File No. 33-61738
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
(Check appropriate box or boxes.)
PREMIER INSURED MUNICIPAL BOND FUND
(Formerly, Premier California Insured Municipal Bond Fund)
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
----
X on February 14, 1994 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a) of Rule 485
----
on (date) pursuant to paragraph (a) of Rule 485
----
Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended July 31, 1994 will be filed on or about September 22, 1994.
PREMIER INSURED MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 5
4 General Description of Registrant 6
5 Management of the Fund 21
6 Capital Stock and Other Securities 38
7 Purchase of Securities Being Offered 22
8 Redemption or Repurchase 28
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-29
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-10
Holders of Securities
16 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PREMIER INSURED MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-27
18 Capital Stock and Other Securities B-29
19 Purchase, Redemption and Pricing B-16
of Securities Being Offered
20 Tax Status *
21 Underwriters B-25
22 Calculations of Performance Data B-27
23 Financial Statements B-76
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-29
30 Location of Accounts and Records C-37
31 Management Services C-37
32 Undertakings C-37
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
February 14, 1994
PREMIER INSURED MUNICIPAL BOND FUND
Supplement to Prospectus Dated February 14, 1994
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled "Management
of the Fund."
The Fund's manager, The Dreyfus Corporation ("Dreyfus"), has entered
into an Agreement and Plan of Merger providing for the merger of Dreyfus
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of Dreyfus and of Mellon.
The merger is expected to occur in mid-1994, but could occur significantly
later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with Dreyfus under the Investment Company Act of 1940
and thus, a termination of such Agreement, Dreyfus will seek prior
approval from the Fund's Board and shareholders.
(Dreyfus Lion Logo)
PREMIER INSURED MUNICIPAL BOND FUND
PROSPECTUS FEBRUARY 14, 1994
Premier Insured Municipal Bond Fund (the "Fund") is an open-end,
management investment company, known as a mutual fund. Its goal is to
maximize current income exempt from Federal and, where applicable, from
State personal income taxes to the extent consistent with the
preservation of capital.
The Fund permits you to invest in any of six separate non-diversified
portfolios (each, a "Series"): the National Series, the California Series,
the Connecticut Series, the Florida Series, the New Jersey Series and the
New York Series. Each Series will invest primarily in a portfolio of
Municipal Obligations (as defined below) that are insured as to the timely
payment of principal and interest by recognized insurers of Municipal
Obligations. Each Series, other than the National Series will invest
primarily in Municipal Obligations issued by issuers in the State after
which it is named. It is anticipated that substantially all dividends paid
by each Series will be exempt from Federal income tax and also, where
applicable, will be exempt from the personal income tax of the State after
which the Series is named.
By this Prospectus, Class A and Class B shares of each Series are
being offered. Class A shares are subject to a sales charge imposed at the
time of purchase and Class B shares are subject to a contingent deferred
sales charge imposed on redemptions made within five years of purchase.
Other differences between the two Classes include the services offered to
and the expenses borne by each Class and certain voting rights, as
described herein. The Fund offers these alternatives to permit an investor
to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the investor expects to
hold the shares and other circumstances.
The Fund provides free redemption checks with respect to Class A
shares, which you can use in amounts of $500 or more for cash or to pay
bills. You can purchase or redeem Fund shares by telephone using the
TELETRANSFER Privilege.
The Dreyfus Corporation will professionally manage the Fund's
portfolio.
--------------
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
Part B (also known as the Statement of Additional Information),
dated February 14, 1994, which may be revised from time to time,
provides a further discussion of certain areas in this Prospectus and other
matters which may be of interest to some investors. It has been filed with
the Securities and Exchange Commission and is incorporated herein by
reference. For a free copy, write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144, or call 1-800-554-4611.
When telephoning, ask for Operator 666.
--------------
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. EACH SERIES' SHARES INVOLVE
CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
EACH SERIES' SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE
AND ARE NOT GUARANTEED.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Fee Table............................................... 3
Condensed Financial Information......................... 5
Alternative Purchase Methods............................ 5
Description of the Fund................................. 6
Management of the Fund.................................. 21
How to Buy Fund Shares.................................. 22
Shareholder Services.................................... 25
How to Redeem Fund Shares............................... 28
Distribution Plan and Shareholder Services Plan......... 32
Dividends, Distributions and Taxes...................... 33
Performance Information................................. 37
General Information..................................... 38
(2)
FEE TABLE
<TABLE>
<CAPTION>
NATIONAL CONNECTICUT
SERIES SERIES
---------------- ----------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemption
(as a percentage of the amount subject to charge).... -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.............................................. .55% .55% .55% .55%
12b-1 Fees................................................... -- .50% -- .50%
Service Fees................................................. .25% .25% .25% .25%
Other Expenses............................................... .15% .15% .15% .15%
Total Series Operating Expenses.............................. .95% 1.45% .95% 1.45%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except
where noted, redemption at the end of each time period:
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
1 YEAR............................................................... $54 $45/$15* $54 $45/$15*
3 YEARS.............................................................. $74 $66/$46* $74 $66/$46*
*Assuming no redemption of Class B shares.
