INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - - - - - - - - -------------------------------------------------------------------------------
When InterCapital New York Quality Municipal Securities (NYSE symbol: IQN)
began its new fiscal year in November 1993, municipal yields had reached
record lows in a trend that began six years ago. Strong economic growth in
the fourth quarter of 1993 prompted concern about inflation and caused
interest rates to rise. This induced the Federal Reserve Board to tighten
monetary policy by raising the federal-funds rate -- the interest rate that
banks charge each other for overnight loans -- from 3.00 percent to 3.75
percent in three separate moves between early February and April. This action
was presented as a preemptive strike against inflation. However, the
fixed-income markets interpreted the change in Fed policy as the beginning of
a trend toward higher interest rates. In mid-May, the Federal Reserve Board
initiated another round of tightening with a 50 basis point increase in both
the federal-funds rate and the discount rate -- the interest rate the Federal
Reserve charges member banks for loans.
By the end of April the bond market was battered. Interest rates were at
levels not seen in over a year. Long-term municipal bond yields as measured
by The Bond Buyer Revenue Bond Index* increased by 86 basis points from 5.56
percent to 6.42 percent between November and April. This corresponded to a
price decline of more than 11 percent.
New-issue underwriting totaled $290 billion in 1993, a 23 percent increase
over the previous high of $235 billion set in 1992. Refunding issues, which
are used by state and local governments to refinance higher-coupon debt,
represented 66 percent of total volume last year. It is estimated that 1994's
underwriting volume will decline by 30 percent to about $200 billion and that
approximately $260 billion in bonds will either mature or be called. Thus,
the amount of municipal debt outstanding will be reduced. In line with these
projections, new-issue volume for the first four months of 1994 declined by
34 percent and totaled $59 billion. Refunding activity, the catalyst of last
year's record underwriting, dropped even more sharply.
PERFORMANCE
For the six-month period ended April 30, 1994, the Trust paid shareholders
tax-free income dividends totaling $0.33 per share. IQN's total return for
this period was -23.57 percent. This calculation is based on a change in the
Trust's New York Stock Exchange market price from $15.25 on October 31, 1993
to $11.375 per share on April 30, 1994 and includes the reinvestment of all
dividends and distributions. Over the same period, the Trust's net asset
value (NAV) declined by roughly 14 percent from $13.99 to $11.97 per share.
The current-coupon bonds purchased by the Trust in 1993 declined in line with
the Revenue Bond Index. However, the preferred stock leverage (as discussed
below) caused the Trust's NAV to decline 1.3 times more than the unleveraged
Revenue Bond Index. As of April 30, 1994, the Trust was trading at a 4.97
percent discount to NAV.
- - - - - - - - - ---------------
* The Bond Buyer Revenue Bond Index is an arithmetic average of the yields
of 25 selected municipal revenue bonds with 30-year maturities. Ratings of
these bonds range from Aaa to Baa1 by Moody's and AAA to A- by S&P.
<PAGE>
PORTFOLIO STRUCTURE
The portfolio's long-term investments were diversified among 13 specific
municipal sectors and 20 credits. The three largest sectors were hospital
revenue, education revenue and general obligation bonds, representing 40
percent of net assets. The average maturity and call protection of the
Trust's long-term holdings were 24 years and 9 years, respectively. Bonds
subject to the alternative minimum tax (AMT) comprised approximately four
percent of net assets. At the end of the period, the Trust's net assets
exceeded $108 million. The credit quality ratings of the long-term portfolio
are summarized below:
<TABLE>
<CAPTION>
MOODY'S OR STANDARD & POOR'S RATING PERCENT
- - - - - - - - - ----------------------------------- ---------
<S> <C>
Aaa or AAA ........................ 15.8%
Aa or AA .......................... 22.1
A1 or A+ .......................... 2.1
A or A ............................ 27.6
Baa or BBB ........................ 32.4
-----
100.0%
======
</TABLE>
PREFERRED SHARE LEVERAGE
In addition to common shares, the Trust has also issued two $20 million
series of Auction Rate Preferred Shares (ARPS). Dividend and distribution
payments for these shares rank ahead of the common shares. ARPS are
short-term securities with maturities normally ranging from one week to one
year. The dividend rates on tax-free ARPS are established by an auction
process, when the maturity is rolled over. The Trust uses the proceeds from
ARPS issuance to purchase long-term municipal bonds.
