File No. 33-9654
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. 11 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11 [X]
(Check appropriate box or boxes.)
Dreyfus New York Insured Tax Exempt Bond Fund
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
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 May 1, 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
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for the fiscal year ended December 31, 1995 was filed on February 14,
1996.
Dreyfus New York Insured Tax Exempt Bond Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 21
5 Management of the Fund 10
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 21
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-11
15 Control Persons and Principal B-15
Holders of Securities
16 Investment Advisory and Other B-15
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
Dreyfus New York Insured Tax Exempt Bond Fund
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-24
18 Capital Stock and Other Securities B-26
19 Purchase, Redemption and Pricing B-17, B-18,
of Securities Being Offered B-23
20 Tax Status *
21 Underwriters B-17
22 Calculations of Performance Data B-25
23 Financial Statements B-47
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.
FOR USE BY BANKS ONLY
May 1, 1996
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
SUPPLEMENT TO PROSPECTUS
DATED MAY 1, 1996
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
577s050196BNK
- ----------------------------------------------------------------------------
PROSPECTUS MAY 1, 1996
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
- ----------------------------------------------------------------------------
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND (THE "FUND") IS AN
OPEN-END, NON-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, NEW YORK STATE AND NEW
YORK CITY INCOME TAXES AS IS CONSISTENT WITH THE PRESERVATION OF CAPITAL. THE
FUND INVESTS PRIMARILY IN A PORTFOLIO OF NEW YORK 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 MAY 1, 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. FOR A FREE COPY, 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 FLUCTUATE FROM TIME TO
TIME.
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 4
Description of the Fund........................... 5
Management of the Fund............................ 10
How to Buy Shares................................. 11
Shareholder Services.............................. 13
How to Redeem Shares.............................. 16
Service Plan...................................... 18
Dividends, Distributions and Taxes................ 19
Performance Information........................... 21
General Information............................... 21
Appendix.......................................... 23
- ----------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------
This Page Intentionally Left Blank
Page 2
<TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<S> <C> <C> <C> <C>
Management Fees ............................................................ .60%
12b-1 Fees (distribution and servicing)..................................... .25%
Other Expenses.............................................................. .14%
Total Fund Operating Expenses............................................... .99%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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 $32 $55 $121
</TABLE>
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%.
- ----------------------------------------------------------------------------
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. Long-term investors could pay more in 12b-1 fees
than the economic equivalent of paying a front-end sales charge. The
information in the foregoing table does not reflect any fee waiver or expense
reimbursement arrangements that may be in effect. Certain Service Agents (as
defined below) may charge their clients direct fees for effecting
transactions in 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 beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicted. This
information has been derived from the Fund's financial statements.
<TABLE>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1987(1) 1988 1989 1990 1991 1992 1993 1994 1995
-------- ------- -------- ------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year.... $12.50 $10.17 $10.56 $10.75 $10.64 $11.33 $11.60 $12.04 $10.66
------- ------ ------ ------ ------ ------ ------ ----- -----
INVESTMENT OPERATIONS:
Investment income_net..... .64 .73 .71 .72 .66 .63 .60 .60 .59
Net realized and unrealized gain
(loss) on investments..... (2.33) .39 .19 (.11) .69 .31 .66 (1.39) 1.02
------- ------ ------ ------ ------ ------ ------ ----- -----
TOTAL FROM INVESTMENT OPERATIONS... (1.69) 1.12 .90 .61 1.35 .94 1.26 (.79) 1.61
------- ------ ------ ------ ------ ------ ------ ----- -----
DISTRIBUTIONS:
Dividends from investment income--net... (.64) (.73) (.71) (.72) (.66) (.63) (.60) (.59) (.59)
Dividends from net realized
gain on investments....... -- -- -- -- -- (.04) (.22) -- --
------- ------ ------ ------ ------ ------ ------ ----- -----
TOTAL DISTRIBUTIONS....... (.64) (.73) (.71) (.72) (.66) (.67) (.82) (.59) (.59)
------- ------ ------ ------ ------ ------ ------ ----- -----
Net asset value, end of year... $10.17 $10.56 $10.75 $10.64 $11.33 $11.60 $12.04 $10.66 $11.68
====== ====== ====== ======= ======= ====== ====== ======= ======
TOTAL INVESTMENT RETURN......... (15.62%)(2) 11.32% 8.76% 5.91% 13.06% 8.55% 11.08% (6.62%) 15.38%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets... -- .23% .50% .50% .88% .90% .96% .98% .99%
Ratio of net investment income
to average net assets..... 7.12%(2) 7.00% 6.64% 6.74% 6.01% 5.49% 5.01% 5.31% 5.20%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation provision
of the Management Agreement)... 1.50%(2) 1.27% .72% .61% .17% .11% .02% .01% --
Portfolio Turnover Rate..... 48.74%(3) 32.10% 54.18% 63.12% 15.95% 16.12% 19.89% 12.79% 31.13%
Net Assets, end of year
(000's omitted)... $25,768 $44,619 $66,384 $92,259 $147,527 $180,326 $198,257 $151,696 $157,317
- -------------------
(1) From February 18, 1987 (commencement of operations) to December 31, 1987.
(2) Annualized.
(3) Not annualized.
</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, New York State and New York City
income taxes as is consistent with the preservation of capital. To accomplish
its investment objective, the Fund invests primarily in the debt securities
of the State of New York, its political subdivisions, authorities and
corporations, the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal, New York State and New York City income
taxes (collectively, "New York Municipal Obligations") that are insured as to
the timely payment of principal and interest by recognized insurers of
Municipal Obligations (as defined below). To the extent acceptable insured
New York Municipal Obligations are at any time unavailable for investment by
the Fund, the Fund will invest temporarily in New York Municipal Obligations
that are not subject to insurance, insured Municipal Obligations and/or other
debt securities the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income tax. 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
Debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development bonds
issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds and 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 its 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
that are insured New York Municipal Obligations. See "Insurance Feature" and
"Investment Considerations and Risks _ Investing in New York Municipal
Obligations" below, and "Dividends, Distributions and Taxes."
The Municipal Obligations purchased by the Fund will be rated no
lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Ratings Group, a division of The
Page 5
McGraw-Hill Companies, Inc. ("S&P"), or Fitch Investors Service, L.P.
("Fitch"). Municipal Obligations rated BBB by S&P or Fitch or Baa by Moody's
are considered investment grade obligations; those rated BBB by S&P and Fitch
are regarded as having an adequate capacity to pay principal and interest,
while those rated Baa by Moody's are considered medium grade obligations which
lack outstanding investment characteristics and have speculative
characteristics as well. See "Appendix B" in the Statement of Additional
Information. 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 will invest no
more than 20% of the value of its net assets in Municipal Obligations the
interest from which gives rise to a preference item for the purpose of the
alternative minimum tax and, except for temporary defensive purposes, in
other investments subject to Federal income tax. 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" and "Appendix
_ Investment Techniques" 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.
Page 6
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 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
Financial Guaranty Insurance Company ("Financial Guaranty"), MBIA Insurance
Corporation ("MBIA"), 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 and the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of Northern Mariana Islands,
the Virgin Islands of the United States and theTerritory of Guam. As of Decemb
er 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,
the Commonwealth of Puerto Rico and the Territory of Guam. 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 $1.38 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, formerly known as Capital Guaranty Insurance Company, is a
wholly-owned subsidiary of Financial Security Assurance Holdings, Ltd., which
is 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 September 30, 1995, FSA's statutory capital was approximately $650
million (unaudited)
Page 7
and 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 to which your attention is directed.
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. Certain
securities purchased by the Fund, such as those rated Baa by Moody's and BBB
by S&P and Fitch, may be subject to such risk with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. Once the rating of a portfolio security has
been changed, the Fund will consider all circumstances deemed relevant in
determining whether to continue to hold the security. The Fund's net asset
value generally will not be stable and should fluctuate based upon changes in
the value of the Fund's portfolio securities. See "Appendix -- Certain
Portfolio Securities -- Ratings" below and "Appendix B" in the Statement of
Additional Information.
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS -- You should consider carefully
the special risks inherent in the Fund's investment in New York Municipal
Obligations. These risks result from the financial condition of New York
State, certain of its public bodies and municipalities and New York City. Begi
nning in early 1975, New York State, New York City and other State entities
faced serious financial difficulties which jeopardized the credit standing
and impaired the borrowing abilities of such entities and contributed to high
interest rates on, and lower market prices for, debt obligations issued by
them. A recurrence of such financial difficulties or a failure of certain
financial recovery programs could result in defaults or declines in the
market values of various New York Municipal Obligations in which the Fund may
invest. If there should be a default or other financial crisis relating to
New York State, New York City, a State or City agency, or a State
municipality, the market value and marketability of outstanding New York
Municipal Obligations in the Fund's portfolio and the interest income to the
Fund could be adversely affected. Moreover, the national recession and the
significant slowdown in the New York regional economies in the early 1990's
added substantial uncertainty to estimates of the State's tax revenues,
which, in part, caused the State to incur cash-basis operating deficits in
the General Fund and issue deficit notes during the fiscal periods 1989
through 1992. The State's financial operations improved, however, during the
1993 and 1994 fiscal years. After reflecting a 1993 year-end deposit to the
State's refund reserve account of $671 million, reported 1993 General Fund
receipts were $45 million higher than originally projected in April 1992. The
State completed the 1994 fiscal year with an operating surplus in the General
Fund of $914 million. The State reported a General Fund operating deficit of
$1.426 billion for the 1995 fiscal year. There can be no assurance that New
York will not face substantial potential budget gaps in future years. In
January 1992, Moody's lowered from A to Baal its ratings of certain
appropriation-backed debt of New York State and its agencies. The State's
general obligation, state-guaranteed and New York State Local Government
Assistance Corporation bonds continued to be rated A by Moody's. In January
1992, S&P lowered from A to A- its ratings of New York State general
obligation bonds and stated that it continued to assess the ratings outlook
as negative. S&P also lowered its ratings of various agency debt, State moral
obligations, contractual obligations, lease purchase obligations and
Page 8
State guarantees. In February 1991, Moody's lowered its rating of New York
City's general obligation bonds from A to Baal. The rating changes reflected
the rating agencies' concerns about the financial condition of New York State
and City, the heavy debt load of the State and City and economic uncertainties
in the region. You should obtain and review a copy of the Statement of
Additional Information which more fully sets forth these and other risk
factors.
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 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. 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 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 available yield. Shareholders should consult their tax advisers
concerning the effect of these provisions on an investment in the Fund.
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.
Page 9
USE OF DERIVATIVES -- The Fund may invest 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 "Investment
Objective and Management Policies _ Management Policies _ Derivatives" in the
Statement of Additional Information.
NON-DIVERSIFIED STATUS -- The classification of the Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. A "diversified" investment company is required by
the 1940 Act generally, with respect to 75% of its total assets, to invest
not more than 5% of such assets in the securities of a single issuer. Since a
relatively high percentage of the Fund's assets may be invested in the
obligations of a limited number of issuers, the Fund's portfolio may be more
sensitive to changes in the market value of a single issuer. However, to meet
Federal tax requirements, at the close of each quarter the Fund may not have
more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested
in any one issuer. These limitations do not apply to U.S. Government
securities.
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
MellonBank, N.A., which is a wholly-owned subsidiary of MellonBank
Corporation ("Mellon"). As of March 29, 1996, The Dreyfus Corporation managed
or administered approximately $82 billion in assets for more than 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
Massachusetts law. The Fund's primary portfolio manager is L. Lawrence
Troutman. He has held that position since February 18, 1986 and has been
employed by The Dreyfus Corporation since 1985. 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
$233 billion in
Page 10
assets as of December 31, 1995, including approximately $81 billion in
proprietary mutual fund assets. As of December 31, 1995, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $786 billion in assets, including
approximately $60 billion in mutual fund assets.
For the fiscal year ended December 31, 1995, the Fund paid The
Dreyfus Corporation a monthly management fee at the annual rate of .60 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
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 One Exchange Place, 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.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer ("Selected Dealer"), bank or other financial institution
(collectively, "Service Agents"). Share certificates are issued only upon
your written request. No certificates are issued for fractional shares. It is
not recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified 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
Page 11
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 subseq
uent 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 bank 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#8900052198/Dreyfus New York
Insured Tax Exempt Bond Fund, for purchase of Fund 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
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. Other purchase procedures may be in effect for clients of certain
Service Agents. 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 each business day 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
Page 12
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 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 Fund shares by telephoning
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.
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 to check the applicable
"No" box on the Account Application, indicating that you specifically refuse
this Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also available by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-645-6561
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
Page 13
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 other funds in the
Dreyfus Family of Funds of which you are currently an investor. The amount
you designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth 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 canceled 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
Page 14
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 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 Builder, 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 Builder, 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 price
s 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 on redemption 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 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 to 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.
Page 15
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.
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 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 BUILDER 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 BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES 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
BUILDER 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 30 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 Fund 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 been
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
cer-
Page 16
tain 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 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 is currently
contemplated. Shares for which certificates have been issued are not eligible
for 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
write them. Please do not postdate your Redemption Checks. If you do, the
Transfer
Page 17
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 telephoning
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 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 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 .25 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
Page 18
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 determine 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 used 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 (such as
costs of printing and mailing service agreements), 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. Each item for which a payment may be made under the Service Plan
may constitute an expense of distributing Fund shares as the Securities and
Exchange Commission construes such term under Rule 12b-1.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment income on
each day the New York Stock Exchange is open for business. The Fund's
earnings for Saturdays, Sundays and holidays are declared as dividends on the
next 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 invest 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, New York State or New York City income taxes.
To the extent you are obligated to pay state or local taxes outside of the
State of New York, dividends earned by an investment in the Fund may
represent taxable income. Dividends derived from Taxable Investments,
together with distributions from any net realized short-term securities gains
and all or a portion of any gains realized from the sale or other disposition
of certain market discount bonds, paid by the Fund are subject to Federal
income tax as ordinary income whether or not reinvested in additional shares.
No dividend paid by the Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. 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 deductible.
Page 19
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by shareholders of the Fund 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 an investor who is subject to the alternative minimum tax and/or
tax on Social Security benefits and may cause an investor to be subject to
such taxes.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in the Fund. If the Fund pays
dividends derived from taxable income, it intends to designate as taxable the
same percentage of the day's dividend 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 employee identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended December 31, 1995 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. In
addition, the Fund is subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gain.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
Page 20
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. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Fund."
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, or for shorter time periods depending
upon the length of time during which the Fund has operated.
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.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated September 19, 1986, and
commenced operations on February 18, 1987. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
Each share has one vote.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given
in each agreement,
Page 21
obligation or instrument entered into or executed by the Fund or a Board
member. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited
to circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Fund intends to conduct its operations in such a way so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the
Fund. As described under "Management of the Fund" in the Statement of
Additional Information, the Fund ordinarily will not hold shareholder
meetings; however, shareholders under certain circumstances may have the
right to call a meeting of shareholders for the purpose of voting to remove
Board members.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, 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 borrowing is
made. While borrowings exceed 5% of the Fund's total assets, the Fund will
not make any additional investments.
LENDING PORTFOLIO SECURITIES -- TheFund 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 or other distributions
payable on the loaned securities which affords the Fund an opportunity to
earn interest on the amount of the loan and 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 within 45 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 when the
Fund enters into the commitment, 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. No additional
when-issued commitments will be made if more than 20% of the value of the
Fund's net assets would be so committed.
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 amounts 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, plus accrued
interest. Accordingly, where these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal
Page 23
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, it 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 security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of the Fund,
will consider on an ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligation, of any custodian and of the third party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in
payment of principal or interest on the underlying Municipal Obligation and
for other reasons.
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
Page 24
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 its 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.
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 interest-bearing securities and are likely to respond to a
greater degree to changes in interest rates than interest-bearing securities
having similar maturities and credit qualities.
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.
