<PAGE>
Dreyfus
New York Insured
Tax Exempt
Bond Fund
Annual Report
December 31, 1997
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus New York
Insured Tax Exempt Bond Fund for its 12-month reporting period ended December
31, 1997. Your Fund produced a total return, including share price changes and
dividend income generated, of 7.41%.* The Fund's tax-free distribution rate per
share was 4.34%.**
ECONOMIC REVIEW
Inflation seems to have lost its terrors. Not since the oil price collapse in
1986 has it been so restrained. As the economy approached the end of its seventh
uninterrupted year of expansion, inflation seemed to become even more subdued.
As of November 30, 1997, the 12-month pace of consumer price increases fell
below the 2% level. Producer prices actually fell at an annual rate of 1.2% over
the first 11 months of the year.
An ongoing fear in financial markets has been that the Federal Reserve
Board's (the "Fed") unremitting fight against inflation could lead to further
increases in interest rates. Yet, the Federal Open Market Committee (FOMC), the
policy-making arm of the Fed, has raised interest rates just once in over two
years, a period roughly coinciding with the latest surge of economic growth. The
last increase occurred on March 25, 1997 when the FOMC increased the Federal
Funds rate by a modest one quarter of a percentage point to 5.50%. (The Federal
Funds target rate is the rate of interest that banks charge one another for
overnight loans.) Investor concern about additional monetary restraint has
centered on the low unemployment rate of just 4.6%, a 24-year low. In
particular, there have been fears that wages would rise at a rate that could
rekindle inflation.
Not surprisingly, an almost ideal economic climate-- plentiful jobs, low
interest rates and dwindling inflation-- put consumers in an optimistic mood.
Though holiday retail sales were below expectations, spending in the third
quarter grew at the strongest pace in five years. Since consumer spending
accounts for two thirds of all economic activity, consumer attitudes are
generally considered important indicators of future economic conditions. The
Conference Board (a business-sponsored research group) reported in December that
its Index of Consumer Confidence rose to its highest level since 1969. So far,
the serious economic developments in Asia have not had an inhibiting effect on
consumer attitudes.
The Asian financial crisis, while bound to affect the import/export segment
of our economy, may also afford the Fed additional flexibility in implementing
monetary policy. While the Fed is concerned about the potential resurgence of
inflation, lower-priced Asian imports may counteract upward pressure on the rate
of U.S. inflation. Moreover, with our economic expansion mature by any
historical precedent (it's the second longest peacetime expansion in this
century), a slackening in overseas demand for U.S. products, combined with the
lower-priced imports, may help contain economic growth without additional
monetary tightening by the Fed. Regardless, it is unlikely that the Fed would
raise interest rates in the near term and further unsettle the international
financial markets while Asian countries struggle to stabilize their currencies
in relation to the U.S. dollar. Perhaps the biggest uncertainty ahead is the
extent to which the Asian turmoil will affect the U.S. economy. We are
particularly vigilant for developments abroad that might have either negative or
positive consequences for the portfolio. The trouble in Asia shows the close and
sensitive relationship between our economy and the economies around the globe.
MARKET ENVIRONMENT
The past year provided positive results for the municipal bond market. After
a rather rocky first quarter, the market enjoyed a fairly smooth ride to lower
yields, and in the process, the value of municipal bonds rose considerably. For
the one-year period, the average yield on long-term municipal bonds fell by over
50 basis points. Spurred by this dramatic drop in rates, the issuance of new
municipal securities surged by nearly 20% over the previous year, marking 1997
as one of the most prolific years of issuance in history. As rates continue to
move lower, the large volume of new supply has
<PAGE>
proven to be no obstacle to the market. On an historical basis, the yields
available today from municipal bonds are attractive versus those of U.S.
Treasuries. This favorable relationship relative to the taxable Treasury bonds
should continue to underpin the tax-exempt market. A further argument in support
of bonds is the uncertainty stemming from the Asian financial crisis and its
indeterminable impact on the U.S. stock market and economy.
