-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvrH4zmZrIbEKqqM5i/gzn92rpENHplI1djJaV8bw/viBKwJlvJrsKl5O8gmvgrA s14PRy1RXrRKpWt36AbCRA== 0000806176-98-000016.txt : 19980630 0000806176-98-000016.hdr.sgml : 19980630 ACCESSION NUMBER: 0000806176-98-000016 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980629 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS PREMIER STATE MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000806176 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04906 FILM NUMBER: 98656006 BUSINESS ADDRESS: STREET 1: 144 GENN CURTISS BLVD CITY: NUIONDALE STATE: NY ZIP: 11556 BUSINESS PHONE: 2129226805 MAIL ADDRESS: STREET 1: 144 GENN CURTISS BLVD CITY: NUIONDALE STATE: NY ZIP: 11556 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER STATE MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER SERIES TAX EXEMPT BOND FUND DATE OF NAME CHANGE: 19870224 N-30D 1 ANNUAL REPORT ANNUAL REPORT --------------------- DREYFUS PREMIER STATE MUNICIPAL BOND FUND MINNESOTA SERIES --------------------- APRIL 30, 1998 (DREYFUS LION LOGO) DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------ LETTER TO SHAREHOLDERS Dear Shareholder: We are pleased to report the performance for the Dreyfus Premier State Municipal Bond Fund - Minnesota Series for the 12-month period ended April 30, 1998, as shown in the following table: TOTAL RETURN* DISTRIBUTION RATE** ------------- ------------------- Class A shares.................. 7.36% 5.09% Class B shares.................. 6.79% 4.81% Class C shares.................. 6.46% 4.49% ECONOMIC REVIEW The United States is now in its eighth year of economic expansion. Inflation continues to rise at the slowest pace since 1964, and the unemployment rate has fallen to a level not seen in 25 years. Not surprisingly, consumer confidence has soared. Along with continued evidence of the robustness of the economy have come heightened expectations that the Federal Reserve Board (the "Fed") might raise interest rates in a preemptive move to avoid a reigniting of inflation. The last increase in short-term rates came in March 1997 when the Federal Open Market Committee (the policy-making arm of the Fed) hiked the target rates for Federal Funds by one quarter of a percent to 5.5%. (The Federal Funds rate is the rate of interest that banks charge one another for overnight loans.) Inflation has remained benign on all fronts, even in the tight labor market, an area closely watched by the Fed for signs of incipient inflation. The Labor Department's Employment Cost Index (ECI), a measure of wage, salary and benefit costs, suggests that wage inflation so far is not a problem. In fact, the first quarter increase in the ECI (0.7%) was its smallest quarterly rise in two years. Another inflation gauge, the broad-based Gross Domestic Product Price Deflator, rose at an annual rate of only 0.9% in the first quarter, its lowest rate since 1964. Inflation, as measured by the Consumer Price Index (a measure of a fixed basket of goods bought by a typical consumer including food, transportation, shelter, utilities, clothing, medical care, entertainment and other items), has been similarly tame. Prices at the consumer level have risen at an annual rate of about 1.5% over the reporting period. The lack of inflation has been more dramatic at the production level of the economy where prices have fallen: in the 12 months ended April 30, the Producer Price Index declined 1.8%. Such a generally tepid price environment has been partly fostered by the economic problems in Asia which have suppressed worldwide demand for commodities, particularly oil. Reflecting a level of confidence not seen in three decades, consumers increased their spending over the reporting period, the first-quarter rate rising at the fastest pace in six years. Not surprisingly, the growth rate in new home construction over the reporting period was the strongest in four years. Plentiful and well-paying jobs (total wage and salary income is 7% higher than a year ago), low interest rates, the relative absence of inflation and investment market gains have resulted in a financially healthy consumer with a corresponding propensity to spend. Strong domestic demand for lower-priced imports has contributed further to the quiescent inflation environment while offsetting the drag on the economy resulting from the Asian financial crisis. It is still widely expected that the Asian economic slowdown will have a further dampening effect on the U.S. economy. Although the surge in domestic spending has masked the full impact of the fall in Asian demand, our trade deficit has reached a ten-year high, a dramatic sign of deterioration. Expectation of an economic slowdown may be a reason why the Fed has been reluctant to raise short-term interest rates. The production side of the economy has remained robust. Factory utilization has been high, production rates strong, and while exports to Asia have fallen sharply, they are growing in the rest of the world. Such