Page 25
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-1 by Moody's, A-1 by S&P or F-1 by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic banks,
with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase agreements
in respect of any of the foregoing. Dividends paid by 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. When the Fund has
adopted a temporary defensive position, including when acceptable New York
Municipal Obligations are unavailable for investment by the Fund, in excess
of 35% of the Fund's net assets may be invested in securities that are not
exempt from New York State and New York City income taxes. Under normal
market conditions, the Fund anticipates that not more than 5% of the value 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 -- Obligations which are rated Baa 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&P are regarded as having adequate capacity to pay interest and repay
principal, and while such bonds normally 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
bonds in this category than in higher rated categories. Bonds rated BBB by
Fitch are considered to be of satisfactory credit quality; while 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. See "Appendix B" in the Statement of Additional
Information for a general description of Moody's, S&P and Fitch ratings of
Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their opinions as to
the quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of these
bonds. 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 26
[This Page Intentionally Left Blank]
Page 27
DREYFUS
New York Insured
Tax Exempt
Bond Fund
Prospectus
(LION LOGO)
Copy Rights 1996 Dreyfus Service Corporation
577p050196
Registration Mark
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus New York Insured Tax Exempt Bond Fund (the "Fund"), dated May 1,
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-11
Management Agreement . . . . . . . . . . . . . . . . . . . . . B-15
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . B-17
Service Plan . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . B-18
Shareholder Services . . . . . . . . . . . . . . . . . . . . . B-20
Determination of Net Asset Value . . . . . . . . . . . . . . . B-23
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . B-24
Dividends, Distributions and Taxes . . . . . . . . . . . . . . B-24
Performance Information. . . . . . . . . . . . . . . . . . . . B-25
Information About the Fund . . . . . . . . . . . . . . . . . . B-26
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . . . . B-27
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . B-41
Financial Statements . . . . . . . . . . . . . . . . . . . . . B-47
Report of Independent Auditors . . . . . . . . . . . . . . . . B-56
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 December 31, 1995, computed
on a monthly basis, was as follows:
<TABLE>
Fitch Investors Moody's Investors Standard & Poor's Percentage
Service, L.P. ("Fitch") or Services, Inc. ("Moody's") or Ratings Group ("S&P") of Value
<S> <C> <C> <C>
AAA Aaa AAA 98.9%
F-1 MIG 1, P1 SP-1, A1 1.1%
------
100.0%
======
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the 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 leasee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. 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. 11" 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 relevant 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, each 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 nonpayment 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
coverage would be non-cancellable 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 B."
Illiquid Securities. When 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 stable 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. 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 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 or sub-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 security.
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 for 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 dividends, 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
Fund's 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 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 investment may lower the Fund's return
or result in a loss. The Fund also could experience losses if it 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. 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 Derivatives 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 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.
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 Considerations and Risks
Investing in New York Municipal Obligations. Each investor should consider
carefully the special risks inherent in the Fund's investment in New York
Municipal Obligations. These risks result from the financial condition of
New York State and certain of its public bodies and municipalities,
including New York City. Beginning in early 1975, New York State, New York
City and other State entities faced serious financial difficulties which
jeopardized the credit standing and impaired the borrowing abilities of
such entities and contributed to high interest rates on, and lower market
prices for, debt obligations issued by them. A recurrence of such
financial difficulties or a failure of certain financial recovery programs
could result in defaults or declines in the market values of various New
York Municipal Obligations in which the Fund may invest. If there should
be a default or other financial crisis relating to New York State, New York
City, a State or City agency, or a State municipality, the market value and
marketability of outstanding New York Municipal Obligations in the Fund's
portfolio and the interest income to the Fund could be adversely affected.
Moreover, the national recession and the significant slowdown in the New
York and regional economies in the early 1990's added substantial
uncertainty to estimates of the State's tax revenues, which, in part,
caused the State to incur cash-basis operating deficits in the General Fund
and issued deficit notes during the fiscal periods 1989 through 1992. The
State's financial operations improved, however, during the 1993 and 1994
fiscal years. After reflecting a 1993 year-end deposit to the State's
refund reserve account of $671 million, reported 1993 General Fund receipts
were $45 million higher than originally projected in April 1992. The State
completed the 1994 fiscal year with an operating surplus in the General
Fund of $914 million. The State reported a General Fund operating deficit
of $1.426 billion for the 1995 fiscal year. There can be no assurance that
New York will not face substantial potential budget gaps in future years.
In January 1992, Moody's lowered from A to Baa1 its ratings of certain
appropriation-backed debt of New York State and its agencies. The State's
general obligation, State-guaranteed and New York State Local Government
Assistance Corporation bonds continued to be rated A by Moody's. In
January 1992, S&P lowered from A to A- ratings of New York State general
obligation bonds and stated that it continued to assess the ratings outlook
as negative. S&P also lowered its ratings of various agency debts, State
moral obligations, contractual obligations, lease purchase obligations and
State guarantees. In February 1991, Moody's lowered its rating of New York
City's general obligation bonds from A to Baa1. The rating changes
reflected the rating agencies' concerns about the financial condition of
New York State and City, the heavy debt load of the State and City, and
economic uncertainties in the region. Investors should review "Appendix A"
which more fully sets forth these and other risk factors.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 7
below as fundamental policies, which 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.
Investment restrictions numbered 8 through 11 are not fundamental policies
and may be changed by vote of a majority of the Fund's Board members at any
time. The Fund may not:
1. Invest more than 25% of its total assets in securities of issuers
in any single industry; provided that there shall be no such limitation on
the purchase of Municipal Obligations and, for temporary defensive
purposes, obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
2 Borrow money, except to the extent permitted under the 1940 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.
3. 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 interest
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.
4. 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.
5. 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.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities permitted
in Investment Restriction Nos. 2, 3 and 10 may be deemed to give rise to a
senior security.
7. Sell securities short or purchase securities on margin, but the
Fund may make margin deposits in connection with transactions in options,
forward contracts, futures contracts, including those relating to indices,
and options on futures contracts or indices.
8. 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.
9. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage 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.
11. 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
the value of its net assets would be so invested.
For purposes of Investment Restriction No. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry." If a percentage restriction is adhered to at the time of
investment, a later increase or decrease 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
interests 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 "inter-
ested person" of the Fund, as defined in the 1940 Act, is indicated by an
asterisk.
Board Members of the Fund
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board for various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to December
31, 1994, he was a director of Mellon Bank Corporation. He is
Chairman of the Board of Directors of the Noel Group, Inc.; a trustee
of Bucknell University; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway, Inc.,
Curtis Industries, Inc. and Staffing Resources, Inc. He is 52 years
old and his address is 200 Park Avenue, New York, New York 10166.
GORDON J. DAVIS, Board Member. Since October 1994, Mr. Davis has been a
senior partner with the law firm of LeBoeuf, Lamb, Greene & MacRae.
From 1983 to September 1994, he was a senior partner with the law firm
of Lord Day & Lord, Barrett Smith. Mr. Davis was Commissioner of
Parks and Recreation for the City of New York from 1978 to 1983. He
is also a Director of Consolidated Edison, a utility company, and
Phoenix Home Life Insurance Company and a member of various other
corporate and not-for-profit boards. Mr. Davis is 54 years old and
his address is 241 Central Park West, New York, New York 10024.
*DAVID P. FELDMAN, Board Member. Corporate Vice President-Investment
Management of AT&T. He is also a trustee of Corporate Property
Investors, a real estate investment company. Mr. Feldman is 56 years
old and his address is One Oak Way, Berkeley Heights, New Jersey
07922.
LYNN MARTIN, Board Member. Professor, J.L. Kellogg Graduate School of
Management, Northwestern University. During the Spring Semester of
1993, she was a Visiting Fellow at the Institute of Politics, Kennedy
School of Government, Harvard University. Ms. Martin also is an
advisor to the international accounting firm of Deloitte & Touche, LLP
and chair of its Council for the Advancement of Women. From January
1991 through January 1993, Ms. Martin served as Secretary of the
United States Department of Labor. From 1981 to 1991, she served in
the United States House of Representatives as a congresswoman from the
state of Illinois. She also is a director of Harcourt General, Inc.;
Ameritech; Ryder System, Inc.; The Proctor & Gamble Co.; and TRW, Inc.
She is 56 years old and her address is Deloitte & Touche, LLP, Two
Prudential Plaza, 180 N. Stetson Avenue, Chicago, Illinois, 60601.
EUGENE McCARTHY, Board Member Emeritus. Writer and columnist; former
Senator from Minnesota from 1958-1970. He also is a director of
Harcourt Brace Jovanovich, Inc., Publisher. He is 80 years old and
his address is 271 Hawlin Road, Woodville, Virginia 22749.
DANIEL ROSE, Board Member. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic American Enterprise
Fund, which will make equity investments and loans and provide
technical business assistance to new business concerns in the Baltic
States. He is also Chairman of the Housing Committee of The Real
Estate Board of New York, Inc., and a Trustee of Corporate Property
Investors, a real estate investment company. Mr. Rose is 66 years old
and his address is c/o Rose Associates, Inc., 200 Madison Avenue, New
York, New York 10016.
SANDER VANOCUR, Board Member. Since May 1995, Mr. Vanocur has been a
Professional in Residence at the Freedom Forum in Arlington, VA. From
January 1994 to May 1995, he has served as Visiting Professional
Scholar at the Freedom Forum First Amendment Center of Vanderbilt
University. Since January 1992, Mr. Vanocur has been the President of
Old Owl Communications, a full-service communications firm, and since
November 1989, he has served as a Director of the Damon Runyon-Walter
Winchell Cancer Research Fund. From June 1986 to December 1991, he
was a Senior Correspondent of ABC News and, from October 1986 to
December 1991, he was Anchor of the ABC News program "Business World,"
a weekly business program on the ABC television network. Mr. Vanocur
is 68 years old and his address is 2928 P Street, N.W., Washington,
D.C. 20007.
ANNE WEXLER, Board Member. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also
a Director of Alumax, Comcast Corporation, The New England Electric
System, NOVA Corporation and a member of the Board of the Carter
Center of Emory University, the Council of Foreign Relations, the
National Park Foundation; the Visiting Committee of the John F.
Kennedy School of Government at Harvard University and the Board of
Visitors of the University of Maryland School of Public Affairs. Ms.
Wexler is 66 years old and her address is 1317 F Street, N.W.,
Washington, D.C. 20004.
REX WILDER, Board Member. Financial Consultant. Mr. Wilder is 75 years
old and his address is 290 Riverside Drive, New York, New York 10025.
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.
No meetings of shareholders will be held for the purpose of electing
Board members unless and until such time as less than a majority of the
Board members holding office have been elected by shareholders, at which
time the Board members then in office will call a shareholders' meeting for
the election of Board members. Under the 1940 Act, shareholders of record
of not less than two-thirds of the outstanding shares of the Fund may
remove a Board member through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. The Board members
are required to call a meeting of shareholders for the purpose of voting
upon the question of removal of any such Board member when requested in
writing to do so by the shareholders of record of not less than 10% of the
Fund's outstanding shares.
The Fund typically pays its Board members an annual retainer and a per
meeting fee end reimbursed 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. For the fiscal year
ended December 31, 1995, the aggregate amount of compensation paid to each
Board member by the Fund 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) were
as follows:
Total Compensation
Aggregate from Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members
Gordon J. Davis $4,000 $ 76,575 (26)
Joseph S. DiMartino $4,499 $448,618 (93)
Lynn Martin $3,750 $ 38,500 (12)
David P. Feldman $4,000 $113,783 (28)
Eugene McCarthy+ $4,000 $ 80,250 (22)
Daniel Rose $4,000 $ 80,250 (22)
Sander Vanocur $4,000 $ 79,750 (22)
Anne Wexler $3,750 $ 62,201 (17)
Rex Wilder $4,000 $ 41,250 (12)
________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $557 for all Board members as a group.
+ Board Member Emeritus since March 29, 1996.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., 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 38 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 31 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered the Manager. From September 1992 to
August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 31 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.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was manager of the High Performance Fabric Division of
Springs Industries Inc. He is 34 years old.
JOSEPH F. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was Assistant
Vice President in the Mutual Fund Accounting Department of the
Manager. He is 60 years old.
MARGARET M. PARDO, Assistant Secretary. Legal Assistant with the
Distributor and an officer of other investment companies advised or
administered by the Manager. From June 1992 to April 1995, she was a
Medical Coordination Officer at ORBIS International. Prior to June
1992, she worked as Program Coordinator at Physicians World
Communications Group. She is 27 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares outstanding on April 1, 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 on August 3, 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 July 17, 1995. The Agreement is terminable without penalty, on 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, upon 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; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President-Human Resources; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Andrew S. Wasser, Vice President-Information Systems;
Maurice Bendrihem, Controller; 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 Fund's Board to
execute purchases and sales of securities. The Fund's portfolio managers
are Richard J. Moynihan, A. Paul Disdier, Karen M. Hand, Stephen C. Kris,
Jill C. Shaffro, L. Lawrence Troutman, Samuel J. Weinstock and Monica S.
Wieboldt. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who
provide research services for the Fund as well as for other funds advised
by the Manager. All purchases and sales are reported for the Board
members' 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: 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
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and 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. The management fees payable
for the fiscal years ended December 31, 1993, 1994 and 1995 amounted to
$1,178,284, $1,034,322 and $940,247, respectively. The fee for fiscal year
1993 was reduced by $38,503 pursuant to an undertaking in effect, resulting
in a net fee paid by the Fund to the Manager of $1,139,781 in fiscal 1993.
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.
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 dated August 24, 1994. 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 Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (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 for servicing shareholder accounts ("Servicing") and (b) pays
the Manager and Dreyfus Service Corporation and any affiliate of either of
them (collectively, "Dreyfus") for advertising and marketing relating to
the Fund and 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 or the Manager and have no direct or indirect
financial interest in the operation 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 such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Plan. The Plan
was last so approved at a meeting held on July 17, 1995. The Plan is
terminable at any time by vote of a majority of the Board members 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
or, 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'
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 December 31, 1995, the total
amount payable by the Fund was $397,126, of which (a) $11,649 was payable
to the Distributor for payments made to Service Agents for distributing
Fund shares and Servicing, (b) $380,121 was payable to Dreyfus for
advertising and marketing Fund shares and Servicing and (c) $5,356 was
payable for printing the Fund's prospectus and statement of additional
information, as well as implementing and operating the Plan. Pursuant to
undertakings in effect, the amount chargeable to the Fund pursuant to the
Plan was reduced by $5,356, resulting in a net fee of $391,770.
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 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, or a representative of the investor's Service Agent, 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 a
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 and 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 "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have 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."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Signature Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians and may accept other
suitable verification arrangements from foreign investors, such as consular
verification. 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
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 would 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 in certificate form are not eligible for telephone
exchange.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment 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 described above under "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is
effective three business days following notification by the investor. An
investor will be notified if his account falls below the amount designated
to be exchanged under this Privilege. In this case, an investor's account
will fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange transaction. Shares held
under IRA and other retirement plans are eligible for this Privilege.
Exchanges of IRA shares may be made between IRA accounts and from regular
accounts to IRA accounts, but not from IRA accounts to regular accounts.
With respect to all other retirement accounts, exchanges may be made only
among those accounts.
Fund Exchanges and the 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 1-800-654-6561. The Fund reserves the right to reject
any exchange request in whole or in part. Fund Exchanges 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 the sale of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. 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 on the payment date 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
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 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 will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to
the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the 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 stated in "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 or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of 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 at a discount or providing for
deferred interest or 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 which it
might otherwise have continued to hold in order 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 December 31, 1995
was 4.29%. 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 (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 combined 1995 Federal, New York State and New York City
personal income tax rate of 46.60%, the Fund's tax equivalent yield for the
30-day period ended December 31, 1995 was 8.03%. 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, New York State and New York City marginal personal income
tax rates currently in effect. For Federal income tax purposes, a 39.60%
tax rate has been used. For New York State and New York City personal
income tax purposes, tax rates of 7.875% and 4.46%, respectively, have been
used. The tax equivalent figure, however, does not reflect the potential
effect of any other local (including, but not limited to, county, district
or city, other than New York City) taxes, including applicable surcharges.
In addition, there may be pending legislation which could affect such
stated tax rates or yields. Each investor should consult its tax adviser,
and consider its own factual circumstances and applicable tax laws, in
order to ascertain the relevant tax equivalent yield.
The Fund's average annual total return for the 1, 5 and 8.868 year
periods ended December 31, 1995 was 15.38%, 7.97% and 5.65%, 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 February 18, 1987 to December
31, 1995 was 62.77%. 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.
From time to time, the Fund may use hypothetical equivalent yields or
charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and not as representative of the Fund's
past or future performance. Advertising materials for the Fund also may
refer to or discuss then-current or past economic conditions, developments
and/or events, and actual or proposed tax legislation, to statistical or
other information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company Institute,
and to Morningstar ratings and related analyses supporting the rating.
Advertising material for the Fund may include biographical information
relating to its portfolio manager and may refer to, or include commentary
by the 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. Advertising material for
the Fund may include biographical information relating to its portfolio
manager and may refer to, or include commentary by the 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
non-assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
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. 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 portfolio 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 auditors of the Fund.
APPENDIX A
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain of
its public bodies (the "Agencies") and municipalities, particularly New
York City (the "City"), could affect the market values and marketability of
New York Municipal Obligations which may be held by the Fund. The
following information constitutes only a brief summary, does not purport to
be a complete description, and is based on information drawn from official
statements relating to securities offerings of the State, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") available
as of the date of this Statement of Additional Information. While the Fund
has not independently verified such information, it has no reason to
believe that such information is not correct in all material respects.
A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economy expanded modestly during 1995. Although industries that export
goods and services abroad are expected to benefit from the lower dollar,
growth will be slowed by government cutbacks at all levels. On an average
annual basis, employment growth in 1995 was estimated to be about the same
as 1994. Both personal income and wages were estimated to have recorded
moderate gains in 1995. Employment growth is expected to slow
significantly in 1996 as the pace of national economic growth slackens,
entire industries experience consolidations, and governmental employment
continues to shrink. Personal income is estimated to increase by 4.0% in
1996.