Until a clearer picture emerges from Asia, we believe that investors will
continue to find fixed income investments attractive. The still strong and
expanding U.S. economy would normally be a cause for concern for inflation
watchers. However, as previously stated,we believe that in the near term the Fed
will refrain from taking any interest rate actions that could exacerbate the
Asian problem. There is already evidence of some domestic economic slowing from
the developments in Asia. If it continues, the slowdown could work to the
benefit of the bond markets by mitigating the perceived inherent inflation
threat present in a late-cycle continuation of robust economic growth.
PORTFOLIO OVERVIEW
As discussed in previous communications to Shareholders, in addition to
striving to maximize insured, tax-exempt income for New York residents
(consistent with the Fund's other objectives), the Fund is also now being
managed with the objective of owning more securities that bear the best
characteristics and potential for performance maximization in both up and down
markets. For example, earlier last year, we elected to sell a number of
securities that were nearing their optional call dates. The potential for price
appreciation of these types of bonds tends to be less than that of bonds with a
longer time before they can be called away by their issuer. Initially,
performance was adversely impacted as this strategy was being implemented;
however, the decline in rates since mid-year has yielded improved results to the
Fund when measured against other funds with similar investment characteristics
and objectives. This fact leaves us confident that the moves were warranted, and
should continue to benefit the Fund going forward.
Because the underlying characteristics of municipal bonds are static
(coupon, maturity, time until optional call, and quality rating), the
portfolio manager needs to make adjustments in response to a number of
dynamic factors that can affect performance, such as anticipated interest
rate moves. Looking forward, our focus will continue to be on owning the
optimal securities meeting our investment criteria. We trust that this
approach is in concert with your investment objectives.
Very truly yours,
/S/ Richard J. Moynihan
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
January 20, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid. Income is subject to state and local taxes for non-New York
residents.
** Distribution rate per share is based upon dividends per share paid from
net investment income during the period, divided by the net asset value per
share at the end of the period, adjusted for any capital gain distributions.
Some income may be subject to the Federal Alternative Minimum Tax
(AMT) for certain shareholders.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund December 31, 1997
- -------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS NEW YORK INSURED
TAX EXEMPT BOND FUND AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Dollars
$22,787
Lehman Brothers
Municipal Bond Index*
$20,657
Dreyfus New York
Insured Tax Exempt
Bond Fund
*Source: Lehman Brothers
Average Annual Total Returns
- -------------------------------------------------------------------------------
One Year Ended Five Years Ended Ten Years Ended
December 31, 1997 December 31, 1997 December 31, 1997
----------------- ----------------- -----------------
7.41% 5.59% 7.52%
- ----------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus New York Insured
Tax Exempt Bond Fund on 12/31/87 to a $10,000 investment made in the Lehman
Brothers Municipal Bond Index on that date. All dividends and capital gain
distributions are reinvested.
The Fund invests primarily in New York municipal securities, which are insured
as to the timely payment of principal and interest by recognized insurers of
municipal securities. The Fund's performance shown in the line graph takes
into account fees and expenses. Unlike the Fund, the Lehman Brothers Municipal
Bond Index is an unmanaged total return performance benchmark for the
long-term, investment-grade, geographically unrestricted tax exempt bond
market, calculated by using municipal bonds selected to be representative of
the municipal market overall; however, the bonds in the Index generally are not
insured. The Index does not take into account charges, fees and other expenses
and is not limited to investments principally in New York municipal obligations.
These factors can contribute to the Index potentially outperforming the Fund.
