File Nos. 2-96008
811-4237
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 16 [X]
(Check appropriate box or boxes.)
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on September 3, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
____ for a previously filed post-effective amendment.
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice
for the fiscal year ended April 30, 1996 was filed on June 24, 1996.
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 5
5 Management of the Fund 9
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 22
7 Purchase of Securities Being Offered 11
8 Redemption or Repurchase 16
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-26
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-10
Holders of Securities
16 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-23
18 Capital Stock and Other Securities B-26
19 Purchase, Redemption and Pricing B-16; B-18;
of Securities Being Offered B-22
20 Tax Status *
21 Underwriters B-16
22 Calculations of Performance Data B-24
23 Financial Statements B-33
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS September 3, 1996
Dreyfus Insured Municipal Bond Fund, Inc.
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DREYFUS INSURED MUNICIPAL BOND FUND, INC. (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUNICIPAL
BOND FUND. THE FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE YOU WITH AS HIGH A
LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX AS IS CONSISTENT WITH
THE PRESERVATION OF CAPITAL. THE FUND INVESTS PRIMARILY IN A PORTFOLIO OF
MUNICIPAL OBLIGATIONS (AS DEFINED BELOW) THAT ARE INSURED AS TO THE TIMELY
PAYMENT OF PRINCIPAL AND INTEREST BY RECOGNIZED INSURERS OF MUNICIPAL
OBLIGATIONS.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT CHARGE
OR PENALTY IMPOSED BY THE FUND.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO EARN INCOME
ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN PURCHASE OR REDEEM SHARES
BY TELEPHONE USING DREYFUS TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 3, 1996,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. THE SECURITIES AND
EXCHANGE COMMISSION MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS
THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE,
AND OTHER INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD,
UNIONDALE, NEW YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK
FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
<TABLE>
TABLE OF CONTENTS
Page Page
<S> <C> <C> <C>
Annual Fund Operating Expenses.............. 3 How to Redeem Shares....................... 16
Condensed Financial Information............. 4 Service Plan............................... 18
Description of the Fund..................... 5 Dividends, Distributions and Taxes......... 19
Management of the Fund...................... 9 Performance Information.................... 21
How to Buy Shares........................... 11 General Information........................ 22
Shareholder Services........................ 12 Appendix................................... 23
</TABLE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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[This Page Intentionally Left Blank]
Page 2
<TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C>
Management Fees .......................................................................... .60%
12b-1 Fees (distribution and servicing)................................................... .20%
Other Expenses............................................................................ .14%
Total Fund Operating Expenses............................................................. .94%
</TABLE>
<TABLE>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $10 $30 $52 $115
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund, the payment of which will reduce
investors' annual return. The information in the foregoing table does not
reflect any fee waivers or expense reimbursement arrangements that may be in
effect. Long-term investors could pay more in 12b-1 fees than the economic
equivalent of paying a front-end sales charge. Certain Service Agents (as
defined below) may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of the Fund," "How to Buy Shares" and "Service Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of common stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
FISCAL YEAR ENDED APRIL 30,
---------------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year $18.03 $17.38 $16.86 $17.39 $17.10 $17.77 $18.16 $19.23 $17.46 $17.25
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net 1.24 1.20 1.19 1.16 1.14 1.10 1.06 1.00 .94 .91
Net realized and
unrealized gain (loss)
on investments (.65) (.52) .53 (.28) .67 .39 1.28 (1.06) (.21) (.11)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .59 .68 1.72 .88 1.81 1.49 2.34 (.06) .73 .80
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from
investment income-net (1.24) (1.20) (1.19) (1.17) (1.14) (1.10) (1.06) (1.00) (.94) (.92)
Dividends from net
realized gain on investments... -- -- -- -- -- -- (.21) (.63) -- --
Dividends in excess of
net realized gain on
investments.... -- -- -- -- -- -- -- (.08) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.... (1.24) (1.20) (1.19) (1.17) (1.14) (1.10) (1.27) (1.71) (.94) (.92)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $17.38 $16.86 $17.39 $17.10 $17.77 $18.16 $19.23 $17.46 $17.25 $17.13
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.... 3.17% 4.10% 10.52% 5.10% 10.87% 8.56% 13.35% (.74%) 4.36% 4.58%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets .84% .90% 1.00% .99% .96% .96% .94% .93% .94% .85%
Ratio of net investment income
to average net assets.... 6.78% 7.11% 6.96% 6.63% 6.50% 6.07% 5.69% 5.25% 5.49% 5.14%
Decrease reflected in
above expense ratios due
to undertaking by
The Dreyfus Corporation.. -- -- -- -- -- -- -- -- -- .09%
Portfolio Turnover Rate.. 75.49% 95.57% 67.78% 67.09% 61.87% 51.18% 80.72% 34.92% 41.19% 82.86%
Net Assets, end of year
(000's omitted) $197,578 $177,153 $186,233 $190,614 $219,299 $240,612 $276,979 $249,513 $220,398 $208,388
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
Page 4
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with as high a
level of current income exempt from Federal income tax as is consistent with
the preservation of capital. To accomplish its investment objective, the Fund
invests primarily in a portfolio of Municipal Obligations (as described
below) that are insured as to the timely payment of principal and interest by
recognized insurers of Municipal Obligations. The Fund's investment objective
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities, the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal income tax.
Municipal Obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that generally
do not carry the pledge of the credit of the issuing municipality, but
generally are guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities.
Municipal Obligations bear fixed, floating or variable rates of interest,
which are determined in some instances by formulas under which the Municipal
Obligation's interest rate will change directly or inversely to changes in
interest rates or an index, or multiples thereof, in many cases subject to a
maximum and minimum. Certain Municipal Obligations are subject to redemption
at a date earlier than their stated maturity pursuant to call options, which
may be separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at least
80% of the value of the Fund's net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. Generally, at least
65% of the value of the Fund's net assets (except when maintaining a
temporary defensive position) will be invested in bonds, debentures and other
debt instruments and at least 65% of the value of its net assets will be
invested in Municipal Obligations that are subject to insurance. See
"Insurance Feature" and "Dividends, Distributions and Taxes" below.
The Fund will purchase Municipal Obligations only if rated investment
grade. Municipal Obligations are considered investment grade if rated at
least Baa by Moody's Investors Service, Inc. ("Moody's") or at least BBB by
Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies,
Inc. ("S&P"), or Fitch Investors Service, L.P. ("Fitch"). Municipal
Obligations rated Baa by Moody's are considered medium grade obligations
which lack outstanding investment characteristics
Page 5
and have speculative characteristics, while those rated BBB by S&P and Fitch
are regarded as having adequate capacity to pay principal and interest. The
Fund also may invest in securities which, while not rated, are determined by
The Dreyfus Corporation to be of comparable quality to the rated securities
in which the Fund may invest. The Fund also may invest in Taxable Investments
of the quality described under "Appendix -- Certain Portfolio Securities --
Taxable Investments."
From time to time, the Fund may invest more than 25% of the value
of its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The Fund may invest
without limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Investment Considerations and Risks" below.
The Fund's annual portfolio turnover rate is not expected to exceed
100%. The Fund also may lend portfolio securities, which may give rise to
taxable income. See also "Investment Considerations and Risks," "Appendix --
Investment Techniques" and "Dividends, Distributions and Taxes" below and
"Investment Objective and Management Policies -- Management Policies" in the
Statement of Additional Information.
INSURANCE FEATURE
At the time they are purchased by the Fund, the Municipal
Obligations held in the Fund's portfolio that are subject to insurance will
be insured as to timely payment of principal and interest under an insurance
policy (i) purchased by the Fund or by a previous owner of the Municipal
Obligation ("Mutual Fund Insurance") or (ii) obtained by the issuer or
underwriter of the Municipal Obligation ("New Issue Insurance"). The
insurance of principal refers to the face or par value of the Municipal
Obligation and is not affected by nor does it insure the price paid therefor
by the Fund or the market value thereof. The value of Fund shares is not
insured.
New Issue Insurance is obtained by the issuer of the Municipal
Obligations and all premiums respecting such securities are paid in advance
by such issuer. Such policies are noncancelable and continue in force so long
as the Municipal Obligations are outstanding and the insurer remains in
business.
Certain types of Mutual Fund Insurance obtained by the Fund are
effective only so long as the Fund is in existence, the insurer remains in
business and the Municipal Obligations described in the policy continue to be
held by the Fund. The Fund will pay the premiums with respect to such
insurance. Depending upon the terms of the policy, in the event of a sale of
any Municipal Obligation so insured by the Fund, the Mutual Fund Insurance
may terminate as to such Municipal Obligation on the date of sale and in such
event the insurer may be liable only for those payments of principal and
interest which then are due and owing. Other types of Mutual Fund Insurance
may not have this termination feature. The Fund may purchase Municipal
Obligations with this type of insurance from parties other than the issuer
and the insurance would continue for the Fund's benefit.
Typically, the insurer may not withdraw coverage on insured
securities held by the Fund, nor may the insurer cancel the policy for any
reason except failure to pay premiums when due. The insurer may reserve the
right at any time upon 90 days' written notice to the Fund to refuse to
insure any additional
Page 6
Municipal Obligations purchased by the Fund after the effective date of such
notice. The Fund's Board has reserved the right to terminate the Mutual Fund
Insurance policy if it determines that the benefits to the Fund of having its
portfolio insured are not justified by the expense involved. See "Investment
Considerations and Risks -- Investing in Insured Municipal Obligations" below.
Mutual Fund Insurance and New Issue Insurance have been obtained
from MBIA Insurance Corporation ("MBIA"), Financial Guaranty Insurance
Company ("Financial Guaranty"), AMBAC Indemnity Corporation ("AMBAC
Indemnity") and Financial Security Assurance of Maryland, Inc. ("FSA"),
although the Fund may purchase insurance from, or Municipal Obligations
insured by, other insurers.
The following information regarding these insurers has been derived
from information furnished by the insurers. The Fund has not independently
verified any of the information, but the Fund is not aware of facts which
would render such information inaccurate.
Financial Guaranty is a New York stock insurance company regulated
by the New York State Department of Insurance and authorized to provide
insurance in 50 states and the District of Columbia. Financial Guaranty is a
subsidiary of FGIC Corporation, a Delaware holding company, which is a
subsidiary of General Electric Capital Corporation. Financial Guaranty, in
addition to providing insurance for the payment of interest on and principal
of Municipal Obligations held in unit investment trust and mutual fund
portfolios, provides New Issue Insurance and insurance for secondary market
issues of Municipal Obligations and for portions of new and secondary market
issues of Municipal Obligations. As of December 31, 1995, Financial Guaranty
reported total capital and surplus of approximately $1 billion and admitted
assets of approximately $2.3 billion. The claims-paying ability of Financial
Guaranty is rated "AAA" by S&P and Fitch and "Aaa" by Moody's.
MBIA, formerly known as Municipal Bond Investors Assurance
Corporation, is the principal operating subsidiary of MBIA Inc., a New York
Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts or
claims against MBIA. MBIA is domiciled in the State of New York and licensed
to do business in all 50 states, the District of Columbia, the Commonwealth
of Puerto Rico, the Commonwealth of Northern Mariana Islands, the Virgin
Islands of the United States and the Territory of Guam. As of December 31,
1995, MBIA had admitted assets of $3.8 billion, total liabilities of $2.5
billion and total capital and surplus of $1.3 billion, determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. The claims-paying ability of MBIA is rated
"AAA" by S&P and Fitch and "Aaa" by Moody's.
AMBAC Indemnity is a Wisconsin-domiciled stock insurance
corporation, regulated by the Office of the Commissioner of Insurance of the
State of Wisconsin and licensed to do business in 50 states, the District of
Columbia and the Commonwealth of Puerto Rico. AMBAC Indemnity is a
wholly-owned subsidiary of AMBAC Inc., a publicly-held company. AMBAC
Indemnity had admitted assets of approximately $2.4 billion and statutory
capital of approximately $1.4 billion as of December 31, 1995. Statutory
capital consists of AMBAC Indemnity's statutory contingency reserve and
policyholders' surplus. The claims-paying ability of AMBAC Indemnity is rated
"AAA" by S&P and Fitch and "Aaa" by Moody's.
FSA, which acquired Capital Guaranty Insurance Company in December
1995, is a wholly-owned subsidiary of Financial Security Assurance Holdings,
Ltd., a New York Stock Exchange listed company. FSA is authorized to provide
insurance in 50 states, the District of Columbia and three U.S. territories.
As of December 31, 1995, FSA's statutory capital was approximately $650
million (unaudited) and
Page 7
total assets were approximately $1.5 billion (unaudited). The claims-paying
ability of FSA is rated "AAA" by S&P and Fitch and "Aaa" by Moody's.
Additional information concerning the insurance feature appears in
the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments which
promise a stable stream of income, the prices of such securities are
inversely affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. Certain securities that may be
purchased by the Fund, such as those with interest rates that fluctuate
directly or indirectly based on multiples of a stated index, are designed to
be highly sensitive to changes in interest rates and can subject the holders
thereof to extreme reductions of yield and possibly loss of principal. The
values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. Once the rating
of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold the
security. The Fund's net asset value generally will not be stable and will
fluctuate based upon changes in the value of the Fund's portfolio securities.
INVESTING IN INSURED MUNICIPAL OBLIGATIONS -- The insurance feature is
intended to reduce financial risk, but the cost thereof and the restrictions
on investments imposed by the guidelines in the insurance policy will result
in a reduction in the yield on the Municipal Obligations purchased by the
Fund.
Because coverage under certain Mutual Fund Insurance policies may
terminate upon sale of a security from the Fund's portfolio, insurance with
this termination feature should not be viewed as assisting the marketability
of securities in the Fund's portfolio, whether or not the securities are in
default or subject to a serious risk of default. The Dreyfus Corporation
intends to retain any Municipal Obligations subject to such insurance which
are in default or, in the view of The Dreyfus Corporation, in significant
risk of default and to recommend to the Fund's Board that the Fund place a
value on the insurance which will be equal to the difference between the
market value of the defaulted security and the market value of similar
securities of minimum investment grade (i.e., rated Baa by Moody's or BBB by
S&P or Fitch) which are not in default. To the extent that the Fund holds
defaulted securities subject to Mutual Fund Insurance with this termination
feature, it may be limited in its ability in certain circumstances to
purchase other Municipal Obligations. While a defaulted Municipal Obligation
is held in the Fund's portfolio, the Fund continues to pay the insurance
premium thereon but also is entitled to collect interest payments from the
insurer and retains the right to collect the full amount of principal from
the insurer when the security comes due.
INVESTING IN MUNICIPAL OBLIGATIONS -- The Fund may invest more than 25% of
the value of its total assets in Municipal Obligations which are related in
such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for
example, securities the interest upon which is paid from revenues of similar
types of projects, or securities whose issuers are located in the same state.
As a result, the Fund may be subject to greater risk as compared to a fund
that does not follow this practice.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is
Page 8
unrated, The Dreyfus Corporation will consider, on an ongoing basis, a number
of factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund and
thus reduce the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. See "Dividends, Distributions and Taxes." Proposals that may restrict
or eliminate the income tax exemption for interest on Municipal Obligations
may be introduced in the future. If any such proposal were enacted that would
reduce the availability of Municipal Obligations for investment by the Fund
so as to adversely affect Fund shareholders, the Fund would reevaluate its
investment objective and policies and submit possible changes in the Fund's
structure to shareholders for their consideration. If legislation were
enacted that would treat a type of Municipal Obligation as taxable, the Fund
would treat such security as a permissible Taxable Investment within the
applicable limits set forth herein.
ZERO COUPON SECURITIES -- Federal income tax law requires the holder of a
zero coupon security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and avoid
liability for Federal income taxes, the Fund may be required to distribute
such income accrued with respect to these securities and may have to dispose
of portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
USE OF DERIVATIVES -- The Fund may invest, to a limited extent, in
derivatives ("Derivatives"). These are financial instruments which derive
their performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Fund may use include
options. While Derivatives can be used effectively in furtherance of the
Fund's investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, can decrease the
liquidity of the Fund's portfolio and make more difficult the accurate
pricing of the Fund's portfolio. See "Appendix -- Investment Techniques --
Use of Derivatives" below, and "Investment Objective and Management Policies
- -- Derivatives" in the Statement of Additional Information.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or
received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of July 31, 1996, The Dreyfus Corporation managed
or administered approximately $79 billion in assets for approximately $1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Maryland law.
The Fund's primary portfolio manager is Joseph P. Darcy. He has held that
Page 9
position since August 1996 and has been employed by The Dreyfus Corporation
since 1994. Prior to joining The Dreyfus Corporation, Mr. Darcy served for
more than four years as Vice President and Portfolio Manager of Merrill Lynch
Asset Management. The Fund's other portfolio managers are identified in the
Statement of Additional Information. The Dreyfus Corporation also provides
research services for the Fund and for other funds advised by The Dreyfus
Corporation through a professional staff of portfolio managers and securities
analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$220 billion in assets as of June 30, 1996, including approximately $83
billion in mutual fund assets. As of June 30, 1996, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $876 billion in assets, including
approximately $57 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .60 of 1% of
the Fund's average daily net assets. For the fiscal year ended April 30,
1996, the Fund paid The Dreyfus Corporation a monthly management fee at the
effective annual rate of .51 of 1% of the value of the Fund's average daily
net assets. From time to time, The Dreyfus Corporation may waive receipt of
its fees and/or voluntarily assume certain expenses of the Fund, which would
have the effect of lowering the overall expense ratio of the Fund and
increasing yield to investors. The Fund will not pay The Dreyfus Corporation
at a later time for any amounts it may waive, nor will the Fund reimburse The
Dreyfus Corporation for any amounts it may assume.
In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus Corporation
may consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or administered by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service Agents
in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90 Washington
Street, New York, New York 10286, is the Fund's Custodian.
Page 10
HOW TO BUY SHARES
Fund shares are sold through the Distributor or certain financial
institutions (which may include banks), securities dealers ("Selected
Dealers") and other industry professionals, such as investment advisers,
accountants and estate planning firms (collectively, "Service Agents") that
have entered into service agreements with the Distributor. Stock certificates
are issued only upon your written request. No certificates are issued for
fractional shares. It is not recommended that the Fund be used as a vehicle
for Keogh, IRA or other qualified plans. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of a Service Agent which has made an aggregate minimum initial
purchase for its customers of $2,500. Subsequent investments must be at least
$100. The initial investment must be accompanied by the Account Application.
For full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board
members of a fund advised by The Dreyfus Corporation, including members of
the Fund's Board, or the spouse or minor child of any of the foregoing, the
minimum initial investment is $1,000. For full-time or part-time employees of
The Dreyfus Corporation or any of its affiliates or subsidiaries who elect to
have a portion of their pay directly deposited into their Fund account, the
minimum initial investment is $50. The Fund reserves the right to vary
further the initial and subsequent investment minimum requirements at any
time. Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-AUTOMATIC Asset BuilderRegistration
Mark, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings
Plan pursuant to the Dreyfus Step Program described under "Shareholder
Services." These services enable you to make regularly scheduled investments
and may provide you with a convenient way to invest for long-term financial
goals. You should be aware, however, that periodic investment plans do not
guarantee a profit and will not protect an investor against loss in a
declining market.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments to open new accounts which are mailed
should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor
subsequent investments should be made by third party check. Purchase orders
may be delivered in person only to a Dreyfus Financial Center. THESE ORDERS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY.
For the location of the nearest Dreyfus Financial Center, please call one of
the telephone numbers listed under "General Information."
Wire payments may be made if your account is in a commercial bank
that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900052031/Dreyfus Insured
Municipal Bond Fund, Inc., for purchase of shares in your name. The wire must
include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of
Fund shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Account Application and promptly mail the Account Application
to the Fund, as no redemptions will be permitted until the Account
Page 11
Application is received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be made in U.S.
dollars and, to avoid fees and delays, should be drawn only on U.S. banks.
A charge will be imposed if any check used for investment in your account does
not clear. The Fund makes available to certain large institutions the ability
to issue purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory
authorities, may charge their clients direct fees for Servicing (as defined
under "Service Plan"). These fees would be in addition to any amounts which
might be received under the Service Plan. You should consult your Service
Agent in this regard.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form is received by the
Transfer Agent. Net asset value per share is determined as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on each day the New York Stock Exchange is open for business. Net
asset value per share is computed by dividing the value of the Fund's net
assets (i.e., the value of its assets less liabilities) by the total number
of shares outstanding. The Fund's investments are valued by an independent
pricing service approved by the Fund's Board and are valued at fair value as
determined by the pricing service. The pricing service's procedures are
reviewed under the general supervision of the Fund's Board. For further
information regarding the methods employed in valuing Fund investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or
have filed a Shareholder Services Form with the Transfer Agent. The proceeds
will be transferred between the bank account designated in one of these
documents and your Fund account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be so
designated. The Fund may modify or terminate this Privilege at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents may
impose certain conditions on their clients which are different from those
described in this Prospectus. You should consult your Service Agent in this
regard.
Page 12
FUND EXCHANGES
You may purchase, in exchange for shares of the Fund, shares of
certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, you should consult your Service Agent or
call 1-800-645-6561 to determine if it is available and whether any
conditions are imposed on its use.