The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, more than two months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for 1995-96 fiscal year was
formulated on June 20, 1995 and is based on the State's budget as enacted
by the Legislature and signed into law by the Governor.
The 1995-96 budget was the first to be enacted in the administration
of the Governor, who assumed office on January 1. It was the first budget
in over half a century which proposed and, as enacted, projected an
absolute year-over-decline in General Fund disbursements. Spending for
State operations was projected to drop even more sharply, by 4.6%. Nominal
spending from all State funding sources (i.e., excluding Federal aid) was
proposed to increase by only 2.5% from the prior fiscal year, in contrast
to the prior decade when such spending growth averaged more than 6.0%
annually.
In his Executive Budget, the Governor indicated that in the 1995-96
fiscal year, the State Financial Plan, based on then-current law governing
spending and revenues, would be out of balance by almost $4.7 billion, as a
result of the projected structural deficit resulting from the ongoing
disparity between sluggish growth in receipts, the effect of prior-year tax
changes, and the rapid acceleration of spending growth; the impact of
unfunded 1994-95 initiatives, primarily for local aid programs; and the use
of one-time solutions, primarily surplus funds from the prior year, to fund
recurring spending in the 1994-95 budget. The Governor proposed additional
tax cuts, to spur economic growth and provide relief for low and middle-
income tax payers, which were larger than those ultimately adopted, and
which added $240 million to the then projected imbalance or budget gap,
bringing their total to approximately $5 billion.
This gap was projected to be closed in the 1995-96 State Financial
Plan based on the enacted budget, through a series of actions, mainly
spending reductions and cost containment measures and certain reestimates
that were expected to be recurring, but also through the use of one-time
solutions.
The General Fund was projected to be balanced on a cash basis for the
1995-96 fiscal year. Total receipts and transfers from other funds were
projected to be $33.110 billion, a decrease of $48 million from total
receipts in the prior fiscal year. Total General Fund disbursements and
transfers to other funds were projected to be $33.055 billion, a decrease
of $344 million from the total amount disbursed in the prior fiscal year.
The State Financial Plan was based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward spending,
Federal financial and monetary policies, the availability of credit and the
condition of the world economy, which could have an adverse effect on the
State. There can be no assurance that the State economy will not
experience worse-than-predicted results, with corresponding material and
adverse effects on the State's projections of receipts and disbursements.
The State issued its second quarterly update to the cash-basis 1995-96
State Financial Plan (the "Mid-Year Update") on October 26, 1995.
Revisions have been made to estimates of both receipts and disbursements
based on: (1) updated economic forecasts for both the nation and the
State, (2) an analysis of actual receipts and disbursements through the
first six months of the fiscal year, and (3) an assessment of changing
program requirements and cost savings initiatives. The Mid-Year Update
projects continued balance in the State's 1995-96 Financial Plan,with
estimated receipts reduced by a net $71 million and estimated disbursements
reduced by a net $30 million. The resulting General Fund balance decreases
to $172 million in the Mid-Year Update, reflecting the expected use of $41
million from the Contingency Reserve Fund for payment of litigation and
disallowance expenses.
On October 2, 1995, the State Comptroller released a report entitled
"Comptroller's Report on the Financial Condition of New York State 1995" in
which he identified several risks to the State Financial Plan and
reaffirmed his estimate that the State faces a potential imbalance in
receipts and disbursements of at least $2.7 billion for the State's 1996-97
fiscal year and at least $3.9 billion for the State's 1997-98 fiscal year.
There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant
disparity between tax revenues projected from a lower recurring receipts
base and the spending required to maintain State programs at current
levels. To address any potential budgetary imbalance, the State may need
to take significant actions to align recurring receipts and disbursements
in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's outstanding
general obligation bonds from AA- to A and from A to A-, respectively. In
February 1991, Moody's lowered its rating on the City's general obligation
bonds from A to Baa1 and in July 1995, S&P lowered its rating on such bonds
from A- to BBB+. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New York
State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term notes
issued by the New York State Urban Development Corporation ("UDC") in
February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by some of its
municipalities and Agencies. For a time, in late 1975 and early 1976,
these difficulties resulted in a virtual closing of public credit markets
for State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92 million
that actually resulted was financed by issuing notes that were paid during
the first quarter of the State's 1978 fiscal year). In addition,
legislation was enacted limiting the occurrence of additional so-called
"moral obligation" and certain other Agency debt, which legislation does
not, however, apply to MAC debt.
State Financial Plan--GAAP-Basis Results--1995-96 Update. The State
issued its first update to the GAAP-basis Financial Plan for the State's
1995-96 fiscal year on September 1, 1995. The September GAAP-basis update
projected a General Fund operating surplus of $401 million. The prior
projection of the 1995-96 GAAP-basis State Financial Plan, issued in March
1995 as part of the 1995-96 Executive Budget, projected an operating
surplus in the General Fund of $800 million. The change to the projection
primarily reflects the impact of legislative changes to the 1995-96
Executive Budge, as well as increases in projected accruals for certain
local assistance programs (primarily Medicaid).
Total revenues in the General Fund are projected at $31.871 billion,
consisting of $29.625 billion in tax revenues and $2.246 billion in
miscellaneous revenue. Total expenditures in the General Fund are
projected at $32.444 billion, including $22.678 billion for grants to local
governments, $8.037 billion for State operations, $1.711 billion for
general State charges, and $18 million for debt service. Compared to the
projections made in March, expenditures for grants to local governments are
substantially increased, primarily because of legislative changes to the
1995-96 Executive Budget and increased projected accruals for Medicaid.
For all governmental funds, the summary GAAP-basis Financial Plan
shows an excess of revenues and other financing sources over expenditures
and other financing uses of $359 million.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance
Sheet as of March 31, 1995 showed an accumulated deficit in its combined
governmental funds of $1.666 billion reflecting liabilities of $14.778
billion and assets of $13.112 billion. This accumulated governmental funds
deficit includes a $3.308 billion accumulated deficit in the General Fund,
as well as accumulated surpluses in the special Revenue and Debt Service
fund types of $877 million and $1.753 billion, respectively, and a $988
million accumulated deficit in the Capital Projects fund type.
The State completed its 1994-95 fiscal year with a combined
Governmental Funds operating deficit of $1.791 billion, which included
operating deficits in the General Fund of $1.426 billion, in the Capital
Projects Funds of $366 million, and in the Debt Service Funds of $38
million. There is an operating surplus in the Special Revenue Funds of $39
million.
GAAP-Basis Results--1993-94 Fiscal Year. The State reported a General Fund
operating surplus of $914 million for the 1993-94 fiscal year, as compared
to an operating surplus of $2.065 billion for the prior fiscal year. The
1993-94 fiscal year surplus reflects several major factors, including the
cash basis surplus recorded in 1993-94, the use of $671 million of the
1992-93 surplus to fund operating expenses in 1993-94, net proceeds of $575
million in bonds issued by the New York Local Government Assistance
Corporation ("LGAC") and the accumulation of a $265 million balance in the
Contingency Reserve Fund ("CRF"). Revenues increased $543 million (1.7%)
over prior fiscal year revenues with the largest increase occurring in
personal income taxes. Expenditures increased $1.659 billion (5.6%) over
the prior fiscal year, with the largest increase occurring in State aid for
social services programs.
The Special Revenue fund and Debt Service fund ended 1993-94 with
operating surpluses of $149 million and $23 million, respectively. The
Capital Projects fund ended with an operating deficit of $35 million.
GAAP-Basis Results--1992-93 Fiscal Year. The State completed its 1992-93
fiscal year with a GAAP-basis operating surplus of $2.065 billion in the
General Fund and an accumulated deficit of $2.551 billion. The Combined
Statement of Revenues, Expenditures and Changes in Fund Balances reported
total revenues of $31.085 billion, total expenditures of $29.337 billion,
and net other financing sources and uses of $317 million. The surplus
primarily reflects the 1992-93 cash-basis surplus and the net proceeds of
$881 million in bonds issued by LGAC.
The Special Revenue, Debt Service and Capital Projects fund types
ended the 1992-93 fiscal year with GAAP-basis operating surpluses of $131
million, $381 million, and $57 million, respectively.
State Financial Plan--Cash-Basis Results--General Fund. The General
Fund is the principal operating fund of the State and is used to account
for all financial transactions, except those required to be accounted for
in another fund. It is the State's largest fund and receives almost all
State taxes and other resources not dedicated to particular purposes.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types.
The General Fund is projected to be balanced on a cash basis for the
1995-96 fiscal year. Total receipts and transfers from other funds are
projected to be $33.110 billion, a decrease of $48 million from total
receipts in the prior fiscal year. Total General Fund disbursements and
transfers to other funds are projected to be $33.055 billion, a decrease of
$344 million from the total amount disbursed in the prior fiscal year.
New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State
incurred General Fund operating deficits that were closed with receipts
from the issuance of tax and revenue anticipation notes ("TRANs"). First,
the national recession, and then the lingering economic slowdown in the New
York and regional economy, resulted in repeated shortfalls in receipts and
three budget deficits. For its 1992-93, 1993-94 and 1994-95 fiscal years,
the State recorded balanced budgets on a cash basis, with substantial fund
balances in 1992-93 and 1993-94, and smaller fund balance in 1994-95, as
described below.
New York State ended its 1994-95 fiscal year with the General fund in
balance. The closing fund balance of $158 million reflects $157 million in
the Tax Stabilization Reserve Fund and $1 million in the Contingency
Reserve Fund ("CRF"). The CRF was established in State Fiscal year 1993-
94, funded partly with surplus monies, to assist the State in financing the
1994-95 fiscal year costs of extraordinary litigation known or anticipated
at that time; the opening fund balance in State fiscal year 1994-95 was
$265 million. The $241 million change in the fund balance reflects the use
of $264 million in the CRF as planned, as well as the required deposit of
$23 million to the Tax Stabilization Reserve Fund. In addition, $278
million was on deposit in the tax refund reserve account, $250 million of
which was deposited at the end of the State's 1994-95 fiscal year to
continue the process of restructuring the State's cash flow as part of the
New York Local Government Assistance Corporation ("LGAC") program.
Compared to the State Financial Plan for 1994-1995 as formulated on
June 16, 1994, reported receipts fell short of original projections by
$1.163 billion, primarily in the categories of personal income and business
taxes. Of this amount, the personal income tax accounts for $800 million,
reflecting weak estimated tax collections and lower withholding due to
reduced wage and salary growth, more severe reductions in brokerage
industry bonuses than projected earlier, and deferral of capital gains
realizations in anticipation of potential Federal tax changes. Business
taxes fell short by $373 million, primarily reflecting lower payments from
banks as substantial overpayments of 1993 liability depressed net
collections in the 1994-95 fiscal year. These shortfalls were offset by
better performance in the remaining taxes, particularly the user taxes and
fees, which exceeded projections by $210 million. Of this amount, $277
million was attributable to certain restatements for accounting treatment
purposes pertaining to the CRF and LGAC; these restatements had no impact
on balance in the General Fund.
Disbursements were also reduced from original projections by $848
million. After adjusting for the net impact of restatements relating to
the CRF and LGAC which raised disbursements by $38 million, the variance is
$886 million. Well over two-thirds of this variance is in the category of
grants to local governments, primarily reflecting the conservative nature
of the original estimates of projected costs for social services and other
programs. Lower education costs are attributable to the availability of
$110 million in additional lottery proceeds and the use of LGAC bond
proceeds.
The spending reductions also reflect $188 million in actions initiated
in January 1995 by the Governor to reduce spending to avert a potential gap
in the 1994-95 State Financial Plan. These actions included savings from a
hiring freeze, halting the development of certain services, and the
suspension of non-essential capital projects. These actions, together with
$71 million in other measures comprised the Governor's $259 million gap-
closing plan, submitted to the Legislature in connection with the 1995-96
Executive Budget.
The State ended its 1993-94 fiscal year with a balance of $1.140
billion in the tax refund reserve account, $265 million in the CRF and $134
million in its tax stabilization reserve fund. These fund balances were
primarily the result of an improving national economy, State employment
growth, tax collections that exceeded earlier projections and disbursements
that were below expectations.
Before the deposit of $1.140 billion in the tax refund reserve
account, General Fund receipts in 1993-94 exceeded those originally
projected when the State Financial Plan for the year was formulated on
April 16, 1993 by $1.002 billion. Greater-than-expected receipts in the
personal income tax, the bank tax, the corporation franchise tax and the
estate tax accounted for most of this variance, and more than offset
weaker-than-projected collections from the sales and use tax and
miscellaneous receipts. The higher receipts resulted, in part, because the
New York economy performed better than forecasted. Employment growth
started in the first quarter of the State's 1993-94 year, and although this
lagged the national economic recovery, the growth in New York began earlier
than forecasted. The New York economy exhibited signs of strength in the
service sector, in construction, and in trade.
Disbursements and transfer from the General Fund were $303 million
below the level projected in April 1993, an amount that would have been
$423 million had the State not accelerated the payment of Medicaid
billings, which in the April 1993 State Financial Plan were planned to be
deferred into the 1994-95 fiscal year. Compared to the estimates included
in the State Financial Plan formulated in April 1993, disbursements were
lower for Medicaid, capital projects, and debt service (due to refundings).
In addition, $114 million of school and payments were funded from the
proceeds of LGAC bonds. Disbursements were higher-than-expected for
general support for public schools. The State also made the first of six
required payments to the State of Delaware related to the settlement of
Delaware's litigation against the State regarding the disposition of
abandoned property receipts.
During the 1993-94 fiscal year, the State also established and funded
the CRF as a way to assist the State in financing the cost of litigation
affecting the State. The CRF was initially funded with a transfer of $100
million attributable to the positive margin recorded in the 1992-93 fiscal
year. In addition, the State augmented this initial deposit with $132
million on debt service savings attributable to the refinancing of State
and public authority bonds during 1993-94. A year-end transfer of $36
million was also made to the CRF, which, after a disbursement for
authorized fund purposes, brought the CRF balance at the end of 1993-94 to
$265 million. This amount was $165 million higher than the amount
originally targeted for this reserve fund.
The State ended the 1992-93 fiscal year with a balance on a cash basis
of $671 million in the General Fund that was deposited in the tax refund
reserve account and $67 million in the Tax Stabilization Fund.
After reflecting a 1992-93 year-end deposit to the refund reserve
account of $671 million, reported 1992-93 General Fund receipts were $45
million higher than originally projected in April 1992. If not for that
year-end transaction, which had the effect of reducing 1992-93 receipts by
$671 million and making those receipts available in 1993-94, General Fund
receipts would have been $716 million higher than originally projected.
During its 1989-90, 1990-91 and 1991-92 fiscal years, the State
incurred cash-basis operating deficits in the General Fund of $775 million,
$1.081 billion and $575 million, respectively, prior to the issuance of
short-term TRANs, owing to lower-than-projected receipts.
Cash-Basis Results--Other Governmental Funds. Activity in the three other
governmental funds has remained relatively stable over the last three
fiscal years, with Federally-funded programs comprising approximately two-
thirds of these funds. The most significant change in the structure of
these funds has been the redirection, beginning in the 1993-94 fiscal year,
of a portion of transportation-related revenues from the General Fund to
two new dedicated funds in the Special Revenue and Capital Projects Fund
types. These revenues totalling $676 million in the 1994-95 fiscal year
were used to support the capital programs of the Department of
Transportation and the Metropolitan Transportation Authority ("MTA").
The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and
include all moneys received from the Federal government. Total receipts in
Special Revenue Funds are projected at $25.547 billion in the State's 1995-
96 fiscal year. Disbursements from Special Revenue Funds are projected to
be $26.002 billion for the State's 1995-96 fiscal year.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Federal grants for
capital projects, largely highway-related, are projected to account for 24%
of the $4.170 billion in total projected receipts in Capital Projects Funds
in the State's 1995-96 fiscal year. Total disbursements for capital
projects are projected to be $4.160 billion during the State's 1995-96
fiscal year.
The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Total receipts in Debt
Service Funds are projected to reach $2.409 billion in the State's 1995-96
fiscal year. Total disbursements from Debt Service Funds for debt service,
lease/purchase and contractual obligation financing commitments are
projected to be $2.506 billion for the 1995-96 fiscal year.
State Borrowing Plan. The State anticipates that its capital programs
will be financed, in part, through borrowings by the State and public
authorities in the 1995-96 fiscal year. The State expects to issue $248
million in general obligation bonds (including $70 million for purposes of
redeeming outstanding BANs) and $186 million in general obligation
commercial paper. The Legislature has also authorized the issuance of up
to $33 million in COPs during the State's 1995-96 fiscal year for equipment
purchases and $14 million for capital purposes. The projection of the
State regarding its borrowings for the 1995-96 fiscal year may change if
circumstances require.
In addition, the LGAC is authorized to provide net proceeds of up to
$529 million during the 1995-96 fiscal year to redeem notes sold in June
1995.
State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1994, there were 18 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 18 Agencies was $70.3 billion as of September 30,
1994. As of March 31, 1995, aggregate Agency debt outstanding as State-
supported debt was $27.9 billion and as State-related was $36.1 billion.