resilience has been characteristic of one of the longest, most healthy economic advances in our history. Yet we remain mindful that the concept of an economic cycle is not dead, nor is inflation, and we are alert for indications of a resurgence in price pressures. MARKET ENVIRONMENT Long-term taxable interest rates continued to trend lower through mid-January due to a mix of economic turmoil in Asia and good domestic inflation news. The 30-year benchmark Treasury bond yield troughed on January 12, at 5.69%, boosted by non-traditional buyers in a flight to quality out of Asian markets and into U.S. Government securities. Since then, however, Asian markets have stabilized somewhat and shifted the focus of the bond market back to U.S. economic fundamentals. Of particular concern to bond market participants is the increasing tightness of the labor market and the potential for future wage inflation. This concern effectively capped the bond rally and pushed long Treasury yields up to 5.95% on April 30, down from 6.96% at the start of the 12-month period. Long municipal bonds slightly underperformed their taxable counterparts during the reporting period as the tax-exempt arena saw a surge in volume as rates trended lower. The new issue volume included both advance refundings of already existing debt, and municipalities and agencies taking on new debt at attractive rates. This increase in supply more than offset strong demand for municipals as the municipal/Treasury yield ratio (as measured by the Bond Buyer Revenue Bond Index /30-year Treasury yield) increased from 91% to nearly 93% by April 30. From an historic perspective, municipals are very attractive at these percentages relative to Treasuries. In addition, tax-exempt supply traditionally decreases as the summer months approach, thus offering the prospect for municipal outperformance in the months ahead. THE PORTFOLIO In direct contrast to the municipal market in general, the Minnesota tax-exempt market saw very little supply during the reporting period. This lack of volume can best be illustrated by the fact that only two issues over the last six months have been brought to market in which the issue size was in excess of $50 million. Due mainly to supply constraints, the portfolio turnover rate was very low as it was extremely difficult to locate securities which we felt would improve the performance characteristics of the Fund. We have maintained a nucleus of large coupon, income generating securities which should perform well in times of uncertainty. At present, approximately 90% of the Fund is invested in securities which are rated "A" or better, which reflects our view that credit spreads are too narrow to justify a high percentage of lower-rated bonds. Looking forward, issuance should increase as the market anticipates large deals from issuers such as the state of Minnesota, the Minneapolis Airport Authority, and several hospitals. As these deals come to market, we will look for opportunities to sell securities with inferior call features and/or liquidity and replace them with new issues that offer greater potential for price appreciation. In conclusion, the tug of war between foreign economic crises and unusually tame U.S. inflation indicators that has left long-term interest rates range-bound since January cannot go on indefinitely. We will remain alert for signals of the next trend for long-term rates and stand ready to adjust the portfolio accordingly. Sincerely, Richard J. Moynihan Director, Municipal Portfolio Management The Dreyfus Corporation May 18, 1998 New York, N.Y. * Total return includes reinvestment of dividends and any capital gains paid and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the contingent deferred sales charge imposed on redemptions in the case of Class B shares and Class C shares. Income may be subject to state and local income taxes for non-Minnesota residents. ** Distribution rate per share is based upon dividends per share paid from net investment income during the period, divided by the maximum offering price per share at the end of the period in the case of Class A shares, or the net asset value per share in the case of Class B shares and Class C shares, adjusted for capital gain distributions. Some income may be subject to the Federal Alternative Minimum Tax (AMT) for certain shareholders. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES APRIL 30, 1998 - -------------------------------------------------------------------------------- COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX $22,016 Lehman Brothers Municipal Bond Index* CHART $20,796 Dreyfus Premier State Municipal Bond Fund, Minnesota Series (Class A Shares) *Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES CLASS B SHARES - --------------------------------------------------------- ------------------------------------------------------------ % Return Reflecting % Return Applicable Contingent Reflecting % Return Deferred Sales % Return Without Maximum Initial Assuming No Charge Upon Period Ended 4/30/98 Sales Charge Sales Charge (4.5%) Period Ended 4/30/98 Redemption Redemption* - -------------------- ------------------ --------------- -------------------- ----------- --------------------- 1 Year 7.36% 2.51% 1 Year 6.79% 2.79% 5 Year 5.75 4.78 5 Year 5.21 4.88 10 Year 8.09 7.60 From Inception (1/15/93) 5.84 5.69