Further information relating to Fund performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights section
of the Prospectus and elsewhere in this report.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus New York Insured Tax Exempt Bond Fund
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Statement of Investments December 31, 1997
Principal
Long-Term Municipal Investments--96.7% Amount Value
- -------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
New York--87.5%
Development Authority of the North Country,
Solid Waste Management System Revenue, Refunding 6%, 5/15/2015 (Insured; FSA) $ 2,260,000 $ 2,538,748
Islip Resource Recovery Agency, RRR 6.125%, 7/1/2013 (Insured; AMBAC).......... 1,425,000 1,549,474
Metropolitan Transportation Authority
Transit Facilities Revenue:
5%, 7/1/2017 (Insured; AMBAC)............................................ 3,000,000 2,977,860
6.50%, 7/1/2018 (Insured; FGIC) (Prerefunded 7/1/2002) (a)............... 4,000,000 4,447,880
5%, 7/1/2020 (Insured; MBIA)............................................. 2,500,000 2,456,925
Nassau County:
General Improvement 5.10%, 11/1/2014 (Insured; AMBAC)....................... 3,955,000 3,987,985
Refunding 5.50%, 7/1/2006 (Insured; FGIC)................................... 2,500,000 2,698,775
New York City:
6%, 8/1/2007 (Insured; FGIC)................................................ 2,000,000 2,230,380
5.375%, 6/1/2013 (Insured; AMBAC)........................................... 3,825,000 3,963,962
7.25%, 3/15/2018 (Insured; FSA)............................................. 1,000,000 1,063,930
New York City Municipal Water Finance Authority, Water and Sewer System Revenue
6.20%, 6/15/2021 (Insured; AMBAC) (Prerefunded 6/15/2002) (a)............... 2,000,000 2,190,340
New York State Dormitory Authority, Revenue:
(City University):
5.35%, 7/1/2009 (Insured; FGIC).......................................... 5,000,000 5,328,800
6.30%, 7/1/2024 (Insured; AMBAC)......................................... 2,800,000 3,118,220
(Mental Health Services Facilities Improvement)
5.125%, 8/15/2021 (Insured; MBIA)........................................ 8,000,000 7,897,040
(Mount Sinai School of Medicine):
5.15%, 7/1/2024 (Insured; MBIA).......................................... 5,765,000 5,938,527
Refunding 6.75%, 7/1/2009 (Insured; MBIA)................................ 3,000,000 3,297,450
(Refunding - Ithaca College) 6.25%, 7/1/2021 (Insured; MBIA)................ 2,000,000 2,159,260
(Vassar Brothers Hospital) 5.25%, 7/1/2017 (Insured; FSA)................... 3,000,000 3,013,260
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 5,380,600
Pollution Control, Refunding (Niagara Mohawk Power Corp.)
6.625%, 10/1/2013 (Insured; FGIC)........................................ 4,500,000 4,917,060
New York State Local Government Assistance Corp., Refunding
4.875% 4/1/2020 (Insured; MBIA) (b)......................................... 5,000,000 4,838,050
New York State Medical Care Facilities Finance Agency, Revenue:
(Aurelia Osborn Fox Memorial Hospital) 6.50%, 11/1/2019 (Insured; FSA)...... 3,000,000 3,263,880
(Hospital and Nursing Home) 6.125%, 2/15/2015 (Insured; MBIA) (c)........... 4,000,000 4,355,360
</TABLE>
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
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<TABLE>
<CAPTION>
Statement of Investments (continued) December 31, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
New York (continued)
New York State Medical Care Facilities Finance Agency, Revenue (continued):
(Mental Health Service Facilities Improvement):
6.25%, 8/15/2018 (Insured; AMBAC)........................................ $ 4,685,000 $ 5,066,219
7.375%, 8/15/2019 (Insured; MBIA) (Prerefunded 8/15/1999) (a)............ 1,100,000 1,180,124
(Sisters of Charity Hospital) 6.625%, 11/1/2018 (Insured; AMBAC)............ 2,000,000 2,184,640
New York State Mortgage Agency, Revenue (Homeownership Mortgage)
6.45%, 10/1/2017 (Insured; MBIA) (c)........................................ 1,000,000 1,089,700
New York State Urban Development Corp., Revenue, Refunding
(Correctional Facilities)
5.50%, 1/1/2014 (Insured; FSA).............................................. 3,000,000 3,222,240
Port Authority of New York and New Jersey:
5.80%, 11/1/2010 (Insured; FGIC)............................................ 7,160,000 7,717,334
6.25%, 1/15/2027 (Insured; AMBAC)........................................... 2,000,000 2,139,260
Special Obligation Revenue (JFK International Air Terminal Project)
6.25%, 12/1/2013 (Insured; MBIA)......................................... 5,000,000 5,763,850
Triborough Bridge and Tunnel Authority, Special Obligation Refunding
6%, 1/1/2015 (Insured; AMBAC)............................................... 4,000,000 4,219,440