Debt service on the outstanding Agency obligations normally is paid out of
revenues generated by the Agencies' projects or programs, but in recent
years the State has provided special financial assistance, in some cases on
a recurring basis, to certain Agencies for operating and other expenses and
for debt service pursuant to moral obligation indebtedness provisions or
otherwise. Additional assistance is expected to continue to be required in
future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to
meet their obligations could result in a default by one or more of such
Agencies. If a default were to occur, it would likely have a significant
effect on the marketability of obligations of the State and the Agencies.
These Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and
nursing home development, and other programs. In general, HFA depends upon
mortgagors in the housing programs it finances to generate sufficient funds
from rental income, subsidies and other payments to meet their respective
mortgage repayment obligations to HFA, which provide the principal source
of funds for the payment of debt service on HFA bonds, as well as to meet
operating and maintenance costs of the projects financed. From January 1,
1976 through March 31, 1987, the State was called upon to appropriate a
total of $162.8 million to make up deficiencies in the debt service reserve
funds of HFA pursuant to moral obligation provisions. The State has not
been called upon to make such payments since the 1986-87 fiscal year and no
payments are anticipated during the 1995-96 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable
to make full payments on their mortgage loans. Through a subsidiary, UDC
is currently attempting to increase its rate of collection by accelerating
its program of foreclosures and by entering into settlement agreements.
UDC has been, and will remain, dependent upon the State for appropriations
to meet its operating expenses. The State also has appropriated money to
assist in the curing of a default by UDC on notes which did not contain the
State's moral obligation provision.
The MTA oversees New York City's subway and bus lines by its
affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA"). Through
MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North
Commuter Railroad Company and the Metropolitan Suburban Bus Authority, the
MTA operates certain commuter rail and bus lines in the New York
metropolitan area. In addition, the Staten Island Rapid Transit Authority,
an MTA subsidiary, operates a rapid transit line on Staten Island. Through
its affiliated agency, the Triborough Bridge and Tunnel Authority (the
"TBTA"), the MTA operates certain toll bridges and tunnels. Because fare
revenues are not sufficient to finance the mass transit portion of these
operations, the MTA has depended and will continue to depend for operating
support upon a system of State, local government and TBTA support and, to
the extent available, Federal operating assistance, including loans, grants
and subsidies. If current revenue projections are not realized and/or
operating expenses exceed current projections, the TA or commuter railroads
may be required to seek additional State assistance, raise fares or take
other actions.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. In
addition, since 1987, State law has required that the proceeds of .25%
mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. Further, in 1993, the State dedicated a portion of
certain additional State petroleum business tax receipts to fund operating
or capital assistance to the MTA. For the 1995-96 State fiscal year, total
State assistance to the MTA is estimated at approximately $1.1 billion.
In 1981, the State Legislature authorized procedures for the adoption,
approval and amendment of a five-year plan for the capital program designed
to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabilitate facilities and equipment, and also
granted certain additional bonding authorization therefor.
On April 5, 1993, the Legislature approved, and the Governor
subsequently signed into law, legislation authorizing a five-year $9.56
billion capital plan for the MTA for 1992-1996. The MTA has received
approval of the 1992-1996 Capital Program based on this legislation from
the MTA Capital Program Review Board (the "CPRB"), as State law requires.
This is the third five-year plan since the Legislature authorized
procedures for the adoption, approval and amendment of a five-year plan in
1981 for a capital program designed to upgrade the performance of the MTA's
transportation systems and to supplement, replace and rehabilitate
facilities and equipment. The MTA, the TBTA and the TA are collectively
authorized to issue an aggregate of $3.1 billion of bonds (net of certain
statutory exclusions) to finance a portion of the 1992-96 Capital Program.
The 1992-96 Capital Program was expected to be financed in significant part
through dedication of the State petroleum business tax receipts.
There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1992-1996 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad
powers and responsibilities with respect to the government, finances and
welfare of these political subdivisions, especially in education and social
services. In recent years the State has been called upon to provide added
financial assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's 1995-96 fiscal year and thereafter. The potential
impact on the State of such actions by localities is not included in the
projections of the State receipts and disbursements in the State's 1995-96
fiscal year.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1993, the total indebtedness of
all localities in the State, other than the City, was approximately $17.7
billion. A small portion (approximately $105 million) of this indebtedness
represented borrowing to finance budgetary deficits and was issued pursuant
to enabling State legislation. State law requires the Comptroller to
review and make recommendations concerning the budgets of those local
government units other than the City authorized by State law to issue debt
to finance deficits during the period that such deficit financing is
outstanding. Fifteen localities had outstanding indebtedness for deficit
financing at the close of their fiscal year ending in 1993.
Certain proposed Federal expenditure reductions would reduce, or in
some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued by
localities within the State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. The
longer-range, potential problems of declining city population, increasing
expenditures and other economic trends could adversely affect localities
and require increasing State assistance in the future.
Because of significant fiscal difficulties experienced from time to
time by the City of Yonkers, a Financial Control Board was created by the
State in 1984 to oversee Yonkers' fiscal affairs. Future actions taken by
the Governor or the State Legislature to assist Yonkers in this crisis
could result in the allocation of State resources in amounts that cannot
yet be determined.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession
of certain funds taken pursuant to the State's Abandoned Property law;
(vii) alleged responsibility of State officials to assist in remedying
racial segregation in the City of Yonkers; (viii) an action, in which the
State is a third party defendant, for injunctive or other appropriate
relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (ix) actions
challenging the constitutionality of legislation enacted during the 1990
legislative session which changed the actuarial funding methods for
determining contributions to State employee retirement systems; (x) an
action against State and City officials alleging that the present level of
shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (xi) an action challenging
legislation enacted in 1990 which had the effect of deferring certain
employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge
to the constitutionality of financing programs of the Thruway Authority
authorized by Chapters 166 and 410 of the Laws of 1991 (described below in
this Part); (xiii) a challenge to the constitutionality of financing
programs of the Metropolitan Transportation Authority and the Thruway
Authority authorized by Chapter 56 of the Laws of 1993 (described below in
this Part); (xiv) challenges to the delay by the State Department of Social
Services in making two one-week Medicaid payments to the service providers;
(xv) challenges by commercial insurers, employee welfare benefit plans, and
health maintenance organizations to provisions of Section 2807-c of the
Public Health Law which impose 13%, 11% and 9% surcharges on inpatient
hospital bills and a bad debt and charity care allowance on all hospital
bills paid by such entities; (xvi) challenges to the promulgation of the
State's proposed procedure to determine the eligibility for and nature of
home care services for Medicaid recipients; (xvii) a challenge to State
implementation of a program which reduces Medicaid benefits to certain
home-relief recipients; and (xviii) challenges to the rationality and
retroactive application of State regulations recelebrating nursing home
Medicaid rates.
Adverse developments or decisions in such cases could affect the
ability of the State to maintain a balanced 1995-96 State Financial Plan.
(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax
and other ongoing revenues to cover expenses in each fiscal year. However,
the City's operating results for the fiscal year ending June 30, 1995 were
balanced in accordance with GAAP, the thirteenth consecutive year in which
the City achieved balanced operating results in accordance with GAAP. The
City's ability to maintain balanced operating results in future years is
subject to numerous contingencies and future developments.
The City's economy, whose rate of growth slowed substantially over the
past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and increases
in social services costs, and has been required to take actions to close
substantial budget gaps in order to maintain balanced budgets in accordance
with the Financial Plan.
In 1975, the City became unable to market its securities and entered a
period of extraordinary financial difficulties. In response to this
crisis, the State created MAC to provide financing assistance to the City
and also enacted the New York State Financial Emergency Act for the City of
New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of approval
over the City Financial Plan were suspended pursuant to the Emergency Act.
However, the Control Board, MAC and OSDC continue to exercise various
monitoring functions relating to the City's financial condition. The City
prepares and operates under a four-year financial plan which is submitted
annually to the Control Board for review and which the City periodically
updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1995 show a General Fund surplus reported in
accordance with GAAP. The City has eliminated the cumulative deficit in
its net General Fund position.
According to a recent OSDC economic report, the City's economy was
slow to recover from the recession and is expected to experience a weak
employment situation, and moderate wage and income growth, during the 1995-
96 period. Also, Financial Plan reports of OSDC, the Control Board, and
the City Comptroller have variously indicated that many of the City's
balanced budgets have been accomplished, in part, through the use of non-
recurring resource, tax and fee increases, personnel reductions and
additional State assistance; that the City has not yet brought its long-
term expenditures in line with recurring revenues; that the City's proposed
gap-closing programs, if implemented, would narrow future budget gaps; that
these programs tend to rely heavily on actions outside the direct control
of the City; and that the City is therefore likely to continue to face
futures projected budget gaps requiring the City to reduce expenditures
and/or increase revenues. According to the most recent staff reports of
OSDC, the Control Board and the City Comptroller during the four-year
period covered by the current Financial Plan, the City is relying on
obtaining substantial resources from initiatives needing approval and
cooperation of its municipal labor unions, Covered Organizations, and City
Council, as well as the State and Federal governments, among others, and
there can be no assurance that such approval can be obtained.
The City requires certain amounts of financing for seasonal and
capital spending purposes. The City has issued $1.75 billion of notes for
seasonal financing purposes during the 1994 fiscal year. The City's
capital financing program projects long-term financing requirements of
approximately $17 billion for the City's fiscal years 1995 through 1998 for
the construction and rehabilitation of the City's infrastructure and other
fixed assets. The major capital requirement include expenditures for the
City's water supply system, and waste disposal systems, roads, bridges,
mass transit, schools and housing. In addition, the City and the Municipal
Water Finance Authority issued about $1.8 billion in refunding bonds in the
1994 fiscal year.
State Economic Trends. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its relative
economic position. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an
influx of generally less affluent residents. Regionally, the older
Northeast cities have suffered South and the West have had in attracting
people and business. The City has also had to face greater competition as
other major cities have developed financial and business capabilities which
make them less dependent on the specialized services traditionally
available almost exclusively in the City.
During the 1982-83 recession, overall economic activity in the State
declined less than that of the nation as a whole. However, in the calendar
years 1984 through 1991, the State's rate of economic expansion was
somewhat slower than that of the nation. In the 1990-91 recession, the
economy of the State, and that of the rest of the Northeast, was more
heavily damaged than that of the nation as a whole and has been slower to
recover. The total employment growth rate in the State has been below the
national average since 1984. The unemployment rate in the State dipped
below the national rate in the second half of 1981 and remained lower until
1991; since then, it has been higher. According to data published by the
U.S. Bureau of Economic Analysis, during the past ten years, total personal
income in the State rose slightly faster than the national average only
from 1986 through 1988.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA is the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General 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
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General 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 "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 designation to show relative standing
within the major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
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 (+)
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 differences 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 issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
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 for 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 rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
Albany Municipal Water Finance Authority, Water and Sewer System Revenue,
Refunding 5.50%, 12/1/2022 (Insured; FGIC).............................. $ 4,000,000 $ 4,007,400
Briarcliff Manor (Water Improvement) 6%, 9/1/2013 (Insured; FGIC)........... 175,000 195,692
Broome County, COP Public Safety Facility
5.25%, 4/1/2022 (Insured; MBIA)......................................... 3,875,000 3,801,608
East Rockaway Union Free School District 6.10%, 9/1/2012 (Insured; FGIC).... 100,000 111,791
Havestraw-Stony Point Central School District:
6.10%, 6/15/2001 (Insured; MBIA)........................................ 15,000 16,328
6.10%, 6/15/2002 (Insured; MBIA)........................................ 15,000 16,460
Islip Resource Recovery Agency, RRR 6.125%, 7/1/2013 (Insured; AMBAC)....... 1,425,000 1,518,181
Metropolitan Transportation Authority, Revenue:
Commuter Facility (Grand Central Terminal)
5.70%, 7/1/2024 (Insured; FSA)........................................ 5,000,000 5,077,000
Transit Facility:
7%, 7/1/2009 (Insured; AMBAC)......................................... 5,400,000 6,495,768
6%, 7/1/2016 (Insured; AMBAC)......................................... 3,250,000 3,365,668
5%, 7/1/2017 (Insured; BIGI).......................................... 60,000 58,343
6.50%, 7/1/2018 (Insured; FGIC)....................................... 4,000,000 4,365,560
New York City:
7%, 8/1/2006 (Insured; MBIA)............................................ 340,000 359,917
7.25%, 3/15/2018 (Insured; FSA)......................................... 1,000,000 1,139,090
6%, 8/1/2018 (Insured; FSA)............................................. 4,900,000 4,977,959
New York City Housing Development Corp., General Housing
5.80%, 5/1/2002 (Insured; AMBAC)........................................ 400,000 404,260
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue:
6.20%, 6/15/2021 (Insured; AMBAC)....................................... 2,000,000 2,120,440
5.50%, 6/15/2023 (Insured; MBIA)........................................ 7,000,000 7,013,580
New York City Transit Authority, Transit Facility Revenue
(Livingston Plaza Project) 6%, 1/1/2021 (Insured; FSA).................. 5,300,000 5,410,293
New York State 7.10%, 3/1/2020 (Insured; AMBAC) (Prerefunded 3/1/2000) (a).. 1,650,000 1,859,006
New York State Dormitory Authority, Revenue:
(City University) 6.30%, 7/1/2024 (Insured; AMBAC)...................... 2,800,000 3,033,912
(Ellis Hospital Mortgage Project) 5.50%, 8/1/2015 (Insured; MBIA)....... 3,920,000 3,934,778
(International House) 7.60%, 7/1/2009 (Insured; FGIC)................... 2,000,000 2,239,800
(New York University) 6%, 7/1/2015 (Insured; FGIC)...................... 1,750,000 1,825,600
(Refunding - Ithaca College) 6.25%, 7/1/2021 (Insured; MBIA)............ 2,000,000 2,120,840
(Refunding - Mount Sinai School of Medicine):
6.75%, 7/1/2009 (Insured; MBIA)....................................... 3,000,000 3,368,970
5%, 7/1/2021 (Insured; MBIA).......................................... 1,000,000 976,750
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
New York State Energy Research and Development Authority, Revenue:
Facilities:
(Con Edison Co. of New York Inc. Project):
6.375%, 12/1/2027 (Insured; MBIA)................................. $ 5,000,000 $ 5,276,600
6%, 3/15/2028 (Insured; MBIA)..................................... 4,000,000 4,147,000
Pollution Control:
(Central Hudson Gas and Electric)
7.375%, 10/1/2014 (Insured; FGIC)................................. 1,700,000 1,918,059
(New York State Electric and Gas Corporation)
5.95%, 12/1/2027 (Insured; MBIA).................................. 2,000,000 2,061,080
(Refunding - Niagara Mohawk Power Corp.)
6.625%, 10/1/2013 (Insured; FGIC)................................. 4,500,000 4,944,555
New York State Environmental Facility Corp., Water Facilities Revenue:
(Jamaica Water Supply Province) 7.625%, 4/1/2029 (Insured; AMBAC)....... 4,000,000 4,401,760
(Spring Valley Water Co. Inc. Project) 5.65%, 11/1/2023 (Insured; AMBAC) 1,330,000 1,332,367
New York State Housing Finance Agency, Multi-Family Housing Revenue
7.45%, 11/1/2028 (Insured; AMBAC)....................................... 1,980,000 2,116,917
New York State Medical Care Facilities Finance Agency,
Revenue:
(Aurelia Osborn Fox Memorial Hospital) 6.50%, 11/1/2019 (Insured; FSA) 3,000,000 3,255,030
(Hospital and Nursing Home):
6.125%, 2/15/2015 (Insured; MBIA)................................. 4,000,000 4,276,200
7.60%, 2/15/2029 (Insured; MBIA).................................. 2,000,000 2,220,180
(Mental Health Service Facilities Improvement):
6.25%, 8/15/2018 (Insured; AMBAC)................................. 4,820,000 5,110,694
7.375%, 8/15/2019 (Insured; MBIA)................................. 1,345,000 1,500,939
(Montefiore Medical Center) 6%, 2/15/2035 (Insured; AMBAC)............ 5,000,000 5,233,200
(North Shore University Hospital Mortgage Project)
7.20%, 11/1/2020 (Insured; MBIA).................................. 5,750,000 6,525,388
(Sisters of Charity Hospital) 6.625%, 11/1/2018 (Insured; AMBAC)...... 2,000,000 2,186,760
New York State Mortgage Agency, Revenue (Homeownership Mortgage)
6.45%, 10/1/2017 (Insured; MBIA)........................................ 1,000,000 1,050,270
New York State Thruway Authority, General Revenue 6%, 1/1/2025 (Insured; FGIC) 3,750,000 3,952,350
New York State Urban Development Corp., Revenue:
(Correctional Capital Facilities)
5.50%, 1/1/2025 (Insured; MBIA)....................................... 5,000,000 5,022,500
(Correctional Facilities) Refunding
5.25%, 1/1/2018 (Insured; AMBAC)...................................... 5,000,000 4,945,350
Port Authority of New York and New Jersey:
5.875%, 7/15/2018 (Insured; MBIA)....................................... 3,600,000 3,704,148
6.25%, 1/15/2027 (Insured; AMBAC)....................................... 2,000,000 2,107,980
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
Triborough Bridge and Tunnel Authority, Special Obligation Refunding:
6%, 1/1/2015 (Insured; AMBAC)........................................... $ 4,000,000 $ 4,179,400
6.875%, 1/1/2015 (Insured; FGIC)........................................ 3,000,000 3,353,430
6%, 1/1/2019 (Insured; MBIA)............................................ 2,000,000 2,057,740
Yonkers 7.80%, 8/1/2009 (Insured; FGIC)..................................... 2,900,000 3,349,732
______
TOTAL INVESTMENTS (cost $147,840,892)....................................... $160,044,623
=======
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
BIGI Bond Investors Guaranty Insurance MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ____ __________ ___________
<S> <C> <C> <C>
AAA Aaa AAA 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) Fitch currently provides creditworthiness information for a limited
number of investments.