The common shares are impacted by the preferred shares in two ways. First,
following the payment of the dividend on the ARPS, common shares receive any
extra incremental income when the long-term portfolio yield is higher than
the cost of the ARPS (yield plus expenses). Second, the preferred shares
leverage the common shares by a factor of approximately 1.5 times, thus
multiplying any market change in NAV. Over the past six months, incremental
tax-free income from the ARPS leverage maintained common share dividends and
increased the level or cushion of undistributed net investment income. As of
April 30, 1994, an amount equivalent to $0.067 per share had been accumulated
in this cushion to help sustain the Trust's current dividend. The current
average ARPS rate is 2.35 percent for the two outstanding series, with all
resets occurring weekly. Higher yields in future ARPS auctions may begin to
erode the Trust's cushion of undistributed net investment income available
for distribution to common shareholders. If the cushion were to erode
significantly over time, the Trust would take appropriate action, which could
include an adjustment in the common dividend and/or a reduction in the amount
of ARPS.
Leverage is usually a positive influence on the overall value of a
portfolio during periods of stable to declining interest rates. However, the
increase in interest rates over the past few months has adversely impacted
NAV.
LOOKING AHEAD
A continuation of low new-issue supply, coupled with significant bond
calls and maturities should sustain investor demand for municipals. However,
the overall direction of interest rates will primarily be determined by the
strength of the economy, the trend of inflation and the Federal Reserve
Board's response to economic conditions.
<PAGE>
The Trust's procedure for reinvestment of all dividends and distributions
on common shares is by purchase in the open market. This method helps to
support the market value of the Trust's shares. In addition, the Trustees
have approved a procedure whereby the Trust may attempt to reduce or
eliminate a market value discount from net asset value by repurchasing common
shares in the open market or in privately negotiated transactions. The Trust
may also utilize procedures to reduce or eliminate the amount of outstanding
ARPS, including their repurchase in the open market or in privately
negotiated transactions.
We appreciate your support of InterCapital New York Quality Municipal
Securities and look forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS APRIL 30, 1994 (unaudited)
- - - - - - - - - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - - - - - - - - ----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
NEW YORK EXEMPT MUNICIPAL BONDS (93.1%)
GENERAL OBLIGATION (11.4%)
New York City,
$ 6,000 1994 Ser C ................................................. 5.50 % 10/ 1/08 $ 5,538,480
5,000 1994 Ser D ................................................. 5.75 8/15/09 4,708,600
2,500 Puerto Rico, Pub Impr Refg Ser 1993 ......................... 5.25 7/ 1/18 2,143,050
- - - - - - - - - ------- -----------
13,500 12,390,130
- - - - - - - - - ------- -----------
EDUCATIONAL FACILITIES REVENUE (12.3%)
New York State Dormitory Authority,
5,000 City University Ser 1993F .................................. 5.50 7/ 1/12 4,495,400
2,000 New York University Ser A (MBIA Insured) ................... 5.00 7/ 1/11 1,779,400
8,000 State University Ser C ..................................... 5.375 5/15/13 7,056,400
- - - - - - - - - ------- -----------
15,000 13,331,200
- - - - - - - - - ------- -----------
ELECTRIC FACILITIES REVENUE (2.8%)
3,500 New York State Power Authority, Gen Purpose Ser CC ......... 5.25 1/ 1/18 3,062,290
- - - - - - - - - ------- -----------
HOSPITAL FACILITIES REVENUE (15.8%)
2,000 New York State Dormitory Authority, Rochester Hospital - FHA
Insured Mtge ............................................... 5.70 8/ 1/33 1,760,880
