<PAGE> 1
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1997
DEAR SHAREHOLDER:
We are pleased to present the semi-annual report on the operations of
InterCapital New York Quality Municipal Securities (IQN) for the period ended
April 30, 1997.
Economic growth moderated during the third quarter of 1996, causing fixed-income
yields to move lower through November. However, an acceleration of economic
activity led by consumer spending developed in the fourth quarter of 1996 and
continued into the first quarter of 1997. This contributed to rising interest
rates between December and April. On March 25, 1997, the Federal Reserve Board
raised the federal-funds rate 25 basis points to 5.50 percent in a preemptive
move against a possible acceleration in the rate of inflation. Subsequently, the
fixed-income markets began to anticipate the possibility of additional rate
hikes by the Fed.
MUNICIPAL MARKET CONDITIONS
Municipal yields followed the trend of Treasury yields, but were less volatile.
Long-term insured revenue bond yields moved as low as 5.45 percent in November
1996, before rising to 5.75 percent in April 1997. Similarly, yields on one-year
municipal notes moved from 3.70 to 3.95 percent over the past six months. The
yield curve pick-up for extending maturities from 1 to 30 years increased to 180
basis points.
BOND YIELDS 1994-1997
<TABLE>
<CAPTION>
Insured Municipal
30-Year Insured Revenue Yields
Municipal 30-Year U.S. as a Percentage of
Revenue Yields Treasury Yields U.S. Treasury Yields
<S> <C> <C> <C>
5.45 6.35 0.8586
Jan '94 5.29 6.24 0.8481
5.64 6.66 0.8468
6.19 7.09 0.8728
6.24 7.31 0.854
6.23 7.43 0.8387
6.31 7.61 0.8293
6.15 7.4 0.8314
6.17 7.45 0.828
6.42 7.82 0.8212
6.66 7.97 0.8356
6.99 8 0.8738
6.65 7.88 0.8438
Jan '95 6.42 7.7 0.834
6.12 7.44 0.8222
6.07 7.43 0.8167
6.05 7.34 0.8245
5.84 6.65 0.8784
6 6.62 0.9066
5.99 6.85 0.875
5.98 6.65 0.8997
5.97 6.5 0.9184
5.79 6.33 0.915
5.61 6.13 0.9151
5.49 5.95 0.923
Jan '96 5.42 6.03 0.8989
5.55 6.47 0.8577
5.89 6.67 0.8835
5.94 6.91 0.8601
5.99 6.99 0.8571
5.86 6.87 0.8529
5.77 6.97 0.8278
5.82 7.12 0.8176
5.71 6.92 0.8248
5.6 6.64 0.8431
5.45 6.35 0.8583
5.56 6.64 0.8372
Jan '97 5.63 6.79 0.8293
5.53 6.8 0.8129
5.83 7.1 0.8216
5.74 6.96 0.8251
</TABLE>
Source: Bloomberg L.P.
<PAGE> 2
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997, continued
The ratio of 30-year insured revenue bond yields to 30-year U.S. Treasury yields
declined from 86 percent at the end of October 1996 to 82 percent in April 1997.
A declining ratio means that municipals have outperformed Treasuries, but have
become relatively more expensive. The ratio has ranged from 81 to 92 percent
over the past three years.
New-issue municipal volume was down 6 percent during the first four months of
1997. However, underwriting volume for the full year is expected to exceed bond
maturities and redemptions. New York new-issue underwriting represented 16
percent of national volume.
PERFORMANCE
Over the six-month period ended April 30, 1997, the Trust's net asset value
(NAV) moved from $13.07 to $13.01. Based on this NAV change plus reinvestment of
tax-free dividends totaling $0.35 per share, the Trust's total NAV return was
2.64 percent. IQN's market price on the New York Stock Exchange moved from
$11.25 to $11.125 per share. Based on this change in market price plus
reinvestment of tax-free dividends, IQN's total market return was 1.97 percent.
On April 30, 1997, the Trust was trading at a 15 percent discount to NAV.