To request an exchange, you or your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing or by
telephone. Before any exchange, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
personal retirement plans, the shares being exchanged must have a current
value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the
minimum initial investment required for the fund into which the exchange is
being made. The ability to issue exchange instructions by telephone is given
to all Fund shareholders automatically, unless you check the applicable "No"
box on the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, by a separate signed Shareholder Services Form, available by calling
1-800-645-6561 or, by oral request from any of the authorized signatories on
the account, also by calling 1-800-645-6561. If you have established the
Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-645-6561 or, if you are calling from overseas, call
516-794-5452. See "How to Redeem Shares_Procedures." Upon an exchange into a
new account, the following shareholder services and privileges, as applicable
and where available, will be automatically carried over to the fund into which
the exchange is made: Telephone Exchange Privilege, Check Redemption
Privilege, Wire Redemption Privilege, Telephone Redemption Privilege, Dreyfus
TELETRANSFER Privilege and the dividend/capital gain distribution option
(except for Dreyfus Dividend Sweep) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the exchange you must notify the
Transfer Agent or your Service Agent must notify the Distributor. Any such
qualification is subject to confirmation of your holdings through a check of
appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders directly
in connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the Securities and Exchange Commission.
The Fund reserves the right to reject any exchange request in whole or in
part. The availability of Fund Exchanges may be modified or terminated at any
time upon notice to shareholders. See "Dividends, Distributions and Taxes."
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of certain other funds in the Dreyfus Family of Funds of
which you are a shareholder. The amount you designate, which can be
Page 13
expressed either in terms of a specific dollar or share amount ($100 minimum),
will be exchanged automatically on the first and/or fifteenth day of the month
according to the schedule you have selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be charged with
respect to exchanges into funds sold with a sales load. See "Shareholder
Services" in the Statement of Additional Information. The right to exercise
this Privilege may be modified or cancelled by the Fund or the Transfer
Agent. You may modify or cancel your exercise of this Privilege at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. The Fund may charge a service fee
for the use of this Privilege. No such fee currently is contemplated. For
more information concerning this Privilege and the funds in the Dreyfus
Family of Funds eligible to participate in this Privilege, or to obtain a
Dreyfus Auto-Exchange Authorization Form, please call toll free
1-800-645-6561. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-Automatic Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. To establish a Dreyfus-Automatic Asset Builder account, you must
file an authorization form with the Transfer Agent. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may cancel your
participation in this Privilege or change the amount of purchase at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, and the notification will be
effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon your employer's direct deposit program, you may have part or all of your
paycheck transferred to your existing Dreyfus account electronically through
the Automated Clearing House system at each pay period. To establish a
Dreyfus Payroll Savings Plan account, you must file an authorization form
with your employer's payroll department. Your employer must complete the
reverse side of the form and return it to The Dreyfus Family of
Page 14
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You may obtain the
necessary authorization form by calling 1-800-645-6561. You may change the
amount of purchase or cancel the authorization only by written notification to
your employer. It is the sole responsibility of your employer, not the
Distributor, The Dreyfus Corporation, the Fund, the Transfer Agent or any
other person, to arrange for transactions under the Dreyfus Payroll Savings
Plan. The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
DREYFUS STEP PROGRAM
Dreyfus Step Program enables you to purchase Fund shares without
regard to the Fund's minimum initial investment requirements through
Dreyfus-AUTOMATIC Asset BuilderRegistration Mark, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step
Program account, you must supply the necessary information on the Account
Application and file the required authorization form(s) with the Transfer
Agent. For more information concerning this Program, or to request the
necessary authorization form(s), please call toll free 1-800-782-6620. You
may terminate your participation in this Program at any time by discontinuing
your participation in Dreyfus-AUTOMATIC Asset BuilderRegistration Mark,
Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan,
as the case may be, as provided under the terms of such Privilege(s). The
Fund may modify or terminate this Program at any time.
Dreyfus Dividend Options
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of another fund in the Dreyfus Family of Funds of which you are a
shareholder. Shares of the other fund will be purchased at the then-current
net asset value; however, a sales load may be charged with respect to
investments in shares of a fund sold with a sales load. If you are investing
in a fund that charges a sales load, you may qualify for share prices which
do not include the sales load or which reflect a reduced sales load. If you
are investing in a fund that charges a contingent deferred sales charge, the
shares purchased will be subject to the contingent deferred sales charge, if
any, applicable to the purchased shares. See "Shareholder Services" in the
Statement of Additional Information. Dreyfus Dividend ACH permits you to
transfer electronically dividends or dividends and capital gain
distributions, if any, from the Fund to a designated bank account. Only an
account maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. Banks may charge a fee for this
service.
For more information concerning these Privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply for Dreyfus Dividend Sweep. The Fund may modify or
terminate these privileges at any time or charge a service fee. No such fee
currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained by calling 1-800-645-6561. The Automatic
Withdrawal Plan may be ended at any time by you, the Fund or the Transfer
Agent. Shares for which certificates have been issued may not be redeemed
through the Automatic Withdrawal Plan.
Page 15
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents
may charge their clients a nominal fee for effecting redemptions of Fund
shares. Any stock certificates representing Fund shares being redeemed must
be submitted with the redemption request. The value of the shares redeemed
may be more or less than their original cost, depending upon the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY DREYFUS
TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET BUILDERRegistration
Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER
AGENT, THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK
CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS TELETRANSFER PURCHASE OR
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark ORDER, WHICH MAY TAKE UP TO
EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION
CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO
REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER
PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER
AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE OR THE
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME
ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL
OWNERSHIP. Fund shares will not be redeemed until the Transfer Agent has
received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is
$500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the account application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. If you
have given your Service Agent authority to instruct the Transfer Agent to
redeem shares and to credit the proceeds of such redemptions to a designated
account at your Service Agent, you may redeem shares only in this manner and
in accordance with the regular redemption procedure described below. If you
wish to use the other redemption methods described below, you must arrange
with your Service Agent for delivery of the required application(s) to the
Transfer Agent. Other redemption procedures may be in effect for clients of
certain Service Agents. The Fund makes available to certain large
institutions the ability to issue redemption instructions through compatible
computer facilities. The Fund reserves the right to refuse any request made
by wire or telephone, including
Page 16
requests made shortly after a change of address, and may limit the amount
involved or the number of such requests. The Fund may modify or terminate any
redemption Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated. Shares for which
certificates have been issued are not eligible for the Check Redemption,
Wire Redemption, Telephone Redemption or Dreyfus TELETRANSFER Privilege.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Service Agent, and reasonably believed by the Transfer
Agent to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification,
to confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Fund nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. If you have any questions with respect to signature-guarantees,
please call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Potential fluctuations in the net asset
value of Fund shares should be considered in determining the amount of the
check. Redemption Checks should not be used to close your account. Redemption
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current date when you
Page 17
write them. Please do not postdate your Redemption Checks. If you do, the
Transfer Agent will honor, upon presentment, even if presented before the
date of the check, all postdated Redemption Checks which are dated within six
months of presentment for payment, if they are otherwise in good order. This
Privilege will be terminated immediately, without notice, with respect to any
account which is, or becomes, subject to backup withholding on redemptions
(See "Dividends, Distributions and Taxes"). Any Redemption Check written on
an account which has become subject to backup withholding on redemptions will
not be honored by the Transfer Agent.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a Selected
Dealer, you may make redemption requests to your Selected Dealer. If the
Selected Dealer transmits the redemption request so that it is received by
the Transfer Agent by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), the redemption request will be
effective on that day. If a redemption request is received by the Transfer
Agent after the close of trading on the floor of the New York Stock Exchange,
the redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited to
your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed by Selected
Dealers upon redemption.
SERVICE PLAN
Under the Service Plan, adopted pursuant to Rule 12b-1 under the 1940
Act, the Fund (a) reimburses the Distributor for payments to certain Service
Agents for distributing the Fund's shares and servicing
Page 18
shareholder accounts ("Servicing") and (b) pays The Dreyfus Corporation,
Dreyfus Service Corporation, a wholly-owned subsidiary of The Dreyfus
Corporation, and any affiliate of either of them (collectively, "Dreyfus") for
advertising and marketing relating to the Fund and for Servicing, at an
aggregate annual rate of .20 of 1% of the value of the Fund's average daily
net assets. Each of the Distributor and Dreyfus may pay one or more Service
Agents a fee in respect of the Fund's shares owned by shareholders with whom
the Service Agent has a Servicing relationship or for whom the Service Agent
is the dealer or holder of record. Each of the Distributor and Dreyfus
determines the amounts, if any, to be paid to Service Agents under the Service
Plan and the basis on which such payments are made. The fees payable under the
Service Plan are payable without regard to actual expenses incurred.
The Fund also bears the costs of preparing and printing prospectuses
and statements of additional information for regulatory purposes and for
distribution to existing shareholders. Under the Service Plan, the Fund bears
(a) the costs of preparing, printing and distributing prospectuses and
statements of additional information used for other purposes and (b) the
costs associated with implementing and operating the Service Plan, the
aggregate of such amounts not to exceed in any fiscal year of the Fund the
greater of $100,000 or .005 of 1% of the value of the Fund's average daily
net assets for such fiscal year.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange is open for business. Fund shares
begin earning income dividends on the day following the date of purchase. The
Fund's earnings for Saturdays, Sundays and holidays are declared as dividends
on the following business day. Dividends usually are paid on the last
business day of each month and are automatically reinvested in additional
Fund shares at net asset value or, at your option, paid in cash. If you
redeem all shares in your account at any time during the month, all dividends
to which you are entitled will be paid to you along with the proceeds of the
redemption. If you are an omnibus accountholder and indicate in a partial
redemption request that a portion of any accrued dividends to which such
account is entitled belongs to an underlying accountholder who has redeemed
all shares in his or her account, such portion of the accrued dividends will
be paid to you along with the proceeds of the redemption. Distributions from
net realized securities gains, if any, generally are declared and paid once a
year, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the 1940 Act. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily and deducted before
declaration of dividends to investors.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends from net investment income paid by the Fund
will not be subject to Federal income tax. Dividends derived from Taxable
Investments, together with distributions from any net realized short-term
securities gains and all or a portion of any gains realized from the sale or
other disposition of certain market discount bonds, paid by the Fund are
subject to Federal income tax as ordinary income whether received in cash or
reinvested. Distributions from net realized long-term securities gains of the
Fund generally are subject to Federal income tax as long-term capital gains
if you are a citizen or resident of the United States. The Code provides that
the net capital gain of an individual generally will not be subject to
Federal income tax at a rate in excess of 28%. Under the Code, interest on
indebtedness incurred or continued to purchase or carry Fund shares which is
deemed to relate to exempt-interest dividends is not
Page 19
deductible. No dividend paid by the Fund will qualify for the dividends
received deduction allowable to certain U.S. corporations.
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by Fund shareholders from their gross income for Federal
income tax purposes, the Fund may purchase specified private activity bonds,
the interest from which may be (i) a preference item for purposes of the
alternative minimum tax, (ii) a component of the "adjusted current earnings"
preference item for purposes of the corporate alternative minimum tax as well
as a component in computing the corporate environmental tax or (iii) a factor
in determining the extent to which a shareholder's Social Security benefits
are taxable. If the Fund purchases such securities, the portion of the Fund's
dividends related thereto will not necessarily be tax exempt to investors who
are subject to the alternative minimum tax and/or the tax on Social Security
benefits and may cause investors to be subject to such taxes.
Taxable Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in the Fund. If the Fund pays
dividends derived from taxable income, it intends to designate as taxable the
same percentage of the day's dividends as the actual taxable income earned on
that day bears to total income earned on that day. Thus, the percentage of
the dividend designated as taxable, if any, may vary from day to day.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the
TIN furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax
Page 20
imposed on the record owner of the account, and may be claimed as a credit on
the record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended April 30, 1996 as a "regulated investment company" under
the Code. The Fund intends to continue to so qualify if such qualification is
in the best interests of its shareholders. Such qualification relieves the
Fund of any liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period.
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from CDA
Investment Technologies, Inc., Lipper Analytical Services, Inc., Moody's Bond
Survey Bond Index, Lehman Brothers Municipal Bond Index, Morningstar, Inc.
and other industry publications.
Page 21
GENERAL INFORMATION
The Fund was incorporated under Maryland law on February 15, 1985,
and commenced operations on June 25, 1985. The Fund is authorized to issue
300 million shares of Common Stock, par value $.01 per share. Each share has
one vote.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Board members or
the appointment of auditors. However, pursuant to the Fund's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for purposes of
removing a Board member from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders for any
other purpose. Fund shareholders may remove a Board member by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Fund's Board will call a meeting of shareholders for the purpose of electing
Board members if, at any time, less than a majority of the Board members then
holding office have been elected by shareholders.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by writing
to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144,
or by calling toll free 1-800-645-6561. In New York City, call
1-718-895-1206; outside the U.S. and Canada, call 516-794-5452.
Page 22
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- The Fund is permitted to borrow to the extent permitted
under the 1940 Act, which permits an investment company to borrow in an
amount up to 331\3% of the value of its total assets. The Fund currently
intends to borrow money only for temporary or emergency (not leveraging)
purposes, in an amount up to 15% of the value of its total assets (including
the amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations and
Risks -- Use of Derivatives." These instruments and certain related risks are
described more specifically under "Investment Objective and Management
Policies -- Derivatives" in the Statement of Additional Information.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its Derivatives
were poorly correlated with its other investments, or if the Fund were unable
to liquidate its position because of an illiquid secondary market. The market
for many Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for Derivatives.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call options. The Fund may write (i.e.,
sell) covered call option contracts to the extent of 20% of the value of its
net assets at the time such option contracts are written. When required by
the Securities and Exchange Commission, the Fund will set aside permissible
liquid assets in a segregated account to cover its obligations relating to
its transactions in Derivatives. To maintain this required cover, the Fund
may have to sell portfolio securities at disadvantageous prices or times
since it may not be possible to liquidate a Derivative position at a
reasonable price.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest, dividends or other
distributions payable on the loaned securities. Loans of portfolio securities
afford the Fund an opportunity to earn interest on the amount of the loan and
at the same time to earn income on the loaned securities' collateral. Loans
of portfolio securities may not exceed 331\3% of the value of the Fund's
total assets, and the Fund will receive collateral consisting of cash, U.S.
Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the Fund
at any time upon specified notice. The Fund might experience risk of loss if
the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
FORWARD COMMITMENTS -- The Fund may purchase Municipal Obligations and other
securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed at the
time the Fund enters into the commit-
Page 23
ment, but the Fund does not make payment until it receives delivery from the
counterparty. The Fund will commit to purchase such securities only with the
intention of actually acquiring the securities, but the Fund may sell these
securities before the settlement date if it is deemed advisable. A segregated
account of the Fund consisting of cash, cash equivalents or U.S. Government
securities or other high quality liquid debt securities at least equal at all
times to the amount of the commitments will be established and maintained at
the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- The Fund may purchase floating and variable
rate demand notes and bonds, which are tax exempt obligations ordinarily
having stated maturities in excess of one year, but which permit the holder
to demand payment of principal at any time, or at specified intervals.
Variable rate demand notes include master demand notes which are obligations
that permit the Fund to invest fluctuating amounts, at varying rates of
interest, pursuant to direct arrangements between the Fund, as lender, and
the borrower. These obligations permit daily changes in the amount borrowed.
Because these obligations are direct lending arrangements between the lender
and borrower, it is not contemplated that such instruments generally will be
traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on the ability
of the borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established for the
purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS -- The Fund may purchase from financial
institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives the Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation interest bears to
the total principal amount of the Municipal Obligation. These instruments may
have fixed, floating or variable rates of interest. If the participation
interest is unrated or has been given a rating below that which otherwise is
permissable for purchase by the Fund, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank that the
Fund's Board has determined meets the prescribed quality standards for banks
set forth below, or the payment obligation otherwise will be collateralized
by U.S. Government securities. For certain participation interests, the Fund
will have the right to demand payment, on not more than seven days' notice,
for all or any part of the Fund's participation interest in the Municipal
Obligation, plus accrued interest. As to these instruments, the Fund intends
to exercise its right to demand payment only upon a default under the terms
of the Municipal Obligation, as needed to provide liquidity to meet
redemptions, or to maintain or improve the quality of its investment
portfolio.
TENDER OPTION BONDS -- The Fund may purchase tender option bonds. A tender
option bond is a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing interest at a
fixed rate substantially higher than prevailing short-term tax exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing
or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the
Page 24
security holder effectively holds a demand obligation that bears interest at
the prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the underlying Municipal Obligations, of any custodian and of the
third party provider of the tender option. In certain instances and for
certain tender option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying Municipal
Obligations and for other reasons.
CUSTODIAL RECEIPTS -- The Fund may purchase custodial receipts representing
the right to receive certain future principal and interest payments on
Municipal Obligations which underlie the custodial receipts. A number of
different arrangements are possible. In a typical custodial receipt
arrangement, an issuer or a third party owner of Municipal Obligations
deposits such obligations with a custodian in exchange for two classes of
custodial receipts. The two classes have different characteristics, but, in
each case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest rate
is adjusted, and ownership changes, based on an auction mechanism. This
class's interest rate generally is expected to be below the coupon rate of
the underlying Municipal Obligations and generally is at a level comparable
to that of a Municipal Obligation of similar quality and having a maturity
equal to the period between interest rate adjustments. The second class bears
interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but
in this case inversely to changes in the rate of interest of the first class.
If the interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate paid
on the second class. In no event will the aggregate interest paid with
respect to the two classes exceed the interest paid by the underlying
Municipal Obligations. The value of the second class and similar securities
should be expected to fluctuate more than the value of a Municipal Obligation
of comparable quality and maturity and their purchase by the Fund should
increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund also
may purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a multi-class offering and the interest
rate on certain classes may be subject to a cap or floor.
STAND-BY COMMITMENTS -- The Fund may acquire "stand-by commitments" with
respect to Municipal Obligations held in its portfolio. Under a stand-by
commitment, the Fund obligates a broker, dealer or bank to repurchase, at the
Fund's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of
a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Fund will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by commitments if
such action is deemed necessary, thus increasing to a degree the cost of the
underlying Municipal Obligation and similarly decreasing such security's
yield to investors. Gains realized in connection with stand-by commitments
will be taxable. The Fund also may acquire call options on specific Municipal
Obligations. The Fund generally would purchase these call options to protect
the Fund from the issuer of the related Municipal Obligation redeeming, or
other holder of the call option from calling away, the Municipal Obligation
before maturity. The sale by the Fund of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income
by the Fund.
Page 25
ZERO COUPON SECURITIES -- The Fund may invest in zero coupon securities which
are debt securities issued or sold at a discount from their face value which
do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). The amount of
the discount varies depending on the time remaining until maturity or cash
payment date, prevailing interest rates, liquidity of the security and
perceived credit quality of the issuer. Zero coupon securities also may take
the form of debt securities that have been stripped of their unmatured
interest coupons, the coupons themselves and receipts or certificates
representing interest in such stripped debt obligations and coupons. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities, the
Fund is subject to a risk that should the Fund desire to sell them when a
ready buyer is not available at a price the Fund deems representative of
their value, the value of the Fund's net assets could be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of the
Fund's net assets) or for temporary defensive purposes, the Fund may invest
in taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within the
two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities; commercial paper rated not
lower than P-l by Moody's, A-l by S&P or F-l by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic banks,
with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase agreements
in respect of any of the foregoing. Dividends paid by the Fund that are
attributable to income earned by the Fund from Taxable Investments will be
taxable to investors. See "Dividends, Distributions and Taxes." Except for
temporary defensive purposes, at no time will more than 20% of the value of
the Fund's net assets be invested in Taxable Investments. Under normal market
conditions, the Fund anticipates that not more than 5% of its total assets
will be invested in any one category of Taxable Investments. Taxable
Investments are more fully described in the Statement of Additional
Information, to which reference hereby is made.
RATINGS -- Bonds rated Baa by Moody's are considered medium grade
obligations; they are neither highly protected nor poorly secured, and are
considered by Moody's to have speculative characteristics. Bonds rated BBB by
S&Pare regarded as having adequate capacity to pay interest and repay
principal, and while such debt securities ordinarily exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt securities in this category than in higher rated
categories. Fitch considers the obligor's ability to pay interest and repay
principal on bonds rated BBB to be adequate; adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment.
The ratings of Moody's, S&P and Fitch represent their opinions as to
the quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative
Page 26
and subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
these bonds. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, The Dreyfus Corporation also will evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. The Fund's ability to achieve its investment
objective may be more dependent on The Dreyfus Corporation's credit analysis
than might be the case for a fund that invested in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 27
Insured
Municipal
Bond Fund, Inc.
Prospectus
Registration Mark
Copy Rights 1996, Dreyfus Service Corporation 306090396
Page 28
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
SEPTEMBER 3, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Insured Municipal Bond Fund, Inc. (the "Fund"), dated September 3,
1996, as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies................B-2
Management of the Fund......................................B-10
Management Agreement........................................B-14
Purchase of Shares..........................................B-16
Service Plan................................................B-17
Redemption of Shares........................................B-18
Shareholder Services........................................B-20
Determination of Net Asset Value............................B-22
Portfolio Transactions......................................B-23
Dividends, Distributions and Taxes..........................B-23
Performance Information.....................................B-24
Information About the Fund..................................B-26
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors..........................B-26
Appendix....................................................B-27
Financial Statements........................................B-33
Report of Independent Auditors..............................B-45
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the Fund"
and "Appendix."