CLASS C SHARES - ------------------------------------------------------------ % Return Reflecting Applicable Contingent % Return Deferred Sales Assuming Charge Upon Period Ended 4/30/98 No Redemption Redemption** - -------------------- ------------- --------------------- 1 Year 6.46% 5.46% From Inception (8/15/95) 5.72 5.72 - ------------------ Past performance is not predictive of future performance. The above graph compares a $10,000 investment made in Class A shares of Dreyfus Premier State Municipal Bond Fund, Minnesota Series on 4/30/88 to a $10,000 investment made in the Lehman Brothers Municipal Bond Index on that date. All dividends and capital gain distributions are reinvested. Performance for Class B and Class C shares will vary from the performance of Class A shares shown above due to differences in charges and expenses. 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 municipal market overall. The Index does not take into account charges, fees and other expenses and is not limited to investments principally in Minnesota municipal obligations. These factors can contribute to the Index potentially outperforming the Series. Further information relating to Series performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. * The maximum contingent deferred sales charge for Class B shares is 4% and is reduced to 0% after six years. ** The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS APRIL 30, 1998
PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS-97.9% AMOUNT VALUE - ---------------------------------------------------------------------------- ------------ ------------ Anoka County: RRR (Northern States Power Co.) 7.15%, 12/1/2008........................ $ 1,150,000 $ 1,217,482 SWDR (United Power Association Project) 6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance Corp.)........................................................ 3,825,000 4,074,925 Brooklyn Park 5.85%, 2/1/2016 (Insured; FSA)................................ 1,425,000 1,502,491 Burnsville, MFHR Refunding (Conventry Court Apartments) 7.50%, 9/1/2027 (Insured; FHA)............................................................ 2,250,000 2,344,995 Dakota County Housing and Redevelopment Authority, South-Saint Paul Revenue, Refunding (Single Family-GNMA Program) 8.10%, 9/1/2012............................ 115,000 119,115 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 2,731,350 Eagan, MFHR Refunding (Forest Ridge Apartments) 7.50%, 9/1/2017 (Insured; FHA)............................................................ 1,000,000 1,041,150 Eden Prairie, MFHR, Refunding: (Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA)............... 500,000 524,745 (Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA).................. 2,810,000 2,997,230 Edina: Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006........... 1,000,000 1,056,330 Housing Development Revenue, Refunding (Edina Park Plaza Project) 7.70%, 12/1/2028 (Insured; FHA)......................................... 2,500,000 2,602,575 Harmony, MFHR, Refunding (Zedakah Foundation Project) 5.95%, 9/1/2020....... 1,235,000 1,266,628 Hubbard County, SWDR (Potlatch Corp. Project) 7.375%, 8/1/2013.......................................................... 1,000,000 1,052,420 International Falls, PCR, Refunding (Boise Cascade Corp. Project) 5.65%, 12/1/2022................................................................. 1,000,000 1,009,260 Inver Grove Heights Independent School District Number 199 5.75%, 2/1/2017.. 2,225,000 2,312,131 Mahtomedi Independent School District Number 832 Zero Coupon, 2/1/2017 (Insured; MBIA)................................... 1,275,000 475,447 Minneapolis: Zero Coupon, 12/1/2014.................................................. 1,825,000 772,632 Home Ownership Program 7.10%, 6/1/2021.................................. 655,000 687,383 HR (Lifespan Inc.-Minneapolis Children's Medical Center Project) 7%, 12/1/2020 (Prerefunded 6/1/2001) (a).............................. 5,650,000 6,192,570 MFHR, Refunding (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FSA).......................................................... 4,000,000 4,252,560 MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA).. 2,350,000 2,473,093 Refunding (Sports Arena Project) 5.20%, 10/1/2024....................... 3,850,000 3,844,341 Minneapolis Community Development Agency, Ltd. Tax Support Development Revenue: 8.375%, 6/1/2007...................................................... 2,500,000 2,558,475 8%, 12/1/2009......................................................... 300,000 318,354 7.75%, 12/1/2019...................................................... 2,755,000 3,019,535 7.40%, 12/1/2021...................................................... 2,000,000 2,116,040 Minneapolis-Saint Paul Housing and Redevelopment Authority, Health Care Systems Revenue: 8%, 8/15/2014 (Prerefunded 8/15/2000) (a)............................. 3,000,000 3,306,990 (Group Health Plan Inc., Project) 6.75%, 12/1/2013.................... 2,750,000 3,000,608