Undistributed net investment income available for dividends increased from
$0.048 to $0.070 per share.
PORTFOLIO STRUCTURE
The Trust remained fully invested in long-term municipal bonds during the
period. Investments were diversified among 13 long-term sectors and 28 credits.
IQN's average maturity and call protection were 20 years and 7 years,
respectively. The portfolio has consistently sought to maintain quality, with
more than 60 percent of its long-term holdings rated single "A" or better.
FIVE LARGEST SECTORS AS OF APRIL 30, 1997
(% OF NET ASSETS)
<TABLE>
<S> <C>
HOSPITAL 16%
EDUCATION 14%
TRANSPORTATION 10%
GENERAL OBLIGATION 10%
MORTGAGE 10%
ALL OTHERS 40%
</TABLE>
Portfolio structure is subject to change.
CREDIT RATINGS AS OF APRIL 30, 1997
(% OF TOTAL LONG-TERM PORTFOLIO)
<TABLE>
<S> <C>
BBB or Baa 39%
AAA or Aaa 18%
AA or Aa 18%
A or A 25%
</TABLE>
As measured by Standard & Poor's Corp. or Moody's Investors Service, Inc.
Portfolio structure is subject to change.
<PAGE> 3
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997, continued
THE IMPACT OF LEVERAGING
As we have discussed previously, the total income available for distribution to
common shareholders includes incremental income provided by the Trust's
outstanding Auction Rate Preferred Shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities normally ranging from one
week to one year. Incremental income to common shares depends on two factors:
first, the amount of ARPS outstanding, and second, the spread between the
portfolio's cost yield and ARPS expenses (ARPS auction rate and expenses). The
greater the spread and the amount of ARPS outstanding, the greater the amount of
incremental income available for distribution to common shareholders. The level
of net investment income available for distribution to common shareholders
varies with the level of short-term interest rates.
ARPS yields ranged between 2 and 5 1/8 percent during the six months ended April
30, 1997. Over the same period, ARPS leverage contributed $.03 per share to
common share earnings. Two ARPS series totaled $24 million and represented 26
percent of net assets.
LOOKING AHEAD
With the collapse of flat-tax proposals, municipal bonds have improved relative
to U.S. Treasury securities. Although tax-free yields are currently somewhat
"rich" in their historical relationship with Treasury yields, the long-term
benefit of tax-exemption remains intact.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is through purchases in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust, when
appropriate, may purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. During the six-month period ended April 30, 1997,
IQN purchased and retired 82,100 shares of beneficial interest at a weighted
average market discount of 14.40 percent. Acquiring these treasury shares had
the antidilutive effect of adding $0.03 per share to net asset value. The Trust
may also utilize procedures to reduce or eliminate the amount of outstanding
ARPS, including their purchase in the open market or in privately negotiated
transactions.