Portfolio Securities
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended April 30, 1996, calculated
on a monthly basis, was as follows:
Fitch Investors Moody's Investors Standard & Poor's
Service, L.P. Service, Inc. Ratings Group Percentage
("Fitch") or ("Moody's") or ("S&P") of Value
AAA Aaa AAA 98.4%
F-1 VMIG 1 SP-1+ 1.6%
100.0%
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which
Municipal Obligations may be issued include refunding outstanding
obligations, obtaining funds for general operating expenses and lending such
funds to other public institutions and facilities. In addition, certain
types of industrial development bonds are issued by or on behalf of public
authorities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit,
industrial, port or parking facilities, air or water pollution control
facilities and certain local facilities for water supply, gas, electricity,
or sewage or solid waste disposal; the interest paid on such obligations may
be exempt from Federal income tax, although current tax laws place
substantial limitations on the size of such issues. Such obligations are
considered to be Municipal Obligations if the interest paid thereon qualifies
as exempt from Federal income tax in the opinion of bond counsel to the
issuer. There are, of course, variations in the security of Municipal
Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand obligations are tax exempt obligations
ordinarily having stated maturities in excess of one year, but which permit
the holder to demand payment of principal at any time, or at specified
intervals. The issuer of such obligations ordinarily has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders thereof. The interest rate on a
floating rate demand obligation is based on a known lending rate, such as a
bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals.
For the purpose of diversification under the Investment Company Act of
1940, as amended (the "1940 Act"), the identification of the issuer of
Municipal Obligations depends on the terms and conditions of the security.
When the assets and revenues of an agency, authority, instrumentality or
other political subdivision are separate from those of the government
creating the subdivision and the security is backed only by the assets and
revenues of the subdivision, such subdivision would be deemed to be the sole
issuer. Similarly, in the case of an industrial development bond, if that
bond is backed only by the assets and revenues of the non-governmental user,
then such non-governmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other entity
guarantees a security, such a guaranty would be considered a separate
security and will be treated as an issue of such government or other entity.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation and rating of the issue. The imposition
of the Fund's management fee, as well as other operating expenses, including
fees paid under the Service Plan, will have the effect of reducing the yield
to investors.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily
associated with Municipal Obligations. Although lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation ordinarily is
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove
difficult. The staff of the Securities and Exchange Commission currently
considers certain lease obligations to be illiquid. Determination as to the
liquidity of such securities is made in accordance with guidelines
established by the Fund's Board. Pursuant to such guidelines, the Board has
directed the Manager to monitor carefully the Fund's investment in such
securities with particular regard to (1) the frequency of trades and quotes
for the lease obligation; (2) the number of dealers willing to purchase or
sell the lease obligation and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the lease obligation;
(4) the nature of the marketplace trades including the time needed to dispose
of the lease obligation, the method of soliciting offers and the mechanics of
transfer; and (5) such other factors concerning the trading market for the
lease obligation as the Manager may deem relevant. In addition, in
evaluating the liquidity and credit quality of a lease obligation that is
unrated, the Fund's Board has directed the Manager to consider (a) whether
the lease can be cancelled; (b) what assurance there is that the assets
represented by the lease can be sold; (c) the strength of the lessee's
general credit (e.g., its debt, administrative, economic, and financial
characteristics); (d) the likelihood that the municipality will discontinue
appropriating funding for the lease property because the property is no
longer deemed essential to the operations of the municipality (e.g., the
potential for an "event of nonappropriation"); (e) the legal recourse in the
event of failure to appropriate; and (f) such other factors concerning credit
quality as the Manager may deem relevant. The Fund will not invest more than
15% of the value of its net assets in lease obligations that are illiquid and
in other illiquid securities. See "Investment Restriction No. 13" below.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for the Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Insurance Feature. The Mutual Fund Insurance policies provide for a
policy period of one year which the insurer typically renews for successive
annual periods at the request of the Fund for so long as the Fund is in
compliance with the terms of the policy. The insurance premiums are payable
monthly by the Fund and are adjusted for purchases and sales of covered
Municipal Obligations during the month on a daily basis. Premium rates for
each issue of Municipal Obligations covered by the Mutual Fund Insurance are
fixed for as long as the Fund owns the security, although similar Municipal
Obligations purchased at different times may have different premiums. In
addition to the payment of premiums, a Mutual Fund Insurance policy requires
that the Fund notify the insurer on a daily basis as to all Municipal
Obligations in the insured portfolio and permits the insurer to audit its
records. The insurer cannot cancel coverage already in force with respect to
Municipal Obligations owned by the Fund and covered by the Mutual Fund
Insurance policy, except for non-payment of premiums.
Municipal Obligations are eligible for Mutual Fund Insurance if, at the
time of purchase by the Fund, they are identified separately or by category
in qualitative guidelines furnished by the insurer and are in compliance with
the aggregate limitations set forth in such guidelines. Premium variations
are based in part on the rating of the security being insured at the time the
Fund purchases such security. The insurer may prospectively withdraw
particular securities from the classifications of securities eligible for
insurance or change the aggregate amount limitation of each issue or category
of eligible Municipal Obligations but must continue to insure the full amount
of such securities previously acquired so long as they remain in the Fund's
portfolio. The qualitative guidelines and aggregate amount limitations
established by the insurer from time to time will not necessarily be the same
as the Fund or the Manager would use to govern selection of securities for
the Fund's portfolio. Therefore, from time to time such guidelines and
limitations may affect portfolio decisions.
New Issue Insurance provides that in the event of a municipality's
failure to make payment of principal or interest on an insured Municipal
Obligation, the payment will be made promptly by the insurer. There are no
deductible clauses or cancellation provisions, and the tax exempt status of
the securities is not affected. The premiums, whether paid by the issuing
municipality or the municipal bond dealer underwriting the issue, are paid in
full for the life of the Municipal Obligation. The statement of insurance is
attached to or printed on the instrument evidencing the Municipal Obligation
purchased by the Fund and becomes part of the Municipal Obligation. The
benefits of the insurance accompany the Municipal Obligations in any resale.
The Fund, at its option, may purchase secondary market insurance
("Secondary Market Insurance") on any Municipal Obligation purchased by the
Fund. By purchasing Secondary Market Insurance, the fund would obtain, upon
payment of a single premium, insurance against nonpayment of scheduled
principal and interest for the remaining term of the Municipal Obligation,
regardless of whether the fund then owned such security. Such insurance
converge would be noncancelable and would continue in force so long as the
security so insured is outstanding and the insurer remains in business. The
purpose of acquiring Secondary Market Insurance would be to enable the Fund
to sell a Municipal Obligation to a third party as a high rated insured
Municipal Obligation at a market price greater than what otherwise might be
obtainable if the security were sold without the insurance coverage.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for its
investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The ratings
of Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute
standards of quality. Although these ratings may be an initial criterion for
selection of portfolio investments, the Manager also will evaluate these
securities and the creditworthiness of the issuers of such securities based
upon financial and other available information. See "Appendix."
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for the Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased by
the Fund pursuant to Rule 144A under the Securities Act of 1933, as amended,
the Fund intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Fund's Board has directed the Manager to monitor
carefully the Fund's investments in such securities with particular regard to
trading activity, availability of reliable price information and other
relevant information. To the extent that for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to Rule
144A, the Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such
period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the U.S. Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Interest may fluctuate based on generally
recognized reference rates or the relationship of rates. While the U.S.
Government provides financial support to such U.S. Government sponsored
agencies or instrumentalities, no assurance can be given that it will always
do so, since it is not so obligated by law.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally are
limited to London branches of domestic banks that have total assets in excess
of one billion dollars. Time deposits which may be held by the Fund will not
benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of
a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
In a repurchase agreement, the Fund buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian will have custody of, and will hold in a segregated account,
securities acquired by the Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets in excess of
$1 billion, or primary government securities dealers reporting to the Federal
Reserve Bank of New York, with respect to securities of the type in which the
Fund may invest, and will require that additional securities be deposited
with it if the value of the securities purchased should decrease below resale
price. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities.
Management Policies
Lending Portfolio Securities. In connection with its securities lending
transactions, the Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a part
of the interest earned from the investment of collateral received from
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must be
able to terminate the loan at any time; (4) the Fund must receive reasonable
interest on the loan, as well as any interest or other distributions payable
on the loaned securities, and any increase in market value; and (5) the Fund
may pay only reasonable custodian fees in connection with the loan.
Derivatives. The Fund may invest in Derivatives (as defined in the
Prospectus) for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease
the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of counterparties
to over-the-counter Derivatives in the same manner as it would review the
credit quality of a security to be purchased by the Fund. Over-the-counter
Derivatives are less liquid than exchange-traded Derivatives since the other
party to the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for it.
Options--In General. The Fund may purchase and write (i.e., sell) call
options with respect to Municipal Obligations. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security or securities at the exercise price at any time
during the option period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. The principal reason
for writing covered call options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. The Fund receives a premium from writing covered call
options which it retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease
to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, at
times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of customers'
orders, will not recur. In such event, it might not be possible to effect
closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent the
Manager's predictions are incorrect, the Fund may incur losses.
Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to changes
in value (generally changing in the same way, i.e., appreciating when
interest rates decline and depreciating when interest rates rise) based upon
the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased on
a forward commitment or when-issued basis may expose the Fund to risks
because they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued basis can involve the additional risk
that the yield available in the market when the delivery takes place actually
may be higher than that obtained in the transaction itself. Purchasing
securities on a forward commitment or when-issued basis when the Fund is
fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 9 as
fundamental policies, which cannot be changed without approval by the holders
of a majority (as defined in the 1940 Act) of the Fund's outstanding voting
shares. Investment restrictions numbered 10 through 14 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members. The Fund may not:
1. Invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of the Fund's total assets may be
invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations.
2. Purchase more than 10% of the voting securities of any issuer (this
restriction applies only with respect to 75% of the Fund's assets).
3. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, securities issued by banks and obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
4. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33-1/3% of the value of the Fund's
total assets). For purposes of this investment restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
5. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from investing
in Municipal Obligations secured by real estate or interests therein, or
prevent the Fund from purchasing and selling options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
6. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available, and except to the extent the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
7. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value
of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange Commission
and the Fund's Board.
8. Issue any senior security (as such term is defined in Section 18(f)
of the Act), except to the extent that the activities permitted in Investment
Restrictions numbered 4, 5 and 12 may be deemed to give rise to a senior
security.
9. Sell securities short or purchase securities on margin, but the
Fund may make margin deposits in connection with transactions in options,
forward contracts, futures contacts, including those relating to indices, and
options on futures contracts or indices.
10. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or
as otherwise provided in the Fund's Prospectus.
11. Invest in securities of other investment companies, except to the
extent permitted under the Act.
12. Pledge, mortgage, hypothecate, or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
13. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid (which
securities could include participation interests (including municipal
lease/purchase agreements) that are not subject to the demand feature
described in the Fund's Prospectus, and floating and variable rate demand
obligations as to which the Fund cannot exercise the demand feature described
in the Fund's Prospectus on less than seven days' notice and as to which
there is no secondary market), if, in the aggregate, more than 15% of its net
assets would be so invested.
14. Invest in companies for the purpose of exercising control.
For the purposes of Investment Restriction No. 3, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as
an "industry."
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best interest
of the Fund and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Fund shares in the state involved.
MANAGEMENT OF THE FUND
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years, are
shown below. Each Board member who is deemed to be an "interested person" of
the Fund, as defined in the 1940 Act, is indicated by an asterisk.
Board Members of the Fund
*DAVID W. BURKE, Board Member. Chairman of the Board of Governors, an
independent board within the United States Information Agency, since
August 1995. From August 1994 to February 1995, Mr. Burke was a
consultant to the Manager and, from October 1990 to August 1994, he was
Vice President and Chief Administrative Officer of the Manager. From
1977 to 1990, Mr. Burke was involved in the management of national
television news, as Vice-President and Executive Vice-President of ABC
News, and subsequently as President of CBS News. He is 60 years old and
his address is Box 654, Eastham, Massachusetts 02642.
HODDING CARTER, III, Board Member. Chairman of MainStreet, a television
production company. Since 1995, Knight Professor of public affairs
journalism at the University of Maryland. From 1985 to 1986, he was
editor and chief correspondent of "Capitol Journal," a weekly Public
Broadcasting System ("PBS") series on Congress. From 1981 to 1984, he
was anchorman and chief correspondent for PBS' "Inside Story," a
regularly scheduled half-hour critique of press performance. From 1977
to July 1980, Mr. Carter served as Assistant Secretary of State for
Public Affairs and as Department of State spokesman. He is 61 years old
and his address is c/o MainStreet, 918 Sixteenth Street, N.W.,
Washington, D.C. 20006.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the of Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of Directors of The Noel Group, Inc., a
venture capital company; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway, Inc., a
manufacturer and marketer of industrial threads, specialty yarns, home
furnishings and fabrics, Curtis Industries, Inc., a national distributor
of security products, chemicals, and automotive and other hardware, and
Staffing Resources, Inc. For more than five years prior to January
1995, he was President, a director and, until August 24, 1994, Chief
Operating Officer of the Manager and Executive Vice President and a
director of Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager and, until August 24, 1994, the Fund's distributor. From
August 1994 to December 31, 1994, he was a director of Mellon Bank
Corporation. He is 52 years old and his address is 200 Park Avenue, New
York, New York 10166.
EHUD HOUMINER, Board Member. Since July 1991, Professor and Executive-in-
Residence at the Columbia Business School, Columbia University. From
1991 to 1995, he was a Consultant to Bear, Stearns & Co. Inc.,
investment bankers. He was President and Chief Executive Officer of
Philip Morris USA, manufacturers of consumer products, from December
1988 until September 1990. He also is a Director of Avnet Inc. He is
56 years old and his address is c/o Columbia Business School, Columbia
University, Uris Hall, Room 526, New York, New York 10027.
RICHARD C. LEONE, Board Member. President of The Twentieth Century Fund,
Inc., a tax exempt research foundation engaged in the study of economic,
foreign policy and domestic issues. From April 1990 to March 1994, he
was Chairman and, from April 1988 to March 1994, a Commissioner of The
Port Authority of New York and New Jersey. A member in 1985, and from
January 1986 to January 1989, Managing Director of Dillon, Read & Co.
Inc. Mr. Leone is also a director of Resource Mortgage Capital, Inc.
He is 56 years old and his address is 41 East 70th Street, New York, New
York 10021.
HANS C. MAUTNER, Board Member. Chairman, Trustee and Chief Executive Officer
of Corporate Property Investors, a real estate investment company.
Since January 1986, a Director of Julius Baer Investment Management,
Inc., a wholly-owned subsidiary of Julius Baer, Securities, Inc. He is
58 years old and his address is 305 East 47th Street, New York, New York
10017.
ROBIN A. SMITH, Board Member. Since 1993, Vice President, and from March
1992 to October 1993, Executive Director, of One to One Partnership,
Inc., a national non-profit organization that seeks to promote mentoring
and economic empowerment for at-risk youths. From June 1986 to February
1992, she was an investment banker with Goldman, Sachs & Co. She is
also a Trustee of Westover School and a Board member of the Jacobs A.
Riis Settlement House. She is 32 years old and her address is 375 Park
Avenue, Suite 1705, New York, New York 10152.
JOHN E. ZUCCOTTI, Board Member. President and Chief Executive Officer of
Olympia & York Companies (U.S.A.) and a member of its Board of Directors
since the inception of a Board on July 27, 1993. From 1986 to 1990, he
was a partner in the law firm of Brown & Wood and, from 1978 to 1986, a
partner in the law firm of Tufo & Zuccotti. First Deputy Mayor of the
City of New York from December 1975 to June 1977, and Chairman of the
City Planning Commission for the City of New York from 1973 to 1975.
Mr. Zuccotti is also a Director of Starrett Housing Corporation, a
construction, development and real estate properties corporation, and
Capstone Pharmacy Services, Inc. He is 59 years old and his address is
237 Park Avenue, New York, New York 10017.
For so long as the Fund's plan described in the section captioned
"Service Plan" remains in effect, the Board members of the Fund who are not
"interested persons" of the Fund, as defined in the 1940 Act, will be
selected and nominated by the Board members who are not "interested persons"
of the Fund.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year ended
April 30, 1996, and by all other funds in The Dreyfus Family of Funds for
which such person is a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation) for the year
ended December 31, 1995, were as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members
David W. Burke $3,750 $253,654 (49)
Hodding Carter, III $3,750 $ 49,500 (7)
Joseph S. DiMartino $4,688 $448,618 (94)
Ehud Houminer $3,750 $ 55,405 (8)
Richard C. Leone $3,750 $ 49,000 (7)
Hans C. Mautner $3,750 $ 47,000 (7)
Robin A. Smith $3,500 $ 27,526 (7)
John E. Zuccotti $3,750 $ 49,500 (7)
_____________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $2,914 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. Prior to December 1991, she served as
Vice President and Controller, and later as Senior Vice President, of
The Boston Company Advisors, Inc. She is 39 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate at
Ropes & Gray. He is 32 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of the Distributor and an officer
of other investment companies advised or administered by the Manager.
From April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank and Trust Company. From December 1991 to March 1993, he
was employed as a Fund Accountant at The Boston Company, Inc. He is 27
years old.
RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1994 to November 1995, he was
Vice President and Division Manager for First Data Investor Services
Group. From 1989 to 1994, Mr. Ingram was Vice President, Assistant
Treasurer and Tax Director - Mutual Funds at The Boston Company, Inc.
He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From September 1989 to July 1994, she was an Assistant Vice
President and Client Manager for The Boston Company, Inc. She is 32
years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 34 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1% of
the Fund's voting securities outstanding on August 20, 1996.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the
Fund, provided that in either event the continuance also is approved by a
majority of the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Agreement was
approved by shareholders at a meeting held on August 4, 1994 and was last
approved by the Fund's Board, including a majority of the Board members who
are not "interested persons" of any party to the Agreement, at a meeting held
on April 29, 1996. The Agreement is terminable without penalty, on not more
than 60 days' notice, by the Fund's Board or by vote of the holders of a
majority of the Fund's outstanding voting shares, or, on not less than 90
days' notice, by the Manager. The Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman-
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Elie M. Genadry, Vice President-
Institutional Sales; William F. Glavin, Jr., Vice President-Corporate
Development; Mark N. Jacobs, Vice President, General Counsel and Secretary;
Patrice M. Kozlowski, Vice President-Corporate Communications; Mary Beth
Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice President-
Mutual Fund Accounting; Andrew S. Wasser, Vice President-Information Systems;
Elvira Oslapas, Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides the
Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The Fund's Investment Officers are Joseph
P. Darcy, A. Paul Disdier, Karen M. Hand, Stephen C. Kris, Richard J.
Moynihan, Jill C. Shaffro, L. Lawrence Troutman, Samuel J. Weinstock and
Monica S. Wieboldt. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for the Fund as well as for other funds advised by the
Manager. All purchases and sales are reported for the Directors' review at
the meeting subsequent to such transactions.
The Manager maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The expenses
borne by the Fund include: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not
officers, directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange Commission fees,
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining corporate existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, costs of shareholders' reports and
corporate meetings and any extraordinary expenses. Pursuant to the Fund's
Service Plan, the Fund bears expenses for advertising, marketing and
distributing the Fund's shares and servicing shareholder accounts, and also
bears the cost of preparing and printing prospectuses and statements of
additional information and costs associated with implementing and operating
such plan. See "Service Plan."
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .60 of 1% of the
value of the Fund's average daily net assets. All fees and expenses are
accrued daily and deducted before declaration of dividends to investors. For
the fiscal years ended April 30, 1994, 1995 and 1996, the management fees
payable by the Fund amounted to $1,689,476, $1,408,836 and $1,357,180,
respectively. For the fiscal year ended April 30, 1996, the management fee
payable by the Fund was reduced by $213,008 pursuant to an undertaking by the
Manager, resulting in a net fee paid by the Fund to the Manager of $1,144,172
for fiscal 1996.
The Manager has agreed that if in any fiscal year the aggregate expenses
of the Fund, exclusive of taxes, brokerage, interest on borrowings and (with
the prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed 1-1/2% of the
value of the Fund's average net assets for the fiscal year, the Fund may
deduct from the payment to be made to the Manager under the Agreement, or the
Manager will bear, such excess expense. Such deduction or payment, if any,
will be estimated daily, and reconciled and effected or paid, as the case may
be, on a monthly basis. To qualify the sale of Fund shares in certain
states, the Manager may be required to comply with state securities
regulations requiring more stringent expense limitation. During the fiscal
year ended April 30, 1996, no expense reimbursements were made pursuant to
such limitations.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies. In some states,
certain financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that the Transfer Agent and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day the
Transfer Agent and the New York Stock Exchange are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the New York
Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of Fund shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the Account
Application or Shareholder Services Form on file. If the proceeds of a
particular redemption are to be wired to an account at any other bank, the
request must be in writing and signature-guaranteed. See "Redemption of
Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
SERVICE PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Service Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant
to a plan adopted in accordance with the Rule. The Fund's Board has adopted
such a plan (the "Plan"), pursuant to which the Fund (a) reimburses the
Distributor for payments to certain financial institutions (which may include
banks), securities dealers and other financial industry professionals
(collectively, "Service Agents") for distributing the Fund's shares and
servicing shareholder accounts ("Servicing") and (b) pays the Manager,
Dreyfus Service Corporation and any affiliate of either of them
(collectively, "Dreyfus") for advertising and marketing relating to the Fund
and for Servicing. The Fund's Board believes that there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Fund's Board for its review. In addition, the Plan provides that it may not
be amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Plan without shareholder approval and that other
material amendments of the Plan must be approved by the Fund's Board, and by
the Board members who are not "interested persons" (as defined in the 1940
Act) of the Fund and have no direct or indirect financial interest in the
operations of the Plan or in the related service agreements, by vote cast in
person at a meeting called for the purpose of considering such amendments.