New York State Medical Care Facilities Finance Agency,
5,000 Presbyterian Hospital - FHA Insured Mtge Ser A ............ 5.25 8/15/14 4,402,750
2,225 St Lukes-Roosevelt - FHA Insured Mtge Ser 1993 A .......... 5.625 8/15/18 1,978,626
5,000 Hospital & Nursing Home - FHA Insured Mtge Ser B .......... 5.50 2/15/22 4,489,800
5,000 Hospital & Nursing Home - FHA Insured Mtge 1993 Ser A ..... 5.90 8/15/33 4,529,650
- - - - - - - - - ------- -----------
19,225 17,161,706
- - - - - - - - - ------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (9.2%)
New York State Energy Research & Development Authority,
6,000 Consolidated Edison Co of New York Inc Refg Ser 1993-B .... 5.25 8/15/20 5,154,060
3,600 New York State Electric & Gas Co Ser A (AMT) ............... 5.95 12/ 1/27 3,236,364
1,750 New York State Electric & Gas Co Ser A (AMT)(MBIA Insured).. 5.70 12/ 1/28 1,580,110
- - - - - - - - - ------- -----------
11,350 9,970,534
- - - - - - - - - ------- -----------
MORTGAGE REVENUE - MULTI-FAMILY (2.5%)
3,000 New York City Housing Development Corporation,
- - - - - - - - - ------- - FHA Insured Mtge Ser B ................................... 5.85 5/ 1/26 2,720,070
-----------
MORTGAGE REVENUE - SINGLE FAMILY (4.0%)
5,000 New York State Mortgage Agency, Homeowner Ser 29 A ......... 5.25 4/ 1/15 4,310,800
- - - - - - - - - ------- -----------
NURSING & LIFE CARE REVENUE (6.6%)
2,990 New York State Dormitory Authority, Department of Health
Ser 1993 ................................................... 5.70 7/ 1/09 2,872,433
New York State Medical Care Facilities Finance Agency,
2,000 Mental Health 1993 Ser F ................................... 5.375 2/15/14 1,757,260
3,000 Mental Health 1993 Ser D ................................... 5.25 8/15/23 2,480,970
- - - - - - - - - ------- -----------
7,990 7,110,663
- - - - - - - - - ------- -----------
PUBLIC FACILITIES REVENUE (7.4%)
5,000 New York State Dormitory Authority, Court Facilities Ser A... 5.625 5/15/13 4,515,650
4,000 New York State Urban Development Corporation, Correctional
- - - - - - - - - ------- Refg 1993 Ser .............................................. 5.50 1/ 1/15 3,552,360
-----------
9,000 8,068,010
- - - - - - - - - ------- -----------
TAX ALLOCATION REVENUE (2.0%)
2,500 Grand Central Station District Managers Association Inc,
- - - - - - - - - ------- Cap Impr Refg Ser 1994 ..................................... 5.25 1/ 1/22 2,126,250
-----------
</TABLE>
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1994 (unaudited) (continued)
- - - - - - - - - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - - - - - - - - ----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
TRANSPORTATION REVENUE (8.1%)
$ 3,000 New York State Thruway Authority, Local Hwy & Bridge
Ser 1993 ................................................... 5.125% 4/ 1/08 $ 2,738,550
3,000 Triborough Bridge & Tunnel Authority, Ser B ................. 5.00 1/ 1/20 2,506,620
Puerto Rico Highway & Transportation Authority,
2,000 Refg Ser W ................................................. 5.50 7/ 1/17 1,779,460
2,000 Refg Ser X ................................................. 5.50 7/ 1/19 1,769,320
- - - - - - - - - --------- -------------
10,000 8,793,950
- - - - - - - - - --------- -------------
WATER & SEWER REVENUE FACILITIES (3.4%)
New York City Municipal Water Finance Authority,
2,000 1993 Ser A ................................................. 5.50 6/15/11 1,851,380
2,000 1993 Ser B ................................................. 5.50 6/15/19 1,782,040
- - - - - - - - - --------- -------------
4,000 3,633,420
- - - - - - - - - --------- -------------
OTHER REVENUE (7.6%)
4,000 New York Local Government Assistance Corporation, Ser 1993 B
Refg ....................................................... 5.50 4/ 1/21 3,540,440
5,000 United Nations Development Corporation, Sr Lien 1992 Refg
- - - - - - - - - --------- Ser A ...................................................... 6.00 7/ 1/26 4,741,100