<PAGE> 4
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997, continued
We appreciate your ongoing support of InterCapital New York Quality Municipal
Securities and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 5
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK TAX-EXEMPT MUNICIPAL BONDS (98.0%)
General Obligation (9.5%)
New York City,
$ 3,000 1994 Ser C.............................................................. 5.50% 10/01/08 $ 2,910,840
4,000 1994 Ser D.............................................................. 5.75 08/15/09 3,933,960
2,000 Puerto Rico, Pub Impr Refg Ser 1993..................................... 5.25 07/01/18 1,839,300
- -------- ------------
9,000 8,684,100
- -------- ------------
Educational Facilities Revenue (14.1%)
2,500 New York State, City University-John Jay College Ser 1995 A COPs........ 6.00 08/15/06 2,560,525
New York State Dormitory Authority,
4,000 City University Ser 1993 F.............................................. 5.50 07/01/12 3,817,560
2,000 New York University Ser A (MBIA)........................................ 5.00 07/01/11 1,891,020
5,000 State University Ser 1993 C............................................. 5.375 05/15/13 4,632,250
- -------- ------------
13,500 12,901,355
- -------- ------------
Electric Revenue (3.0%)
3,000 New York State Power Authority, General Purpose Ser CC.................. 5.25 01/01/18 2,795,700
- -------- ------------
Hospital Revenue (16.4%)
2,000 New York State Dormitory Authority, Rochester Hospital-FHA Insured Mtge
Ser 1993............................................................... 5.70 08/01/33 1,900,220
New York State Medical Care Facilities Finance Agency,
3,675 Hospital & Nursing Home-FHA Insured Mtge 1993 Ser B..................... 5.50 02/15/22 3,466,186
4,000 Hospital & Nursing Home-FHA Insured Mtge 1993 Ser A..................... 5.90 08/15/33 3,940,720
4,000 Presbyterian Hospital-FHA Insured Mtge Ser 1994 A....................... 5.25 08/15/14 3,786,520
2,000 St Lukes-Roosevelt Hospital-FHA Insured Mtge Ser 1993 A................. 5.625 08/15/18 1,924,240
- -------- ------------
15,675 15,017,886
- -------- ------------
Industrial Development/Pollution Control Revenue (6.2%)
New York State Energy Research & Development Authority,
3,000 Consolidated Edison Co of New York Inc Refg Ser 1993-B.................. 5.25 08/15/20 2,764,500
3,000 New York State Electric & Gas Co Ser A (AMT)............................ 5.95 12/01/27 2,888,790
- -------- ------------
6,000 5,653,290
- -------- ------------
Mortgage Revenue - Multi-Family (5.4%)
3,000 New York City Housing Development Corporation, FHA Insured Mtge Ser 1993
B...................................................................... 5.85 05/01/26 2,926,440
2,000 New York State Housing Finance Agency, Mortgage 1996 Ser A Refg (FSA)... 6.10 11/01/15 2,033,660
- -------- ------------
5,000 4,960,100
- -------- ------------
Mortgage Revenue - Single-Family (4.1%)
4,000 New York State Mortgage Agency, Homeowner Ser 29 A...................... 5.25 04/01/15 3,752,400
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Nursing and Health Related Facilities Revenue (7.1%)
$ 2,990 New York State Dormitory Authority, Department of Health Ser 1993....... 5.70% 07/01/09 $ 2,958,755
New York Medical Care Facilities Finance Agency,
2,000 Mental Health 1993 Ser F................................................ 5.375 02/15/14 1,846,780
2,000 Mental Health 1993 Ser D................................................ 5.25 08/15/23 1,757,240
- -------- ------------
6,990 6,562,775
- -------- ------------
Public Facilities Revenue (8.3%)
4,000 New York State Dormitory Authority, Court Facilities Ser 1993 A......... 5.625 05/15/13 3,850,720
4,000 New York State Urban Development Corporation, Correctional Refg 1993
Ser.................................................................... 5.50 01/01/15 3,734,080
- -------- ------------
8,000 7,584,800
- -------- ------------
Tax Allocation (2.0%)
2,000 Grand Central Station District Managers Association Inc, Cap Impr Refg
- -------- Ser 1994............................................................... 5.25 01/01/22 1,829,560
------------
Transportation Facilities Revenue (10.3%)
1,000 Buffalo & Fort Erie Public Bridge Authority, Toll Bridge Ser 1995
(MBIA)................................................................. 5.75 01/01/25 988,980
3,000 New York State Thruway Authority, Local Hwy & Bridge Ser 1993........... 5.125 04/01/08 2,851,680
3,000 Triborough Bridge & Tunnel Authority, Ser 1993 B........................ 5.00 01/01/20 2,755,830
Puerto Rico Highway & Transportation Authority,
1,000 Refg Ser W.............................................................. 5.50 07/01/17 951,970
2,000 Refg Ser X.............................................................. 5.50 07/01/19 1,896,860
- -------- ------------
10,000 9,445,320
- -------- ------------
Water & Sewer Revenue (4.2%)
New York City Municipal Water Finance Authority,
2,000 1993 Ser A.............................................................. 5.50 06/15/11 1,951,940
2,000 1994 Ser B.............................................................. 5.50 06/15/19 1,892,280
- -------- ------------
4,000 3,844,220
- -------- ------------