(c) At December 31, 1995, 28.7% of the Fund's net assets are insured by
AMBAC and 37.8% are insured by MBIA.
(d) At December 31, 1995, the Fund had $39,948,279 (25.4% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from transportation projects.
See notes to financial statements.
<TABLE>
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $147,840,892)-see statement..................................... $160,044,623
Interest receivable..................................................... 3,166,072
Prepaid expenses........................................................ 4,862
______
163,215,557
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 111,295
Due to Distributor...................................................... 1,929
Due to Custodian........................................................ 5,716,794
Accrued expenses........................................................ 68,132 5,898,150
______ _____
NET ASSETS ................................................................ $157,317,407
=======
REPRESENTED BY:
Paid-in capital......................................................... $144,931,984
Accumulated undistributed investment income-net......................... 43,336
Accumulated undistributed net realized gain on investments.............. 138,356
Accumulated gross unrealized appreciation on investments................ 12,203,731
______
NET ASSETS at value applicable to 13,469,322 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $157,317,407
=======
NET ASSET VALUE, offering and redemption price per share
($157,317,407 / 13,469,322 shares)...................................... $11.68
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 9,708,466
EXPENSES:
Management fee-Note 2(a).............................................. $ 940,247
Shareholder servicing costs-Note 2(b)................................. 471,185
Professional fees..................................................... 52,460
Trustees' fees and expenses-Note 2(c)................................. 36,853
Custodian fees........................................................ 16,810
Prospectus and shareholders' reports-Note 2(b)........................ 15,465
Registration fees..................................................... 6,318
Miscellaneous......................................................... 18,290
______
TOTAL EXPENSES.................................................... 1,557,628
Less-reimbursement of prospectus costs-Note 2(b)...................... 5,356
______
NET EXPENSES...................................................... 1,552,272
______
INVESTMENT INCOME-NET............................................. 8,156,194
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 1,438,863
Net unrealized appreciation on investments.............................. 12,855,137
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 14,294,000
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $22,450,194
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
________________________________
1994 1995
_______ _______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 9,156,209 $ 8,156,194
Net realized gain (loss) on investments................................. (1,233,401) 1,438,863
Net unrealized appreciation (depreciation) on investments for the year.. (20,566,482) 12,855,137
______ ______
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... (12,643,674) 22,450,194
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (9,132,926) (8,136,141)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 38,170,749 30,674,114
Dividends reinvested.................................................... 6,467,485 5,477,142
Cost of shares redeemed................................................. (69,423,052) (44,843,810)
______ ______
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........ (24,784,818) (8,692,554)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (46,561,418) 5,621,499
NET ASSETS:
Beginning of year....................................................... 198,257,326 151,695,908
______ ______
End of year (including undistributed investment income-net: $23,283 in 1994
and $43,336 in 1995).................................................. $151,695,908 $157,317,407
======= =======
SHARES SHARES
______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 3,391,665 2,730,812
Shares issued for dividends reinvested.................................. 579,744 484,599
Shares redeemed......................................................... (6,202,246) (3,979,102)
______ ______
TOTAL (DECREASE) IN SHARES OUTSTANDING................................ (2,230,837) (763,691)
======= =======
See notes to financial statements.
</TABLE>
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated May 1, 1996.
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Premier Mutual
Fund Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. The Distributor, located at One Exchange Place, Boston, Massachusetts
02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc., a
provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is
Boston Institutional Group, Inc. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(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, if any, 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.
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed 11\2% of the average daily value of the Fund's
net assets for any full year. There was no expense reimbursement for the year
ended December 31, 1995.
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 $4,498, for the period from
December 1, 1995 through December 31, 1995.
(B) Under the Service Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, the Fund (a) reimburses the Distributor for payments to
certain Service Agents 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, or any affiliate
(collectively "Dreyfus") for advertising and marketing relating to the Fund
and for Servicing, at an aggregate annual rate of .25 of 1% of the value of
the Fund's average daily net assets. Each of the Distributor and Dreyfus may
pay Service Agents (a securities dealer, financial institution or other
industry professional) 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 determine the amounts to be paid to Service Agents to
which it will make payments and the basis on which such payments are made.
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 year. During the year
ended December 31, 1995, $397,126 was charged to the Fund pursuant to the
Plan, of which $5,356 was reimbursed by the Manager.
(C) Each trustee 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.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended December 31, 1995
amounted to $47,748,722 and $50,305,334, respectively.
At December 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Insured Tax Exempt Bond Fund, including the statement of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Insured Tax Exempt Bond Fund at December 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
February 1, 1996
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information -- for the period from
February 18, 1987 (commencement of operations) to December
31, 1987 and for each of the eight years in the period ended
December 31, 1995.
Included in Part B of the Registration Statement:
Statement of Investments-- December 31, 1995.
Statement of Assets and Liabilities-- December 31, 1995.
Statement of Operations--year ended December 31, 1995.
Statement of Changes in Net Assets--for the years ended
December 31, 1994 and 1995.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
February 1, 1996.
Schedules No. I through VII 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) Amended and Restated Declaration of Trust.
(2) By-Laws are incorporated by reference to Exhibit (2) of Post-
Effective Amendment No. 8 to the Registration Statement on Form
N-1A filed on March 25, 1994.
(4) Specimen certificate for the Registrant's securities is
incorporated by reference to Exhibit (4) of Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-1A, filed
on December 31, 1986.
(5) Management Agreement is incorporated by reference to Exhibit (5)
of Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A, filed on March 1, 1995.
(6)(a) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A, filed on March 1, 1995.
(6)(b) Forms of Service Agreements are incorporated by reference to
Exhibit (6)(b) of Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A, filed on March 1, 1995.
(8)(a) Amended and Restated Custody Agreement dated August 18, 1989.
(8)(b) Sub-Custodian Agreements.
(10) Opinion and Consent of Counsel.
(11) Consent of Independent Auditors.
(15) Service Plan is incorporated by reference to Exhibit (15) of Post-
Effective Amendment No. 9 to the Registration Statement on Form
N-1A, filed on March 1, 1995.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit (16) of Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed on March 25, 1994.
(17) Financial Data Schedule.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney are incorporated by reference to
Other Exhibit (a)(b) of Post-Effective Amendment No. 9
to the Registration Statement on Form N-1A, filed on
March 1, 1995.
(b) Certificate of Secretary is incorporated by reference to
Other Exhibit (a)(b) of Post-Effective Amendment No. 9
to the Registration Statement on Form N-1A, filed on
March 1, 1995.
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 April 1, 1996
______________ _____________________________
Shares of beneficial interest 3,136
(Par value $.001)
Item 27. Indemnification
_______ _______________
Reference is made to Article EIGHTH of the Registrant's Agreement
and Declaration of Trust filed herewith. The application of these
provisions is limited by Article 10 of the Registrant's By-Laws
filed herewith 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 trustees, 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 trustee, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer of 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 is made to the Distribution Agreement filed as Exhibit
(6)(a) of Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A, filed on March 1, 1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, 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, is a registered broker-dealer. 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 Director:
Director Dreyfus America Fund
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:
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*;
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.
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of
Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of
Dreyfus Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
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
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*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 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
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC 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 Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth Fund
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth and Value Funds, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
38) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
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 Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Investment Grade Bond Funds, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Income
70) Dreyfus Strategic Investing
71) Dreyfus Tax Exempt Cash Management
72) The Dreyfus Third Century Fund, Inc.
73) Dreyfus Treasury Cash Management
74) Dreyfus Treasury Prime Cash Management
75) Dreyfus Variable Investment Fund
76) Dreyfus-Wilshire Target Funds, Inc.
77) Dreyfus Worldwide Dollar Money Market Fund, Inc.
78) General California Municipal Bond Fund, Inc.
79) General California Municipal Money Market Fund
80) General Government Securities Money Market Fund, Inc.
81) General Money Market Fund, Inc.
82) General Municipal Bond Fund, Inc.
83) General Municipal Money Market Fund, Inc.
84) General New York Municipal Bond Fund, Inc.
85) General New York Municipal Money Market Fund
86) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
87) Peoples Index Fund, Inc.
88) Peoples S&P MidCap Index Fund, Inc.
89) Premier Insured Municipal Bond Fund
90) Premier California Municipal Bond Fund
91) Premier Equity Funds, Inc.
92) Premier Global Investing, Inc.
93) Premier GNMA Fund
94) Premier Growth Fund, Inc.
95) Premier Municipal Bond Fund
96) Premier New York Municipal Bond Fund
97) Premier State Municipal Bond Fund
98) Premier Strategic Growth Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul D. Furcinito++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. 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. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 17th day of April, 1996.
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
BY: /s/Marie E. Connolly*
----------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title Date
___________________________ ______________________________ ___________
/s/Marie E. Connolly* President (Principal Executive, 4/17/96
- --------------------------- Financial and Accounting Officer)
Marie E. Connolly
/s/Joseph S. DiMartino* Chairman of the Board 4/17/96
- ---------------------------
Joseph S. DiMartino
/s/Gordon J. Davis* Trustee 4/17/96
- ---------------------------
Gordon J. Davis
/s/David P. Feldman* Trustee 4/17/96
- ---------------------------
David P. Feldman
/s/Lynn Martin* Trustee 4/17/96
- ---------------------------
Lynn Martin
/s/Daniel Rose* Trustee 4/17/96
- ---------------------------
Daniel Rose
/s/Sander Vanocur* Trustee 4/17/96
- ---------------------------
Sander Vanocur
/s/Anne Wexler* Trustee 4/17/96
- ---------------------------
Anne Wexler
/s/Rex Wilder* Trustee 4/17/96
- ---------------------------
Rex Wilder
*BY: /s/Eric B. Fischman
---------------------------
Eric B. Fischman,
Attorney-in-Fact
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
Post-Effective Amendment No. 11 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
INDEX TO EXHIBITS
(1)(a) Amended and Restated Declaration of Trust.
(8)(a) Amended and restated Custody Agreement, dated
August 18, 1989.
(8)(b) Sub-Custodian Agreements.
(10) Opinion and Consent of Counsel.
(11) Consent of Independent Auditors.
(17) Financial Data Schedule.
DREYFUS NEW YORK INSURED TAX EXEMPT FUND
(Formerly Dreyfus Columbus Avenue Fund)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF
TRUST made this 21st day of October, 1986, hereby amends and
restates in its entirety the Declaration of Trust made at
Boston, Massachusetts, dated September 19, 1986, by Robert A.
Mullery (hereinafter with any additional and successor trustees
referred to as "the Trustees") and the holders of shares of
beneficial interest to be issued hereunder as hereinafter
provided.
W I T N E S S E T H:
WHEREAS, the Trustees have agreed to manage all
property coming into their hands as trustees of a Massachusetts
business trust in accordance with the provisions hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby declare that they
will hold all cash, securities and other assets, which they may
from time to time acquire in any manner as Trustees hereunder IN
TRUST to manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as
"Dreyfus New York Insured Tax Exempt Fund."
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The term "Commission" shall have the meaning
provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business
trust established by this Agreement and Declaration of Trust, as
amended from time to time;
(c) "Shareholder" means a record owner of Shares of
the Trust;
(d) "Shares" means the equal proportionate
transferable units of interest into which the beneficial
interest in the Trust shall be divided from time to time or, if
more than one series of Shares is authorized by the Trustees,
the equal proportionate transferable units into which each
series of Shares shall be divided from time to time, and
includes a fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company
Act of 1940, and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The term "Manager" is defined in Article IV,
Section 5; and
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other
enterprise.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or
purposes:
(a) to conduct, operate and carry on the business of
an investment company;
(b) to subscribe for, invest in, reinvest in,
purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, lend, write options on, exchange, distribute or
otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without
limitation of the generality of the foregoing, all types of
stocks, shares, futures contracts, bonds, debentures, notes,
bills and other negotiable or non-negotiable instruments,
obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or
evidences of indebtedness issued or created by or guaranteed as
to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States
Government or any agency, instrumentality, territory, district
or possession thereof, by any foreign government or any agency,
instrumentality, territory, district or possession thereof, by
any corporation organized under the laws of any state, the
United States or any territory or possession thereof or under
the laws of any foreign country, bank certificates of deposit,
bank time deposits, bankers' acceptances and commercial paper;
to pay for the same in cash or by the issue of stock, including
treasury stock, bonds or notes of the Trust or otherwise; and to
exercise any and all rights, powers and privileges of ownership
or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right
to consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting
as security the assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer,
and otherwise deal in, Shares including Shares in fractional
denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares of any funds
or other assets of the appropriate series of Shares, whether
capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of The Commonwealth of
Massachusetts;
(e) to conduct its business, promote its purposes,
and carry on its operations in any and all of its branches and
maintain offices both within and without The Commonwealth of
Massachusetts, in any and all States of the United States of
America, in the District of Columbia, and in any other parts of
the world; and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion, and attainment
of any of the businesses and purposes herein specified or which
at any time may be incidental thereto or may appear conducive to
or expedient for the accomplishment of any of such businesses
and purposes and which might be engaged in or carried on by a
Trust organized under the Massachusetts General Laws, and to
have and exercise all of the powers conferred by the laws of The
Commonwealth of Massachusetts upon a Massachusetts business
trust.
The foregoing provisions of this Article II shall be
construed both as purposes and powers and each as an independent
purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares
of the Trust shall be issued in one or more series as the
Trustees may, without Shareholder approval, authorize. Each
series shall be preferred over all other series in respect of
the assets allocated to that series. The beneficial interest in
each series at all times shall be divided into Shares, with or
without par value as the Trustees may from time to time
determine, each of which shall represent an equal proportionate
interest in the series with each other Share of the same series,
none having priority or preference over another. The number of
Shares authorized shall be unlimited, and the Shares so
authorized may be represented in part by fractional shares.
From time to time, the Trustees may divide or combine the Shares
of any series into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series.
Section 2. Ownership of Shares. The ownership of
Shares will be recorded in the books of the Trust or a transfer
agent. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders
of Shares of each series and as to the number of Shares of each
series held from time to time by each. No certificates
certifying the ownership of Shares need be issued except as the
Trustees may otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are
authorized, from time to time, to issue or authorize the
issuance of Shares at not less than the par value thereof, if
any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or
personal, tangible or intangible, as from time to time they may
determine) or minimum consideration for such Shares. Anything
herein to the contrary notwithstanding, the Trustees may issue
Shares pro rata to the Shareholders at any time as a stock
dividend.
All consideration received by the Trust for the issue
or sale of Shares of each series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall belong irrevocably to
the series of Shares with respect to which the same were
received by the Trust for all purposes, subject only to the
rights of creditors, and shall be so handled upon the books of
account of the Trust and are herein referred to as "assets of"
such series.
Shares may be issued in fractional denominations to
the same extent as whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of whole
Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to
participate upon liquidation of the Trust or of a particular
series of Shares.
Section 4. No Preemptive Rights. Shareholders shall
have no preemptive or other right to subscribe for any
additional Shares or other securities issued by the Trust.
Section 5. Status of Shares and Limitation of
Personal Liability. Shares shall be deemed to be personal
property giving only the rights provided in this instrument.
Every Shareholder by virtue of having become a Shareholder shall
be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a
Shareholder during the continuance of the Trust shall not
operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action
in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership
of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust property or right to call
for a partition or division of the same or for an accounting,
nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind any
Shareholder or Trustee personally or to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder at any time
personally may agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a
recitation limiting the obligation represented thereby to the
Trust and its assets (but the omission of such a recitation
shall not operate to bind any Shareholder or Trustee
personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either
by the Trustees or the Shareholders. The Trustees named herein
shall serve until the first meeting of the Shareholders or until
the election and qualification of their successors. Prior to
the first meeting of Shareholders the initial Trustees hereunder
may elect additional Trustees to serve until such meeting and
until their successors are elected and qualified. The Trustees
also at any time may elect Trustees to fill vacancies in the
number of Trustees. The number of Trustees shall be fixed from
time to time by the Trustees and, at or after the commencement
of the business of the Trust, shall be not less than three.