FLORIDA CALIFORNIA
SERIES SERIES
---------------- ----------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemption
(as a percentage of the amount subject to charge).... -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.............................................. .55% .55% .55% .55%
12b-1 Fees................................................... -- .50% -- .50%
Service Fees................................................. .25% .25% .25% .25%
Other Expenses............................................... .15% .15% .15% .15%
Total Series Operating Expenses.............................. .95% 1.45% .95% 1.45%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except
where noted, redemption at the end of each time period:
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
1 YEAR............................................................... $54 $45/$15* $54 $45/$15*
3 YEARS.............................................................. $74 $66/$46* $74 $66/$46*
- --------------------------
*Assuming no redemption of Class B shares.
(3)
NEW JERSEY NEW YORK
SERIES SERIES
---------------- ----------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................. 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemption
(as a percentage of the amount subject to charge).... -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.............................................. .55% .55% .55% .55%
12b-1 Fees................................................... -- .50% -- .50%
Service Fees................................................. .25% .25% .25% .25%
Other Expenses............................................... .15% .15% .15% .15%
Total Series Operating Expenses.............................. .95% 1.45% .95% 1.45%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except
where noted, redemption at the end of each time period:
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
1 YEAR............................................................... $54 $45/$15* $54 $45/$15*
3 YEARS.............................................................. $74 $66/$46* $74 $66/$46*
- -----------------------
*Assuming no redemption of Class B shares.
</TABLE>
- -------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH SERIES' ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
- -------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an
annual basis. Other Expenses and Total Series Operating Expenses are
based on estimated amounts for the current fiscal year. Long-term
investors in Class B shares could pay more in 12b-1 fees than the
economic equivalent of paying a front-end sales charge. The information in
the foregoing table does not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Certain Service
Agents (as defined below) may charge their clients direct fees for
effecting transactions in the relevant Series' shares; such fees are not
reflected in the foregoing table. See "Management of the Fund," "How to
Buy Fund Shares" and "Distribution Plan and Shareholder Services Plan ."
(4)
CONDENSED FINANCIAL INFORMATION
The table below sets forth certain information covering the
California Series investment results for the period indicated. Further
financial data and related notes are included in the Statement of
Additional Information, available upon request. No financial data are
available for the Connecticut Series, the Florida Series, the National
Series, the New Jersey Series and the New York Series, which had not
commenced operation as of the date of this prospectus.
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 the period August 19,
1993 (commencement of operations) to December 31, 1993. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
PER SHARE DATA: SHARES SHARES
------ -------
<S> <C> <C>
Net asset value, beginning of period................................... $12.50 $12.50
INVESTMENT OPERATION:
Investment income-net.................................................. .25 .22
Net unrealized gain on investments..................................... .25 .26
------ ------
TOTAL FROM INVESTMENT OPERATIONS............................... .50 .48
------ ------
DISTRIBUTIONS;
Dividends from investment income-net................................... (.25) (.22)
------ ------
Net asset value, end of period......................................... $12.75 $12.76
====== ======
TOTAL INVESTMENT RETURN(1)(2) 3.99% 3.87%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net asssets(2)............................ -- .50%
Ratio of net investment income to average net assets(2)................ 5.04% 4.65%
Decrease reflected in above ratios due to undertakings by
The Dreyfus Corporation (limited to the expense limitation
provision of the Management Agreement)(2)...................... 2.50% 2.50%
Portfolio Turnover Rate(3)..................................................... -- --
Net Assets, end of period (000's Omitted)...................................... $1,049 $1,422
- ----------------------
(1) Exclusive of sales charge.
(2) Annualized.
(3) Not annualized.
</TABLE>
Further information about the Fund's performance will be contained
in the Fund's annual report for the fiscal year ending July 31, 1994, which
will be availabe approximately the end of September 1994 and may be
obtained without charge by writing to the address or calling the number
set forth on the cover page of this prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you two methods of purchasing each Series' shares;
you may choose the Class of shares that best suits your needs, given the
amount of your purchase, the length of time you expect to hold your shares
and any other relevant circumstances. Each Class A and Class B share of a
Series represents an identical pro rata interest in that Series' investment
portfolio.