Other Revenue (7.4%)
3,000 New York Local Government Assistance Corporation, Ser 1993 B Refg....... 5.50 04/01/21 2,832,420
4,000 United Nations Development Corporation, Sr Lien 1992 Refg Ser A......... 6.00 07/01/26 3,966,920
- -------- ------------
7,000 6,799,340
- -------- ------------
94,165 TOTAL NEW YORK TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $92,822,485)........................ 89,830,846
- -------- ------------
NEW YORK TAX-EXEMPT SHORT-TERM MUNICIPAL OBLIGATION (0.4%)
400 Syracuse Industrial Development Agency, Syracuse University
- -------- Eggers Hall Ser 1993 (Demand 05/01/97) (Identified Cost $400,000)...... 3.75* 03/01/23 400,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 94,565 TOTAL INVESTMENTS (Identified Cost $93,222,485) (a) .................................. 98.4%
======== $ 90,230,846
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 1.6 1,433,135
---- ------------
NET ASSETS............................................................................. 100.0% $ 91,663,981
====== ============
</TABLE>
- ---------------------
<TABLE>
<S> <C>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
* Current coupon of variable rate demand obligation.
(a) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross
unrealized appreciation is $96,293 and the aggregate gross unrealized depreciation is $3,087,932, resulting
in net unrealized depreciation of $2,991,639.
Bond Insurance:
- ---------------
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $93,222,485)......................................... $90,230,846
Cash................................................................... 33,376
Interest receivable.................................................... 1,493,699
Deferred organizational expenses....................................... 9,887
Prepaid expenses....................................................... 26,048
-----------
TOTAL ASSETS....................................................... 91,793,856
-----------
LIABILITIES:
Payable for:
Common shares of beneficial interest repurchased................... 34,215
Investment management fee.......................................... 29,631
Accrued expenses....................................................... 66,029
-----------
TOTAL LIABILITIES.................................................. 129,875
-----------
NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares authorized of
non-participating $.01 par value, 480 shares outstanding)............. 24,000,000
-----------
Common shares of beneficial interest (unlimited shares authorized of
$.01 par value, 5,200,013 shares outstanding)......................... 73,686,804
Net unrealized depreciation............................................ (2,991,639)
Accumulated undistributed net investment income........................ 362,620
Accumulated net realized loss.......................................... (3,393,804)
-----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS....................... 67,663,981
-----------
TOTAL NET ASSETS................................................... $91,663,981
===========
NET ASSET VALUE PER COMMON SHARE
($67,663,981 divided by 5,200,013 common shares outstanding).......... $13.01
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997 (unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME......................................................... $2,611,254
----------
EXPENSES
Investment management fee............................................... 161,006
Professional fees....................................................... 56,105
Auction commission fees................................................. 27,772
Registration fees....................................................... 10,418
Auction agent fees...................................................... 10,068
Shareholder reports and notices......................................... 9,934
Transfer agent fees and expenses........................................ 8,637
Trustees' fees and expenses............................................. 7,609
Organizational expenses................................................. 3,470
Custodian fees.......................................................... 2,845
Other................................................................... 8,135
----------
TOTAL EXPENSES...................................................... 305,999
LESS: EXPENSE OFFSET................................................ (2,810)
----------
NET EXPENSES........................................................ 303,189
----------
NET INVESTMENT INCOME............................................... 2,308,065
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain....................................................... 249
Net change in unrealized depreciation................................... (575,561)
----------
NET LOSS............................................................ (575,312)
----------
NET INCREASE............................................................ $1,732,753
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
1997 OCTOBER 31, 1996
- ------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 2,308,065 $ 4,709,724
Net realized gain (loss)............................. 249 (331,453)