Each Trustee, whether named above or hereafter becoming a
Trustee, shall serve as a Trustee during the lifetime of this
Trust, until such Trustee dies, resigns, retires, or is removed,
or, if sooner, until the next meeting of Shareholders called for
the purpose of electing Trustees and the election and
qualification of his successor. Subject to Section 16(a) of the
1940 Act, the Trustees may elect their own successors and,
pursuant to this Section, may appoint Trustees to fill
vacancies.
Section 2. Powers. The Trustees shall have all
powers necessary or desirable to carry out the purposes of the
Trust, including, without limitation, the powers referred to in
Article II hereof. Without limiting the generality of the
foregoing, the Trustees may adopt By-Laws not inconsistent with
this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the
extent that they do not reserve that right to the Shareholders;
they may fill vacancies in their number, including vacancies
resulting from increases in their own number, and may elect and
remove such officers and employ, appoint and terminate such
employees or agents as they consider appropriate; they may
appoint from their own number and terminate any one or more
committees; they may employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain
a transfer agent and a Shareholder servicing agent, or both,
provide for the distribution of Shares through a principal
underwriter or otherwise, set record dates, and in general
delegate such authority as they consider desirable (including,
without limitation, the authority to purchase and sell
securities and to invest funds, to determine the net income of
the Trust for any period, the value of the total assets of the
Trust and the net asset value of each Share, and to execute such
deeds, agreements or other instruments either in the name of the
Trust or the names of the Trustees or as their attorney or
attorneys or otherwise as the Trustees from time to time may
deem expedient) to any officer of the Trust, committee of the
Trustees, any such employee, agent, custodian or underwriter or
to any Manager.
Without limiting the generality of the foregoing, the
Trustees shall have full power and authority:
(a) To invest and reinvest cash and to hold cash
uninvested;
(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and
discretion with relation to securities or property as the
Trustees shall deem proper;
(c) To hold any security or property in a form not
indicating any trust whether in bearer, unregistered or other
negotiable form or in the name of the Trust or a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent
to any contract, lease, mortgage, purchase or sale of property
By such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(e) To join with other security holders in acting
through a committee, depositary, voting trustee or otherwise,
and in that connection to deposit any security with, or transfer
any security to, any such committee, depositary or trustee, and
to delegate to them such power and authority with relation to
any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including, but not limited to, claims for taxes;
(g) To allocate assets, liabilities and expenses of
the Trust to a particular series of Shares or to apportion the
same among two or more series, provided that any liabilities or
expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including, without
limitation, insurance policies insuring the assets of the Trust
and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or
Managers, principal underwriters, or independent contractors of
the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged
to have been taken or omitted by any such person as Shareholder,
Trustee, officer, employee, agent, investment adviser or
Manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Further, without limiting the generality of the
foregoing, the Trustees shall have full power and authority to
incur and pay out of the principal or income of the Trust such
expenses and liabilities as may be deemed by the Trustees to be
necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred or arising
in connection with a particular series of Shares, as determined
by the Trustees, shall be payable solely out of the assets of
that series.
Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the authority
granted by the Trustees, as to the amount of the assets, debts,
obligations or liabilities of the Trust; the amount of any
reserves or charges set up and the propriety thereof; the time
of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether
or not any debt, obligation or liability for which such reserves
or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged); the price or closing bid or asked price of any
investment owned or held by the Trust; the market value of any
investment or fair value of any other asset of the Trust; the
number of Shares outstanding; the estimated expense to the Trust
in connection with purchases of its Shares; the ability to
liquidate investments in an orderly fashion; the extent to which
it is practicable to deliver a cross-section of the portfolio of
the Trust in payment for any such Shares, or as to any other
matters relating to the issue, sale, purchase and/or other
acquisition or disposition of investments or Shares of the
Trust, shall be final and conclusive, and shall be binding upon
the Trust and its Shareholders, past, present and future, and
Shares are issued and sold on the condition and understanding
that any and all such determinations shall be binding as
aforesaid.
Section 3. Meetings. At any meeting of the Trustees,
a majority of the Trustees then in office shall constitute a
quorum. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned
without further notice.
When a quorum is present at any meeting, a majority of
the Trustees present may take any action, except when a larger
vote is required by this Declaration of Trust, the By-Laws or
the 1940 Act.
Any action required or permitted to be taken at any
meeting of the Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed
by a majority of the Trustees or members of any such committee
then in office, as the case may be, and such written consent is
filed with the minutes of proceedings of the Trustees or any
such committee.
The Trustees or any committee designated by the
Trustees may participate in a meeting of the Trustees or such
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in
person at a meeting.
Section 4. Ownership of Assets of the Trust. Title
to all of the assets of each series of Shares of the Trust at
all times shall be considered as vested in the Trustees.
Section 5. Investment Advice and Management Services.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. The Trustees from time to time may enter into a
written contract or contracts with any person or persons (herein
called the "Manager"), including The Dreyfus Corporation or any
other firm, corporation, trust or association in which any
Trustee or Shareholder may be interested, to act as investment
advisers and/or managers of the Trust and to provide such
investment advice and/or management as the Trustees from time to
time may consider necessary for the proper management of the
assets of the Trust, including, without limitation, authority to
determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets
of the Trust shall be held uninvested and to make changes in the
Trust's investments. Any such contract shall be subject to the
requirements of the 1940 Act with respect to its continuance in
effect, its termination and the method of authorization and
approval of such contract, or any amendment thereto or renewal
thereof.
Any Trustee or any organization with which any Trustee
may be associated also may act as broker for the Trust in making
purchases and sales of securities for or to the Trust for its
investment portfolio, and may charge and receive from the Trust
the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as
broker for the Trust shall be responsible only for the proper
execution of transactions in accordance with the instructions of
the Trust and shall be subject to no further liability of any
sort whatever.
The Manager, or any affiliate thereof, also may be a
distributor for the sale of Shares by separate contract or may
be a person controlled by or affiliated with any Trustee or any
distributor or a person in which any Trustee or any distributor
is interested financially, subject only to applicable provisions
of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also
receiving compensation for services rendered as such
distributor.
Section 6. Removal and Resignation of Trustees. The
Trustees or the Shareholders (by vote of 66-2/3% of the
outstanding shares entitled to vote thereon) may remove at any
time any Trustee with or without cause, and any Trustee may
resign at any time as Trustee, without penalty by written notice
to the Trust; provided that sixty days' advance written notice
shall be given in the event that there are only three or less
Trustees at the time a notice of resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall
have power to vote only (i) for the election of Trustees as
provided in Article IV, Section 1, of this Declaration of Trust;
provided, however, that no meeting of Shareholders is required
to be called for the purpose of electing Trustees unless and
until such time as less than a majority of the Trustees have
been elected by the Shareholders, (ii) for the removal of
Trustees as provided in Article IV, Section 6, (iii) with
respect to any Manager as provided in Article IV, Section 5,
(iv) with respect to any amendment of this Declaration of Trust
as provided in Article IX, Section 8, (v) with respect to a
consolidation, merger or certain sales of assets as provided in
Article IX, Section 4, (vi) with respect to the termination of
the Trust or a series of Shares as provided in Article IX,
Section 5, (vii) to the same extent as the stockholders of a
Massachusetts business corporation, as to whether or not a court
action, proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters
relating to the Trust as may be required by law, by this
Declaration of Trust, or the By-Laws of the Trust or any
registration of the Trust with the Commission or any state, or
as the Trustees may consider desirable. Each whole Share shall
be entitled to one vote as to any matter on which it is entitled
to vote (except that in the election of Trustees said vote may
be cast for as many persons as there are Trustees to be
elected), and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matter submitted
to a vote of Shareholders, all Shares of the Trust then entitled
to vote shall be voted by individual series, except (i) when
required by the 1940 Act, Shares shall be voted in the aggregate
and not by individual series and (ii) when the Trustees have
determined that the matter affects only the interests of one or
more series, then only Shareholders of such series shall be
entitled to vote thereon. There shall be no cumulative voting
in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of
them, unless at or prior to exercise of the proxy the Trust
receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest
on the challenger. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or any By-Laws of the
Trust to be taken by Shareholders.
Section 2. Meetings. Meetings of the Shareholders
may be called by the Trustees or such other person or persons as
may be specified in the By-Laws and shall be called by the
Trustees upon the written request of Shareholders owning at
least 30% of the outstanding Shares entitled to vote.
Shareholders shall be entitled to at least ten days' prior
notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent
(30%) of the outstanding Shares shall be a quorum for the
transaction of business at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust
permits or requires that holders of any series shall vote as a
series, then thirty percent (30%) of the aggregate number of
Shares of that series entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that
series. Any lesser number, however, shall be sufficient for
adjournment and any adjourned session or sessions may be held
within 90 days after the date set for the original meeting
without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust
or the By-Laws of the Trust and subject to any applicable
requirements of law, a majority of the Shares voted shall decide
any question and a plurality shall elect a Trustee, provided
that where any provision of law or of this Declaration of Trust
permits or requires that the holders of any series shall vote as
a series, then a majority of the Shares of that series voted on
the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that series is
concerned.
Section 4. Action by Written Consent. Any action
required or permitted to be taken at any meeting may be taken
without a meeting if a consent in writing, setting forth such
action, is signed by all the Shareholders entitled to vote on
the subject matter thereof and such consent is filed with the
records of the Trust.
Section 5. Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall
distribute periodically to the Shareholders of each series of
Shares an amount approximately equal to the net income of that
series, determined by the Trustees or as they may authorize and
as herein provided. Distributions of income may be made in one
or more payments, which shall be in Shares, cash or otherwise,
and on a date or dates and as of a record date or dates
determined by the Trustees. At any time and from time to time
in their discretion, the Trustees also may cause to be
distributed to the Shareholders of any one or more series as of
a record date or dates determined by the Trustees, in Shares,
cash or otherwise, all or part of any gains realized on the sale
or disposition of the assets of the series or all or part of any
other principal of the Trust attributable to the series. Each
distribution pursuant to this Section 1 shall be made ratably
according to the number of Shares of the series held by the
several Shareholders on the record date for such distribution,
provided that no distribution need be made on Shares purchased
pursuant to orders received, or for which payment is made, after
such time or times as the Trustees may determine.
Section 2. Determination of Net Income. In
determining the net income of each series of Shares for any
period, there shall be deducted from income for that period (a)
such portion of all charges, taxes, expenses and liabilities due
or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier
period and (b) whatever reasonable reserves the Trustees shall
consider advisable for possible future charges, taxes, expenses
and liabilities which the Trustees shall consider properly
chargeable and fairly applicable to income for that period or
any earlier period. The net income of each series for any
period may be adjusted for amounts included on account of net
income in the net asset value of Shares issued or redeemed or
repurchased during that period. In determining the net income
of a series for a period ending on a date other than the end of
its fiscal year, income may be estimated as the Trustees shall
deem fair. Gains on the sale or disposition of assets shall not
be treated as income, and losses shall not be charged against
income unless appropriate under applicable accounting
principles, except in the exercise of the discretionary powers
of the Trustees. Any amount contributed to the Trust which is
received as income pursuant to a decree of any court of
competent jurisdiction shall be applied as required by the said
decree.
Section 3. Redemptions. Any Shareholder shall be
entitled to require the Trust to redeem and the Trust shall be
obligated to redeem at the option of such Shareholder all or any
part of the Shares owned by said Shareholder, at the redemption
price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be
presented for redemption in proper form for transfer to the
Trust or the agent of the Trust appointed for such purpose, and
these shall be presented with a written request that the Trust
redeem all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net
asset value per Share when next determined by the Trust at such
time or times as the Trustees shall designate, following the
time of presentation of certificates for Shares, if issued, and
an appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the
1940 Act, or any rule or regulation made or adopted by any
securities association registered under the Securities Exchange
Act of 1934, as determined by the Trustees.
(c) Net asset value of each series of Shares (for the
purpose of issuance of Shares as well as redemptions thereof)
shall be determined by dividing:
(i) the total value of the assets of such series
determined as provided in paragraph (d) below less, to
the extent determined by or pursuant to the direction
of the Trustees in accordance with generally accepted
accounting principles, all debts, obligations and
liabilities of such series (which debts, obligations
and liabilities shall include, without limitation of
the generality of the foregoing, any and all debts,
obligations, liabilities, or claims, of any and every
kind and nature, fixed, accrued and otherwise,
including the estimated accrued expenses of management
and supervision, administration and distribution and
any reserves or charges for any or all of the
foregoing, whether for taxes, expenses, or otherwise,
and the price of Shares redeemed but not paid for) but
excluding the Trust's liability upon its Shares and
its surplus, by
(ii) the total number of Shares of such series
outstanding.
The Trustees are empowered, in their absolute
discretion, to establish other methods for determining such net
asset value whenever such other methods are deemed by them to be
necessary to enable the Trust to comply with, or are deemed by
them to be desirable, provided they are not inconsistent with
any provision of the 1940 Act.
(d) In determining for the purposes of this
Declaration of Trust the total value of the assets of each
series of Shares at any time, investments and any other assets
of such series shall be valued in such manner as may be
determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may
be made either in cash or in securities or other assets at the
time owned by the Trust or partly in cash and partly in
securities or other assets at the time owned by the Trust. The
value of any part of such payment to be made in securities or
other assets of the Trust shall be the value employed in
determining the redemption price. Payment of the redemption
price shall be made on or before the seventh day following the
day on which the Shares are properly presented for redemption
hereunder, except that delivery of any securities included in
any such payment shall be made as promptly as any necessary
transfers on the books of the issuers whose securities are to be
delivered may be made and, except as postponement of the date of
payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may
deduct from the payment made for any Shares redeemed a
liquidating charge not in excess of one percent (1%) of the
redemption price of the Shares so redeemed, and the Trustees may
alter or suspend any such liquidating charge from time to time.
(f) The right of any holder of Shares redeemed by the
Trust as provided in this Article VI to receive dividends or
distributions thereon and all other rights of such Shareholder
with respect to such Shares shall terminate at the time as of
which the redemption price of such Shares is determined, except
the right of such Shareholder to receive (i) the redemption
price of such Shares from the Trust in accordance with the
provisions hereof, and (ii) any dividend or distribution to
which such Shareholder previously had become entitled as the
record holder of such Shares on the record date for such
dividend or distribution.
(g) Redemption of Shares by the Trust is conditional
upon the Trust having funds or other assets legally available
therefor.
(h) The Trust, either directly or through an agent,
may repurchase its Shares, out of funds legally available
therefor, upon such terms and conditions and for such
consideration as the Trustees shall deem advisable, by agreement
with the owner at a price not exceeding the net asset value per
Share as determined by or pursuant to the order of the Trustees
at such time or times as the Trustees shall designate, less a
charge not to exceed one percent (1%) of such net asset value,
if and as fixed by resolution of the Trustees from time to time,
and to take all other steps deemed necessary or advisable in
connection therewith.
(i) Shares purchased or redeemed by the Trust shall
be cancelled or held by the Trust for reissue, as the Trustees
from time to time may determine.
(j) The obligations set forth in this Article VI may
be suspended or postponed, (1) for any period (i) during which
the New York Stock Exchange is closed other than for customary
weekend and holiday closings, or (ii) during which trading on
the New York Stock Exchange is restricted, (2) for any period
during which an emergency exists as a result of which (i) the
disposal by the Trust of investments owned by it is not
reasonably practicable, or (ii) it is not reasonably practicable
for the Trust fairly to determine the value of its net assets,
or (3) for such other periods as the Commission or any successor
governmental authority by order may permit.
Notwithstanding any other provision of this Section 3
of Article VI, if certificates representing such Shares have
been issued, the redemption or repurchase price need not be paid
by the Trust until such certificates are presented in proper
form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or
repurchase shall be effective, in accordance with the resolution
of the Trustees, regardless of whether or not such presentation
has been made.
Section 4. Redemptions at the Option of the Trust.
The Trust shall have the right at its option and at any time to
redeem Shares of any Shareholder at the net asset value thereof
as determined in accordance with Section 3 of Article VI of this
Declaration of Trust: (i) if at such time such Shareholder owns
fewer Shares than, or Shares having an aggregate net asset value
of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns
Shares of a particular series of Shares equal to or in excess of
a percentage of the outstanding Shares of that series determined
from time to time by the Trustees; or (iii) to the extent that
such Shareholder owns Shares of the Trust representing a
percentage equal to or in excess of such percentage of the
aggregate number of outstanding Shares of the Trust or the
aggregate net asset value of the Trust determined from time to
time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust
or of any series) with respect to, nor any redemption or
repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be
entitled to reasonable compensation from the Trust and may fix
the amount of their compensation.
Section 2. Limitation of Liability. The Trustees
shall not be responsible or liable in any event for any neglect
or wrongdoing of any officer, agent, employee or Manager of the
Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained
shall protect any Trustee against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Every note, bond, contract, instrument, certificate,
share, or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust, shall be deemed
conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section l. Indemnification of Trustees, Officers,
Employees and Agents. Each person who is or was a Trustee,
officer, employee or agent of the Trust shall be entitled to
indemnification out of the assets of the Trust to the extent
provided in, and subject to the provisions of, the By-Laws,
provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of
this Article VIII references to "the Trust" include any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or
agents as well as the resulting or surviving entity; so that any
person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee,
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article
VIII with respect to the resulting or surviving entity as he
would have with respect to such a constituent corporation if its
separate existence had continued.
