LETTER TO SHAREHOLDERS
Dear Shareholder:
For much of your Series' most recent fiscal year, which ended on April
30, 1995, the fixed income markets experienced a measure of volatility not
seen in quite some time. Several factors contributed to this vacillation in
market psychology. Throughout the period, investors were presented with a
wealth of conflicting data covering such indicators of economic activity as
job creation, capacity utilization, retail consumption and business
investment. At times this information seemed to indicate a slowing in the
rate of the domestic economy's expansion, giving rise to a sense of an
abatement in the underlying rate of inflation, causing bond prices to rise
and yields to decline. At other points, however, investors sensed a
surprising resilience in the nation's rate of economic growth for which few
were prepared.
As this perception took hold, investors seemed to question the adequacy
of the Federal Reserve Board's monetary policy and the vigilance of its
anti-inflationary stance. In an effort to engineer an economic soft landing,
the Fed moved to increase the Federal funds rate and the discount rate on
several occasions. At times, investors perceived these efforts as pallid in
comparison to the economy's strength and insufficient in the face of a rising
tide of inflation.
As yields rose during those periods of uncertainty, price swings were
further exacerbated by capital flows from longer- to shorter-dated maturities
as investors repositioned themselves forward on the yield curve. Juxtaposed
against this were events which further clouded the outlook for fixed income
investments. The Mexican debt crises, historic reevaluations of traditional
currency relationships, ongoing debate in Washington regarding the nation's
fiscal policies amidst a dramatically shifting political tide, an escalation
of tensions amongst global trading partners and even the tragic events in
Oklahoma City all combined to further affect investors' perceptions of the
future direction of interest rates.
Throughout this period, municipal securities in general and Minnesota
municipal bonds in particular were hard pressed to escape the volatility
witnessed by the fixed income markets. Ultimately, tax exempt bonds were
supported by strong demand and limited supply which enabled municipals to
modestly outperform their taxable counterparts. While the rise in individual
tax rates has generated a significant amount of demand via direct purchase
and mutual fund participation, issuance of municipal bonds has fallen
dramatically. Through the end of April 1995, new issue volume has fallen
nationally by 50% when compared to the prior year. In the instance of
offerings exempt from Minnesota taxes, an equally striking decline of more
than 49% was witnessed.
A comparison of the movements of thirty-year U.S. Treasury yields and
municipal yields as represented by the Bond Buyer 25 Revenue Bond Index
illustrates this relative outperformance. At the start of the year long term
Treasuries stood at 7.33%, while the Revenue Index yielded 6.42%. As market
sentiment deteriorated through November, Treasury yields rose to a high of
8.17% and the Revenue Index peaked at 7.37%. With the ensuing reemergence of
a more stable environment for bonds through the close of your Series' fiscal
year, Government yields declined from their peak to end the period unchanged
at 7.33%, while municipal yields declined an additional 13 basis points
(0.13%) to close the period at 6.29%.
In managing your Series' assets through this turbulent environment, our
strategy was characterized by a decidedly conservative posture. Two themes
were consistent through the entire fiscal year. First, as a result of the
market's technical foundation, traditional spread relationships between the
yields of higher- and lower-rated issuers tended to become more compressed
than fundamental analysis would normally warrant; therefore, our investment
choices were primarily focused on higher-rated issues. With this measure, the
Series sacrificed a small amount of income in order to substantially reduce
volatility. Second, as the market's volatility caused investors to
reevaluate their exposure to long-term bonds, our strategy emphasized
maintaining adequate levels of portfolio liquidity at all
times. This prevented our having to liquidate securities in the portfolio at
an inopportune time.
With these two themes guiding our activity, we attempted to adjust the
Series' structure to capitalize on the broader movements of the markets as
the year progressed. During those times when prices were buoyed by more
favorable developments, we tried to increase the Series' responsiveness by
purchasing issues with longer durations and greater potential for price
appreciation. As perceptions became more mixed, our attention shifted to
those securities with shorter durations, lesser degrees of principal
volatility, and higher profiles of tax exempt income. In general, our
conservative approach caused your Series to perform relatively well as
interest rates rose while restraining performance as interest rates fell.
Over the course of the entire year our investment choices enabled the Series
to generate tax free income dividends totaling approximately $.829 per share
for Class A shareholders, representing a distribution rate per share of 5.31%
based on the April 30 closing maximum offering price, adjusted for capital gain
distributions. For the Class B shareholders, the Series produced tax-free
income dividends totaling approximately $.751 per share, for a distribution
rate per share of 5.03% based on the April 30 closing net asset value,
adjusted for capital gain distributions. All income dividends paid were
exempt from Federal and Minnesota personal income taxes.*
Moving forward, while it appears that the economy is indeed slowing and
the prospects for a continued decline in long-term interest rates appears
significant, we continue to maintain a conservative posture in the
marketplace. In our view, the question of whether the economy is moving
toward contraction or simply pausing before its next surge of expansion
remains unresolved. In addition, while the current rhetoric emanating from
Washington with respect to the nation's fiscal well-being is encouraging for
fixed income investors, we remain mindful of the distinction between the
politics of popular opinions and legislative disciplines.
We appreciate your investment in the Premier State Municipal Bond Fund,
Minnesota Series, and we want to assure you that we are, at all times,
working in your Series' best interest.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
May 18, 1995
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders. Capital gains may be subject to Federal, State and
local taxes.