The Plan and the related service agreements are subject to annual approval by
vote of the Board members cast in person at a meeting called for the purpose
of voting on the Plan. The Plan was approved by shareholders on August 4,
1994, and was last approved by the Fund's Board at a meeting held on April
29, 1996. The Plan is terminable at any time by vote of a majority of the
Directors who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Plan or in any of the related
service agreements or by vote of a majority of the Fund's shares. Any
service agreement is terminable without penalty, at any time, by such vote of
the Board members, upon not more than 60 days' written notice to the Service
Agent, by vote of the holders of a majority of the Fund's shares or upon 15
days' written notice by the Distributor. Each service agreement will
terminate automatically in the event of its assignment (as defined in the
1940 Act).
Under the Plan, for the fiscal year ended April 30, 1996, the total
amount payable by the Fund was $464,095, of which (a) $28,792 was payable to
the Distributor for payments made to Service Agents for distributing Fund
shares and Servicing, (b) $423,601 was payable to Dreyfus for advertising and
marketing Fund shares and Servicing and (c) $11,702 was payable for printing
the Fund's prospectus and statement of additional information, as well as
implementing and operating the Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the investor's Fund ac
count. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. The Account Application, Shareholder
Services Form or later written request must be manually signed by the
registered owner(s). Checks may be made payable to the order of any person
in an amount of $500 or more. When a Check is presented to the Transfer
Agent for payment, the Transfer Agent, as the investor's agent, will cause
the Fund to redeem a sufficient number of full or fractional shares in the
investor's account to cover the amount of the Check. Dividends are earned
until the Check clears. After clearance, a copy of the Check will be
returned to the investor. Investors generally will be subject to the same
rules and regulations that apply to checking accounts, although election of
this Privilege creates only a shareholder-transfer agent relationship with
the Transfer Agent.
If the amount of the Check is greater than the value of the shares in an
investor's account, the Check will be returned marked insufficient funds.
Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt by the Transfer Agent
of the redemption request in proper form. Redemption proceeds ($1,000
minimum) will be transferred by Federal Reserve wire only to the commercial
bank account specified by the investor on the Account Application or
Shareholder Services Form, or to a correspondent bank if the investor's bank
is not a member of the Federal Reserve System. Fees ordinarily are imposed
by such bank usually are borne by the investor. Immediate notification by
the correspondent bank to the investor's bank is necessary to avoid a delay
in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
----------------- ----------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if they
have also selected the Dreyfus TeleTransfer Privilege, any request for a wire
redemption will be effected as a Dreyfus TeleTransfer transaction through the
Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. See "Purchase of Shares--Dreyfus
TeleTransfer Privilege."
Stock Certificates; Signatures. Any stock certificate representing Fund
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each owner
of a joint account, and each signature must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which signature-
guarantees in proper form generally will be accepted from domestic banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations, as well
as from participants in the New York Stock Exchange Medallion Program, the
Securities Transfer Agents Medallion Program ("STAMP"), and the Stock
Exchanges Medallion Program. Signatures on endorsed certificates submitted
for redemption also must be guaranteed. Guarantees must be signed by an
authorized signatory of the guarantor, and "Signature-Guaranteed" must appear
with the signature. The Transfer Agent may request additional documentation
from corporations, executors, administrators, trustees or guardians and may
accept other suitable verification arrangements from foreign investors, such
as consular verification. For more information with respect to signature-
guarantees, please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Securities and Exchange Commission. In the
case of requests for redemption in excess of such amount, the Fund's Board
reserves the right to make payments in whole or in part in securities (which
may include non-marketable securities) or other assets of the Fund in case of
an emergency or any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sold such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered
without a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may
be exchanged for shares of other funds sold with a sales load,
and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other funds sold
without a sales load.
D. Shares of funds purchased with a sales load, shares
of funds acquired by a previous exchange from shares purchased
with a sales load, and additional shares acquired through
reinvestment of dividends or distributions of any such funds
(collectively referred to herein as "Purchased Shares") may be
exchanged for shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if
the sales load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed in connection
with the Purchased Shares (at the time the Purchased Shares
were acquired), without giving effect to any reduced loads,
the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor, or the investor's Service Agent
acting on the investor's behalf, must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless the investor checks the applicable "No" box on the Account
Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, or a
representative of the investor's Service Agent, and reasonably believed by
the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchanges.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. For
Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among the
funds in the Dreyfus Family of Funds. To exchange shares held in personal
retirement plans, the shares exchanged must have a current value of at least
$100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits
an investor to purchase, in exchange for shares of the Fund, shares of
another fund in the Dreyfus Family of Funds. This Privilege is available
only for existing accounts. Shares will be exchanged on the basis of
relative net asset value as described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. An investor will
be notified if his account falls below the amount designated to be exchanged
under this Privilege. In this case, and investor's account will fall to zero
unless additional investments are made in excess of the designated amount
prior to the next Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA accounts,
but not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or the
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield
on the shares. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually may be de
pleted. Automatic Withdrawal may be terminated at any time by the investor,
the Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of another fund in the Dreyfus
Family of Funds of which the investor is a shareholder. Shares of other
funds purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds sold
with a sales load; and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a
sales load may be invested in shares of other funds sold with a
sales load (referred to herein as "Offered Shares"), provided that,
if the sales load applicable to the Offered Shares exceeds the
maximum sales load charged by the fund from which dividends or
distributions are being swept, without giving effect to any reduced
loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
each business day by an independent pricing service (the "Service") approved
by the Fund's Board. When, in the judgment of the Service, quoted bid prices
for investments are readily available and are representative of the bid side
of the market, these investments are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority
of the portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices
of municipal bonds of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. The
Service may employ electronic data processing techniques and/or a matrix
system to determine valuations. The Service's procedures are reviewed by the
Fund's officers under the general supervision of the Fund's Board. Expenses
and fees, including the management fees (reduced by the expense limitation,
if any) and fees pursuant to the Service Plan, are accrued daily and are
taken into account for the purpose of determining the net asset value of Fund
shares.
Subject to guidelines established by the Fund's Board, the Manager
intends to retain in the Fund's portfolio Municipal Obligations which are
insured under the Mutual Fund Insurance policy and which are in default or in
significant risk of default in the payment of principal or interest until the
default has been cured or the principal and interest are paid by the issuer
or the insurer. In establishing fair value for these securities the Fund's
Board will give recognition to the value of the insurance feature as well as
the market value of the securities. Absent any unusual or unforeseen
circumstances, the Manager will recommend valuing these securities at the
same price as similar securities of a minimum investment grade (i.e., rated
Baa by Moody's or BBB by S&P or Fitch.)
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases
and sales usually are placed with those dealers from which it appears that
the best price or execution is obtained. Usually no brokerage commissions,
as such, are paid by the Fund for such purchases and sales, although the
price paid usually includes an undisclosed compensation to the dealer acting
as agent. The prices paid to underwriters of newly-issued securities usually
include a concession paid by the issuer to the underwriter, and purchases of
after-market securities from dealers ordinarily are executed at a price
between the bid and asked price. No brokerage commissions have been paid by
the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by the
Manager in advising the Fund. Although it is not possible to place a dollar
value on these services, it is the opinion of the Manager that the receipt
and study of such services should not reduce the overall expenses of its
research department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Dividends, Distributions
and Taxes."
The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six months
(or such shorter period as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to such
shares, any loss incurred on the sale of such shares will be disallowed to
the extent of the exempt-interest dividend received. In addition, any
dividend or distribution paid shortly after an investor's purchase may have
the effect of reducing the net asset value of his shares below the cost of
his investment. Such a distribution would be a return on investment in an
economic sense although taxable as described under "Dividends, Distributions
and Taxes" in the Prospectus.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gains
realized from the sale of other disposition of certain market discount bonds
will be treated as ordinary income under Section 1276 of the Code. In
addition, all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "Conversion transactions" are defined to include certain forward,
futures, option and "straddle" transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to
be issued in the future.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion
in order to maintain its qualification as a regulated investment company. In
such case, the Fund may have to dispose of securities to generate cash to
satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance Information."
The Fund's current yield for the 30-day period ended April 30, 1996 was
4.96%, which reflects the waiver of a portion of the management fee. See
"Management of the Fund" in the Prospectus. Had a portion of the management
fee not been waived, the Fund's current yield for the same period would have
been 4.78%. Current yield is computed pursuant to a formula which operates
as follows: the amount of the Fund's expenses accrued for the 30-day period
(net of reimbursements) is subtracted from the amount of the dividends and
interest earned (computed in accordance with regulatory requirements) by the
Fund during the period. That result is then divided by the product of: (a)
the average daily number of shares outstanding during the period that were
entitled to receive dividends and distributions, and (b) the net asset value
per share on the last day of the period less any undistributed earned income
per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to the
6th power, after which 1 is subtracted. The current yield is then arrived at
by multiplying the result by 2.
Based upon a 1996 Federal personal income tax rate of 39.60%, the Fund's
tax equivalent yield for the 30-day period ended April 30, 1996 was 8.21%,
which reflects the waiver of a portion of the management fee. See
"Management of the Fund" in the Prospectus. Had a portion of the management
fee not been waived, the Fund's tax equivalent yield for the same period
would have been 7.91%. Tax equivalent yield is computed by dividing that
portion of the current yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that portion,
if any, of the yield of the Fund that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The
tax equivalent yield figure, however, does not include the potential effect
of any state or local (including, but not limited to, county, district or
city) taxes, including applicable surcharges. In addition, there may be
pending legislation which could affect such stated rate or yield. Each
investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant tax
equivalent yield.
The Fund's average annual total return for the 1, 5 and 10 year periods
ended April 30, 1996 was 4.58%, 5.92% and 6.31%, respectively. Average
annual total return is calculated by determining the ending redeemable value
of an investment purchased with a hypothetical $1,000 payment made at the
beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period)
and subtracting 1 from the result.
The Fund's total return for the period June 25, 1985 (commencement of
operations) to April 30, 1996 was 115.55%. Total return is calculated by
subtracting the amount of the Fund's net asset value per share at the
beginning of a stated period from the net asset value per share at the end of
the period (after giving effect to the reinvestment of dividends and
distributions during the period), and dividing the result by the net asset
value per share at the beginning of the period.
The Fund may use hypothetical tax equivalent yields or charts in its
advertising. These hypothetical yields or charts will be used for
illustrative purposes only and are not indicative of the Fund's past or
future performance.
Advertising materials for the Fund may refer to or discuss then-current
or past economic conditions, developments and/or events, including those
relating to or arising from actual or proposed tax legislation, statistical
or other information relating to investment companies, as compiled by
industry associations such as the Investment Company Institute, and
Morningstar ratings and related analysis supporting such rating.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio managers and may refer to,
or include commentary by a portfolio manager relating to investment strategy,
asset growth, current or past business, political, economic or financial
conditions and other matters of general interest to investors.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and nonassessable. Fund shares
are of one class and have equal rights as to dividends and in liquidation.
Fund shares have no preemptive, subscription or conversion rights and are
freely transferable.
On August 2, 1990, the Fund's name was changed from Dreyfus Insured Tax
Exempt Bond Fund, Inc. to Dreyfus Insured Municipal Bond Fund, Inc.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-of-
pocket expenses. For the period December 1, 1995 (effective date of transfer
agency agreement) through April 30, 1996, the Fund paid the Transfer Agent
$39,096.
The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's custodian.
Neither the Transfer Agent nor The Bank of New York has any part in
determining the investment policies of the Fund or which securities are to be
purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York, 10019,
independent auditors, have been selected as independent auditors of the Fund.
APPENDIX
Description of certain S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in the category are regarded as
safe. This rating describes the third strongest capacity for payment of debt
service. If differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local economic
base, in debt burden, in the balance between revenues and expenditures, or in
quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at
some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
decreased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between an A and BBB rating is that the latter shows
more than one fundamental weakness, or one very substantial fundamental
weakness, whereas the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
Plus (+) or minus (-): The ratings from AA to BBB may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) sign designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365
days. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category. The
modifier 1 indicates a ranking for the security in the higher end of a rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). Such ratings recognize the
difference between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to
the fact that the source of payment may be limited to the external liquidity
with no or limited legal recourse to the issuer in the event the demand is
not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for repayment
of short-term promissory obligations, and ordinarily will be evidenced by
leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate
reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well established access to a range of financial markets and assured sources
of alternate liquidity.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take
into consideration special features of the issuer, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's financial strength and
credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the AAA category covering 12-36 months.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
Although the credit analysis is similar to Fitch's bond ratings
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity to meet the issuer's obligations in a timely
manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-93.5% AMOUNT VALUE
_______ _______
<S>
CALIFORNIA-12.8%
Bay Area Government Association, Tax Allocation Revenue, <C> <C>
California Redevelopment Agency 6%, 12/15/2024 (Insured; CGIC).......... $ 250,000 $ 250,660
Fairfield Public Financing Authority, Revenue (Fairfield Redevelopment
Projects)
5.25%, 8/1/2013 (Insured; CGIC)......................................... 3,500,000 3,289,720
Lancaster Redevelopment Agency, Tax Allocation, Refunding
(Lancaster Redevelopment Project) 5.80%, 8/1/2023 (Insured; MBIA)....... 2,000,000 1,939,920
San Bernadino County (Medical Center Financing Project)
5.50%, 8/1/2022 (Insured; MBIA)......................................... 10,000,000 9,373,500
Southern California Public Power Authority, Transmission Project Revenue,
Refunding
5%, 7/1/2022 (Insured; MBIA)............................................ 3,000,000 2,590,290
University of California, Revenue, Refunding (Multiple Purpose Projects)
5%, 9/1/2023 (Insured; AMBAC)........................................... 10,000,000 8,586,100
CONNECTICUT-2.5%
Connecticut Health & Educational Facilities Authority, Revenue
(Greenwich Hospital Issue) 5.80%, 7/1/2026 (Insured; AMBAC)............. 5,000,000 4,864,250
South Central Regional Water Authority, Water System Revenue
5.75%, 8/1/2012 (Insured; FGIC)......................................... 250,000 251,310
DELAWARE-.5%
Delaware Economic Development Authority, Gas Facilities Revenue
(Delmarva Power & Light) 7.30%, 7/1/2021 (Insured; FGIC)................ 1,000,000 1,091,500
FLORIDA-7.9%
Florida Division Bond Finance Department, General Services Revenues
(Department of Natural Resource-Preservation 2000)
5.80%, 7/1/2013 (Insured; FSA)........................................ 2,300,000 2,313,892
Florida Housing Finance Agency, Single Family Mortgage
6.65%, 7/1/2026 (Insured; MBIA)......................................... 950,000 968,439
Hillsboro County, Port District Special Revenue, Refunding (Tampa Port
Authority)
6%, 6/1/2020 (Insured; FSA)............................................. 2,000,000 1,973,560
Jacksonville Health Facilities Authority, HR
(Memorial Regional Rehabilitation Center Project)
6.625%, 5/1/2022 (Insured; MBIA)...................................... 3,000,000 3,153,750
Lee County:
Solid Waste System Revenue 7%, 10/1/2011 (Insured; MBIA)................ 1,420,000 1,535,915
Tourist Development, Tax Revenue, Refunding 5.625%, 10/1/2011 (Insured; FGIC) 250,000 251,075
Orange County, Sales Tax Revenue 5.375%, 1/1/2024 (Insured; FGIC)........... 5,975,000 5,553,045
Osceola County, COP, School Board 5.75%, 6/1/2014 (Insured; AMBAC).......... 250,000 246,260
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
ILLINOIS-9.7%
Carbondale, HR, Refunding (Southern Illinois Hospital Services)
6.875%, 3/1/2015 (Insured; MBIA)........................................ $ 1,000,000 $ 1,035,560
Chicago O'Hare International Airport, Special Facility Revenue (International
Terminal)
6.50%, 1/1/2018 (Insured; FGIC)......................................... 1,750,000 1,771,087
Illinois Regional Transportation Authority, Refunding 5.60%, 6/1/2025 (Insured; MBIA) 8,000,000 7,535,600
Metropolitan Pier and Exposition Authority, Dedicated State Tax Revenue
(McCormick Place Expansion Project) 6.50%, 6/15/2027 (Insured; FGIC).... 6,375,000 6,630,000
University of Illinois, Auxilliary Facilities System Revenue
5.60%, 10/1/2022 (Insured; MBIA)........................................ 3,000,000 2,827,050
KENTUCKY-4.5%
Louisville and Jefferson County Metropolitan Sewer District, Sewer and Drain
System
Revenue 5.20%, 5/15/2026 (Insured; FGIC)................................ 10,000,000 9,091,700
LOUISIANA-8.0%
Ernest N. Morial - New Orleans Exhibit Hall Authority, Special Tax Revenue
5.60%, 7/15/2025 (Insured; MBIA)........................................ 14,085,000 13,413,850
Louisiana Public Facilities Authority, HR (Our Lady of the Lake Regional
Medical Center) 5.90%, 12/3/2021 (Insured; FSA)......................... 3,000,000 2,887,590
MASSACHUSETTS-1.4%
Massachusetts Education Loan Authority, Education Loan Revenue:
7.60%, 1/1/2003 (Insured; MBIA)......................................... 810,000 879,295
7.65%, 1/1/2004 (Insured; MBIA)......................................... 935,000 1,012,885
Massachusetts Housing Finance Agency, Housing Revenue (Rental-Mortgage)
6.50%, 7/1/2025 (Insured; AMBAC)........................................ 1,000,000 1,016,560
MICHIGAN-2.6%
Detroit Water Supply System Revenue 5.50%, 7/1/2025 (Insured; MBIA)......... 4,000,000 3,780,840
Michigan Housing Development Authority, LOR (Greenwood Villa Project)
6.50%, 9/15/2007 (Insured; FSA)......................................... 1,500,000 1,587,210
MONTANA-1.2%
Forsyth, PCR, Refunding (Puget Sound, Power & Light Co.)
7.25%, 8/1/2021 (Insured; AMBAC)........................................ 2,250,000 2,453,017
NEVADA-1.8%
Reno, HR (Saint Mary's Hospital) 7.75%, 7/1/2015 (Insured; BIGI)
(Prerefunded 11/1/2000) (a)............................................. 1,425,000 1,575,238
Washoe County, Gas Facilities Revenue (Sierra Pacific Power Co. Project)
6.70%, 11/1/2032 (Insured; MBIA)........................................ 2,000,000 2,089,040
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW JERSEY-10.6%
Mercer County Improvement Authority, Solid Waste Revenue, Refunding
6.70%, 4/1/2013 (Insured; FGIC)......................................... $ 5,000,000 $ 5,062,000
New Jersey Building Authority, Building Revenue, Refunding
5%, 6/15/2017 (Insured; MBIA)........................................... 2,700,000 2,422,035
New Jersey Economic Development Authority:
Health Systems Revenue (Clara Maass)5%, 7/1/2025 (Insured; FSA)......... 4,000,000 3,524,080
PCR (Public Service Electric & Gas Co.) 6.40%, 5/1/2032 (Insured; MBIA). 7,600,000 7,760,284
New Jersey Health Care Facilities Financing Authority, Revenue:
Refunding (Jersey Shore Medical Center) 6.25%, 7/1/2021 (Insured; AMBAC) 100,000 101,987
(Underwood Memorial Hospital) 5.70%, 7/1/2023 (Insured; AMBAC).......... 100,000 96,578
New Jersey Housing & Mortgage Finance Agency, Revenue:
Home Buyer:
6.20%, 10/1/2025 (Insured; MBIA)...................................... 2,250,000 2,246,828
6.375%, 10/1/2026 (Insured; MBIA)..................................... 270,000 271,836
Home Mortgage 9.125%, 4/1/2015 (Insured; MBIA).......................... 5,000 5,026
Salem County Industrial Pollution Control Financing Authority, Revenue,
Refunding
(Atlantic City Electric) 6.15%, 6/1/2029 (Insured; FSA)................. 100,000 101,988
NEW MEXICO-1.9%
Farmington, PCR, Refunding (Southern California Edison Co.)