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1998
PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE - ---------------------------------------------------------------------------- ------------ ------------ Minneapolis-Saint Paul Housing Finance Board, SFMR: 8.875%, 11/1/2018 (Collateralized; GNMA)................................ $ 100,000 $ 103,207 8.30%, 8/1/2021 (Collateralized; GNMA).................................. 300,000 307,968 7.30%, 8/1/2031 (Collateralized; GNMA).................................. 5,490,000 5,786,295 Minneapolis-Saint Paul Metropolitan Apartments Community 7.80%, 1/1/2014.... 3,000,000 3,133,770 Minneapolis Special School District Number 001, COP: 5.375%, 1/1/2014 (Insured; MBIA)........................................ 1,000,000 1,019,140 5.90%, 2/1/2017 (Insured; MBIA)......................................... 4,400,000 4,646,884 5.65%, 2/1/2018 (Insured; MBIA)......................................... 1,300,000 1,350,050 State of Minnesota (Duluth Airport) 6.25%, 8/1/2014......................... 2,500,000 2,695,800 Minnesota Agricultural and Economic Development Board, Minnesota Small Business Development Loan Revenue: 8.125%, 8/1/2009...................................................... 500,000 507,835 8.20%, 8/1/2009....................................................... 655,000 672,921 8.375%, 8/1/2010...................................................... 1,385,000 1,421,578 Minnesota Higher Education Facilities Authority, College and University Revenue (University of Saint Thomas): 5.35%, 4/1/2017....................................................... 1,000,000 1,008,420 5.40%, 4/1/2022....................................................... 2,200,000 2,216,918 Minnesota Housing Finance Agency, Revenue: Rental Housing 6.10%, 8/1/2009.......................................... 2,065,000 2,089,326 Single Family Mortgage: 7.35%, 7/1/2016....................................................... 1,325,000 1,378,384 7.30%, 1/1/2017....................................................... 715,000 743,500 7.90%, 7/1/2019....................................................... 1,485,000 1,530,946 7.45%, 7/1/2022 (Insured; FHA)........................................ 2,730,000 2,882,307 7.95%, 7/1/2022....................................................... 1,495,000 1,573,996 6.95%, 7/1/2026....................................................... 2,800,000 2,988,272 Minnesota Public Facilities Authority, Water Pollution Control Revenue: 7.10%, 3/1/2012 (Prerefunded 3/1/2000) (a).............................. 2,350,000 2,519,905 6.95%, 3/1/2013 (Prerefunded 3/1/2001) (a).............................. 3,000,000 3,271,440 6.50%, 3/1/2014 (Prerefunded 3/1/2001) (a).............................. 5,200,000 5,690,880 5.00%, 3/1/2018......................................................... 1,320,000 1,295,488 Northern Municipal Power Agency, Electric System Revenue, Refunding: 7.25%, 1/1/2016......................................................... 3,500,000 3,648,505 5.30%, 1/1/2021 (Insured; FSA).......................................... 1,000,000 999,920 City of Red Wing, Health Care Facilities Revenue, Refunding (River Region Obligation Group) 6.50%, 9/1/2022......................... 3,445,000 3,697,587 Rosemount Independent School District Number 196 Zero Coupon, 4/1/2014 (Insured; MBIA)................................... 3,000,000 1,314,720 Saint Cloud, Hospital Facilities Revenue (The Saint Cloud Hospital) 7%, 7/1/2020 (Insured; AMBAC) (Prerefunded 7/1/2001) (a)................ 1,000,000 1,097,700
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1998
PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE - ---------------------------------------------------------------------------- ------------ ------------ Saint Paul Housing and Redevelopment Authority, Revenue: Hospital (HealthEast Project): 5.70%, 11/1/2015 (Insured; ACA)....................................... $ 2,000,000 $ 2,054,020 5.85%, 11/1/2017 (Insured; ACA)....................................... 1,000,000 1,031,260 Single Family Mortgage, Refunding 6.90%, 12/1/2021 (Insured; FNMA)...... 2,490,000 2,637,881 Sartell, PCR, Refunding (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,420,900 Seeway Port Authority of Duluth, Industrial Development Dock and Wharf Revenues, Refunding (Cargill Inc. Project) 6.80%, 5/1/2012........................ 3,000,000 3,294,000 Southern Minnesota Municipal Power Agency, Power Supply System Revenue: Zero Coupon, 1/1/2025 (Insured; MBIA)................................... 