------------
9,000 8,281,540
- - - - - - - - - --------- ------------
113,065 TOTAL NEW YORK EXEMPT MUNICIPAL BONDS
(IDENTIFIED COST $111,416,380) ............................. 100,960,563
------------
NEW YORK EXEMPT SHORT-TERM MUNICIPAL OBLIGATIONS (5.3%)
3,700 New York City, Ser A-8 (Tender 5/2/94) ...................... 2.95* 8/ 1/18 3,700,000
2,000 New York City Municipal Water Finance Authority, 1994 Ser C
- - - - - - - - - --------- (FGIC Insured) (Tender 5/2/94) ............................. 2.75* 6/15/23 2,000,000
------------
5,700 TOTAL NEW YORK EXEMPT SHORT-TERM MUNICIPAL
- - - - - - - - - --------- OBLIGATIONS (IDENTIFIED COST $5,700,000) ................... 5,700,000
------------
$ 118,765 TOTAL INVESTMENTS
========= (IDENTIFIED COST $117,116,380)(A) .......................... 98.4% 106,660,563
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .............. 1.6 1,720,543
----- ------------
NET ASSETS .................................................. 100.0% $108,381,106
===== ============
<FN>
- - - - - - - - - ---------------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
(a) The aggregate cost for federal income tax purposes is $117,116,380;
the aggregate gross and net unrealized depreciation is $10,455,817.
</TABLE>
See Notes to Financial Statements
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL STATEMENTS
- - - - - - - - - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1994 (unaudited)
- - - - - - - - - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $117,116,380) (Note 1) .. $106,660,563
Cash ....................................... 106,983
Interest receivable ........................ 1,845,619
Prepaid expenses ........................... 34,226
Deferred organizational expenses (Note 1) . 30,917
------------
TOTAL ASSETS ............................. 108,678,308
------------
LIABILITIES:
Payable for shares of beneficial interest
repurchased (Note 5) ...................... 71,352
Investment management fee payable (Note 2) 37,561
Offering expenses payable (Note 1) ........ 35,000
Accrued expenses and other payables (Note 3) 153,289
------------
TOTAL LIABILITIES ........................ 297,202
------------
NET ASSETS:
Preferred shares of beneficial interest
(1,000,000 shares authorized of non-
participating $.01 par value, 800 shares
outstanding (Note 4)) ..................... 40,000,000
------------
Common shares of beneficial interest
(unlimited shares authorized of $.01 par
value, 5,711,413 shares outstanding (Note
5)) ....................................... 79,109,263
Accumulated net realized loss on
investments ............................... (654,167)
Net unrealized depreciation on investments.. (10,455,817)
Accumulated undistributed net investment
income .................................... 381,827
------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS .................... 68,381,106
------------
TOTAL NET ASSETS ........................ $108,381,106
============
NET ASSET VALUE PER COMMON SHARE
($68,381,106 divided by 5,711,413 common
shares outstanding) ....................... $11.97
======
</TABLE>
- - - - - - - - - -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months
Ended April 30, 1994 (unaudited)
- - - - - - - - - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME ......................... $ 2,895,170
------------
EXPENSES
Investment management fee (Note 2) .... 196,023
Professional fees ...................... 85,452
Auction commission fees ................ 42,608
Transfer agent fees and expenses ...... 15,890
Auction agent fees ..................... 14,621
Trustees' fees and expenses ............ 9,385
Shareholder reports and notices ....... 9,147
Registration fees ...................... 8,223
Custodian fees ......................... 4,671
Organizational expenses (Note 1) ...... 3,470
Other .................................. 5,667
------------
TOTAL EXPENSES ........................ 395,157
------------
NET INVESTMENT INCOME ................ 2,500,013