5.875%, 6/1/2023 (Insured; MBIA)........................................ 4,000,000 3,930,600
NEW YORK-1.5%
New York State Energy & Research Development Authority, Facilities Revenue
(Con Edison Co.-New York, Inc.) 6.375%, 12/1/2027 (Insured; MBIA)....... 3,000,000 3,046,590
NORTH CAROLINA-.8%
North Carolina Municipal Power Agency, Revenue, Refunding (No. 1 Catawba
Electric)
5.75%, 1/1/2020 (Insured; MBIA)......................................... 1,600,000 1,550,608
NORTH DAKOTA-1.9%
Mercer County, PCR, Refunding (Montana-Dakota Utilities Co. Project)
6.65%, 6/1/2022 (Insured; FGIC)......................................... 3,500,000 3,810,030
OREGON-.9%
Oregon, Health Sciences University Revenue 5.25%, 7/1/2025 (Insured; MBIA).. 2,000,000 1,821,180
PENNSYLVANIA-3.0%
Beaver County Industrial Development Authority, PCR, Refunding
(Ohio Edison Co./Mansfield) 7%, 6/1/2021 (Insured; FGIC)................ 3,000,000 3,271,290
Dauphin County General Authority, HR (Hapsco Western Pennsylvania Hospital
Project)
5.50%, 7/1/2023 (Insured; MBIA)......................................... 1,100,000 1,020,393
Philadelphia School District 5.65%, 7/1/2006 (Insured; MBIA)................ 1,700,000 1,752,751
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
RHODE ISLAND-2.2%
Rhode Island Housing & Mortgage Finance Corp., SFMR
9.30%, 7/1/2004 (Insured; FGIC)......................................... $ 20,000 $ 20,020
Rhode Island Port Authority & Economic Development Corp.,
Airport Revenue 6.625%, 7/1/2024 (Insured; FSA)......................... 4,250,000 4,395,605
SOUTH CAROLINA-.5%
Florence County, COP, Refunding (Law Enforcement Center Project)
6%, 3/1/2008 (Insured; AMBAC)........................................... 1,000,000 1,047,720
TEXAS-5.5%
Brazos River Authority, PCR, Refunding (Texas Utilities Electric Co. Project)
6.625%, 6/1/2022 (Insured; FGIC)........................................ 5,500,000 5,726,270
Brownsville Housing Finance Corp., SFMR (Mortgage-Multiple Originators &
Services)
9.625%, 12/1/2011 (Insured; FGIC)....................................... 815,000 839,866
Gregg County Health Facilities Development Corp., HR, Refunding
(Good Shepherd Medical Center Project) 5.50%, 10/1/2015 (Insured; AMBAC) 5,000,000 4,701,600
UTAH-2.0%
Murray City, HR (IHC Health Services, Inc.) 4.75%, 5/15/2020 (Insured; MBIA) 5,000,000 4,129,700
WASHINGTON-9.8%
King County, Sewer Revenue 6.125%, 1/1/2033 (Insured; MBIA)................. 5,000,000 5,094,200
Seattle Municipality, Metropolitan Seattle Sewer Revenue
6.25%, 1/1/2020 (Insured; MBIA)......................................... 3,730,000 3,823,586
Washington, MFMR 7.40%, 1/1/2030 (Insured; FSA)............................. 6,500,000 6,932,120
Yakima-Tieton Irrigation District, Revenue, Refunding 6.20%, 6/1/2019 (Insured; FSA) 4,000,000 4,067,760
_______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $189,785,857)................... $190,394,239
=======
SHORT-TERM MUNICIPAL INVESTMENTS-6.5%
FLORIDA-1.9%
Dade County, Water and Sewer System Revenue, VRDN 4.10% (Insured; FGIC) (b). $ 3,800,000 $ 3,800,000
NEW JERSEY-2.2%
New Jersey Sports and Exposition Authority, VRDN
3.85% (LOC; Industrial Bank of Japan) (b,c)............................. 4,400,000 4,400,000
NEW YORK-2.4%
New York City Municipal Water Finance Authority,
Water and Sewer System Revenue, VRDN 4.10% (Insured; FGIC) (b).......... 5,000,000 5,000,000
_______
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $13,200,000)................... $ 13,200,000
=======
TOTAL INVESTMENTS-100.0% (cost $202,985,857)................................ $203,594,239
=======
</TABLE>
<TABLE>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOR Limited Obligation Revenue
BIGI Bond Investors Guaranty Insurance MBIA Municipal Bond Investors Assurance
CGIC Capital Guaranty Insurance Corporation Insurance Corporation
COP Certificate of Participation MFMR Multi-Family Mortgage Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ ___________ ____________
<S> <C> <C> <C>
AAA Aaa AAA 93.5%
F-1, F-1+ VMIG, MIG1, P1 SP1, A1 6.5
_____
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) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(c) Secured by letter of credit.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) At April 30, 1996, 43.7% of the Fund's net assets are insured by
MBIA and 25.0% are insured by FGIC.
See notes to financial statements.
<TABLE>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $202,985,857)-see statement..................................... $203,594,239
Cash.................................................................... 1,307,181
Interest receivable..................................................... 3,671,457
Prepaid expenses........................................................ 34,833
_______
208,607,710
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $110,047
Due to Distributor...................................................... 3,621
Payable for Common Stock redeemed....................................... 15,059
Accrued expenses........................................................ 90,800 219,527
_____ ______
NET ASSETS.................................................................. $208,388,183
=======
REPRESENTED BY:
Paid-in capital......................................................... $211,864,117
Accumulated net realized (loss) on investments.......................... (4,084,316)
Accumulated net unrealized appreciation on investments-Note 3........... 608,382
_______
NET ASSETS at value applicable to 12,164,309 shares outstanding
(300 million shares of $.01 par value Common Stock authorized).......... $208,388,183
=======
NET ASSET VALUE, offering and redemption price per share
($208,388,183 / 12,164,309 shares)...................................... $17.13
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $13,595,425
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,357,180
Shareholder servicing costs-Note 2(b)................................. 576,485
Professional fees..................................................... 61,350
Registration fees..................................................... 51,879
Directors' fees and expenses-Note 2(c)................................ 32,522
Prospectus and shareholders' reports-Note 2(b)........................ 25,641
Custodian fees........................................................ 24,796
Miscellaneous......................................................... 19,558
______
TOTAL EXPENSES.................................................. 2,149,411
Less-reduction in management fee due to undertaking-Note 2(a)......... 213,008
______
NET EXPENSES.................................................... 1,936,403
______
INVESTMENT INCOME-NET........................................... 11,659,022
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 3,649,281
Net unrealized (depreciation) on investments............................ (3,943,459)
______
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (294,178)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $11,364,844
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
__________________________________
1995 1996
________ ________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 12,900,999 $ 11,659,022
Net realized gain (loss) on investments................................. (6,623,592) 3,649,281
Net unrealized appreciation (depreciation) on investments for the year.. 3,594,757 (3,943,459)
________ ________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 9,872,164 11,364,844
________ ________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (12,872,821) (11,724,725)
________ ________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 258,893,824 347,829,321
Dividends reinvested.................................................... 8,373,130 7,587,757
Cost of shares redeemed................................................. (293,381,175) (367,066,927)
________ ________
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.............. (26,114,221) (11,649,849)
________ ________
TOTAL (DECREASE) IN NET ASSETS.................................... (29,114,878) (12,009,730)
NET ASSETS:
Beginning of year....................................................... 249,512,791 220,397,913
________ ________
End of year (including undistributed investment income-net;
$65,703 in 1995)...................................................... $ 220,397,913 $ 208,388,183
======== ========
SHARES SHARES
________ ________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 15,155,340 19,661,606
Shares issued for dividends reinvested.................................. 490,282 429,419
Shares redeemed......................................................... (17,163,553) (20,702,049)
________ ________
NET (DECREASE) IN SHARES OUTSTANDING.................................. (1,517,931) (611,024)
======== ========
See notes to financial statements.
</TABLE>
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated September 3,
1996.
See notes to financial statements.
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Insured Municipal Bond Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company. The Fund's investment objective is to provide
investors with as high a level of current income exempt from Federal income
tax as is consistent with the preservation of capital. The Dreyfus
Corporation ("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") acts as the distributor of the Fund's shares, which
are sold to the public without a sales load.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Directors. 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.
(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.
(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 $4,089,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1996. If not
applied, $2,972,000 of the carryover expires in fiscal 2003 and $1,117,000 of
the carryover expires in fiscal 2004.
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 .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Fund's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed 11/2% of the value of the
Fund's average net assets for any full fiscal year. The Manager has currently
undertaken from September 1, 1995 through June 30, 1996 to reduce the
management fee paid by, or reimburse such excess expenses of the Fund, to the
extent that the Fund's aggregate annual expenses (exclusive of certain
expenses as described above) exceed an annual rate of .80 of 1% of the value
of the Funds' average daily net assets. The reduction in management fee,
pursuant to the undertaking, amounted to $213,008 for the year ended April
30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
(B) Under the Service Plan (the "Plan") pursuant to Rule 12b-1 under the
Act, the Fund (a) reimburses the Distributor for payments to certain Service
Agents (a securities dealer, financial institution or other industry
professional) for distributing the Fund's shares and servicing shareholder
accounts ("Servicing") and (b) pays the Manager, Dreyfus Service Corporation,
a wholly-owned subsidiary of the Manager, and any affiliate of either of them
(collectively "Dreyfus") for advertising and marketing relating to the Fund
and for servicing, at an aggregate annual rate of .20 of 1% of the value of
the Fund's average daily net assets. Both the Distributor and Dreyfus may pay
one or more Service Agents a fee in respect of the Fund's shares owned by
shareholders with whom the Service Agent has a Servicing relationship or for
whom the Service Agent is the dealer or holder of record. Both the
Distributor and Dreyfus determine the amounts, if any, to be paid to Service
Agents under the Plan and the basis on which such payments are made. The fees
payable under the Plan are payable without regard to actual expenses
incurred. The Plan also separately provides for the Fund to bear the costs of
preparing, printing and distributing certain of the Fund's prospectuses and
statements of additional information and costs associated with implementing
and operating the Plan, not to exceed the greater of $100,000 or .005 of 1%
of the Fund's average daily net assets for any full fiscal year. During the
year ended April 30, 1996, $464,095 was charged to the Fund pursuant to the
Plan.
Effective December 1, 1995, 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. Such compensation amounted to $39,096 for the period from
December 1, 1995 through April 30, 1996.
(C) Each director who is not an "affiliated person" as defined in the Act
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 and the Director Emeritus receives 50% less of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended April 30, 1996
amounted to $182,133,550 and $214,730,632, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $608,382, consisting of $4,141,109 gross unrealized appreciation and
$3,532,727 gross unrealized depreciation.
At April 30, 1996, 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 INSURED MUNICIPAL BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus Insured Municipal Bond Fund, Inc., including the statement of
investments, as of April 30, 1996, 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, 1996 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 Dreyfus Insured Municipal Bond Fund, Inc. at April 30, 1996, 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]
May 29, 1996
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for each of the ten
years in the period ended April 30, 1996.
Included in Part B of the Registration Statement:
Statement of Investments-- April 30, 1996.
Statement of Assets and Liabilities--
April 30, 1996.
Statement of Operations--year ended April
30, 1996.
Statement of Changes in Net Assets--for
each of the two years in the period ended
April 30, 1996.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent
Auditors, dated May 29, 1996.
All schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Articles of Incorporation.
(1)(b) Articles of Amendment.
(2) By-Laws.
(5) Management Agreement is incorporated by reference to Exhibit
(5) of Post-Effective Amendment No. 14 to the Registration
Statement on Form N-1A, filed on August 14, 1995.
(6)(a) Distribution Agreement is incorporated by reference to
Exhibit (6)(a) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A, filed on August 14, 1995.
(6)(b) Form of Service Agreements are incorporated by reference
to Exhibit (6)(b) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A, filed on August 14, 1995.
(8)(a) Amended and Restated Custody Agreement.
(8)(b) Form of Sub-Custodian Agreements are incorporated by
reference to Exhibit (8)(b) of Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A, filed on June 24, 1994.
(10) Opinion and Consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A, filed on August 14, 1995.
(11) Consent of Independent Auditors.
(15) Service Plan is incorporated by reference to Exhibit (15) of
Post-Effective Amendment No. 14 to the Registration Statement on
Form N-1A, filed on August 14, 1995.
(16) Schedules of Computation of Performance Data are incorporated
by reference to Exhibit (16) of Post-Effective Amendment No. 12 to
the Registration Statement on Form N-1A, filed on August 19, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney.
(b) Certificate of Corporate Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of August 20, 1996
______________ _____________________________
Common Stock
(Par value $.01) 5,191
Item 27. Indemnification
_______ _______________
Reference is made to Articles SEVENTH of the Registrant's Articles of
Incorporation filed as Exhibit 1 hereto and to Section 2-418 of the
Maryland General Corporation Law. The application of these provisions is
limited by Article VIII of the Registrant's By-Laws filed as Exhibit 2
hereto and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference also is made to the Distribution Agreement filed as Exhibit
6 hereto.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial services organization whose business
consists primarily of providing investment management services as
the investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as distributor of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser and administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****;
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and Member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE None
Director
JULIAN M. SMERLING None
Director
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****;
Vice Chairman of the Board:
Mellon Bank Corporation****;
Mellon Bank, N.A.****;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****;
Operating Officer The Boston Company*****;
and a Director Deputy Director:
Mellon Trust****;
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
Dreyfus America Fund++++
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****;
Laurel Capital Advisors****;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.****;
Boston Safe Deposit and Trust
Company*****;
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase
Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund++++
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
xclusive distributor:
(1) Comstock Partners Strategy Fund, Inc.
(2) Dreyfus A Bonds Plus, Inc.
(3) Dreyfus Appreciation Fund, Inc.
(4) Dreyfus Asset Allocation Fund, Inc.
(5) Dreyfus Balanced Fund, Inc.
(6) Dreyfus BASIC GNMA Fund
(7) Dreyfus BASIC Money Market Fund, Inc.
(8) Dreyfus BASIC Municipal Fund, Inc.
(9) Dreyfus BASIC U.S. Government Money Market Fund
(10) Dreyfus California Intermediate Municipal Bond Fund
(11) Dreyfus California Tax Exempt Bond Fund, Inc.
(12) Dreyfus California Tax Exempt Money Market Fund
(13) Dreyfus Capital Value Fund, Inc.
(14) Dreyfus Cash Management
(15) Dreyfus Cash Management Plus, Inc.
(16) Dreyfus Connecticut Intermediate Municipal Bond Fund
(17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
(18) Dreyfus Florida Intermediate Municipal Bond Fund
(19) Dreyfus Florida Municipal Money Market Fund
(20) The Dreyfus Fund Incorporated
(21) Dreyfus Global Bond Fund, Inc.
(22) Dreyfus Global Growth Fund
(23) Dreyfus GNMA Fund, Inc.
(24) Dreyfus Government Cash Management
(25) Dreyfus Growth and Income Fund, Inc.
(26) Dreyfus Growth and Value Funds, Inc.
(27) Dreyfus Growth Opportunity Fund, Inc.
(28) Dreyfus Income Funds
(29) Dreyfus Institutional Money Market Fund
(30) Dreyfus Institutional Short Term Treasury Fund
(31) Dreyfus Insured Municipal Bond Fund, Inc.
(32) Dreyfus Intermediate Municipal Bond Fund, Inc.
(33) Dreyfus International Equity Fund, Inc.
(34) The Dreyfus/Laurel Funds, Inc.
(35) The Dreyfus/Laurel Funds Trust
(36) The Dreyfus/Laurel Tax-Free Municipal Funds
(37) Dreyfus Stock Index Fund, Inc.
(38) Dreyfus LifeTime Portfolios, Inc.
(39) Dreyfus Liquid Assets, Inc.
(40) Dreyfus Massachusetts Intermediate Municipal Bond Fund
(41) Dreyfus Massachusetts Municipal Money Market Fund
(42) Dreyfus Massachusetts Tax Exempt Bond Fund
(43) Dreyfus Michigan Municipal Money Market Fund, Inc.
(44) Dreyfus MidCap Index Fund
(45) Dreyfus Money Market Instruments, Inc.
(46) Dreyfus Municipal Bond Fund, Inc.
(47) Dreyfus Municipal Cash Management Plus
(48) Dreyfus Municipal Money Market Fund, Inc.
(49) Dreyfus New Jersey Intermediate Municipal Bond Fund
(50) Dreyfus New Jersey Municipal Bond Fund, Inc.
(51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
(52) Dreyfus New Leaders Fund, Inc.
(53) Dreyfus New York Insured Tax Exempt Bond Fund
(54) Dreyfus New York Municipal Cash Management
(55) Dreyfus New York Tax Exempt Bond Fund, Inc.
(56) Dreyfus New York Tax Exempt Intermediate Bond Fund
(57) Dreyfus New York Tax Exempt Money Market Fund
(58) Dreyfus Ohio Municipal Money Market Fund, Inc.
(59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
(60) Dreyfus 100% U.S. Treasury Long Term Fund
(61) Dreyfus 100% U.S. Treasury Money Market Fund
(62) Dreyfus 100% U.S. Treasury Short Term Fund
(63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
(64) Dreyfus Pennsylvania Municipal Money Market Fund
(65) Dreyfus S&P 500 Index Fund
(66) Dreyfus Short-Intermediate Government Fund
(67) Dreyfus Short-Intermediate Municipal Bond Fund
(68) Dreyfus Investment Grade Bond Funds, Inc.
(69) The Dreyfus Socially Responsible Growth Fund, Inc.
(70) Dreyfus Tax Exempt Cash Management
(71) The Dreyfus Third Century Fund, Inc.
(72) Dreyfus Treasury Cash Management
(73) Dreyfus Treasury Prime Cash Management
(74) Dreyfus Variable Investment Fund
(75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
(76) General California Municipal Bond Fund, Inc.
(77) General California Municipal Money Market Fund
(78) General Government Securities Money Market Fund, Inc.
(79) General Money Market Fund, Inc.
(80) General Municipal Bond Fund, Inc.
(81) General Municipal Money Market Fund, Inc.
(82) General New York Municipal Bond Fund, Inc.
(83) General New York Municipal Money Market Fund
(84) Premier Insured Municipal Bond Fund
(85) Premier California Municipal Bond Fund
(86) Premier Equity Funds, Inc.
(87) Premier Global Investing, Inc.
(88) Premier GNMA Fund
(89) Premier Growth Fund, Inc.
(90) Premier Municipal Bond Fund
(91) Premier New York Municipal Bond Fund
(92) Premier State Municipal Bond Fund
(93) Premier Strategic Growth Fund
(94) Premier Strategic Investing
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President None
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice
President
and Assistant
Secretary
Mary Nelson+ Assistant Treasurer Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
Richard W. Ingram++ Senior Vice President Vice President
and Assistant
Treasurer
Douglas C. Conroy++ Assistant Treasurer Vice President
and Assistant
Secretary
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of one or more Board members when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares and in connection with such meeting
to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
-------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 23rd day of August, 1996.
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
BY: /s/Marie E. Connolly*
-----------------------------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
__________________________ _______________________________ _________
/s/Marie E. Connolly* President and Treasurer 8/23/96
- ------------------------------ (Principal Executive Officer and
Marie E. Connolly Principal Financial Officer)
/s/Joseph F. Tower, III* Vice President and Assistant 8/23/96
- ------------------------------ Treasurer (Principal Accounting
Joseph F. Tower, III Officer)
/s/Joseph S. DiMartino* Chairman of the Board 8/23/96
- ------------------------------
Joseph S. DiMartino
/s/David W. Burke* Board Member 8/23/96
- ------------------------------
David W. Burke
/s/Hodding Carter, III* Board Member 8/23/96
- ------------------------------
Hodding Carter, III
/s/Ehud Houminer* Board Member 8/23/96
- ------------------------------
Ehud Houminer
/s/Richard C. Leone* Board Member 8/23/96
- ------------------------------
Richard C. Leone
/s/Hans C. Mautner* Board Member 8/23/96
- ------------------------------
Hans C. Mautner
/s/Robin A. Smith* Board Member 8/23/96
- ------------------------------
Robin A. Smith
/s/John E. Zuccotti* Board Member 8/23/96
- ------------------------------
John E. Zuccotti
*BY: /s/Elizabeth Bachman
------------------------------
Elizabeth Bachman,
Attorney-in-Fact
INDEX OF EXHIBITS
(1)(a) Articles of Incorporation
(1)(b) Articles of Amendment
(2) By-Laws
(8)(a) Amended and Restated Custody Agreement
(11) Consent of Independent Auditors
Other Exhibits
(a) Powers of Attorney
(b) Certificate of Corporate Secretary
ARTICLES OF INCORPORATION
OF
DREYFUS INSURED TAX EXEMPT BOND FUND, INC.
FIRST: The undersigned, Mitchell A. Tanzman, whose
address is Seven Hanover Square, New York, New York 10004, being
at least eighteen years of age, hereby forms a corporation under
the Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter
called the "corporation") is Dreyfus Insured Tax Exempt Bond
Fund, Inc.
THIRD: The corporation is formed for the following
purpose or purposes:
(a) to conduct, operate and carry on the
business of an investment company;
(b) to subscribe for, invest in, reinvest in,
purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, exchange, distribute or otherwise
dispose of and deal in and with securities of every
nature, kind, character, type and form, including
without limitation of the generality of the foregoing,
all types of stocks, shares, bonds, debentures, notes,
bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest,
certificates of interest, certificates of
participation, certificates, interests, evidences of
ownership, guarantees, warrants, options or evidences
of indebtedness issued or created by or guaranteed as
to principal and interest by any state or local
government or any agency or instrumentality thereof,
by the United States Government or any agency,
instrumentality, territory, district or possession
thereof, by any foreign government or any agency,
instrumentality, territory, district or possession
thereof, by any corporation organized under the laws
of any state, the United States or any territory or
possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper;
to pay for the same in cash or by the issue of stock,
including treasury stock, bonds or notes of the
corporation or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest
in respect of any and all such investments of every
kind and description, including without limitation,
the right to consent and otherwise act with respect
thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any
said instruments;
(c) to borrow money or otherwise obtain credit
and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the
corporation;
(d) to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in, shares of stock of
the corporation, including shares of stock of the
corporation in fractional denominations, and to apply
to any such repurchase, redemption, retirement,
cancellation or acquisition of shares of stock of the
corporation any funds or property of the corporation
whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the
State of Maryland;
(e) to conduct its business, promote its
purposes and carry on its operations in any and all of
its branches and maintain offices both within and
without the State of Maryland, in any States of the
United States of America, in the District of Columbia
and in any other parts of the world; and
(f) to do all and everything necessary,
suitable, convenient, or proper for the conduct,
promotion, and attainment of any of the businesses and
purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in
or carried on by a corporation incorporated or
organized under the Maryland General Corporation Law,
and to have and exercise all of the powers conferred
by the laws of the State of Maryland upon corporations
incorporated or organized under the Maryland General
Corporation Law.
The foregoing provisions of this Article THIRD shall
be construed both as purposes and powers and each as an
independent purpose and power. The foregoing enumeration of
specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the
corporation, and the purposes and powers herein specified shall,
except when otherwise provided in this Article THIRD, be in no
wise limited or restricted by reference to, or inference from,
the terms of any provision of this or any other Article of these
Articles of incorporation; provided, that the corporation shall
not conduct any business, promote any purpose, or exercise any
power or privilege within or without the State of Maryland
which, under the laws thereof, the corporation may not lawfully
conduct, promote, or exercise.