5,255,000 1,273,497 Zero Coupon, 1/1/2026 (Insured; MBIA)................................... 15,530,000 3,555,283 Refunding Zero Coupon, 1/1/2027 (Insured; MBIA)......................... 4,800,000 1,041,840 University of Minnesota, College and University Revenue, Refunding 5.50%, 7/1/2021.................................................................. 5,925,000 6,186,826 Western Minnesota Municipal Power Agency, Electric Power and Light Revenue, Refunding 5.50%, 1/1/2012 (Insured; AMBAC).............................. 1,000,000 1,039,450 White Bear Lake Independent School District Number 624 5.75%, 2/1/2017...... 1,265,000 1,317,826 ------------ TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $140,191,819)..................................................... $149,317,300 ============ SHORT-TERM MUNICIPAL INVESTMENTS-2.1% - ---------------------------------------------------------------------------- Cohasset, Refunding, VRDN (Minnesota Power and Light Company Project) 4.25% (LOC; ABN Amro Bank N.V.) (b,c) (cost $3,200,000)....................................................... $ 3,200,000 $ 3,200,000 ============ TOTAL INVESTMENTS-100.0% (cost $143,391,819)....................................................... $152,517,300 ============
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS - ----------------------------------------------------------------------------------------------------------------------- ACA American Capital Assurance MBIA Municipal Bond Investors Assurance AMBAC American Municipal Bond Assurance Corporation Insurance Corporation COP Certificate of Participation MFHR Multi-Family Housing Revenue FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue FNMA Federal National Mortgage Association PCR Pollution Control Revenue FSA Financial Security Assurance RRR Resources Recovery Revenue GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue HR Hospital Revenue SWDR Solid Waste Disposal Revenue LOC Letter of Credit VRDN Variable Rate Demand Notes
SUMMARY OF COMBINED RATINGS (UNAUDITED) - ----------------------------------------------------------------------------------------------------------------------- FITCH (d) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE - --------- ------- ----------------- ------------------- AAA Aaa AAA 50.9% AA Aa AA 22.7 A A A 16.0 BBB Bbb BBB 6.6 F1 MIG1 SP1 2.1 Not Rated (e) Not Rated (e) Not Rated (e) 1.7 ------ 100.0% ====== 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) 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. (c) Secured by letters of credit. (d) Fitch currently provides creditworthiness information for a limited number of investments. (e) Securities which, while not rated by Fitch, Moody's and Standard & Poor's have been determined by the Manager to be of comparable quality to those rated securities in which the Fund may invest. (f) At April 30, 1998, the Fund had $39,644,173 (25.5% 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. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1998
Cost Value ------------ ------------ ASSETS: Investments in securities-See Statement of Investments...... $143,391,819 $152,517,300 Cash........................................................ 118,811 Interest receivable......................................... 2,580,174 Receivable for shares of Beneficial Interest subscribed..... 265,607 Receivable for investment securities sold................... 98,375 Prepaid expenses............................................ 2,729 ------------ 155,582,996 ------------ LIABILITIES: Due to The Dreyfus Corporation and affiliates............... 70,433 Due to Distributor.......................................... 44,113 Payable for shares of Beneficial Interest redeemed.......... 94,576 Accrued expenses............................................ 24,354 ------------ 233,476 ------------ NET ASSETS............................................................................. $155,349,520 ============ REPRESENTED BY: Paid-in capital............................................. $146,521,986 Accumulated net realized gain (loss) on investments......... (297,947) Accumulated net unrealized appreciation (depreciation) on investments-Note 4................................... 9,125,481 ------------ NET ASSETS............................................................................. $155,349,520 ============
NET ASSET VALUE PER SHARE -------------------------
CLASS A CLASS B CLASS C ------------ ------------ ------------ Net Assets................................................ $126,114,723 $ 28,567,854 $ 666,943 Shares Outstanding........................................ 8,240,323 1,863,549 43,515 NET ASSET VALUE PER SHARE................................. $15.30 $15.33 $15.33 ====== ====== ======