Section 3. Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely
by reason of his being or having been a Shareholder and not
because of his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of
a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to
be held harmless from and indemnified against all losses and
expenses arising from such liability. Upon request, the Trust
shall cause its counsel to assume the defense of any claim
which, if successful, would result in an obligation of the Trust
to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby
expressly declared that a trust and not a partnership is created
hereby. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind
personally either the Trust's Trustees or officers or any
Shareholders. All persons extending credit to, contracting with
or having any claim against the Trust or a particular series of
Shares shall look only to the assets of the Trust or the assets
of that particular series for payment under such credit,
contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect
any Trustee against any liability to which such Trustee
otherwise would be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety. The exercise by the Trustees of
their powers and discretion hereunder under the circumstances
then prevailing, shall be binding upon everyone interested. A
Trustee shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for
nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and subject to the
provisions of Section 1 of this Article IX shall be under no
liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is
required.
Section 3. Liability of Third Persons Dealing with
Trustees. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made
or to be made by the Trustees pursuant hereto or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not
Personally Liable: Notice. All persons extending credit to,
contracting with or having any claim against the Trust or a
particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares for
payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be
personally liable therefor.
Section 5. Consolidation, Merger, Sale of Assets.
The Trust may, in accordance with the provisions of this
Section:
(1) Consolidate with one or more corporations or
trusts to form a new consolidated corporation or trust; or
(2) Merge into a corporation or trust, or have merged
into it one or more corporations or trusts; or
(3) Sell, lease, exchange or transfer all, or
substantially all, its property and assets, including its good
will and franchises.
Any such consolidation, merger, sale, lease, exchange
or other transfer of all or substantially all of the property
and assets of the Trust may be made only upon substantially the
terms and conditions set forth in a proposed form of articles of
consolidation, articles of merger or articles of sale, lease,
exchange or transfer, as the case may be, which are approved by
votes of the Trustees and Shareholders holding a majority of the
Shares entitled to vote thereon, provided that in the case of a
merger in which the Trust is the surviving entity which effects
no reclassification or change of any outstanding shares of the
Trust or other amendment of this Declaration of Trust, no vote
of the Shareholders shall be necessary (and in lieu thereof, the
proposed articles of merger shall be approved by a majority of
the Trustees) if the number of Shares, if any, of the Trust to
be issued or delivered in the merger does not exceed fifteen
percent of the number of Shares outstanding (before giving
effect to the merger) on the effective date of the merger. Any
articles of consolidation, merger, sale, lease, exchange or
transfer shall constitute a supplemental Declaration of Trust,
copies of which shall be filed as specified in Section 7 of this
Article IX.
Section 6. Termination of Trust. Unless terminated
as provided herein, the Trust shall continue without limitation
of time. The Trust may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of each
series entitled to vote or by the Trustees by written notice to
the Shareholders. Any series of Shares may be terminated at any
time by vote of Shareholders holding at least a majority of the
Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more
series of Shares, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued
or anticipated as may be determined by the Trustees, the Trust
shall reduce, in accordance with such procedures as the Trustees
consider appropriate, the remaining assets to distributable form
in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the
series involved, ratably according to the number of Shares of
such series held by the several Shareholders of such series on
the date of termination.
Section 7. Filing of Copies, References, Headings.
The original or a copy of this instrument and of each amendment
hereto and of each Declaration of Trust supplemental hereto
shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of
each such amendment and supplemental Declaration of Trust shall
be filed by the Trust with the Secretary of The Commonwealth of
Massachusetts and the Boston City Clerk, as well as any other
governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any
such amendments or supplemental Declarations of Trust have been
made and as to matters in connection with the Trust hereunder;
and, with the same effect as if it were the original, may rely
on a copy certified by an officer of the Trust to be a copy of
this instrument or of any such amendment or supplemental
Declaration of Trust. In this instrument or in any such
amendment or supplemental Declaration of Trust, references to
this instrument, and all expressions like "herein," "hereof ,"
and "hereunder," shall be deemed to refer to this instrument as
amended or affected by any such amendment or supplemental
Declaration of Trust. Headings are placed herein for
convenience of reference only and in case of any conflict, the
text of this instrument, rather than the headings, shall
control. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 8. Applicable Law. The Trust set forth in
this instrument is made in The Commonwealth of Massachusetts,
and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth.
The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by
such a trust.
Section 9. Amendments. This Declaration of Trust may
be amended at any time by an instrument in writing signed by a
majority of the then Trustees when authorized so to do by a vote
of Shareholders holding a majority of the Shares of each series
entitled to vote, except that an amendment which shall affect
the holders of one or more series of Shares but not the holders
of all outstanding series shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote
of each series affected and no vote of Shareholders of a series
not affected shall be required. Amendments having the purpose
of changing the name of the Trust or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not
require authorization by Shareholder vote.
IN WITNESS WHEREOF, Robert R. Mullery has hereunto set
his hand and seal in the City of Boston, Massachusetts, for him-
self and his assigns as of the day and year first above written.
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, October 21, 1986
Then personally appeared the above-named Robert R.
Mullery, and acknowledged the foregoing instrument to be his
free act and deed, before me.
Notary Public
My Commission expires:
(Notarial Seal)
AMENDED AND RESTATED CUSTODY AGREEMENT
Amended and Restated Custody Agreement made as of
August 18, 1989 between DREYFUS NEW YORK INSURED TAX EXEMPT BOND
FUND, a business trust organized and existing under the laws of
the Commonwealth of Massachusetts, having its principal office
and place of business at 666 Old Country Road, Garden City, New
York 11530 (hereinafter called the "Fund"), and THE BANK OF NEW
YORK, a New York corporation authorized to do a banking
business, having its principal office and place of business at
48 Wall Street, New York, New York 10015 (hereinafter called the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have
the following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not
any such person is an Officer or employee of the Fund, duly
authorized by the Trustees of the Fund to give Oral Instructions
and Written Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to
time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds
held in the Fund's custody account(s) at The Bank of New York,
or its successors, as of the close of such day or, if such day
is not a business day, the close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party
such party's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or
instituting or having instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or the entry of an order
for relief under the Federal bankruptcy law or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or if a petition is presented for
the winding up or liquidation of the party or a resolution is
passed for its winding up or liquidation, or it seeks, or
becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to approval
of, or acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federal
agency securities, its successor or successors and its nominee
or nominees.
5. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts and Futures Contract Options entitling the
holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the
specified underlying Securities.
6. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by
any two Officers of the Fund.
7. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange qualified
to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a
clearing member.
8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as security
for, and in consideration of, the Custodian's issuance of (a)
any Put Option guarantee letter or similar document described in
paragraph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban consumers, U.S.
city average 1982-84 equals 100, as first published without
seasonal adjustment by the Bureau of Labor Statistics, the
Department of Labor, without regard to subsequent revisions or
corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to purchase
from the writer thereof the specified Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has received
a certified copy of a resolution of the Fund's Trustees
specifically approving deposits in DTC. The term "Depository"
shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of
the Fund's Trustees specifically approving deposits therein by
the Custodian.
12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available
same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.I5 (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 Trustees 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 beneficial
interest 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 Trustees 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 Trustees 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 it's
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 Trustees approving, authorizing and instructing
the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate actually received by
the Custodian, to accept, utilize and act in accordance with
such confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate account
in the name of the Fund 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 are called, but only if
either (i) the Custodian receives a written notice of such call,
or (ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which may mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited,
for the account of 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 l 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 1 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 1
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 Member from which such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
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 1 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 1 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 no notify the Fund.
2. The custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its
lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee
letter or similar document or any receipt issued hereunder by
the Custodian. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed
the Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
Statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions
specifying the then market value of the securities described in
such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option, guarantee letter or
similar document, the Fund shall promptly specify in a
Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such
deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Trustees, certified by the Secretary or
any Assistant Secretary, either (i) setting forth the date of
the declaration of a dividend or distribution, the date of
payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the
total amount payable to the Dividend Agent of the Fund on the
payment date, or (ii) authorizing the declaration of dividends
and distributions on a daily basis and authorizing the Custodian
to rely on Oral Instructions, Written Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per share to the shareholders
of record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such
resolution, Oral Instructions, Written Instructions or
Certificate, as the case may be, the Custodian shall pay out of
the moneys held for the account of the Fund the total amount
payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF BENEFICIAL INTEREST
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 1 of Article XIII, "overdraft" shall mean a negative
Available Balance.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant
to a separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities 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 Trustees adopted in accordance with Rule 17f-5
under the Investment Company Act of 1940, as amended.
8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of its
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 change 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 responsibi-
lities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
ARTICLE XVI
TERMINATION
1. (a) Except as provided in subparagraphs (b), (c)
and (d) herein, neither party may terminate this Agreement until
the earlier of the following: (i) August 31, 1993, and (ii) the
third anniversary of the earliest date on which none of the
companies listed on Schedule C hereto is a transfer agency
customer of the Custodian. Any such termination may be effected
only by the terminating party giving to the other party a notice
in writing specifying the date of such termination, which shall
be not less than two hundred seventy (270) days after the date
of giving of such notice.
(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under this Agreement and such breach has remained
uncured for a period of thirty days after the Custodian's
receipt from the Fund of written notice specifying such breach.
(c) Either party, immediately upon written
notice to the other party, may terminate this Agreement upon the
Merger or Bankruptcy of the other party.
(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under the "Amendment to Transfer Agency Agreements"
dated August 18, 1989 and has not cured such breach as promptly
as practicable and in any event within seven days of its receipt
of written notice of such breach, provided that the Custodian
shall not be permitted to cure any such material breach arising
from the willful misconduct of the Custodian.
In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution of the
Trustees 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 Trustees, certified by the Secretary
or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth
in such notice, this Agreement shall terminate and the Custodian
shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and
held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall
then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall, upon the date specified in the notice
of termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot
be delivered to the Fund, to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
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 Trustees 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
Trustees.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. This Agreement shall not be effective on the date
hereof and instead shall become effective on January l, 1990.
When effective, this Agreement shall supercede the then-existing
Custody Agreement between the parties hereto.
10. This Agreement has been executed on behalf of the
Fund by the undersigned Officer of the Fund in his capacity as
an Officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, Officer or shareholder of
the Fund individually.
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 New York Insured Tax Exempt Bond Fund
By: __________________________
John Pyburn, Treasurer
Attest:
______________________
THE BANK OF NEW YORK
By: __________________________
Attest:
______________________
Appendix A
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN
ACCOUNT FOR PORTFOLIO SECURITIES
TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Frank Greene, John Bale, Jeffey Nachman Lawrence Greene
Michael Condon, Steven John Pyburn Julian Smerling
Powanda and Richard Cassaro Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to The
Shareholder Services Group, Inc. in its capacity as
Transfer
Agent or agent of the Fund:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except
that an officer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over
$25,000:
Two (2) signatures required, one of which must be
from Group II, except that an officer of the Fund
who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or
Group II, including any one of the following:
Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburn or Alan Eisner, except that no
individual shall be authorized to sign more than
once.
Custodian Account for Portfolio Securities Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,
Robert Dubuss, Alan Eisner, Lawrence Greene,
Julian Smerling, Alan Brown, Richard Cassaro,
Paul
Disdier, Alfonso Fulgieri, Gregory Gruber,
Michael
Condon, Steven Powanda, Linda Raffinello, Ann
Weintraub, Michael Charash, Theresa Viviano and
Paul Casti, Jr.
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
AMENDED AND RESTATED CUSTODY AGREEMENT
APPENDIX B
The undersigned Officers of the Fund do hereby certify
that the following individuals, whose specimen signatures are on
file with The Bank of New York, have been duly elected or
appointed by the Fund's Board to the position set forth opposite
their names and have qualified therefor:
Name Position
Richard J. Moynihan President and Investment Officer
A. Paul Disdier Vice President and Investment Officer
Karen M. Hand Vice President and Investment Officer
Stephen C. Kris Vice President and Investment Officer
L. Lawrence Troutman Vice President and Investment Officer
Samuel J. Weinstock Vice President and Investment Officer
Monica S. Wieboldt Vice President and Investment Officer
Mark N. Jacobs Vice President
John J. Pyburn Treasurer
Daniel C. Maclean Secretary
Christine Pavalos Assistant Secretary
Robert I. Frenkel Assistant Secretary
Jeffrey N. Nachman Controller
Title: Title:
AMENDED AND RESTATED CUSTODY AGREEMENT
APPENDIX C
The following, are designated publications for
purposes
of paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
Schedule A
The fees payable to the Custodian with respect to
securities held in domestic custody are annexed hereto.
DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
Domestic Custody Fees
Basic Fee: 1/100th of 1% per annum of the total market value
of domestic securities held.
Custodial Transactions:
$13.00 for each receipt and delivery of Treasuries
(excluding Euro Dollar CDs).
$20.00 for physical settlements, and Paydowns on
Mortgage Backs.
$40.00 for any receipt, delivery or redemption of a
Euro Dollar CD for which BNY's London branch is
utilized for settlement and safekeeping.
$200.00 for the collection of interest on securities
held in "street name."
Schedule B
The fees payable to the Custodian with respect to
securities
held in foreign custody are as set forth in a letter dated
August
10, 1989 from Masao Yamaguchi of The Bank of New York to Kevin
Flood of Dreyfus Service Corporation, a copy of which is annexed
hereto.
The above foreign custody fees apply to the following
Global
Custody Network countries:
1. Australia 12. Japan
2. Austria 13. Luxembourg
3. Belgium 14. Malasia
4. Canada 15. Netherlands
5. Denmark 16. New Zealand
6. Finland 17. Norway
7. France 18. Singapore
8. Germany 19. Spain
9. Hong Kong 20. Sweden
10. Ireland 21. Switzerland
11. Italy 22. United Kingdom
[LETTERHEAD OF BANK OF NEW YORK]
August 10, 1989
Mr. Kevin Flood
Senior Vice President
The Dreyfus Corporation
222 Broadway, 7th Floor
New York, NY
Re: Global Custodian Fees
Dear Kevin:
This letter is to confirm our discussion regarding our
Global Custody fee schedule. The fees will be calculated on a
relationship basis with no annual minimum.
- Safekeeping/Income Collection/Capital Changes/Tax
Reclamation/Daily Reporting/Monthly Summary
16 basis points per annum on the market value of
securities held for all of your funds in our sub-
custodian network, up to $250 MM.
15 basis points on the next $250 MM.
14 basis points on the next $250 MM.
12 basis points on the excess.
- Securities Settlements
$35 per transaction - includes our processing and the
sub-custodians.
- Out-of-Pocket Expense
Telex, swift, telephone, securities registration,
etc.,
are in addition to the above.
- We can provide centralized foreign exchange services.
THE BANK OF NEW YORK
Mr. Kevin Flood
August 10, 1989
Page 2
The above fee schedule is applicable to the 22 countries
listed on Attachment I. Please note that expansion into other
more emerging markets/countries is possible, but would be
covered under a separate agreement.
If you are in agreement with this fee schedule, please sign
and return the enclosed copy of this letter.
Sincerely,
/s/ Masao Yamaguchi
Approved by: ____________________
Kevin Flood
Date : ____________________
MY:to
cc: The Bank of New York Dreyfus
F. Ricciardi J. Nachman
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment companies identified in Schedule A attached
(collectively, the "Funds") hereby appoints on the following
terms and conditions Chemical Bank as subcustodian (the
"Subcustodian") for it and the Subcustodian hereby accepts such
appointment on the following terms and conditions as of the date
set forth below.
1. Qualification. The Custodian and the Subcustodian each
represent to the other and to each Fund that it is qualified to
act as a custodian for a registered investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
2. Subcustody. The Subcustodian agrees to hold in a
separate account, segregated at all times from all other
accounts maintained by the Subcustodian, all securities and
evidence of rights thereto of each of the Funds (collectively,
"Fund Securities") deposited, from time to time by the Custodian
with the Subcustodian. The Subcustodian will accept, hold or
dispose of and take such other reasonable actions with respect
to Fund Securities, in addition to those specified in Section 3,
in accordance with the instructions of the Custodian relating to
Fund Securities given in the manner set forth in Section 4
("Instructions"). The Subcustodian hereby waives any claim
against, or lien on, any Fund Securities for any claim
hereunder. Registered Fund Securities may be held in the name
of the Subcustodian or its nominee. To the extent that
ownership of Fund Securities may be recorded by a book entry
system maintained by any transfer agent or registrar for such
Fund Securities (including, but not limited to, any such system
operated by the Subcustodian) or by Depository Trust Company,
the Subcustodian may hold Fund Securities as a book entry
reflecting the ownership of such Fund Securities by it or its
nominee and need not possess certificates or any other evidence
of ownership.
