROUPS IV & V
Dreyfus Appreciation Fund, Inc.
General California Municipal Bond Fund, Inc.
General California Municipal Money Market Fund
General Government Securities Money Market Fund, Inc.
General Money Market Fund, Inc.
General Municipal Bond Fund, Inc.
General Municipal Money Market Fund, Inc.
General New York Municipal Bond Fund, Inc.
General New York Municipal Money Market Fund
Premier California Municipal Bond Fund
Premier GNMA Fund
Premier Growth Fund, Inc.
Premier Insured Municipal Bond Fund
Premier Municipal Bond Fund
Premier New York Municipal Bond Fund
Premier State Municipal Bond Fund
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John Pelletier and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the Registration
Statement for each Fund listed on Schedule A attached hereto (including
post-effective amendments and amendments thereto), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Premier State Municipal Bond Fund
/s/ Joseph S. DiMartino
Joseph S. DiMartino, Board Member
Dated: January 18, 1995
SCHEDULE A
GROUPS IV & V
Dreyfus Appreciation Fund, Inc.
General California Municipal Bond Fund, Inc.
General California Municipal Money Market Fund
General Government Securities Money Market Fund, Inc.
General Money Market Fund, Inc.
General Municipal Bond Fund, Inc.
General Municipal Money Market Fund, Inc.
General New York Municipal Bond Fund, Inc.
General New York Municipal Money Market Fund
Premier California Municipal Bond Fund
Premier GNMA Fund
Premier Growth Fund, Inc.
Premier Insured Municipal Bond Fund
Premier Municipal Bond Fund
Premier New York Municipal Bond Fund
Premier State Municipal Bond Fund
OTHER EXHIBITS(b)
PREMIER STATE MUNICIPAL BOND FUND
Certificate of Assistant Secretary
The undersigned, Ruth D. Leibert, Assistant Secretary of Premier
State Municipal Bond Fund (the "Fund"), hereby certifies that set forth below
is a copy of the resolution adopted by the Fund's Board of Trustees pursuant
to unanimous written consent authorizing the signing of Frederick C. Dey,
Eric B. Fischman, Ruth D. Leibert or John Pelletier on behalf of the Fund
pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto, may be signed by any of
Frederick C. Dey, Eric B. Fischman, Ruth D. Leibert or
John Pelletier as the attorney-in-fact for the proper
officers of the Fund, with full power of substitution and
resubstitution; and that the appointment of each of such
persons as such attorney-in-fact is authorized and
approved; and that such attorneys-in-fact, and each of
them, shall have full power and authority to do and perform
each and every act and thing requisite and necessary to be
done in connection with such Registration Statement and any
and all amendments and supplements thereto, as fully to all
intents and purposes as the officer, for whom he is acting
as attorney-in-fact, might or could do in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Fund on August 11, 1995.
Ruth D. Leibert
Assistant Secretary