Yonkers 5.125%, 8/1/2009 (Insured; AMBAC)...................................... 3,125,000 3,233,031
U.S. Related--9.2%
Commonwealth of Puerto Rico Infrastructure Financing Authority, Special Tax Revenue
5%, 7/1/2028 (Insured; AMBAC)............................................... 5,000,000 4,907,900
Guam, Government Limited Obligation Revenue, Refunding
(Infrastructure Improvement) 5%, 11/1/2017 (Insured; AMBAC)................. 3,725,000 3,716,395
Puerto Rico Electic Power Authority, Power Revenue
5.40%, 7/1/2013 (Insured; MBIA)............................................. 3,700,000 3,878,118
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $124,590,858)......................................................... $131,932,017
=============
Short-Term Municipal Investments--3.3%
- --------------------------------------------------------------------------------
New York City Municipal Water Finance Authority, Water and Sewer System Revenue, VRDN
5.10% (Insured; FGIC) (d) (cost $4,500,000)................................. $ 4,500,000 $ 4,500,000
=============
TOTAL INVESTMENTS--100.0%
(cost $129,090,858)......................................................... $136,432,017
=============
</TABLE>
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
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<TABLE>
Statement of Investments (continued) December 31, 1997
Summary of Abbreviations
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance RRR Resources Recovery Revenue
VRDN Variable Rate Demand Notes
</TABLE>
Summary of Combined Ratings (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fitch (e) or Moody's or Standard & Poor's Percentage of Value
- ------ ------- ---------------- -----------------
AAA Aaa AAA 96.7%
F1 MIG1/P1 SP1/A1 3.3
-------
100.0%
=======
<FN>
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) Purchased on a delayed-delivery basis.
(c) Wholly held by custodian as collateral for delayed-delivery security.
(d) Securities payable on demand. The interest rate, which is subject to change,
is based upon bank prime rates or an index of market interest rates.
(e) Fitch currently provides creditworthiness information for a limited number of
investments.
(f) At December 31, 1997, 31.9% of the Fund's net assets are insured by AMBAC
and 35.5% are insured by MBIA.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Assets and Liabilities December 31, 1997
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $129,090,858 $136,432,017
Cash............................................. 2,160,438
Interest receivable.............................. 2,201,798
Prepaid expenses................................. 2,477
-------------
140,796,730
-------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 99,274
Due to Distributor............................... 2,586
Payable for investment securities purchased...... 4,820,896
Accrued expenses................................. 51,687
-------------
4,974,443
-------------
NET ASSETS..................................................................... $135,822,287
=============
REPRESENTED BY: Paid-in capital.................................. $127,940,383
Accumulated net realized gain (loss) on investments 540,745
Accumulated gross unrealized appreciation on investments 7,341,159
-------------
NET ASSETS..................................................................... $135,822,287
=============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 11,946,812
NET ASSET VALUE, offering and redemption price per share--Note 3(d)............. $11.37
=======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Operations Year Ended December 31, 1997
<S> <C> <C> <C>
INCOME Interest Income............................ $7,496,288
EXPENSES: Management fee--Note 3(a).................. $ 823,270
Shareholder servicing costs--Note 3(b)..... 412,687
Professional fees.......................... 51,891
Trustees' fees and expenses--Note 3(c)..... 39,358
Custodian fees............................. 15,468
Registration fees.......................... 10,877
Prospectus, shareholders' reports and miscellaneous 5,976
Loan commitment fees--Note 2............... 1,419
-----------
Total Expenses........................... 1,360,946
Less--reimbursement of prospectus costs--Note 3(b) (1,800)
-----------
Net Expenses............................. 1,359,146
----------
INVESTMENT INCOME--NET................................................... 6,137,142
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.... $2,032,000
Net realized gain (loss) on financial futures (293,625)
-----------
Net Realized Gain (Loss)................. 1,738,375
Net unrealized appreciation (depreciation)
on investments........................... 1,772,442
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 3,510,817
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $9,647,959