3. Subcustodian's Acts Without Instructions. Except as
otherwise instructed pursuant to Section 4, the Subcustodian
will (i) present all Fund Securities requiring presentation for
any payment thereon, (ii) distribute to the Custodian cash
received thereupon, (iii) collect and distribute to the
Custodian interest and any dividends and distributions on Fund
Securities, (iv) forward to the Custodian all confirmations,
notices, proxies or proxy soliciting materials relating to the
Fund Securities received by it (and the Custodian agrees to
forward same to the Fund), (v) report to the Custodian any
missed payment or other default upon any Fund Securities known
to it as Subcustodian hereunder, (the Subcustodian shall be
deemed to have knowledge of any payment default on any Fund
Securities in respect of which it acts as paying agent); all
cash distributions from the Subcustodian to the Custodian will
be in same day funds, on the same day funds are received by the
Subcustodian unless such distribution required instructions from
the Custodian which were not timely received, and (vi) at the
request of the Custodian, or on its behalf, execute any
necessary declarations or certificates of ownership (provided by
the Custodian or on its behalf) under any tax law now or
hereafter in effect. The Subcustodian will furnish to the
Custodian, upon the Custodian's request, any report of the
Subcustodian's independent public accountants on an examination
of its internal accounting controls and procedures for
safeguarding securities held in its custody for the account of
others.
4. Instructions, Other Communications. Any officer of the
Custodian designated from time to time, by letter to the
Subcustodian, signed by the President or any Vice President and
any Assistant Vice President, Assistant Secretary or Assistant
Treasurer of the Custodian or any other officer or employee
designated by the Custodian in writing, as an officer of the
Custodian authorized to give Instructions to the Subcustodian
with respect to Fund Securities (an "Authorized Officer") shall
be authorized to instruct the Subcustodian as to the acceptance,
holding, voting, presentation, disposition or any other action
with respect to Fund Securities from time to time in writing
signed by such Authorized Officer and delivered by hand, mail,
telecopier, tested telex, tested computer printout or such other
reasonable method as the Custodian and Subcustodian shall agree
is designed to prevent unauthorized officer's instructions. The
Subcustodian is also authorized to accept and act upon
Instructions regardless of the manner in which given (whether
orally, by telephone or otherwise) if the Subcustodian
reasonably believes such Instructions are given by an Authorized
Officer. The Subcustodian will promptly transmit to the
Custodian all receipts, confirmations or other transactional
evidence received by it in respect of Fund Securities as to
which the Subcustodian has received any Instructions.
Instructions and other communications to the Subcustodian shall
be given to Chemical Bank, 55 Water Street, Room 504, New York,
New York, Attention: Debt Securities Administration, Phone
(212) 820-5616 Telex: (212) 269-8510 (or to such other address
as the Subcustodian shall specify by notice to the Custodian and
each of the Funds). Communications to the Custodian and the
Funds shall be made at the addresses set forth below (or to such
other address as the Custodian or the Fund or Funds giving such
notice, shall specify by notice to the Subcustodian).
5. The Subcustodian. The Subcustodian shall not be liable
for any action taken or omitted to be taken in carrying out the
terms and provision of this Agreement if done without willful
malfeasance, bad faith, negligence or reckless disregard of its
obligations and duties under this Agreement.
The Subcustodian shall not have any responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities, except upon Instructions from
the Custodian, nor for informing the Custodian with respect
thereto, unless the Subcustodian has knowledge or is deemed to
have knowledge of the aforesaid. The Subcustodian shall be
deemed to have knowledge in circumstances where it is acting as
tender agent or paying agent for the Fund Securities. The
Subcustodian shall not be under a duty to supervise or to
provide advice (other than notice) to the Custodian or any of
the Funds relative to any purchase, sale, retention or other
disposition of any Fund Securities held hereunder. The
Subcustodian shall for the benefit of the Custodian and the
Funds be required to exercise the same care with respect to the
receiving, safekeeping, handling and delivery of Fund Securities
than it customarily exercises in respect of its own securities.
The Subcustodian will indemnify, defend and save harmless
the Custodian and the Funds from any loss or liability incurred
by the Custodian arising out of or in connection with the
Subcustodian's willful malfeasance, bad faith, negligence or
reckless disregard of its obligations and duties under this
Agreement; provided, however, that the Subcustodian shall in no
event be liable for any special, indirect or consequential
damages.
The Custodian agrees to be responsible for, and will
indemnify, defend and save harmless the Subcustodian (or any
nominee in whose name any Fund Securities are registered) for,
any loss or liability incurred by the Subcustodian (or such
nominee) arising out of or in connection with any action taken
by the Subcustodian (or such nominee) in accordance with any
Instructions or any other action taken by the Subcustodian (or
such nominee) in good faith and without negligence pursuant to
this Agreement, including any expenses, taxes or other charges
which the Subcustodian (or such nominee) is required to incur or
pay in connection therewith.
6. Resignation. The Subcustodian may resign as such at
any time upon not less than five business days' prior written
notice to the Custodian. In the event of such resignation or
any other termination of this Agreement, the Subcustodian shall
deliver all Fund Securities then held by it to the Custodian, or
as otherwise directed by the Custodian pursuant to Instructions
received by the Subcustodian, at the Custodian's expense;
provided, however, that the Subcustodian shall not be required
to effect any such delivery outside the Borough of Manhattan.
7. Miscellaneous. This Agreement (i) shall be governed by
and construed in accordance with the laws of the State of New
York, (ii) may be executed in counterparts each of which shall
be deemed an original but all of which shall constitute the same
instrument, and (iii) may be amended only by written agreement
executed by the parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth below.
Dated: , 199_
The Bank of New York
By:
As Custodian for the Funds
Listed in Schedule A Attached
Chemical Bank
By:
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment company identified below (the "Fund") hereby appoints
on the following terms and conditions Bankers Trust Company as
subcustodian (the "Subcustodian") for it and the Subcustodian
hereby accepts such appointment on the following terms and
conditions as of the date set forth below.
1. Qualification. The Custodian and the Subcustodian
each represents to the other and to the Fund that it is
qualified to act as a custodian for a registered investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
2. Subcustody. The Subcustodian agrees to maintain a
separate account and to hold segregated at all times from the
Subcustodian's securities and from all other customers' secur-
ities held by the Subcustodian, all the Fund's securities and
evidence of rights thereto ("Fund Securities") deposited, from
time to time by the Custodian with the Subcustodian. The Sub-
custodian will accept, hold or dispose of and take other actions
with respect to Fund Securities in accordance with the Instruc-
tions of the Custodian given in the manner set forth in Section
4 and will take certain other actions as specified in Section 3.
The Subcustodian hereby waives any claim against or lien on any
Fund Securities. The Subcustodian may take steps to register
and continue to hold Fund Securities in the name of the Subcustodi-
an's nominee and shall take such other steps as the Subcustodian
believes necessary or appropriate to carry out efficiently the
terms of this Agreement. To the extent that ownership of Fund
Securities may be recorded by a book entry system maintained by
any transfer agent or registrar for such Fund Securities or by
Depository Trust Company, the Subcustodian may hold Fund Secur-
ities as a book entry reflecting the ownership of such Fund Se-
curities by its nominee and need not possess certificates or any
other evidence of ownership of Fund Securities.
3. Subcustodian's Acts Without Instructions. Except
as otherwise instructed pursuant to Section 4, the Subcustodian
will (i) present all Fund Securities requiring presentation for
any payment thereon, (ii) distribute to the Custodian cash re-
ceived thereon, (iii) collect and distribute to the Custodian
interest and any dividends and distributions on Fund Securities,
(iv) at the request of the Custodian, or on its behalf, execute
any necessary declarations or certificates of ownership
(provided by the Custodian or on its behalf) under any tax law now or
hereafter in effect, (v) forward to the Custodian, or notify it by
telephone of, confirmations, notices, proxies or proxy
soliciting materials relating to the Fund Securities received by it as
registered holder (and the Custodian agrees to forward same to
the Fund), and (vi) promptly report to the Custodian any missed
payment or other default upon any Fund Securities known to it as
Subcustodian hereunder (the Subcustodian shall be deemed to have
knowledge of any payment default on any Fund Securities in re-
spect of which it acts as paying agent). All cash distributions
from the Subcustodian to the Custodian will be in same day
funds, on the same day that same day funds are received by the
Subcustodian unless such distribution required instructions from the
Custodian which were not timely received. Promptly after the
Subcustodian is furnished with any report of its independent
public accountants on an examination of its internal accounting
controls and procedures for safeguarding securities held in its
custody as subcustodian under this Agreement or under similar
agreements, the Subcustodian will furnish a copy thereof to the
Custodian.
4. Instructions, Other Communications. Any officer
of the Custodian designated from time to time by letter to the Sub-
custodian, signed by the President or any Vice President and any
Assistant Vice President, Assistant Secretary or Assistant
Treasurer of the Custodian, as an officer of the Custodian auth-
orized to give instructions to the Subcustodian with respect to
Fund Securities (an "Authorized Officer"), shall be authorized
to instruct the Subcustodian as to the acceptance, holding,
presentation, disposition or any other action with respect to
Fund Securities from time to time by telephone, or in writing
signed by such Authorized Officer and delivered by tested telex,
tested computer printout or such other reasonable method as the
Custodian and Subcustodian shall agree is designed to prevent
unauthorized officer's instructions; provided, however, the
Subcustodian is authorized to accept and act upon orders from
the Custodian, whether given orally, by telephone or otherwise,
which the Subcustodian reasonably believes to be given by an
authorized person. The Subcustodian will promptly transmit to the
Custodian all receipts and transaction confirmations in respect of Fund
Securities as to which the Subcustodian has received any
instructions. The Authorized Officers shall be as set forth on Exhibit
A attached hereto and, as amended from time to time, made a part
hereof.
5. Liabilities. (i) The Subcustodian shall not be
liable for any action taken or omitted to be taken in carrying
out the terms and provision of this Agreement if done without
willful malfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under this Agreement.
Except as otherwise set forth herein, the Subcustodian shall
have no responsibility for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes or
similar matters relating to the Fund Securities (except at the
instructions of the Custodian), nor for informing the Custodian
with respect thereto, whether or not the Subcustodian has, or is
deemed to have, knowledge of the aforesaid. The Subcustodian is
under no duty to supervise or to provide investment counseling
or advice to the Custodian or to the Fund relative to the purchase,
sale, retention or other disposition of any Fund Securities held
hereunder. The Subcustodian shall for the benefit of the
Custodian and the Fund use the same care with respect to
receiving, safekeeping, handling and delivery of Fund Securities
as it uses in respect of its own securities.
(ii) The Subcustodian will indemnify, defend and save
harmless the Custodian and the Fund from and against all loss,
liability, claims and demands incurred by the Custodian or the
Fund arising out of or in connection with the Subcustodian's
willful malfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties under this Agreement.
(iii) The Custodian agrees to be responsible for and
indemnify the Subcustodian and any nominee in whose name the
Fund Securities are registered, from and against all loss, liability,
claims and demands incurred by the Subcustodian and the nominee
in connection with the performance of any activity pursuant to
this Agreement, done in good faith and without negligence, in-
cluding any expenses, taxes or other charges which the Subcusto-
dian is required to pay in connection therewith.
6. Each party may terminate this Agreement at any
time by not less than ten (10) business days' prior written notice.
In the event that such notice is given, the Subcustodian shall
make delivery of the Fund Securities held in the Subcustodian
account to the Custodian or to any third party within the
Borough of Manhattan, specified by the Custodian in writing within ten
(10) days of receipt of the termination notice, at the Custodi-
an's expense.
7. All communications required or permitted to be
given under this Agreement, unless otherwise agreed by the parties,
shall be addressed as follows:
(i) to the Subcustodian:
Bankers Trust Company
1 Bankers Trust Plaza
14th Floor
New York, NY 10015
Attention: Barbara Walter
RMO Safekeeping Unit
(ii) to the Custodian:
The Bank of New York
110 Washington Street
New York, New York 10286
8. Miscellaneous: This Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each of
which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended by the
parties hereto in writing.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated: , 199_
THE BANK OF NEW YORK
Custodian
By:__________________________
Title:_______________________
As Custodian For
[NAME OF FUND]
BANKERS TRUST COMPANY
As Subcustodian
By:___________________________
Title:________________________
EXHIBIT A TO SUBCUSTODIAN AGREEMENT
DATED , 199_
The Authorized Officers pursuant to Section 4 of the
Agreement shall be:
__________________________ _____________________________
__________________________ _____________________________
__________________________ _____________________________
__________________________ _____________________________
__________________________ _____________________________
__________________________ _____________________________
Dated: , 199_
THE BANK OF NEW YORK
As Custodian
By:__________________________
Title:_______________________
EXHIBIT 10
[LETTERHEAD OF STROOCK & STROOCK & LAVAN]
December 18, 1986
Dreyfus New York Insured Tax
Exempt Bond Fund
666 Old Country Road
Garden City, New York 11530
Gentlemen:
We have acted as counsel to Dreyfus New York Insured
Tax Exempt Bond Fund (the "Fund") in connection with the
preparation of a Registration Statement on Form N-lA,
Registration No. 33-9654 (the "Registration Statement"),
covering shares of beneficial interest (the "Shares") of the
Fund.
We have examined copies of the Agreement and
Declaration of Trust and By-Laws of the Fund, the Registration
Statement and such other documents, records, papers, statutes
and authorities as we deemed necessary to form a basis for the
opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to
us. As to various questions of fact material to such opinion,
we have relied upon statements and certificates of officers and
representatives of the Fund and others.
Attorneys involved in the preparation of this opinion
are admitted only to the bar of the State of New York. As to
various questions arising under the laws of the Commonwealth of
Massachusetts, we have relied on the opinion of Messrs. Ropes &
Gray, a copy of which is attached hereto. Qualifications set
forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that
the shares of the Fund to be issued in accordance with the terms
of the offering as set forth in the Prospectus included as part
of the Registration Statement, when so issued and paid for, will
constitute validly authorized and issued Shares, fully paid and
non-assessable by the Fund.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to us
in the Prospectus included in the Registration Statement, and to
the filing of this opinion as an exhibit to any application made
by or on behalf of the Fund or any Distributor or dealer in
connection with the registration and qualification of the Fund
or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s Stroock & Stroock & Lavan
STROOCK & STROOCK & LAVAN
[LETTERHEAD OF ROPES & GRAY]
December 18, 1986
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with the
proposed offer and sale from time to time by Dreyfus New York
Insured Tax Exempt Bond Fund, a Massachusetts business trust
(the "Trust"), of an indefinite number of shares of beneficial
interest (the "Shares") of the Trust pursuant to the Trust' s
Registration Statement on Form N-1A under the Securities Act of
1933.
We are familiar with the action taken by the Trustees
of the Trust to authorize the issuance of the Shares. We have
examined the Trust's records of Trustee action, its By-Laws and
its Agreement and Declaration of Trust, as amended to date, on
file at the Office of the Secretary of State of The Commonwealth
of Massachusetts. We have examined copies of such Registration
Statement in the form filed with the Securities and Exchange
Commission, and such other documents as we deem necessary for
the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust
will receive the net asset value thereof. We also assume that,
in connection with any offer and sale of the Shares, the Trust
will take proper steps to effect compliance with applicable
federal and state laws regulating offerings and sales of
securities.
Based upon the foregoing, we are of the opinion that
the Trust is authorized to issue an unlimited number of Shares,
and that, when the Shares are issued and sold and the authorized
consideration therefor is received by the Trust, they will be
validly issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust". Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Trust. However,
the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of the Trust property for all
loss and expense of any shareholder held personally liable for
the obligations of the Trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be
unable to meet its obligations.
We consent to the filing of this opinion as an exhibit
to the aforesaid Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
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 February 1, 1996, in this Registration Statement (Form N-1A 33-9654)
of Dreyfus New York Insured Tax Exempt Bond Fund.
ERNST & YOUNG LLP
New York, New York
April 12, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000804260
<NAME> DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 147841
<INVESTMENTS-AT-VALUE> 160045
<RECEIVABLES> 3166
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 163215
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5898
<TOTAL-LIABILITIES> 5898
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144932
<SHARES-COMMON-STOCK> 13469
<SHARES-COMMON-PRIOR> 14233
<ACCUMULATED-NII-CURRENT> 43
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 138
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12204
<NET-ASSETS> 157317
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9708
<OTHER-INCOME> 0
<EXPENSES-NET> 1552
<NET-INVESTMENT-INCOME> 8156
<REALIZED-GAINS-CURRENT> 1439
<APPREC-INCREASE-CURRENT> 12855
<NET-CHANGE-FROM-OPS> 22450
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8136)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2731
<NUMBER-OF-SHARES-REDEEMED> (3979)
<SHARES-REINVESTED> 485
<NET-CHANGE-IN-ASSETS> 5621
<ACCUMULATED-NII-PRIOR> 23
<ACCUMULATED-GAINS-PRIOR> (1301)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 940
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1558
<AVERAGE-NET-ASSETS> 156708
<PER-SHARE-NAV-BEGIN> 10.66
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> 1.02
<PER-SHARE-DIVIDEND> (.59)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.68
<EXPENSE-RATIO> .010
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