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1998 INVESTMENT INCOME INCOME Interest Income............................ $ 9,747,475 EXPENSES: Management fee-Note 3(a)................... $ 861,736 Shareholding servicing costs-Note 3(c)..... 486,849 Distribution fees-Note 3(b)................ 142,697 Professional fees.......................... 22,578 Custodian fees............................. 16,199 Prospectus and shareholders' reports....... 13,887 Registration fees.......................... 3,961 Trustees' fees and expenses-Note 3(d)...... 3,328 Loan commitment fees-Note 2................ 1,682 Miscellaneous.............................. 7,857 ---------- TOTAL EXPENSES......................... 1,560,774 ----------- INVESTMENT INCOME-NET....................................................... 8,186,701 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4: Net realized gain (loss) on investments.... $ 363,867 Net unrealized appreciation (depreciation) on investments......................... 2,446,953 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 2,810,820 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $10,997,521 ===========
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED APRIL 30, 1998 APRIL 30, 1997 -------------- -------------- OPERATIONS: Investment income-net............................................. $ 8,186,701 $ 8,482,213 Net realized gain (loss) on investments........................... 363,867 (646,676) Net unrealized appreciation (depreciation) on investments......... 2,446,953 1,631,040 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS. 10,997,521 9,466,577 ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Investment income-net: Class A shares.................................................. (6,834,721) (7,188,410) Class B shares.................................................. (1,326,960) (1,273,471) Class C shares.................................................. (25,020) (20,332) Net realized gain on investments: Class A shares.................................................. (16,629) (301,648) Class B shares.................................................. (3,601) (60,551) Class C shares.................................................. (94) (1,243) ------------ ------------ TOTAL DIVIDENDS............................................. (8,207,025) (8,845,655) ------------ ------------ BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from shares sold: Class A shares.................................................. 5,462,533 7,615,027 Class B shares.................................................. 3,686,719 2,280,709 Class C shares.................................................. 622,715 232,695 Dividends reinvested: Class A shares.................................................. 4,245,838 4,853,932 Class B shares.................................................. 836,985 874,682 Class C shares.................................................. 18,241 18,406 Cost of shares redeemed: Class A shares.................................................. (14,941,030) (22,037,210) Class B shares.................................................. (2,427,267) (2,851,658) Class C shares.................................................. (287,817) (312,743) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................................................... (2,783,083) (9,326,160) ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 7,413 (8,705,238) NET ASSETS: Beginning of Period............................................... 155,342,107 164,047,345 ------------ ------------ End of Period..................................................... $155,349,520 $155,342,107 ============ ============
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES --------------------------------- YEAR ENDED YEAR ENDED APRIL 30, 1998 APRIL 30, 1997 -------------- -------------- CAPITAL SHARE TRANSACTIONS: CLASS A ------- Shares sold............................................................ 356,989 503,203 Shares issued for dividends reinvested................................. 276,670 321,163 Shares redeemed........................................................ (975,447) (1,455,677) -------- ---------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING..... (341,788) (631,311) ======== ========== CLASS B ------- Shares sold............................................................ 240,321 150,960 Shares issued for dividends reinvested................................. 54,439 57,774 Shares redeemed........................................................ (157,971) (188,834) -------- ---------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING..... 136,789 19,900 ======== ========== CLASS C ------- Shares sold............................................................ 40,658 15,195 Shares issued for dividends reinvested................................. 1,185 1,215 Shares redeemed........................................................ (18,723) (20,849) -------- ---------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING..... 23,120 (4,439) ======== ==========
See notes to financial statements. DREYFUS 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 period indicated. This information has been derived from the Fund's financial statements.