==========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 6,137,142 $ 7,072,916
Net realized gain (loss) on investments................................. 1,738,375 2,411,129
Net unrealized appreciation (depreciation) on investments............... 1,772,442 (6,635,014)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations...... 9,647,959 2,849,031
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.................................................. (6,137,142) (7,116,252)
Net realized gain on investments........................................ (1,483,996) (2,263,119)
------------- -------------
Total Dividends...................................................... (7,621,138) (9,379,371)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 11,403,371 48,175,210
Dividends reinvested.................................................... 5,088,496 6,350,869
Cost of shares redeemed................................................. (25,533,191) (62,476,356)
------------- -------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (9,041,324) (7,950,277)
------------- -------------
Total Increase (Decrease) in Net Assets........................... (7,014,503) (14,480,617)
NET ASSETS:
Beginning of Period..................................................... 142,836,790 157,317,407
------------- -------------
End of Period........................................................... $135,822,287 $142,836,790
============= =============
Shares Shares
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,022,421 4,290,801
Shares issued for dividends reinvested.................................. 454,542 564,570
Shares redeemed......................................................... (2,293,385) (5,561,459)
------------- -------------
Net Increase (Decrease) in Shares Outstanding........................ (816,422) (706,088)
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $11.19 $11.68 $10.66 $12.04 $11.60
------- ------- ------- ------- -------
Investment Operations:
Investment income--net............................. .50 .54 .59 .60 .60
Net realized and unrealized gain (loss) on investments .30 (.31) 1.02 (1.39) .66
------- ------- ------- ------- -------
Total from Investment Operations.................. .80 .23 1.61 (.79) 1.26
------- ------- ------- ------- -------
Distributions:
Dividends from investment income--net.............. (.50) (.54) (.59) (.59) (.60)
Dividends from net realized gain on investments... (.12) (.18) -- -- (.22)
------ ------- ------- ------- -------
Total Distributions............................... (.62) (.72) (.59) (.59) (.82)
------- ------- ------- ------- -------
Net asset value, end of period.................... $11.37 $11.19 $11.68 $10.66 $12.04
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN.............................. 7.41% 2.12% 15.38% (6.62%) 11.08%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .99% 1.02% .99% .98% .96%
Ratio of net investment income to average net assets 4.47% 4.78% 5.20% 5.31% 5.01%
Decrease reflected in above expense ratios
due to undertakings by the Manager............. -- -- -- .01% .02%
Portfolio Turnover Rate........................... 116.40% 84.24% 31.13% 12.79% 19.89%
Net Assets, end of period (000's Omitted)......... $135,822 $142,837 $157,317 $151,696 $198,257
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New York Insured Tax Exempt Bond Fund (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company. The Fund's investment objective is to provide
investors with as high a level of current income exempt from Federal, New York
State and New York City income taxes as is consistent with the preservation of
capital. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual
Fund Services, Inc. (the "Distributor") is the distributor of the Fund's shares,
which are sold to the public without a sales load.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) PORFOLIO VALUATION: Investments in securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the Board
of Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Fund.
(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.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
December 31, 1997, the Fund did not borrow under the Facility.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .60 of 1% of the value of the
Fund's average daily net assets and is payable monthly. The Agreement provides
that if in any full fiscal year the aggregate expenses of the Fund, exclusive of
taxes, brokerage, commitment fees, interest on borrowings and extraordinary
expenses, exceed 1 1/2% of the value of the Fund's average daily net assets,
the Fund may deduct from payments to be made to the Manager, or the Manager
will bear such excess expense. During the period ended December 31, 1997,
there was no expense reimbursement pursuant to the Agreement.