Net change in unrealized depreciation................ (575,561) 1,196,763
----------- ------------
NET INCREASE..................................... 1,732,753 5,575,034
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Preferred............................................ (392,246) (852,366)
Common............................................... (1,806,012) (3,893,323)
----------- ------------
TOTAL............................................ (2,198,258) (4,745,689)
----------- ------------
Decrease from transactions in common shares of
beneficial interest................................. (920,563) (2,370,386)
----------- ------------
NET DECREASE..................................... (1,386,068) (1,541,041)
NET ASSETS:
Beginning of period.................................. 93,050,049 94,591,090
----------- ------------
END OF PERIOD
(Including undistributed net investment income of
$362,620 and $252,813, respectively)............. $91,663,981 $ 93,050,049
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (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. The Trust's investment objective is to
provide current income which is exempt from federal, New York State and New York
City income taxes. The Trust was organized as a Massachusetts business trust on
March 3, 1993 and commenced operations on September 29, 1993.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Trust that in valuing the portfolio securities, it uses both a
computerized 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 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. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Trust amortizes premiums and accretes discounts over the life of the
respective securities. 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
<PAGE> 12
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
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
reclassification. 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 EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Trust's common shares in the
amount of $35,000 which have been reimbursed for the full amount thereof. Such
expenses have been deferred and are being amortized by the straight-line method
over a period not to exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays the Investment
Manager a management fee, calculated weekly and payable monthly, by applying the
annual rate of 0.35% to the Trust's 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, at its own expense, office space, 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended April 30, 1997 aggregated $90,000.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1997, the Trust had transfer agent fees and
expenses payable of approximately $6,100.
<PAGE> 13
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
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 approval of the
common shareholders. The Trust has issued Series 1 and 2 Auction Rate Preferred
Shares ("Preferred Shares") which have a liquidation value of $50,000 per share
plus the redemption premium, if any, plus accumulated but unpaid dividends,
whether or not declared, thereon to the date of distribution. The Trust may
redeem such shares, in whole or in part, at the original purchase price of
$50,000 per share plus accumulated but unpaid dividends, whether or not
declared, thereon to the date of redemption.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
AMOUNT IN RESET RANGE OF
SERIES SHARES* THOUSANDS* RATE* DATE DIVIDEND RATES**
- ------- ------- ---------- ----- --------- -----------------
<S> <C> <C> <C> <C> <C>
1 260 $ 13,000 2.00% 05/06/97 2.00% - 5.125%
2 220 11,000 4.15 05/02/97 2.00 - 4.15
</TABLE>
- ---------------------
* As of April 30, 1997.
** For the six months ended April 30, 1997.
Subsequent to April 30, 1997 and up through June 6, 1997, the Trust paid
dividends to Series 1 and 2 at rates ranging from 3.725% to 4.00%, respectively,
in the aggregate amount of $17,752.
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 purchasing 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 vote separately as a class to elect two Trustees and
on any matters affecting the rights of the preferred shares.
<PAGE> 14
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
5. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
--------- --------- -----------
<S> <C> <C> <C>
Balance, October 31, 1995......................................................... 5,488,313 $54,883 $76,922,870
Treasury shares purchased and retired (weighted average discount 11.40%)*......... (206,200) (2,062) (2,368,324)
--------- ------- -----------
Balance, October 31, 1996......................................................... 5,282,113 52,821 74,554,546
Treasury shares purchased and retired (weighted average discount 14.40%)*......... (82,100) (821) (919,742)
--------- ------- -----------
Balance, April 30, 1997........................................................... 5,200,013 $52,000 $73,634,804
========= ======= ===========
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS
At October 31, 1996, the Trust had a net capital loss carryover of approximately
$3,394,000 to offset future capital gains to the extent provided by regulations,
which will be available through October 31 of the following years.