------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (Note 1):
Net realized loss on investments ....... (654,167)
Net change in unrealized depreciation on
investments ............................ (10,243,854)
------------
NET LOSS ON INVESTMENTS ............... (10,898,021)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........... $ (8,398,008)
============
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED SEPTEMBER 29, 1993
APRIL 30, 1994 THROUGH OCTOBER
(UNAUDITED) 31, 1993 (NOTE 1)
-------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................................................ $ 2,500,013 $ 164,052
Net realized loss on investments ..................................... (654,167) -0-
Net change in unrealized depreciation on investments ................. (10,243,854) (211,963)
------------- -----------
Net decrease in net assets resulting from operations ................ (8,398,008) (47,911)
------------- -----------
Dividends to preferred shareholders from net investment income ........ (413,592) -0-
Dividends to common shareholders from net investment income ........... (1,868,646) -0-
------------ -----------
Total dividends ..................................................... (2,282,238) -0-
------------ -----------
Transactions in common shares of beneficial interest (Note 5) ......... (1,467,746) 80,477,000
------------ -----------
Gross proceeds from issuance of preferred shares (Note 4) ............. 40,000,000 -0-
------------ -----------
Total increase ...................................................... 27,852,008 80,429,089
NET ASSETS:
Beginning of period .................................................... 80,529,098 100,009
------------ -----------
END OF PERIOD (including undistributed net investment income of
$381,827 and $164,052, respectively) .................................. $108,381,106 $80,529,098
============ ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS (unaudited)
- - - - - - - - - -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- InterCapital New York Quality
Municipal Securities (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management
investment company. It was organized on March 3, 1993 as a Massachusetts
business trust and had no operations until September 29, 1993 other than
matters related to the sale and issuance of 7,113 common shares of beneficial
interest to Dean Witter InterCapital Inc. (the "Investment Manager").
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued for the
Trust by an outside independent pricing service approved by the
Trustees. The pricing service has informed the Trust that in valuing the
Trust's portfolio securities, it uses both a computerized grid matrix of
tax-exempt securities and evaluations by its staff, in each case based
on information concerning market transactions and quotations from
dealers which reflect the bid side of the market each day. The Trust's
portfolio securities are thus valued by reference to a combination of
transactions and quotations for the same or other securities believed to
be comparable in quality, coupon, maturity, type of issue, call
provisions, trading characteristics and other features deemed to be
relevant.
B. Accounting for Investments -- Security transactions are accounted
for on the trade date (date the order to buy or sell is executed). In
computing net investment income, the Trust amortizes premiums and
original issue discounts on fixed income securities. Additionally, with
respect to market discount on bonds, a portion of any capital gain
realized upon disposition is recharacterized as taxable investment
income. Realized gains and losses on security transactions are
determined on the identified cost method. Interest income is accrued
daily.
C. Federal Income Tax Status -- It is the Trust's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and nontaxable
income to its shareholders. Accordingly, no federal income tax provision
is required.