(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 (a) securities dealer, financial institution or other industry
professional) for distributing the Fund's shares and servicing shareholder
accounts ("Servicing") and (b) pays the Manager, Dreyfus Service Corporation, a
wholly-owned subsidiary of the Manager, or any affiliate (collectively,
"Dreyfus") for advertising and marketing relating to the Fund and Servicing, at
an aggregate annual rate of .25 of 1% of the value of the Fund's average daily
net assets. Both the Distributor and Dreyfus may pay Service Agents a fee in
respect of the Fund's shares owned by shareholders with whom the Service Agent
has a Servicing relationship or for whom the Service Agent is the dealer or
holder of record. Both the Distributor and Dreyfus determine the amounts 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 value of the Fund's average daily net assets for any full
year. During the period ended December 31, 1997, $344,829 was charged to the
Fund pursuant to the Plan, of which $1,800 was reimbursed by the Manager.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended December 31, 1997, the Fund was charged $48,873 pursuant to the transfer
agency agreement.
(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 and the Trustee Emeritus receives 50% of such compensation.
(d) A 1% redemption fee is charged and retained by the Fund on certain
redemptions of Fund shares (including redemptions through the use of the Fund
Exchanges service) where the shares being redeemed were issued subsequent to a
specified effective date and the redemption or exchange occurs less than fifteen
days following the date of issuance.
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4--SECURITIES TRANSACTIONS:
(a) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1997
amounted to $146,525,645 and $163,313,187, respectively.
The Fund may invest in financial futures contracts in order to gain exposure
to or protect against changes in the market. The Fund is exposed to market risk
as a result of changes in the value of the underlying financial instruments.
Investments in financial futures require the Fund to "mark to market" on a daily
basis, which reflects the change in market value of the contracts at the close
of each day's trading. Typically, variation margin payments are received or made
to reflect daily unrealized gains or losses. When the contracts are closed, the
Fund recognizes a realized gain or loss. These investments require initial
margin deposits with a custodian, which consist of cash or cash equivalents, up
to approximately 10% of the contract amount. The amount of these deposits is
determined by the exchange or Board of Trade on which the contract is traded and
is subject to change. At December 31, 1997, there were no financial futures
contracts outstanding.
(b) At December 31, 1997, 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).
<PAGE>
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, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus New York Insured Tax Exempt Bond Fund at December 31, 1997, 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.
/S/ Ernst & Young LLP
New York, New York
February 2, 1998
<PAGE>
Dreyfus New York Insured Tax Exempt Bond Fund
- ------------------------------------------------------------------------------
Important Tax Information (Unaudited)
In accordance with Federal tax law, the Fund hereby makes the following
designations regarding its fiscal year ended December 31, 1997:
--all the dividends paid from investment income-net are "exempt-interest
dividends" (not subject to regular Federal and, for residents of New York, New
York State and New York City personal income taxes), and
--the Fund hereby designates $.0968 per share as a long-term capital gain
distribution (of which 30.37% is subject to the 20% maximum Federal tax rate) of
the $.1002 per share paid on December 4, 1997. The Fund also designates $.0238
per share as a long-term capital gain distribution paid on August 6, 1997.
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Fund's taxable ordinary dividends and
capital gains distributions paid for the 1997 calendar year on Form 1099-DIV
which will be mailed by January 31, 1998.
<PAGE>
Dreyfus New York Insured
Tax Exempt Bond Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 577AR9712
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS NEW YORK INSURED TAX EXEMPT BOND FUND
AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
PERIOD LEHMAN BROTHERS DREYFUS NEW YORK
MUNICIPAL INSURED TAX EXEMPT
BOND INDEX* BOND FUND
12/31/87 10,000 10,000
12/31/88 11,016 11,132
12/31/89 12,205 12,107
12/31/90 13,094 12,822
12/31/91 14,684 14,497
12/31/92 15,979 15,736
12/31/93 17,972 17,479
12/31/94 17,014 16,322
12/31/95 19,984 18,832
12/31/96 20,869 19,232
12/31/97 22,787 20,657
*Source: Lehman Brothers