<TABLE>
<CAPTION>
AMOUNT IN THOUSANDS
- -------------------------
<S> <C> <C>
2002 2003 2004
- ------- ----- -----
$2,208 $854 $332
======= ===== =====
</TABLE>
7. DIVIDENDS TO COMMON SHAREHOLDERS
The Trust declared the following dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT RECORD PAYABLE
DATE PER SHARE DATE DATE
- --------------- --------- ------------- --------------
<S> <C> <C> <C>
April 29, 1997 $0.0575 May 9, 1997 May 23, 1997
May 27, 1997 $0.0575 June 6, 1997 June 20, 1997
</TABLE>
<PAGE> 15
INTERCAPITAL NEW YORK QUALITY MUNICIPAL SECURITIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED OCTOBER 31**
APRIL 30, ---------------------------
1997** 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................. $ 13.07 $ 12.86 $ 10.90
------ ------ ------
Net investment income............................................ 0.44 0.88 0.87
Net realized and unrealized gain (loss).......................... (0.11) 0.15 1.98
------ ------ ------
Total from investment operations................................. 0.33 1.03 2.85
------ ------ ------
Less dividends from:
Net investment income......................................... (0.35) (0.72) (0.73)
Common share equivalent of dividends paid to preferred
shareholders................................................. (0.07) (0.16) (0.16)
------ ------ ------
Total dividends.................................................. (0.42) (0.88) (0.89)
------ ------ ------
Anti-dilutive effect of acquiring treasury shares................ 0.03 0.06 --
------ ------ ------
Offering costs charged against capital........................... -- -- --
------ ------ ------
Net asset value, end of period................................... $ 13.01 $13.07 $12.86
====== ===== =====
Market value, end of period...................................... $11.125 $11.25 $11.25
====== ====== ======
TOTAL INVESTMENT RETURN+......................................... 1.97%(1) 6.52% 23.58%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses................................................... 0.90%(2)(3) 0.93%(3) 0.99%(3)
Net investment income before preferred stock dividends........... 6.77%(2) 6.74% 7.31%
Preferred stock dividends........................................ 1.15%(2) 1.22% 1.37%
Net investment income available to common shareholders........... 5.62%(2) 5.52% 5.94%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.......................... $91,664 $93,050 $94,591
Asset coverage on preferred shares at end of period.............. 382% 389% 394%
Portfolio turnover rate.......................................... -- 5% 1%
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED OCTOBER 31** SEPTEMBER 29, 1993*
------------------------------- THROUGH
1994 OCTOBER 31, 1993**
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................. $ 13.99 $ 14.06
------ ------
Net investment income............................................ 0.92 0.03
Net realized and unrealized gain (loss).......................... (2.98) (0.04)
------ ------
Total from investment operations................................. (2.06) (0.01)
------ ------
Less dividends from:
Net investment income......................................... (0.72) --
Common share equivalent of dividends paid to preferred
shareholders................................................. (0.17) --
------ ------
Total dividends.................................................. (0.89) --
------ ------
Anti-dilutive effect of acquiring treasury shares................ -- --
------ ------
Offering costs charged against capital........................... (0.14) (0.06)
------ ------
Net asset value, end of period................................... $10.90 $13.99
===== =====
Market value, end of period...................................... $ 9.75 $15.25
====== ======
TOTAL INVESTMENT RETURN+......................................... (32.18)% 1.67%(1)
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses................................................... 1.08% 0.67%(2)
Net investment income before preferred stock dividends........... 7.31% 2.55%(2)
Preferred stock dividends........................................ 1.31% N/A
Net investment income available to common shareholders........... 6.00% 2.55%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.......................... $92,671 $80,529
Asset coverage on preferred shares at end of period.............. 297% N/A
Portfolio turnover rate.......................................... 17% --
</TABLE>
- ---------------------
* 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 last
day of each period reported. Dividends are assumed to be reinvested at the
prices obtained under the Trust's dividend reinvestment plan. Total
investment return does not reflect brokerage commissions.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
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
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.
INTERCAPITAL
NEW YORK
QUALITY
MUNICIPAL
SECURITIES
Semiannual Report
April 30, 1997