CLASS A SHARES ------------------------------------------------------- YEAR ENDED APRIL 30, ------------------------------------------------------- PER SHARE DATA: 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ Net asset value, beginning of period.................. $15.03 $14.98 $14.90 $14.72 $15.31 ------ ------ ------ ------ ------ INVESTMENT OPERATIONS: Investment income-net................................. .82 .82 .82 .83 .87 Net realized and unrealized gain (loss) on investments .27 .09 .08 .18 (.53) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS...................... 1.09 .91 .90 1.01 .34 ------ ------ ------ ------ ------ DISTRIBUTIONS: Dividends from investment income-net.................. (.82) (.82) (.82) (.83) (.87) Dividends from net realized gain on investments....... -- (.04) -- -- (.06) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................... (.82) (.86) (.82) (.83) (.93) ------ ------ ------ ------ ------ Net asset value, end of period........................ $15.30 $15.03 $14.98 $14.90 $14.72 ====== ====== ====== ====== ====== TOTAL INVESTMENT RETURN*.................................. 7.36% 6.16% 6.11% 7.14% 2.08% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets............... .90% .91% .90% .90% .80% Ratio of net investment income to average net assets.. 5.32% 5.42% 5.41% 5.68% 5.61% Decrease reflected in above expense ratios due to undertakings by the Manager......................... -- -- -- .01% .11% Portfolio Turnover Rate............................... 13.37% 25.82% 35.47% 51.95% 12.21% Net Assets, end of period (000's Omitted)............. $126,115 $129,031 $138,058 $145,444 $155,657 - -------------------------- * Exclusive of sales load.
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (CONTINUED) 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 period indicated. This information has been derived from the Fund's financial statements.
CLASS B SHARES ------------------------------------------------------- YEAR ENDED APRIL 30, ------------------------------------------------------- PER SHARE DATA: 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ Net asset value, beginning of period.................. $15.06 $15.01 $14.92 $14.74 $15.32 ------ ------ ------ ------ ------ INVESTMENT OPERATIONS: Investment income-net................................. .74 .74 .74 .75 .78 Net realized and unrealized gain (loss) on investments .27 .09 .09 .18 (.52) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS...................... 1.01 .83 .83 .93 .26 ------ ------ ------ ------ ------ DISTRIBUTIONS: Dividends from investment income-net.................. (.74) (.74) (.74) (.75) (.78) Dividends from net realized gain on investments....... -- (.04) -- -- (.06) ------ ------ ------ ------ ------ TOTAL DIVIDENDS....................................... (.74) (.78) (.74) (.75) (.84) ------ ------ ------ ------ ------ Net asset value, end of period........................ $15.33 $15.06 $15.01 $14.92 $14.74 ====== ====== ====== ====== ====== TOTAL INVESTMENT RETURN*.................................. 6.79% 5.60% 5.62% 6.57% 1.55% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets............... 1.42% 1.44% 1.43% 1.44% 1.38% Ratio of net investment income to average net assets.. 4.79% 4.90% 4.87% 5.13% 4.91% Decrease reflected in above expense ratios due to undertakings by the Manager......................... -- -- -- .01% .09% Portfolio Turnover Rate............................... 13.37% 25.82% 35.47% 51.95% 12.21% Net Assets, end of period (000's Omitted)............. $28,568 $26,004 $25,617 $23,217 $21,004 - -------------------------- * Exclusive of sales load.
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (CONTINUED) 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 period indicated. This information has been derived from the Fund's financial statements.
CLASS C SHARES --------------------------------- YEAR ENDED APRIL 30, --------------------------------- PER SHARE DATA: 1998 1997 1996(1) ------ ------ -------- Net asset value, beginning of period.................... $15.06 $15.01 $14.96 ------ ------ ------ INVESTMENT OPERATIONS: Investment income-net................................... .69 .70 .50 Net realized and unrealized gain (loss) on investments.. .27 .09 .05 ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS........................ .96 .79 .55 ------ ------ ------ DISTRIBUTIONS: Dividends from investment income-net.................... (.69) (.70) (.50) Dividends from net realized gain on investments......... -- (.04) -- ------ ------ ------ TOTAL DISTRIBUTIONS..................................... (.69) (.74) (.50) ------ ------ ------ Net asset value, end of period.......................... $15.33 $15.06 $15.01 ====== ====== ====== TOTAL INVESTMENT RETURN(2).................................. 6.46% 5.34% 5.15%(3) RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets................. 1.73% 1.67% 1.42%(3) Ratio of net investment income to average net assets.... 4.40% 4.62% 4.00%(3) Portfolio Turnover Rate................................. 13.37% 25.82% 35.47% Net Assets, end of period (000's Omitted)............... $667 $307 $373 - ------------------------ (1) From August 15, 1995 (commencement of initial offering) to April 30, 1996. (2) Exclusive of sales load. (3) Annualized.