FOURTH: The post office address of the principal
office of the corporation within the State of Maryland, and of
the resident agent of the corporation within the State of
Maryland, is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
FIFTH: (1) The total number of shares of stock which
the corporation has authority to issue is three hundred million
(300,000,000), all of which are of a par value of one cent
($.01) each and are designated as Common Stock.
(2) The aggregate par value of all the authorized
shares of stock is three million (3,000,000) dollars.
(3) The Board of Directors of the corporation is
authorized, from time to time, to fix the price or the minimum
price or the consideration or minimum consideration for, and to
issue, the shares of stock of the corporation.
(4) The Board of Directors of the corporation is
authorized, from time to time, to classify or to reclassify, as
the case may be, any unissued shares of stock of the
corporation.
(5) Notwithstanding any provisions of the Maryland
General Corporation Law requiring a greater proportion than a
majority of the votes of stockholders entitled to be cast in
order to take or authorize any action, any such action may be
taken or authorized upon the concurrence of a majority of the
aggregate number of votes entitled to be cast thereon.
(6) The presence in person or by proxy of the holders
of one-third of the shares of stock of the corporation entitled
to vote (without regard to class) shall constitute a quorum at
any meeting of the stockholders, except with respect to any
matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or
more classes of stock, in which case the presence in person or
by proxy of the holders of one-third of the shares of stock of
each class required to vote as a class on the matter shall
constitute a quorum.
(7) The corporation may issue shares of its stock in
fractional denominations to the same extent as its whole shares,
and shares in fractional denominations shall be shares of stock
having proportionately to the respective fractions represented
thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends
and distributions and the right to participate upon liquidation
of the corporation, but excluding the right to receive a stock
certificate evidencing a fractional share.
(8) No holder of any shares of any class of the
corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any shares of any class of the
corporation which the corporation proposes to issue, or any
rights or options which the corporation proposes to issue or to
grant for the purchase of shares of any class of the corporation
or for the purchase of any shares, bonds, securities, or
obligations of the corporation which are convertible into or
exchangeable for, or which carry any rights to subscribe for,
purchase, or otherwise acquire shares of any class of the
corporation; and any and all of such shares, bonds, securities
or obligations of the corporation, whether now or hereafter
authorized or created, may be issued, or may be reissued or
transferred if the same have been reacquired and have treasury
status, and any and all of such rights and options may be
granted by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful
consideration, and or such terms, as the Board of Directors in
its discretion may determine, without first offering the same,
or any thereof, to any said holder.
SIXTH: (1) The number of directors of the
corporation, until such number shall be increased or decreased
pursuant to the by-laws of the corporation, is two. The number
of directors shall never be less than the number prescribed by
the Maryland General Corporation Law.
(2) The names of the persons who shall act as
directors of the corporation until the first annual meeting or
until their successors are duly chosen and qualify are as
follows:
Mark N. Jacobs
Daniel C. Maclean
(3) The initial by-laws of the corporation shall be
adopted by the directors at their organizational meeting or by
their informal written action, as the case may be. Thereafter,
the power to make, alter, and repeal the by-laws of the
corporation shall be vested in the Board of Directors of the
corporation.
(4) Any determination made in good faith and, so far
as accounting matters are involved, in accordance with generally
accepted accounting principles, by or pursuant to the direction
of the Board of Directors, as to: the amount of the assets,
debts, obligations, or liabilities of the corporation; the
amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or
charges; the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall
have been paid or discharged or shall be then or thereafter
required to be paid or discharged); the value of any investment
or fair value of any other asset of the corporation; the number
of shares of the corporation outstanding; the estimated expense
to the corporation in connection with purchases or redemptions
of its shares; the ability to liquidate investments in orderly
fashion; the extent to which it is practicable to deliver a
cross-section of the portfolio of the corporation in payment for
any such shares, or as to any other matters relating to the
issue, sale, purchase, redemption and/or other acquisition or
disposition of investments of shares of the corporation, or the
determination of the net asset value of shares of the
corporation shall be final and conclusive, and shall be binding
upon the corporation and all holders of its shares, past,
present and future, and shares of the corporation are issued and
sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
SEVENTH: (1) To the maximum extent permitted by the
Maryland General Corporation Law as from time to time amended,
the corporation shall indemnify its currently acting and its
former directors, officers, and employees and those persons who,
at the request of the corporation serve or have served another
corporation, partnership, joint venture, trust or other
enterprise in one or more of such capacities. The
indemnification provided for herein shall not be deemed
exclusive of any other rights to which those seeking
indemnification may be entitled under any statute, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise.
(2) Anything herein contained to the contrary
notwithstanding, no officer or director of the corporation shall
be indemnified for any liability to the corporation or its
security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office.
EIGHTH: Any holder of shares of stock of the
corporation may require the corporation to redeem and the
corporation shall be obligated to redeem at the option of such
holder all or any part of the shares of stock of the corporation
owned by said holder, at the redemption price, pursuant to the
method, upon the terms and subject to the conditions hereinafter
set forth:
(a) The redemption price per share shall be the
net asset value per share when next determined by the
corporation at such time or times as the Board of
Directors of the corporation shall designate in
accordance with any provision of the Investment
Company Act of 1940, any rule or regulation
thereunder, or any rule or regulation made or adopted
by any securities association registered under the
Securities Exchange Act of 1934, as determined by the
Board of Directors of the corporation.
(b) Net asset value shall be determined by
dividing:
(i) The total value of the assets of the
corporation determined as provided in Subsection
(c) below less, to the extent determined by or
pursuant to the direction of the Board of
Directors in accordance with generally accepted
accounting principles, all debts, obligations and
liabilities of the corporation (which debts,
obligations and liabilities shall include,
without limitation of the generality of the
foregoing, any and all debts, obligations,
liabilities, or claims, of any and every kind and
nature, fixed, accrued and otherwise, including
the estimated accrued expenses of management and
supervision, administration and distribution and
any reserves or charges for any or all of the
foregoing, whether for taxes, expenses or
otherwise, and the price of stock redeemed but
not paid for) but excluding the corporation's
liability upon its shares and its surplus, by
(ii) The total number of shares of the
corporation outstanding.
The Board of Directors is empowered, in its
absolute discretion, to establish other methods for
determining such net asset value whenever such other
methods are deemed by it to be necessary in order to
enable the corporation to comply with, or are deemed
by it to be desirable provided they are not
inconsistent with, any provision of the Investment
Company Act of 1940 or any rule or regulation
thereunder.
(c) In determining for the purposes of these
Articles of Incorporation the total value of the
assets of the corporation at any time, investments and
any other assets of the corporation shall be valued in
such manner as may be determined from time to time by
the Board of Directors.
(d) Payment of the redemption price by the
corporation may be made either in cash or in
securities or other assets at the time owned by the
corporation or partly in cash and partly in securities
or other assets at the time owned by the corporation.
The value of any part of such payment to be made in
securities or other assets of the corporation shall be
the value employed in determining the redemption
price. Payment of the redemption price shall be made
on or before the seventh day following the day on
which the shares are properly presented for redemption
hereunder, except that delivery of any securities
included in any such payment shall be made as promptly
as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made, and,
except as postponement of the date of payment may be
permissible under the Investment Company Act of 1940
and the rules and regulations thereunder.
The corporation, pursuant to resolution of the
Board of Directors, may deduct from the payment made
for any shares redeemed a liquidating charge not in
excess of one per cent (1%) of the redemption price of
the shares so redeemed, and the Board of Directors may
alter or suspend any such liquidating charge from time
to time.
(e) The right of any holder of shares of stock
redeemed by the corporation as provided in this
Article EIGHTH to receive dividends or distributions
thereon and all other rights of such holder with
respect to such shares shall terminate at the time as
of which the redemption price of such shares is
determined, except the right of such holder to receive
(i) the redemption price of such shares from the
corporation in accordance with the provisions hereof,
and (ii) any dividend or distribution to which such
holder had previously become entitled as the record
holder of such shares on the record date for such
dividend or distribution.
(f) Redemption of shares of stock by the
corporation is conditional upon the corporation having
funds or property legally available therefor.
(g) The corporation, either directly or through
an agent, may repurchase its shares, out of funds
legally available therefor, upon such terms and
conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the
owner at a price not exceeding the net asset value per
share as determined by the corporation at such time or
times as the Board of Directors of the corporation
shall designate, less a charge not to exceed one per
cent (1%) of such net asset value, if and as fixed by
resolution of the Board of Directors of the
corporation from time to time, and take all other
steps deemed necessary or advisable in connection
therewith.
(h) The corporation, pursuant to resolution of
the Board of Directors, may cause the redemption, upon
the terms set forth in such resolution and in
subsections (a) through (f) and subsection (i) of this
Article EIGHTH, of shares of stock owned by
stockholders whose shares have an aggregate net asset
value of five hundred dollars or less.
Notwithstanding any other provision of this Article
EIGHTH, if certificates representing such shares have
been issued, the redemption price need not be paid by
the corporation until such certificates are presented
in proper form for transfer to the corporation or the
agent of the corporation appointed for such purpose;
however, the redemption shall be effective, in
accordance with the resolution of the Board of
Directors, regardless of whether or not such
presentation has been made.
(i) The obligations set forth in this Article
EIGHTH may be suspended or postponed as may be
permissible under the Investment Company Act of 1940
and the rules and regulations thereunder.
(j) The Board of Directors may establish other
terms and conditions and procedures for redemption,
including requirements as to delivery of certificates
evidencing shares, if issued.
NINTH: All persons who shall acquire stock or other
securities of the corporation shall acquire the same subject to
the provisions of the corporation's Charter, as from time to
time amended.
TENTH: From time to time any of the provisions of
the Charter of the corporation may be amended, altered or
repealed, including amendments which alter the contract rights
of any class of stock outstanding, and other provisions
authorized by the Maryland General Corporation Law at the time
in force may be added or inserted in the manner and at the time
prescribed by said Law, and all rights at any time conferred
upon the stockholders of the corporation by its Charter are
granted subject to the provisions of this Article.
IN WITNESS WHEREOF, I have adopted and signed these
Articles of Incorporation and do hereby acknowledge that the
adoption and signing are my act.
Dated: February 12, 1985
/s/ Mitchell A. Tanzman
Mitchell A. Tanzman, Incorporator
DREYFUS INSURED TAX EXEMPT BOND FUND, INC.
ARTICLES OF AMENDMENT
Dreyfus Insured Tax Exempt Bond Fund, Inc., a Maryland
corporation having its principal office in the State of Maryland
at 32 South Street, Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended
by striking Article SECOND of the Articles of Incorporation and
inserting in lieu thereof the following:
"SECOND: The name of the corporation
(hereinafter called the 'corporation') is
Dreyfus Insured Municipal Bond Fund, Inc."
SECOND: The Board of Directors of the Corporation at a
meeting held on April 5, 1990, duly adopted a resolution in
which was set forth the foregoing amendment to the charter,
declaring that the said amendment of the charter as proposed was
advisable.
THIRD: Said amendment has been consented to, authorized
and approved by the holders of at least a majority of the issued
and outstanding stock entitled to vote, at a meeting of
stockholders held August 2, 1990.
IN WITNESS WHEREOF, Dreyfus Insured Tax Exempt Bond
Fund, Inc. has caused these Articles to be signed and filed in
its name and on its behalf by its President and witnessed by its
Assistant Secretary on August 2, 1990.
DREYFUS INSURED TAX EXEMPT
BOND FUND, INC.
By: /s/ Richard J. Moynihan President
Richard J. Moynihan, President
Witness:
/s/ Robert I. Frenkel
Robert I. Frenkel,
Assistant Secretary
The undersigned, President of Dreyfus Insured Tax Exempt
Bond Fund, Inc., who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is
made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to
the best of his knowledge, information and belief, the matters
and facts set forth therein with respect to the approval thereof
are true in all material respects, under the penalties of
perjury.
/s/ Richard J. Moynihan
Richard J. Moynihan
ARTICLES OF AMENDMENT
DREYFUS INSURED MUNICIPAL BOND FUND, INC., a Maryland
corporation having its principal place of business in Baltimore
City, Maryland (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The charter of the Corporation is hereby
amended by striking Article SEVENTH of the Articles of
Incorporation and inserting in lieu thereof the following:
"SEVENTH: (1) To the fullest extent that limitations
on the liability of directors and officers are
permitted by the Maryland General Corporation Law, no
director or officer of the corporation shall have any
liability to the corporation or its stockholders for
damages. This limitation on liability applies to
events occurring at the time a person serves as a
director or officer of the corporation whether or not
such person is a director or officer at the time of
any proceeding in which liability is asserted.
(2) The corporation shall indemnify and advance
expenses to its currently acting and its former
directors to the fullest extent that indemnification
of directors is permitted by the Maryland General
Corporation Law. The corporation shall indemnify and
advance expenses to its officers to the same extent as
its directors and to such further extent as is
consistent with law. The board of directors may,
through a by-law, resolution or agreement, make
further provisions for indemnification of directors,
officers, employees and agents to the fullest extent
permitted by the Maryland General Corporation Law.
(3) No provision of this Article SEVENTH shall
be effective to protect or purport to protect any
director or officer of the corporation against any
liability to the corporation or its stockholders to
which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of his office.
(4) References to the Maryland General
Corporation Law in this Article SEVENTH are to the law
as from time to time amended. No amendment to the
Articles of Incorporation of the corporation shall
affect any right of any person under this Article
SEVENTH based on any event, omission or proceeding
prior to such amendment."
SECOND: The Board of Directors of the Corporation
approved the foregoing amendment to the charter as set forth in
Article FIRST hereto, and declared that said amendment was
advisable. The Corporation's stockholders approved the
foregoing amendment at a meeting held on November 20, 1992.
The Vice President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the
matters and facts set forth in these Articles with respect to
the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and
that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Insured Municipal Bond
Fund, Inc. has caused this instrument to be filed in its name
and on its behalf by its Vice President, Daniel C. Maclean, and
witnessed by its Assistant Secretary, Christine Pavalos, on the
4th day of December, 1992.
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
BY: /s/ Daniel C. Maclean
Daniel C. Maclean, Vice President
ATTEST:
/s/ Christine Pavalos
Christine Pavalos,
Assistant Secretary
BY-LAWS
OF
DREYFUS INSURED TAX EXEMPT BOND FUND, INC.
(A Maryland Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing shares of stock shall set forth thereon the
statements prescribed by Section 2-211 of the Maryland General
Corporation Law ("General Corporation Law") and by any other
applicable provision of law and shall be signed by the President
or a Vice President and countersigned by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer
and may be sealed with the corporate seal. The signatures of
any such officers may be either manual or facsimile signatures
and the corporate seal may be either facsimile or any other form
of seal. In case any such officer who has signed manually or by
facsimile any such certificate ceases to be such officer before
the certificate is issued, it nevertheless may be issued by the
corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
No certificate representing shares of stock shall be
issued for any share of stock until such share is fully paid,
except as otherwise authorized in Section 2-207 of the General
Corporation Law.
The corporation may issue a new certificate of stock
in place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, and the Board of Directors
may require, in its discretion, the owner of any such
certificate or his legal representative to give bond, with
sufficient surety, to the corporation to indemnify it against
any loss or claim that may arise by reason of the issuance of a
new certificate.
2. SHARE TRANSFERS. Upon compliance with provisions
restricting the transferability of shares of stock, if any,
transfers of shares of stock of the corporation shall be made
only on the stock transfer books of the corporation by the
record holder thereof or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of
the corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes
due thereon.
3. RECORD DATE FOR STOCKHOLDERS. The Board of
Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to
vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any
rights or in order to make a determination of stockholders for
any other proper purpose. Such date, in any case, shall be not
more than 90 days, and in case of a meeting of stockholders not
less than 10 days, prior to the date on which the meeting or
particular action requiring such determination of stockholders
is to be held or taken. In lieu of fixing a record date, the
Board of Directors may provide that the stock transfer books
shall be closed for a stated period but not to exceed 20 days.
If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of, or to vote at, a
meeting of stockholders, such books shall be closed for at least
10 days immediately preceding such meeting. If no record date
is fixed and the stock transfer books are not closed for the
determination of stockholders: (1) The record date for the
determination of stockholders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business
on the day on which the notice of meeting is mailed or the day
30 days before the meeting, whichever is the closer date to the
meeting; and (2) The record date for the determination of
stockholders entitled to receive payment of a dividend or an
allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors declaring
the dividend or allotment of rights is adopted, provided that
the payment or allotment date shall not be more than 60 days
after the date on which the resolution is adopted.
4. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders or a
waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be,
the term "share of stock" or "shares of stock" or "stockholder"
or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares
of stock when the corporation is authorized to issue only one
class of shares of stock and said reference also is intended to
include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class
or series upon which or upon whom the Charter confers such
rights where there are two or more classes or series of shares
or upon which or upon whom the General Corporation Law confers
such rights notwithstanding that the Charter may provide for
more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder.
5. STOCKHOLDER MEETINGS.
- ANNUAL MEETINGS. If a meeting of the
stockholders of the corporation is required by the Investment
Company Act of 1940, as amended, to elect the directors, then
there shall be submitted to the stockholders at such meeting the
question of the election of directors, and a meeting called for
that purpose shall be designated the annual meeting of
stockholders for that year. In other years in which no action
by stockholders is required for the aforesaid election of
directors, no annual meeting need be held.
- SPECIAL MEETINGS. Special stockholder meetings
for any purpose may be called by the Board of Directors or the
President and shall be called by the Secretary for the purpose
of removing a Director whenever the holders of shares entitled
to at least ten percent of all the votes entitled to be cast at
such meeting shall make a duly authorized request that such
meeting be called.
The Secretary shall call a special meeting of
stockholders for all other purposes whenever the holders of
shares entitled to at least twenty-five percent of all the votes
entitled to be cast at such meeting shall make a duly authorized
request that such meeting be called. Such request shall state
the purpose of such meeting and the matters proposed to be acted
on thereat, and no other business shall be transacted at any
such special meeting. The Secretary shall inform such
stockholders of the reasonably estimated costs of preparing and
mailing the notice of the meeting, and upon payment to the
corporation of such costs, the Secretary shall give notice in
the manner provided for below. Notwithstanding the foregoing,
unless requested by stockholders entitled to cast a majority of
the votes entitled to be cast at the meeting, a special meeting
of the stockholders need not be called at the request of
stockholders to consider any matter that is substantially the
same as a matter voted on at any special meeting of the
stockholders held during the preceding twelve (12) months.
- PLACE AND TIME. Stockholder meetings shall be
held at such place, either within the State of Maryland or at
such other place within the United States, and at such date or
dates as the directors from time to time may fix.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF
NOTICE. Written or printed notice of all meetings shall be
given by the Secretary and shall state the time and place of the
meeting. The notice of a meeting shall state in all instances
the purpose or purposes for which the meeting is called.
Written or printed notice of any meeting shall be given to each
stockholder either by mail or by presenting it to him personally
or by leaving it at his residence or usual place of business not
less than ten days and not more than ninety days before the date
of the meeting, unless any provisions of the General Corporation
Law shall prescribe a different elapsed period of time, to each
stockholder at his address appearing on the books of the
corporation or the address supplied by him for the purpose of
notice. If mailed, notice shall be deemed to be given when
deposited in the United States mail addressed to the stockholder
at his post office address as it appears on the records of the
corporation with postage thereon prepaid. Whenever any notice
of the time, place or purpose of any meeting of stockholders is
required to be given under the provisions of these by-laws or of
the General Corporation Law, a waiver thereof in writing, signed
by the stockholder and filed with the records of the meeting,
whether before or after the holding thereof, or actual
attendance or representation at the meeting shall be deemed
equivalent to the giving of such notice to such stockholder.
The foregoing requirements of notice also shall apply, whenever
the corporation shall have any class of stock which is not
entitled to vote, to holders of stock who are not entitled to
vote at the meeting, but who are entitled to notice thereof and
to dissent from any action taken thereat.
- STATEMENT OF AFFAIRS. The President of the
corporation or, if the Board of Directors shall determine
otherwise, some other executive officer thereof, shall prepare
or cause to be prepared annually a full and correct statement of
the affairs of the corporation, including a balance sheet and a
financial statement of operations for the preceding fiscal year,
which shall be filed at the principal office of the corporation
in the State of Maryland.
- CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in the
order of seniority and if present and acting: the President,
the Chairman of the Board, a Vice President or, if none of the
foregoing is in office and present and acting, by a chairman to
be chosen by the stockholders. The Secretary of the corporation
or, in his absence, an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the chairman of the meeting shall
appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may
authorize another person or persons to act for him by proxy in
all matters in which a stockholder is entitled to participate,
whether for the purposes of determining his presence at a
meeting, or whether by waiving notice of any meeting, voting or
participating at a meeting, expressing consent or dissent
without a meeting or otherwise. Every proxy shall be executed
in writing by the stockholder or by his duly authorized
attorney-in-fact and filed with the Secretary of the
corporation. No unrevoked proxy shall be valid after eleven
months from the date of its execution, unless a longer time is
expressly provided therein.
- INSPECTORS OF ELECTION. The directors, in advance
of any meeting, may, but need not, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector,
if any, before entering upon the discharge of his duties, shall
take and sign an oath to execute faithfully the duties of
inspector at such meeting with strict impartiality and according
to the best of his ability. The inspectors, if any, shall
determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents,
determine the result and do such acts as are proper to conduct
the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting or any
stockholder, the inspector or inspectors, if any, shall make a
report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact
found by him or them.