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES APRIL 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE
MUNICIPAL BOND FUND, MINNESOTA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
$19,125 Lehman Brothers Municipal Bond
Index* In Dollars
$18,312 Premier State
Municipal Bond Fund
Minnesota Series
(Class A Shares)
*Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
CLASS A CLASS B
- ------------------------------------------------------------ -----------------------------------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Periods ended 4/30/95 Sales Charge Sales Charge (4.5%) Periods ended 4/30/95 Redemption Redemption*
- --------------------- ---------------- ------------------ ---------------------- ------------ -------------------
<S> <C> <C> <C> <C>
1 Year 7.14% 2.35% 1 Year 6.57% 3.57%
5 Years 8.44 7.44 From Inception (1/15/93) 5.62 4.80
From Inception (5/28/87) 8.56 7.93
</TABLE>
Past performance is not predictive of future performance. Share price and
investment return fluctuate and share price may be more or less than original
cost upon redemption.
The above graph compares a $10,000 investment made in Class A shares of
Premier State Municipal Bond Fund, Minnesota Series on 5/28/87 (Inception
Date) to a $10,000 investment made in the Lehman Brothers Municipal Bond
Index on that date. For comparative purposes the value of the Index on
5/31/87 is used as the beginning value on 5/28/87. All dividends and capital
gain distributions are reinvested. Performance for Class B shares will differ
from the results shown above due to difference in charges and expenses
charged to that class.
The Series invests primarily in Minnesota municipal securities and its
performance shown in the line graph takes into account the maximum initial
sales charge on Class A shares and all other applicable fees and expenses.
Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged
total return performance benchmark for the long-term, investment grade,
geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the market. The Index does
not take into account charges, fees and other expenses. Also, unlike the Fund
which principally limits investments to Minnesota municipal obligations, the
Index is not state-specific. Further information relating to Series
performance, including expense reimbursements, if applicable, is contained in
the Condensed Financial Information section of the Prospectus and elsewhere
in this report.
*Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
<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>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES CLASS B SHARES
---------------------------------------------- ---------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------------------------------------- ---------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995 1993(1) 1994 1995
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.74 $14.28 $14.63 $15.31 $14.72 $14.86 $15.32 $14.74
------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net........... 1.02 .96 .92 .87 .83 .24 .78 .75
Net realized and unrealized gain (loss)
on investments................. .56 .36 .77 (.53) .18 .46 (.52) .18
------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 1.58 1.32 1.69 .34 1.01 .70 .26 .93
------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income--net (1.02) (.96) (.92) (.87) (.83) (.24) (.78) (.75)
Dividends from net realized gain
on investments................. (.02) (.01) (.09) (.06) -- -- (.06) --
------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS............ (1.04) (.97) (1.01) (.93) (.83) (.24) (.84) (.75)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year..... $14.28 $14.63 $15.31 $14.72 $14.90 $15.32 $14.74 $14.92
====== ======= ======= ======= ======= ======= ======== =======
TOTAL INVESTMENT RETURN (2).......... 11.89% 9.45% 11.96% 2.08% 7.14% 16.32%(3) 1.55% 6.57%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .20% .53% .69% .80% .90% 1.16%(3) 1.38% 1.44%
Ratio of net investment income to
average net assets............. 7.19% 6.53% 6.13% 5.61% 5.68% 4.83%(3) 4.91% 5.13%
Decrease reflected in above expense ratios
due to undertakings by the Manager .79% .41% .24% .11% .01% .14%(3) .09% .01%
Portfolio Turnover Rate.......... 14.04% 12.32% 23.42% 12.21% 51.95% 23.42% 12.21% 51.95%
Net Assets, end of year (000's Omitted) $85,066 $122,782 $148,765 $155,657 $145,444 $4,633 $21,004 $23,217
(1) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(2) Exclusive of sales load.
(3) Annualized.
See notes to financial statements.
</TABLE>
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
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby makes the following
designations regarding its fiscal year ended April 30, 1995:
-all the dividends paid from investment income-net are "exempt interest
dividends" (not subject to regular Federal, and for individuals who are
Minnesota residents, Minnesota personal income taxes), and
-the Series hereby designates $.0039 per share as a long-term capital
gain distribution of the $.004 per share paid on December 14, 1994.
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1995 calendar year
on Form 1099-DIV which will be mailed by January 31, 1996.
[Dreyfus lion "d" logo]
PREMIER STATE MUNICIPAL
BOND FUND, MINNESOTA SERIES
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 055/618AR954Annual Report
[Dreyfus logo]
Premier State
Municipal Bond Fund
Minnesota Series
April 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
EXHIBIT A:
___________________________________________________
| | | |
| | | PREMIER STATE |
| PERIOD | LEHMAN BROTHERS |MUNICIPAL BOND FUND,|
| | MUNICIPAL | MINNESOTA SERIES |
| | BOND INDEX * | (CLASS A SHARES) |
|-----------|-----------------|--------------------|
| 5/28/87 | 10,000 | 9,547 |
| 4/30/88 | 10,929 | 10,169 |
| 4/30/89 | 11,905 | 11,447 |
| 4/30/90 | 12,763 | 12,210 |
| 4/30/91 | 14,229 | 13,663 |
| 4/30/92 | 15,582 | 14,954 |
| 4/30/93 | 17,553 | 16,742 |
| 4/30/94 | 17,932 | 17,090 |
| 4/30/95 | 19,125 | 18,312 |
|--------------------------------------------------|
* Source: Lehman Brothers