D. Dividends and Distributions to Shareholders -- The Trust records
dividends and distributions to its shareholders on the ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted
accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassifications. Dividends and
distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
E. Organizational and Offering Expenses -- The Trust's Investment
Manager paid the organizational and offering expenses of the Trust's
common shares in the amount of approximately $35,000 and $368,000,
respectively, and paid approximately $315,000 in offering expenses of
the Trust's
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - - - - - - - - ------------------------------------------------------------------------
preferred shares. Organizational expenses have been reimbursed by the
Trust for the full amount thereof and are being amortized by the
straight-line method over a period not to exceed five years from the
commencement of operations. Offering expenses will be reimbursed by the
Trust and were charged to capital at the time of issuance of the Trust's
respective shares.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the
"Investment Manager"), the Trust pays its Investment Manager a management
fee, calculated weekly and payable monthly, by applying the annual rate of
0.35% to the Trust's average weekly net assets.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's books
and records and furnishes office space and facilities, equipment, clerical,
bookkeeping and certain legal services, and pays the salaries of all
personnel, including officers of the Trust, who are employees of the
Investment Manager. The Investment Manager also bears the cost of telephone
services, heat, light, power and other utilities provided to the Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales of portfolio securities for the six
months ended April 30, 1994, excluding short-term investments, aggregated
$77,384,138 and $6,856,489, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1994, the Trust had transfer agent fees
and expenses payable of approximately $5,100.
Dean Witter Distributors Inc., the Trust's principal underwriter and an
affiliate of the Investment Manager, has informed the Trust that it received
approximately $600,000 in underwriting discounts and commissions in
connection with the offering of the preferred shares.
4. PREFERRED SHARES OF BENEFICIAL INTEREST -- The Trust is authorized to
issue up to 1,000,000 non-participating preferred shares of beneficial
interest having a par value of $.01 per share, in one or more series, with
rights as determined by the Trustees, without the approval of the common
shareholders. On November 16, 1993, the Trust issued 800 shares of Auction
Rate Preferred Shares ("Preferred Shares") consisting of 400 shares each of
Series 1 and 2 for gross total proceeds of $40,000,000. Underwriting
discounts, commissions and offering expenses were charged to capital at the
time of issuance. The preferred shares have a liquidation value of $50,000
per share plus any accumulated but unpaid dividends plus the redemption
premium, if any, and are redeemable (in whole or in part) on any dividend
payment date.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
RESET RANGE OF
SHARES SERIES RATE* DATE DIVIDEND RATES**
- - - - - - - - - -------- -------- ------- -------- ----------------
<S> <C> <C> <C> <C>
400 1 2.89% 5/2/94 2.00 % to 2.89%
400 2 2.96% 5/5/94 2.099% to 2.96%
<FN>
- - - - - - - - - ---------------
* As of April 30, 1994.
** For the period ended April 30, 1994.
</TABLE>
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - - - - - - - - -----------------------------------------------------------------------------
The Trust is subject to certain restrictions relating to the preferred
shares. Failure to comply with these restrictions could preclude the Trust
from declaring any distributions to common shareholders or repurchasing
common shares and/or could trigger the mandatory redemption of preferred
shares at liquidation value.
The preferred shares, which are entitled to one vote per share, generally
vote with the common shares but will vote separately as a class to elect two
Trustees and on any matter affecting the rights of the preferred shares.
5. COMMON SHARES OF BENEFICIAL INTEREST -- Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
PAR VALUE IN EXCESS OF
SHARES OF SHARES PAR VALUE
----------- ----------- ------------
<S> <C> <C> <C>
Balance (Note 1) ............................................... 7,113 $ 71 $ 99,938
Shares issued at close of public offering on September 29,
1993*.......................................................... 5,000,000 50,000 69,882,000
Shares issued on October 12, 1993 and October 27, 1993 to cover
over-allotment ................................................ 750,000 7,500 10,537,500
--------- ------- ------------
Balance, October 31, 1993 ...................................... 5,757,113 57,571 80,519,438
--------- ------- ------------
Offering costs and underwriting discounts associated with the
issuance of preferred shares .................................. (915,000)
Treasury shares purchased and retired (weighted average
discount 3.85%)** ............................................. (45,700) (457) (552,289)
--------- ------- -----------
Balance, April 30, 1994 ........................................ 5,711,413 $57,114 $79,052,149
========= ======= ===========
<FN>
- - - - - - - - - ---------------
* Net of offering cost of $368,000.