- VOTING. Each share of stock shall entitle the
holder thereof to one vote, except in the election of directors,
at which each said vote may be cast for as many persons as there
are directors to be elected. Except for election of directors,
a majority of the votes cast at a meeting of stockholders, duly
called and at which a quorum is present, shall be sufficient to
take or authorize action upon any matter which may come before a
meeting, unless more than a majority of votes cast is required
by the corporation's Articles of Incorporation. A plurality of
all the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a director.
6. INFORMAL ACTION. Any action required or permitted
to be taken at a meeting of stockholders may be taken without a
meeting if a consent in writing, setting forth such action, is
signed by all the stockholders entitled to vote on the subject
matter thereof and any other stockholders entitled to notice of
a meeting of stockholders (but not to vote thereat) have waived
in writing any rights which they may have to dissent from such
action and such consent and waiver are filed with the records of
the corporation.
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and
affairs of the corporation shall be managed under the direction
of a Board of Directors. The use of the phrase "entire board"
herein refers to the total number of directors which the
corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall
be a natural person of full age. A director need not be a
stockholder, a citizen of the United States or a resident of the
State of Maryland. The initial Board of Directors shall consist
of three persons. Thereafter, the number of directors
constituting the entire board shall never be less than three or
the number of stockholders, whichever is less. At any regular
meeting or at any special meeting called for that purpose, a
majority of the entire Board of Directors may increase or
decrease the number of directors, provided that the number
thereof shall never be less than three or the number of
stockholders, whichever is less, nor more than eleven and
further provided that the tenure of office of a director shall
not be affected by any decrease in the number of directors.
3. ELECTION AND TERM. The first Board of Directors
shall consist of the directors named in the Articles of
Incorporation and shall hold office until the first meeting of
stockholders or until their successors have been elected and
qualified. Thereafter, directors who are elected at a meeting of
stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold
office until their successors have been elected and qualified.
Newly created directorships and any vacancies in the Board of
Directors, other than vacancies resulting from the removal of
directors by the stockholders, may be filled by the Board of
Directors, subject to the provisions of the Investment Company
Act of 1940. Newly created directorships filled by the Board of
Directors shall be by action of a majority of the entire Board
of Directors. All other vacancies to be filled by the Board of
Directors may be filled by a majority of the remaining members
of the Board of Directors, although such majority is less than a
quorum thereof.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly
elected Board shall be held as soon after its election as the
directors conveniently may assemble.
- PLACE. Meetings shall be held at such place
within or without the State of Maryland as shall be fixed by the
Board.
- CALL. No call shall be required for regular
meetings for which the time and place have been fixed. Special
meetings may be called by or at the direction of the President
or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER.
Whenever any notice of the time, place or purpose of any meeting
of directors or any committee thereof is required to be given
under the provisions of the General Corporation Law or of these
by-laws, a waiver thereof in writing, signed by the director or
committee member entitled to such notice and filed with the
records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting shall be deemed
equivalent to the giving of such notice to such director or such
committee member.
- QUORUM AND ACTION. A majority of the entire
Board of Directors shall constitute a quorum except when a
vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum,
provided such majority shall constitute at least one-third of
the entire Board and, in no event, less than two directors. A
majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place.
Except as herein otherwise provided and, except as in the
General Corporation Law otherwise provided, the action of a
majority of the directors present at a meeting at which a quorum
is present shall be the action of the Board of Directors.
- CHAIRMAN OF THE MEETING. The Chairman of the
Board, if any and if present and acting, or the President or any
other director chosen by the Board, shall preside at all
meetings.
5. REMOVAL OF DIRECTORS. Any or all of the
directors may be removed for cause or without cause by the
stockholders, who may elect a successor or successors to fill
any resulting vacancy or vacancies for the unexpired term of the
removed director or directors.
6. COMMITTEES. The Board of Directors may appoint
from among its members an Executive Committee and other
committees composed of two or more directors and may delegate to
such committee or committees, in the intervals between meetings
of the Board of Directors, any or all of the powers of the Board
of Directors in the management of the business and affairs of
the corporation, except the power to amend the by-laws, to
approve any consolidation, merger, share exchange or transfer of
assets, to declare dividends, to issue stock or to recommend to
stockholders any action requiring the stockholders' approval.
In the absence of any member of any such committee, the members
thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in
the place of such absent member.
7. INFORMAL ACTION. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written
consent to such action is signed by all members of the Board of
Directors or any such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of
the Board or any such committee.
Members of the Board of Directors or any committee
designated thereby may participate in a meeting of such Board or
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in
person at a meeting.
ARTICLE III
OFFICERS
The corporation may have a Chairman of the Board and
shall have a President, a Secretary and a Treasurer, who shall
be elected by the Board of Directors, and may have such other
officers, assistant officers and agents as the Board of
Directors shall authorize from time to time. Any two or more
offices, except those of President and Vice President, may be
held by the same person, but no person shall execute,
acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the
corporation will be served thereby.
ARTICLE IV
PRINCIPAL OFFICE - RESIDENT AGENT - STOCK LEDGER
The address of the principal office of the corporation
in the State of Maryland prescribed by the General Corporation
Law is 32 South Street, c/o The Corporation Trust Incorporated,
Baltimore, Maryland 21202. The name and address of the resident
agent in the State of Maryland prescribed by the General
Corporation Law are: The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202.
The corporation shall maintain, at its principal
office in the State of Maryland prescribed by the General
Corporation Law or at the business office or an agency of the
corporation, an original or duplicate stock ledger containing
the names and addresses of all stockholders and the number of
shares of each class held by each stockholder. Such stock
ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual
inspection.
The corporation shall keep at said principal office in
the State of Maryland the original or a certified copy of the
bylaws, including all amendments thereto, and shall duly file
thereat the annual statement of affairs of the corporation
prescribed by Section 2-314 of the General Corporation Law.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the
name of the corporation and shall be in such form and contain
such other words and/or figures as the Board of Directors shall
determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and
shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
The power to make, alter, amend and repeal the by-laws
is vested in the Board of Directors of the corporation.
ARTICLE VIII
INDEMNIFICATION
Notwithstanding any provision in the General
Corporation Law or the corporation's Articles of Incorporation:
In the event that a claim for indemnification is
asserted by a director, officer or controlling person
of the corporation in connection with the registered
securities of the corporation, the corporation will
not make such indemnification unless (i) the
corporation has submitted, before a court or other
body, the question of whether the person to be
indemnified was liable by reason of wilful
misfeasance, bad faith, gross negligence, or reckless
disregard of duties, and has obtained a final decision
on the merits that such person was not liable by
reason of such conduct or (ii) in the absence of such
decision, the corporation shall have obtained a
reasonable determination, based upon a review of the
facts, that such person was not liable by virtue of
such conduct, by (a) the vote of a majority of
directors who are neither interested persons as such
term is defined in the Investment Company Act of 1940,
nor parties to the proceeding or (b) an independent
legal counsel in a written opinion.
The corporation will not advance attorneys' fees
or other expenses incurred by the person to be
indemnified unless the corporation shall have (i)
received an undertaking by or on behalf of such person
to repay the advance unless it is ultimately
determined that such person is entitled to
indemnification and one of the following conditions
shall have occurred: (x) such person shall provide
security for his undertaking, (y) the corporation
shall be insured against losses arising by reason of
any lawful advances or (z) a majority of the
disinterested, non-party directors of the corporation,
or an independent legal counsel in a written opinion,
shall have determined that based on a review of
readily available facts there is reason to believe
that such person ultimately will be found entitled to
indemnification.
As amended, August 3, 1989
AMENDED AND RESTATED CUSTODY AGREEMENT
Amended and Restated Custody Agreement made as of
August 18, 1989 between DREYFUS INSURED TAX EXEMPT BOND FUND,
INC., a corporation organized and existing under the laws of the
State of Maryland, having its principal office and place of
business at 666 Old Country Road, Garden City, New York 11530
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New
York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have
the following meanings:
1. "Authorized Person" shall be deemed to include
the Treasurer, the Controller or any other person, whether or
not any such person is an Officer or employee of the Fund, duly
authorized by the Directors of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time
to time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds
held in the Fund's custody account(s) at The Bank of New York,
or its successors, as of the close of such day or, if such day
is not a business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party
such party's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or
instituting or having instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or the entry of an order
for relief under the Federal bankruptcy law or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or if a petition is presented for
the winding up or liquidation of the party or a resolution is
passed for its winding up or liquidation, or it seeks, or
becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to approval
of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federal
agency securities, its successor or successors and its nominee
or nominees.
5. "Call Option" shall mean an exchange traded
option with respect to Securities other than Stock Index
Options, Futures Contracts and Futures Contract Options
entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the
writer thereof the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by
any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and
a member of a national securities exchange qualified to act as a
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.
8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as security
for, and in consideration of, the Custodian's issuance of (a)
any Put Option guarantee letter or similar document described in
paragraph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban consumers, U.S.
city average 1982-84 equals 100, as first published without
seasonal adjustment by the Bureau of Labor Statistics, the
Department of Labor, without regard to subsequent revisions or
corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to purchase
from the writer thereof the specified Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of the Fund's Directors
specifically approving deposits in DTC. The term "Depository"
shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of
the Fund's Directors specifically approving deposits therein by
the Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.15 (519) and
applicable to such day and each succeeding day which is not a
business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option
with respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account
in the name of a broker, dealer, futures commission merchant or
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant or Clearing Member,
or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant
or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund
may from time to time determine. Securities held in the
Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and
records.
19. "Merger" shall mean (a) with respect to the Fund,
the consolidation or amalgamation with, merger into, or transfer
of all or substantially all of its assets to, another entity,
where the Fund is not the surviving entity, and (b) with respect
to the Custodian, any consolidation or amalgamation with, merger
into, or transfer of all or substantially all of its assets to,
another entity, except for any such consolidation, amalgamation,
merger or transfer of assets between the Custodian and The Bank
of New York Company, Inc. or any subsidiary thereof, or the
Irving Bank Corporation or any subsidiary thereof, provided that
the surviving entity agrees to be bound by the terms of this
Agreement.
20. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or
guaranteed as to principal and interest by the government of the
United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers'
acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase
and sale of such securities normally requires settlement in
Federal funds on the same date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation,
a clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.
22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or
any other person or persons duly authorized by the Directors of
the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time.
23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal
instructions actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
to repurchase such Securities at a described or specified date
and price.
27. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public
authorities (including, without limitation, general obligation
bonds, revenue bonds and industrial bonds and industrial
development bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase, sell or
subscribe for the same, or evidencing or representing any other
rights or interest therein, or any property or assets.
28. "Segregated Security Account" shall mean an
account maintained under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the
custody account in which certain Securities and/or other assets
of the Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to
time determine.
29. "Shares" shall mean the shares of Common Stock of
the Fund, each of which, in the case of a Fund having Series, is
allocated to a particular Series.
30. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take
or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the value of a
particular stock index at the close of the last business day of
the contract and the price at which the futures contract is
originally struck.
31. "Stock Index Option" shall mean an exchange
traded option entitling the holder, upon timely exercise, to
receive an amount of cash determined by reference to the
difference between the exercise price and the value of the index
on the date of exercise.
32. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the period of this Agreement,
except that (a) if the Custodian fails to provide for the
custody of any of the Fund's Securities and moneys located or to
be located outside the United States in a manner satisfactory to
the Fund, the Fund shall be permitted to arrange for the custody
of such Securities and moneys located or to be located outside
the United States other than through the Custodian at rates to
be negotiated and borne by the Fund and (b) if the Custodian
fails to continue any existing sub-custodial or similar
arrangements on substantially the same terms as exist on the
date of this Agreement, the Fund shall be permitted to arrange
for such or similar services other than through the Custodian at
rates to be negotiated and borne by the Fund. The Custodian
shall not charge the Fund for any such terminated services after
the date of such termination.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver or cause
to be delivered to the Custodian all Securities and all moneys
owned by it, including cash received for the issuance of its
shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and such
moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where
such credits have been previously made and moneys are not
finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and
on-going basis to deposit in the Book-Entry System all
Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of
Securities collateral. Prior to a deposit of Securities of the
Fund in the Depository the Fund shall deliver to the Custodian a
certified resolution of the Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository
all Securities eligible for deposit therein and to utilize the
Depository to the extent possible in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of
Securities collateral. Securities and moneys of the Fund
deposited in either the Book-Entry System or the Depository will
be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts
in which the Custodian acts in a fiduciary or representative
capacity. Prior to the Custodian's accepting, utilizing and
acting with respect to Clearing Member confirmations for Options
and transactions in Options as provided in this Agreement, the
Custodian shall have received a certified resolution of the
Fund's Board of Directors approving, authorizing and instructing
the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate actually received by
the Custodian, to accept, utilize and act in accordance with
such confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate account
in the name of the Fund all moneys received by it for the
account of the Fund, and shall disburse the same only:
(a) In payment for Securities purchased, as provided
in Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes, as
provided in Article XII hereof;
(d) In payment for Shares redeemed by it, as provided
in Article XII hereof;
(e) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made, and
the purpose for which payment is to be made; or
(f) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian, as provided in
Article XV hereof.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund
during said day. Where Securities are transferred to the
account of the Fund, the Custodian shall also by book-entry or
otherwise identify as belonging to the Fund a quantity of
Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held for the Fund under this
Agreement.
4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held for the
Fund, which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities held
for the Fund may be registered in the name of the Fund, in the
name of any duly appointed registered nominee of the Custodian
as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository, any Securities which it
may hold for the account of the Fund and which may from time to
time be registered in the name of the Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry
System or in the Depository in a separate account in the name of
the Fund physically segregated at all times from those of any
other person or persons.
5. Except as otherwise provided in this Agreement
and unless otherwise instructed to the contrary by a
Certificate, the Custodian by itself, or through the use of the
Book-Entry System or the Depository with respect to Securities
therein deposited, shall with respect to all Securities held for
the Fund in accordance with this Agreement:
(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last 90 days, the Custodian will
provide a conditional payment of income within 60 days from the
date the Custodian received such notice, unless the Custodian
reasonably concludes that such income was not due or payable to
the Fund, provided that the Custodian may reverse any such
conditional payment upon its reasonably concluding that all or
any portion of such income was not due or payable, and provided
further that the Custodian shall not be liable for failing to
collect on a timely basis the full amount of income due or
payable in respect of a "floating rate instrument" or "variable
rate instrument" (as such terms are defined under Rule 2a-7
under the Investment Company Act of 1940, as amended) if it has
acted in good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount
payable upon such Securities which one called, but only if
either (i) the Custodian receives a written notice of such call,
or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited,
for the account of the Fund all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority
of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets of
the Fund and take such other steps as shall be stated in said
order to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph
5(b) of this Article which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, Option or Futures Contract Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options or Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or futures commission
merchants with respect to such Futures Contracts, Options or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the
name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, provided, however, that payments to or
deliveries from the Margin Account shall be made in accordance
with the terms and conditions of the Margin Account Agreement.
Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement
to the contrary, make payment for any Futures Contract, Option
or Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the
Custodian of such instrument or such certificate, and deliver
any Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject
to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract,
Futures Contract Option or Reverse Repurchase Agreement, the
Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase:
(a) the name of the issuer and the title of the Securities; (b)
the number of shares or the principal amount purchased and
accrued interest, if any; (c) the date of purchase and
settlement; (d) the purchase price per unit; (e) the total
amount payable upon such purchase; (f) the name of the person
from whom or the broker through whom the purchase was made, and
the name of the clearing broker, if any; and (g) the name of the
broker to which payment is to be made. The Custodian shall,
upon receipt of Securities purchased by or for the Fund, pay out
of the moneys held for the account of the Fund the total amount
payable to the person from whom, or the broker through whom, the
purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.
2. Promptly after each sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the name of the
issuer and the title of the Security; (b) the number of shares
or principal amount sold, and accrued interest, if any; (c) the
date of sale; (d) the sale price per unit; (e) the total amount
payable to the Fund upon such sale; (f) the name of the broker
through whom or the person to whom the sale was made, and the
name of the clearing broker, if any; and (g) the name of the
broker to whom the Securities are to be delivered. The
Custodian shall deliver the Securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the
same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions. Subject
to the foregoing, the Custodian may accept payment in such form
as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the type
of Option (put or call); (b) the name of the issuer and the
title and number of shares subject to such Option or, in the
case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased;
(c) the expiration date; (d) the exercise price; (e) the dates
of purchase and settlement; (f) the total amount payable by the
Fund in connection with such purchase; (g) the name of the
Clearing Member through which such Option was purchased; and (h)
the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase of such Option held by such
Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian
for the Fund, out of moneys held for the account of the Fund,
the total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided that the
same conforms to the total amount payable as set forth in such
Certificate.
2. Promptly after the sale of any Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) the type of Option (put or call); (b)
the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of
Stock Index Options sold; (c) the date of sale; (d) the sale
price; (e) the date of settlement; (f) the total amount payable
to the Fund upon such sale; and (g) the name of the Clearing
Member through which the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing
Member which previously supplied the confirmation described in
preceding paragraph l of this Article with respect to such
Option against payment to the Custodian of the total amount
payable to the Fund, provided that the same conforms to the
total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph l
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Call Option: (a) the name of
the issuer and the title and number of shares subject to the
Call Option; (b) the expiration date; (c) the date of exercise
and settlement; (d) the exercise price per share; (e) the total
amount to be paid by the Fund upon such exercise; and (f) the
name of the Clearing Member through which such Call Option was
exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the
moneys held for the account of the Fund the total amount payable
to the Clearing Member through whom the Call Option was
exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any
Put Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the name of the issuer and
the title and number of shares subject to the Put Option; (b)
the expiration date; (c) the date of exercise and settlement;
(d) the exercise price per share; (e) the total amount to be
paid to the Fund upon such exercise; and (f) the name of the
Clearing Member through which such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the
exercise of the Put Option, deliver or direct the Depository to
deliver the Securities, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
type of Stock Index Option (put or call); (b) the number of
Options being exercised; (c) the stock index to which such
Option relates; (d) the expiration date; (e) the exercise price;
(f) the total amount to be received by the Fund in connection
with such exercise; and (g) the Clearing Membr from which such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same;
(b) the expiration date; (c) the exercise price; (d) the premium
to be received by the Fund; (e) the date such Covered Call
Option was written; and (f) the name of the Clearing Member
through which the premium is to be received. The Custodian
shall deliver or cause to be delivered, in exchange for receipt
of the premium specified in the Certificate with respect to such
Covered Call Option, such receipts as are required in accordance
with the customs prevailing among Clearing Members dealing in
Covered Call Options and shall impose, or direct the Depository
to impose, upon the underlying Securities specified in the
Certificate such restrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time
to refuse to issue any receipts for Securities in the possession
of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the
Fund and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the name of the issuer
and the title and number of shares subject to the Covered Call
Option; (b) the Clearing Member to whom the underlying
Securities are to be delivered; and (c) the total amount payable
to the Fund upon such delivery. Upon the return and/or
cancellation of any receipts delivered pursuant to paragraph 6
of this Article, the Custodian shall deliver, or direct the
Depository to deliver, the underlying Securities as specified in
the Certificate for the amount to be received as set forth in
such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the name of the issuer and
the title and number of shares for which the Put Option is
written and which underlie the same; (b) the expiration date;
(c) the exercise price; (d) the premium to be received by the
Fund; (e) the date such Put Option is written; (f) the name of
the Clearing Member through which the premium is to be received
and to whom a Put Option guarantee letter is to be delivered;
(g) the amount of cash, and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security
Account; and (h) the amount of cash and/or the amount and kind
of Securities to be deposited into the Collateral Account. The
Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option
guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the
Clearing Member specified in the Certificate against receipt of
the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue
any Put Option guarantee letter or similar document if it is
unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the name of the issuer and title and number of
shares subject to the Put Option; (b) the Clearing Member from
which the underlying Securities are to be received; (c) the
total amount payable by the Fund upon such delivery; (d) the
amount of cash and/or the amount and kind of Securities to be
withdrawn from the Collateral Account; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account. Upon the return
and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such
Put Option, the Custodian shall pay out of the moneys held for
the account of the Fund the total amount payable to the Clearing
Member specified in the Certificate as set forth in such
Certificate, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) whether
such Stock Index Option is a put or a call; (b) the number of
Options written; (c) the stock index to which such Option
relates; (d) the expiration date; (e) the exercise price; (f)
the Clearing Member through which such Option was written; (g)
the premium to be received by the Fund; (h) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Collateral Account; and (j) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in a Margin Account, and the name in which such
account is to be or has been established. The Custodian shall,
upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Segregated Security Account
specified in the Certificate, and either (1) deliver such
receipts, if any, which the Custodian has specifically agreed to
issue, which are in accordance with the customs prevailing among
Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2)
make the deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) such information as may be necessary to identify the Stock
Index Option being exercised; (b) the Clearing Member through
which such Stock Index Option is being exercised; (c) the total
amount payable upon such exercise, and whether such amount is to
be paid by or to the Fund; (d) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Margin
Account; and (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article,
the Custodian shall pay to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical
to a previously written Option described in paragraphs 6, 8 or
10 of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its
position as a writer of an Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect
to the Option being purchased: (a) that the transaction is a
Closing Purchase Transaction; (b) the name of the issuer and the
title and number of shares subject to the Option, or, in the
case of a Stock Index Option, the stock index to which such
Option relates and the number of Options held; (c) the exercise
price; (d) the premium to be paid by the Fund; (e) the
expiration date; (f) the type of Option (put or call); (g) the
date of such purchase; (h) the name of the Clearing Member to
which the premium is to be paid; and (i) the amount of cash
and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account, a specified Margin
Account or the Segregated Security Account. Upon the
Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8
or 10 of this Article with respect to the Option being
liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove the
previously imposed restrictions on the Securities underlying
the Call Option.