See notes to financial statements. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS NOTE 1-SIGNIFICANT ACCOUNTING POLICIES: Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series, including the Minnesota Series (the "Fund"). The Fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the Fund's shares. The Fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. Other differences between the classes include the services offered to and the expenses borne by each class and certain voting rights. The Trust accounts separately for the assets, liabilities and operations of each fund. Expenses directly attributable to each fund are charged to that fund's operations; expenses which are applicable to all funds are allocated among them on a pro rata basis. The Fund's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. The Fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the Fund. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS (CONTINUED) (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the Fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. To the extent that net realized capital gain can be offset by capital loss carryovers, it is the policy of the Fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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 $315,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 1998. If not applied, the carryover expires in fiscal 2006. NOTE 2-BANK LINE OF CREDIT: The Fund participates with other Dreyfus-managed funds in a $600 million redemption credit facility ("Facility") to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the Fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the Fund at rates based on prevailing market rates in effect at the time of borrowings. For the period ended April 30, 1998, the Fund did not borrow under the Facility. NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the Fund's average daily net assets and is payable monthly. Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained $29 during the period ended April 30, 1998, from commissions earned on sales of the Fund's shares. (B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, the Fund pays the Distributor for distributing the Fund's Class B and Class C shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended April 30, 1998, Class B and Class C shares were charged $138,437 and $4,260, respectively, pursuant to the Distribution Plan. (C) Under the Shareholder Services Plan, the Fund pays the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets of Class A, Class B and Class C shares for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the Fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended April 30, 1998, Class A, Class B and Class C shares were was charged $321,060, $69,218 and $1,420, respectively, pursuant to the Shareholder Services Plan. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the Fund. During the period ended April 30, 1998, the Fund was charged $71,954 pursuant to the transfer agency agreement. (D) Each trustee who is not an "affiliated person" as defined in the Act receives from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board receives an additional 25% of such compensation. NOTE 4-SECURITIES TRANSACTIONS: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period April 30, 1998 amounted to $20,347,469 and $23,748,938, respectively. At April 30, 1998, accumulated net unrealized appreciation on investments was $9,125,481, consisting of $9,125,670 gross unrealized appreciation and $189 gross unrealized depreciation. At April 30, 1998, 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). DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES - ------------------------------------------------------------------------------ REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS SHAREHOLDERS AND BOARD OF TRUSTEES DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Minnesota Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 1998, 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 and the financial highlights. Our procedures included confirmation of securities owned as of April 30, 1998 by correspondence with the custodian and broker. 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 Dreyfus Premier State Municipal Bond Fund, Minnesota Series at April 30, 1998, 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 New York, New York June 3, 1998 IMPORTANT TAX INFORMATION (UNAUDITED) In accordance with Federal tax law, the Fund hereby designates all the dividends paid from investment income-net during its fiscal year ended April 30, 1998 as "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Minnesota residents, Minnesota personal income taxes). As required by Federal tax law rules, shareholders will receive notification of their portion of the Fund's taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 1998 calendar year on Form 1099-DIV which will be mailed by January 31, 1999. DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES 200 Park Avenue New York, NY 10166 MANAGER The Dreyfus Corporation 200 Park Avenue New York, NY 10166 CUSTODIAN The Bank of New York 90 Washington Street New York, NY 10286 TRANSFER AGENT & DIVIDEND DISBURSING AGENT Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Printed in U.S.A. 055/618AR984 EX-99 2 GRAPH IN THE PRESIDENT'S LTR OF THE ANNUAL REPROT COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX EXHIBIT A: DREYFUS PREMIER STATE MUNICIPAL PERIOD LEHMAN BROTHERS BOND FUND, MUNICIPAL MINNESOTA SERIES BOND INDEX * (CLASS A SHARES) 4/30/88 10,000 9,550 4/30/89 10,893 10,751 4/30/90 11,678 11,467 4/30/91 13,019 12,831 4/30/92 14,257 14,044 4/30/93 16,061 15,723 4/30/94 16,407 16,050 4/30/95 17,499 17,197 4/30/96 18,889 18,247 4/30/97 20,142 19,371 4/30/98 22,016 20,796 *Source: Lehman Brothers -----END PRIVACY-ENHANCED MESSAGE-----