** The Trustees have voted to retire the shares repurchased.
</TABLE>
6. DIVIDENDS -- The Trust has declared the following dividends from net
investment income --
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER RECORD PAYABLE
DATE SHARE DATE DATE
- - - - - - - - - -------------- ------------ --------------- --------------
<S> <C> <C> <C>
April 26, 1994 $.065 May 6, 1994 May 20, 1994
May 31, 1994 $.065 June 10, 1994 June 24, 1994
</TABLE>
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - - - - - - - - -----------------------------------------------------------------------------
7. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
QUARTERS ENDED*
---------------------------------------
4/30/94 1/31/94
-------------------- -----------------
PER PER
TOTAL SHARE TOTAL SHARE
---------- -------- -------- -------
<S> <C> <C> <C> <C>
Total investment income ................... $ 1,604 $ 0.28 $1,291 $0.22
Net investment income ..................... 1,404 0.25 1,096 0.19
Net realized and unrealized gain (loss) on
investments .............................. (13,029) (2.27) 2,131 0.37
<CAPTION>
QUARTER ENDED*
----------------
10/31/93**
----------------
PER
TOTAL SHARE
------- -------
<S> <C> <C>
Total investment income .......................... $ 207 $ 0.04
Net investment income ............................ 164 0.03
Net unrealized loss on investments................ (212) (0.04)
<FN>
- - - - - - - - - ---------------
* Totals expressed in thousands of dollars.
** For the period September 29, 1993 (commencement of operations) through
October 31, 1993.
</TABLE>
<PAGE>
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL HIGHLIGHTS
- - - - - - - - - -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED SEPTEMBER 29, 1993*
APRIL 30, 1994** THROUGH OCTOBER 31,
(UNAUDITED) 1993
---------------- -------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............... $ 13.99 $ 14.06
-------- -------
Net investment income ............................. 0.44 0.03
Net realized and unrealized loss on investments .. (1.90) (0.04)
-------- -------
Total from investment operations ................... (1.46) (0.01)
-------- -------
Less dividends and other charges:
Dividends from net investment income .............. (0.33) -0-
Common share equivalent of dividends paid to
preferred shareholders ........................... (0.07) -0-
Offering costs charged against capital ............ (0.16) (0.06)
-------- -------
Total dividends and other charges .................. (0.56) (0.06)
-------- -------
Net asset value, end of period ..................... $ 11.97 $ 13.99
======== =======
Market value, end of period ........................ $ 11.375 $ 15.25
======== =======
TOTAL INVESTMENT RETURN+ ............................ (23.57)%(1) 1.67%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........... $108,381 $80,529
Ratios to average net assets of common
shareholders:
Total expenses .................................... 1.03%(2) 0.67%(2)
Net investment income before preferred stock
dividends ........................................ 6.54%(2) 2.55%(2)
Preferred stock dividends ......................... 1.08%(2) N/A
Net investment income available to common
shareholders ..................................... 5.46%(2) 2.55%(2)
Asset coverage on preferred shares at end of period 271% N/A
Portfolio turnover rate ............................ 7% 0%
<FN>
- - - - - - - - - ---------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the
first and last day of each period reported. Dividends and distributions
are assumed to be reinvested at the prices obtained under the Trust's
dividend reinvestment plan. Total investment return does not reflect
sales charges or brokerage commissions.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements
- - - - - - - - - -----------------------------------------------------------------------------
The financial statements included herein have been taken from the records
of the Trust without examination by the independent accountants and
accordingly they do not express an opinion thereon.
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center--Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
INTERCAPITAL
NEW YORK
QUALITY
MUNICIPAL
SECURITIES
SEMIANNUAL REPORT
APRIL 30, 1994