13. Upon the expiration or exercise of, or
consummation of a Closing Purchase Transaction with respect to,
any Option purchased or written by the Fund and described in
this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, and upon the return and/or cancellation of
any receipts issued by the Custodian, shall make such
withdrawals from the Collateral Account, the Margin Account
and/or the Segregated Security Account as may be specified in a
Certificate received in connection with such expiration,
exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract (or with
respect to any number of identical Futures Contract(s)): (a)
the category of Futures Contract (the name of the underlying
stock index or financial instrument); (b) the number of
identical Futures Contracts entered into; (c) the delivery or
settlement date of the Futures Contract(s); (d) the date the
Futures Contract(s) was (were) entered into and the maturity
date; (e) whether the Fund is buying (going long) or selling
(going short) on such Futures Contract(s); (f) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (g) the name of
the broker, dealer or futures commission merchant through which
the Futures Contract was entered into; and (h) the amount of fee
or commission, if any, to be paid and the name of the broker,
dealer or futures commission merchant to whom such amount is to
be paid. The Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and conditions of
the Margin Account Agreement. The Custodian shall make payment
of the fee or commission, if any, specified in the Certificate
and deposit in the Segregated Security Account the amount of
cash and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar
payment required to be made by the Fund to a broker, dealer or
futures commission merchant with respect to an outstanding
Futures Contract shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar
payment from a broker, dealer or futures commission merchant to
the Fund with respect to an outstanding Futures Contract shall
be received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Futures Contract;
(b) with respect to a Stock Index Futures Contract, the total
cash settlement amount to be paid or received, and with respect
to a Financial Futures Contract, the Securities and/or amount of
cash to be delivered or received; (c) the broker, dealer or
futures commission merchant to or from which payment or delivery
is to be made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Segregated Security Account.
The Custodian shall make the payment or delivery specified in
the Certificate and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the items of information required in a
Certificate described in paragraph l of this Article, and (b)
the Futures Contract being offset. The Custodian shall make
payment of the fee or commission, if any, specified in the
Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, and make such withdrawals from the
Segregated Security Account as may be specified in such
Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the type of Futures Contract Option (put
or call); (b) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (c) the
expiration date; (d) the exercise price; (e) the dates of
purchase and settlement; (f) the amount of premium to be paid by
the Fund upon such purchase; (g) the name of the broker or
futures commission merchant through which such option was
purchased; and (h) the name of the broker or futures commission
merchant to whom payment is to be made. The Custodian shall pay
the total amount to be paid upon such purchase to the broker or
futures commission merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph l hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the type of
Futures Contract Option (put or call); (b) the type of Futures
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract
Option; (c) the date of sale; (d) the sale price; (e) the date
of settlement; (f) the total amount payable to the Fund upon
such sale; and (g) the name of the broker or futures commission
merchant through which the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by
the Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option (put or
call) being exercised; (b) the type of Futures Contract
underlying the Futures Contract Option; (c) the date of
exercise; (d) the name of the broker or futures commission
merchant through which the Futures Contract Option is exercised;
(e) the net total amount, if any, payable by the Fund; (f) the
amount, if any, to be received by the Fund; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited
in the Segregated Security Account. The Custodian shall make the
payments, if any, and the deposits, if any, into the Segregated
Security Account as specified in the Certificate. The deposits,
if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract
Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the type of Futures Contract Option (put or call);
(b) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the
Futures Contract Option; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund; (f)
the name of the broker or futures commission merchant through
which the premium is to be received; and (g) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account. The Custodian
shall, upon receipt of the premium specified in the Certificate,
make the deposits into the Segregated Security Account, if any,
as specified in the Certificate. The deposits, if any, to be
made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
particular Futures Contract Option exercised; (b) the type of
Futures Contract underlying the Futures Contract Option; (c) the
name of the broker or futures commission merchant through which
such Futures Contract Option was exercised; (d) the net total
amount, if any, payable to the Fund upon such exercise; (e) the
net total amount, if any, payable by the Fund upon such
exercise; and (f) the amount of cash and/or the amount and kind
of Securities to be deposited in the Segregated Security
Account. The Custodian shall, upon its receipt of the net total
amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any,
into the Segregated Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is exercised, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option
exercised; (b) the type of Futures Contract underlying such
Futures Contract Option; (c) the name of the broker or futures
commission merchant through which such Futures Contract Option
is exercised; (d) the net total amount, if any, payable to the
Fund upon such exercise; (e) the net total amount, if any,
payable by the Fund upon such exercise; and (f) the amount and
kind of Securities and/or cash to be withdrawn from or deposited
in the Segregated Security Account, if any. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate, make the payments,
if any, and the deposits, if any, into the segregated Security
Account as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as
a writer of such Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased: (a)
that the transaction is a closing transaction; (b) the type of
Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract
Option; (c) the exercise price; (d) the premium to be paid by
the Fund; (e) the expiration date; (f) the name of the broker or
futures commission merchant to which the premium is to be paid;
and (g) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account. The Custodian shall effect the withdrawals from the
Segregated Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or
consummation of a closing transaction with respect to, any
Futures Contract Option written or purchased by the Fund and
described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein, and (b) make
such withdrawals from, and/or, in the case of an exercise, such
deposits into, the Segregated Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin
Account Agreement.
9. Futures Contracts acquired by the Fund through
the exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the name
of the issuer and the title of the Security; (b) the number of
shares or principal amount sold, and accrued interest or
dividends, if any; (c) the dates of the sale and settlement;
(d) the sale price per unit; (e) the total amount credited to
the Fund upon such sales, if any; (f) the amount of cash and/or
the amount and kind of Securities, if any, which are to be
deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in a Segregated Security Account; and (h) the name of
the broker through which such short sale was made. The
Custodian shall upon its receipt of a statement from such broker
confirming such sale and that the total amount credited to the
Fund upon such sale, if any, as specified in the Certificate is
held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the
Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing-out:
(a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued
interest or dividends, if any, required to effect such
closing-out to be delivered to the broker; (c) the dates of the
closing-out and settlement; (d) the purchase price per unit; (e)
the net total amount payable to the Fund upon such closing-out;
(f) the net total amount payable to the broker upon such
closing-out; (g) the amount of cash and the amount and kind of
Securities to be withdrawn, if any, from the Margin Account; (h)
the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and
(i) the name of the broker through which the Fund is effecting
such closing-out. The Custodian shall, upon receipt of the net
total amount payable to the Fund upon such closing-out and the
return and/or cancellation of the receipts, if any, issued by
the custodian with respect to the short sale being closed-out,
pay out of the moneys held for the account of the Fund to the
broker the net total amount payable to the broker and make the
withdrawals from the Margin Account and the Segregated Security
Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters into a Reverse
Repurchase Agreement with respect to Securities and money held
by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral
Instructions or Written Instructions specifying: (a) the total
amount payable to the Fund in connection with such Reverse
Repurchase Agreement; (b) the broker or dealer through or with
which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (d) the date of such Reverse Repurchase
Agreement; and (e) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in a Segregated Security
Account in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable to
the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer,
and the deposits, if any, to the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the Fund
shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement
being terminated; (b) the total amount payable by the Fund in
connection with such termination; (c) the amount and kind of
Securities to be received by the Fund in connection with such
termination; (d) the date of termination; (e) the name of the
broker or dealer with or through which the Reverse Repurchase
Agreement is to be terminated; and (f) the amount of cash and/or
the amount and kind of Securities to be withdrawn from the
Segregated Security Account. The Custodian shall, upon receipt
of the amount and kind of Securities to be received by the Fund
specified in the Certificate, Oral Instructions or Written
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account
as specified in a Certificate received by the Custodian. Such
Certificate shall specify the amount of cash and/or the amount
and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the
title and the number of shares or the principal amount of any
particular Securities to be deposited by the Custodian into, or
withdrawn from, a Segregated Securities Account, the Custodian
shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its
lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee
letter or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed
the Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
Statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions
specifying the then market value of the securities described in
such statement. In the event such then market value is indicated
to be less than the Custodian's obligation with respect to any
o~standing Put Option, guarantee letter or similar document, the
Fund shall promptly specify in a Certificate the additional cash
and/or Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Directors, certified by the Secretary or
any Assistant Secretary, either (i) setting forth the date of
the declaration of a dividend or distribution, the date of
payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the
total amount payable to the Dividend Agent of the Fund on the
payment date, or (ii) authorizing the declaration of dividends
and distributions on a daily basis and authorizing the Custodian
to rely on Oral Instructions, Written Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per share to the shareholders
of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions, Written Instructions or
Certificate, as the case may be, the Custodian shall pay out of
the moneys held for the account of the Fund the total amount
payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF COMMON STOCK
1. Whenever the Fund shall sell any of its Shares,
it shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price;
and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the account of
the Fund.
3. Upon issuance of any of the Fund's Shares in
accordance with the foregoing provisions of this Article, the
Custodian shall pay, out of the money held for the account of
the Fund, all original issue or other taxes required to be paid
by the Fund in connection with such issuance upon the receipt of
a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
shall hereafter redeem any of its Shares, it shall furnish to
the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of Shares received by the Transfer
Agent for redemption and that such Shares are valid and in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held for the account of the
Fund of the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding
the redemption of any of the Fund's Shares, whenever its Shares
are redeemed pursuant to any check redemption privilege which
may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon
receipt of an advice from the Fund or its agent setting forth
that the redemption is in good form for redemption in accordance
with the check redemption procedure, honor the check presented
as part of such check redemption privilege out of the money held
in the account of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of the Fund which results in an
overdraft because the moneys held by the Custodian for the
account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a
Certificate or Oral Instructions issued pursuant to Article IV,
or which results in an overdraft for some other reason, or if
the Fund is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article XIII), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund payable on demand
and shall bear interest from the date incurred at a rate per
annum (based on a 360-day year for the actual number of days
involved) equal to the Federal Funds Rate plus 1/2%, such rate
to be adjusted on the effective date of any change in such
Federal Funds Rate but in no event to be less than 6% per annum,
except that any overdraft resulting from an error by the
Custodian shall bear no interest. Any such overdraft or
indebtedness shall be reduced by an amount equal to the total of
all amounts due the Fund which have not been collected by the
Custodian on behalf of the Fund when due because of the failure
of the Custodian to make timely demand or presentment for
payment. In addition, the Fund hereby agrees that the Custodian
shall have a continuing lien and security interest in and to any
property at any time held by it for the benefit of the Fund or
in which the Fund may have an interest which is then in the
Custodian's possession or control or in possession or control of
any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to
charge any such overdraft or indebtedness together with interest
due thereon against any balance of account standing to the
Fund's credit on the Custodian's books. For purposes of this
Section l of Article XIII, "overdraft" shall mean a negative
Available Balance.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is Pursuant
to a separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the name of the bank;
(b) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement; (c) the time
and date, if known, on which the loan is to be entered into; (d)
the date on which the loan becomes due and payable; (e) the
total amount payable to the Fund on the borrowing date; (f) the
market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular
Securities; and (g) a statement specifying whether such loan is
for investment purposes or for temporary or emergency purposes
and that such loan is in conformance with the Investment Company
Act of 1940 and the Fund's prospectus. The Custodian shall
deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian
may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver
such Securities as additional collateral as may be specified in
a Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities released
from collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the name of the issuer, the
title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
Articles of Incorporation and as disclosed in its most recent
and currently effective prospectus to lend its portfolio
Securities, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each such
loan: (a) the name of the issuer and the title of the
Securities; (b) the number of shares or the principal amount
loaned; (c) the date of loan and delivery; (d) the total amount
to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the
premium, if any, separately identified; and (e) the name of the
broker, dealer or financial institution to which the loan was
made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities.
The Custodian may accept payment in connection with a delivery
otherwise than through the Book-Entry System or Depository only
in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance
with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
name of the issuer and the title of the Securities to be
returned; (b) the number of shares or the principal amount to be
returned; (c) the date of termination; (d) the total amount to
be delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in
said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which such
Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the
Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. The
Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting
from the use of the Book-Entry System or any Depository arising
by reason of any negligence, misfeasance or willful misconduct
on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;
(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received
therefor;
(c) The legality of the redemption of any of the
Fund's Shares, or the propriety of the amount to be paid
therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the
Custodian be under any duty or obligation to see to it that any
cash collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan
of portfolio Securities of the Fund is adequate collateral for
the Fund against any loss it might sustain as a result of such
loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check
or notify the Fund that the amount of such cash collateral held
by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the
Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent
pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the
account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian
shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see
that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund of
the Custodian's receipt or non-receipt of any such payment;
provided however that the Custodian, upon the Fund's written
request, shall, as Custodian, demand from any broker, dealer,
futures commission merchant or Clearing Member identified by the
Fund the payment of any variation margin payment or similar
payment that the Fund asserts it is entitled to receive pursuant
to the terms of a Margin Account Agreement or otherwise from
such broker, dealer, futures commission merchant or Clearing
Member.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls,
conversions, exchange, offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in
the Depository which may mature or be redeemed, retired, called
or otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities
held in the Depository, the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian
shall not be under any obligation to appear in, prosecute or
defend any action, suit or proceeding in respect to any
Securities held by the Depository which in its opinion may
involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be
furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction
of reimbursement of its costs and expenses in connection with
any such action.
7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions
approved in a Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the
Fund's Board of Directors adopted in accordance with Rule 17f-5
under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of its
Articles of Incorporation.
9. (a) The Custodian shall be entitled to receive
and the Fund agrees to pay to the Custodian all reasonable
out-of-pocket expenses and such compensation and fees as are
specified on Schedule A hereto. The Custodian shall not deem
amounts payable in respect of foreign custodial services to be
out-of-Pocket expenses, it being the parties' intention that all
fees for such services shall be as set forth on Schedule B
hereto and shall be provided for the term of this Agreement
without any automatic or unilateral increase. The Custodian
shall have the right to unilaterally increase the figures on
Schedule A on or after March 1, 1991 and on or after each
succeeding March 1 thereafter by an amount equal to 50% of the
increase in the Consumer Price Index for the calendar year
ending on the December 31 immediately preceding the calendar
year in which such March 1 occurs, provided, however, that
during each such annual period commencing on a March 1, the
aggregate increase during such period shall not be in excess of
10%. Any increase by the Custodian shall be specified in a
written notice delivered to the Fund at least thirty days prior
to the effective date of the increase. The Custodian may charge
such compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to such agreement
against any money held by it for the account of the Fund. The
Custodian shall also be entitled to charge against any money
held by it for the account of the Fund the amount of any loss,
damage, liability or expense, including counsel fees, for which
it shall be entitled to reimbursement under the provisions of
this Agreement. The expenses which the Custodian may charge
against the account of the Fund include, but are not limited to,
the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of
the Fund.
(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of the
Custodian as may be payable by the Fund with respect to such
calendar month in an amount equal to the aggregate of its
Earnings Credit for such calendar month. In no event may any
Earnings Credits be carried forward to any fiscal year other
than the fiscal year in which it was earned, or, unless
permitted by applicable law, transferred to, or utilized by, any
other person or entity, provided that any such transferred
Earnings Credit can be used only to offset compensation and fees
of the Custodian for services rendered to such transferee and
cannot be used to pay the Custodian's out-of-pocket expenses.
For purposes of this subsection (b), the Fund is permitted to
transfer Earnings Credits only to The Dreyfus Corporation, its
affiliates and/or any investment company now or in the future
sponsored by The Dreyfus Corporation or any of its affiliates or
for which The Dreyfus Corporation or any of its affiliates acts
as the sole investment adviser or as the principal distributor,
and Daiwa Money Fund Inc. For purposes of this sub-section (b),
a fiscal year shall mean the twelve-month period commencing on
the effective date of this Agreement and on each anniversary
thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or XI hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business of the
same day that such Oral Instructions or Written Instructions are
given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions, provided
such instructions reasonably appear to have been received from
an Authorized Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund
which are in the possession of the Custodian shall be the
property of the Fund. Such books and records shall be prepared
and maintained as required by the Investment Company Act of
1940, as amended, and other applicable securities laws and rules
and regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund or the
Fund's authorized representative at the Fund's expense.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository,
or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.
14. The Fund agrees to indemnify the Custodian
against and save the Custodian harmless from all liability,
claims, losses and demands whatsoever, including attorney's
fees, howsoever arising or incurred because of or in connection
with the Custodian's payment or non-payment of checks pursuant
to paragraph 6 of Article XII as part of any check redemption
privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own
negligence or willful misconduct.
15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Except as provided in subparagraphs (b), (c)
and (d) herein, neither party may terminate this Agreement until
the earlier of the following: (i) August 31, 1993, and (ii) the
third anniversary of the earliest date on which none of the
companies listed on Schedule C hereto is a transfer agency
customer of the Custodian. Any such termination may be effected
only by the terminating party giving to the other party a notice
in writing specifying the date of such termination, which shall
be not less than two hundred seventy (270) days after the date
of giving of such notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under this Agreement and such breach has remained
uncured for a period of thirty days after the Custodian's
receipt from the Fund of written notice specifying such breach.
(c) Either party, immediately upon written
notice to the other party, may terminate this Agreement upon the
Merger or Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under the "Amendment to Transfer Agency Agreements"
dated August 18, 1989 and has not cured such breach as promptly
as practicable and in any event within seven days of its receipt
of written notice of such breach, provided that the Custodian
shall not be permitted to cure any such material breach rising
from the willful misconduct of the Custodian.
In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution of the
Directors of the Fund, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which
shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event
notice of termination is given by the Custodian, the Fund shall,
on or before the termination date, deliver to the Custodian a
copy of a resolution of its Directors, certified by the
Secretary or any Assistant Secretary, designating a successor
custodian or custodians. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice, this Agreement shall
terminate and the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date deliver
directly to the successor custodian all Securities and moneys
then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment
or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall, upon the date specified in the notice
of termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot
be delivered to the Fund, to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under its
seal, setting forth the names and the signatures of the present
Authorized Persons. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or
in the event that other or additional Authorized Persons are
elected or appointed. Until such new Certificate shall be
received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the
last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund under its
seal, setting forth the names and the signatures of the present
Officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any
such present Officer ceases to be an Officer of the Fund, or in
the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers
as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other
place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund, shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at 666 Old Country Road,
Garden City, New York 11530, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement and approved
by a resolution of the Directors of the Fund.
6. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its
Directors.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. This Agreement shall not be effective on the date
hereof and instead shall become effective on January 1, 1990.
When effective, this Agreement shall supersede the then-existing
Custody Agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto
duly authorized, and their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
Dreyfus Insured Tax Exempt Bond
Fund, Inc.
By: /s/ John Pyburn
John Pyburn, Treasurer
Attest:
/s/ Robert I. Frenkel
Robert I. Frenkel
THE BANK OF NEW YORK
By: /s/ Donald Colby
Donald Colby
Attest:
/s/ Robert W. Viets
Robert W. Viets
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our report
dated May 29, 1996, in this Registration Statement (Form N-1A 2-96008)
of Dreyfus Insured Municipal Bond Fund, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
August 21, 1996
Item 24.(b)
Other Exhibits (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth Bachman, Marie
E. Connolly, Richard W. Ingram and John E. Pelletier and each of them, with
full power to act without the other, his or her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities
(until revoked in writing) to sign any and all amendments to the Registration
Statement of Dreyfus Insured Municipal Bond Fund, Inc. (including post-
effective amendments and amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/David W. Burke July 29, 1996
- --------------------------------
David W. Burke
/s/Hodding Carter, III July 29, 1996
- --------------------------------
Hodding Carter, III
/s/Joseph S. DiMartino July 29, 1996
- --------------------------------
Joseph S. DiMartino
/s/Ehud Houminer July 29, 1996
- --------------------------------
Ehud Houminer
/s/Richard C. Leone July 29, 1996
- --------------------------------
Richard C. Leone
/s/Hans C. Mautner July 29, 1996
- --------------------------------
Hans C. Mautner
/s/Robin A. Smith July 29, 1996
- --------------------------------
Robin A. Smith
/s/John E. Zuccotti July 29, 1996
- --------------------------------
John E. Zuccotti
ITEM 24.(b)
OTHER EXHIBIT (b)
DREYFUS INSURED MUNICIPAL BOND FUND, INC.
Certificate of Assistant Secretary
The undersigned, Elizabeth Bachman, Vice President and Assistant
Secretary of Dreyfus Insured Municipal Bond Fund, Inc. (the "Fund"), hereby
certifies that set forth below is a copy of the resolution adopted by the
Fund's Board authorizing the signing by Elizabeth Bachman, Marie E. Connolly,
Richard W. Ingram and John Pelletier on behalf of the proper officers of the
Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any
and all amendments and supplements thereto, may be signed
by any one of Elizabeth Bachman, Marie E. Connolly,
Richard W. Ingram and John Pelletier as the attorney-in-
fact for the proper officers of the Fund, with full power
of substitution and resubstituion; and that the
appointment of each of such persons as such attorney-in-
fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full
power and authority to do and perform each and every act
and thing requisite and necessary to be done in
connection with such Registration Statement and any and
all amendments and supplements thereto, as fully to all
intents and purposes as the officer, for whom he or she
is acting as attorney-in-fact, might or could do in
person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Fund on August 23, 1996.
/s/ Elizabeth Bachman
-----------------------
Elizabeth Bachman
Vice President and
Assistant Secretary
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<NAME> DREYFUS INSURED MUNICIPAL BOND FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
<INVESTMENTS-AT-COST> 202986
<INVESTMENTS-AT-VALUE> 203594
<RECEIVABLES> 3672
<ASSETS-OTHER> 1342
<OTHER-ITEMS-ASSETS> 0
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