As to each Series, Class A shares are sold at net asset value per share
plus a maximum initial sales charge of 4.50% of the public offering price
imposed at the time of purchase. The initial sales charge may be reduced
or waived for certain purchases. See "How to Buy Fund Shares_Class A
Shares." These shares are subject to an annual service fee at the rate of
.25 of 1% of the value of the average daily net assets of Class A. See
"Distribution Plan and Shareholder Services Plan-Shareholder Services
Plan ."
(5)
As to each Series, Class B shares are sold at net asset value per
share with no initial sales charge at the time of purchase; as a result, the
entire purchase price is immediately invested in the Series. Class B
shares are subject to a maximum 3% contingent deferred sales charge
("CDSC"), which is assessed only if you redeem Class B shares within five
years of purchase. See "How to Buy Fund Shares-Class B Shares" and "How
to Redeem Fund Shares-Contingent Deferred Sales Charge-Class B
Shares." These shares also are subject to an annual service fee at the rate
of .25 of 1% of the value of the average daily net assets of Class B. In
addition, Class B shares are subject to an annual distribution fee at the
rate of .50 of 1% of the value of the average daily net assets of Class B.
See "Distribution Plan and Shareholder Services Plan - Distribution Plan."
The distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. Approximately six
years after the date of purchase, Class B shares of a Series automatically
will convert to Class A shares of such Series, based on the relative net
asset values for shares of each Class, and will no longer be subject to the
distribution fee. Class B shares that have been acquired through the
reinvestment of dividends and distributions will be converted on a pro
rata basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the
total Class B shares not acquired through the reinvestment of dividends
and distributions.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC on
Class B shares prior to conversion would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A. In this
regard, generally, Class B shares may be more appropriate for investors
who invest less than $100,000 in Fund shares. Additionally, investors
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing
Class A shares because the accumulated continuing distribution fees on
Class B shares may exceed the initial sales charge on Class A shares
during the life of the investment. Generally, Class A shares may be more
appropriate for investors who invest $250,000 or more in Fund shares.
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios. Each portfolio is treated as a separate entity for
certain matters under the Investment Company Act of 1940 and for other
purposes, and a shareholder of one Series is not deemed to be a
shareholder of any other Series. As described below, for certain matters
Fund shareholders vote together as a group; as to others they vote
separately by Series. When used herein, the term "State" refers to the
State, if applicable, after which a Series is named.
INVESTMENT OBJECTIVE
The Fund's goal is to maximize current income exempt from Federal
income tax and, where applicable, from State personal income taxes for
residents of the States of California, Connecticut, Florida, New Jersey and
New York, to the extent consistent with the preservation of capital. To
accomplish this goal, each Series will invest primarily in debt securities
issued by States, territories and possessions of the United States and the
District of Columbia and their political subdivisions, authorities and
corporations, the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income taxes ( "Municipal Obligations")
that are insured as to the timely payment of principal and interest by
recognized insurers of Municipal Obligations . In addition, the California
Series, the Connecticut Series, the Florida Series, the New Jersey Series
and the New York Series (collectively, the "State Series") will invest
primarily in such Municipal Obligations of the State after which the
relevant Series is named the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal and, if applicable, such State's
personal income taxes (collectively, "State Municipal Obligations" or
when the context so requires, "California Municipal Obligations,"
"Connecticut Municipal Obligations," "Florida Municipal
(6)
Obligations," etc.). To the extent acceptable insured State Municipal
Obligations at any
time are unavailable for investment, a State Series will invest
temporarily in State Municipal Obligations that are not subject to
insurance, insured Municipal Obligations and/or other debt securities the
interest from which is, in the opinion of bond counsel to the issuer,
exempt from Federal, but not State, income tax. With respect to the
National Series, to the extent acceptable insured Municipal Obligations at
any time are unavailable for investment, such Series will invest
temporarily in Municipal Obligations that are not subject to insurance
and/or other debt securities the interest from which is, in the opinion of
bond counsel to the issuer, exempt from Federal income tax. Each Series'
investment objective cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940) of such
Series' outstanding voting shares. There can be no assurance that the
Series' investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Municipal Obligations generally include debt obligations issued to
obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and
notes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest which are determined in some
instances by formulas under which the Municipal Obligation's interest rate
will change directly or inversely to changes in interest rates of an index,
or multiples thereof, in many cases subject to a maximum and minimum.
Certain Municipal Obligations are subject to redemption at a date earlier
than their stated maturity pursuant to call options, which may be
separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at least
80% of the value of each Series' net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. Generally, at least
65% of the value of each Series' net assets (except when maintaining a
temporary defensive position) will be invested in bonds and debentures
that are insured Municipal Obligations which, with respect to the State
Series, are issued by issuers in the State after which such Series is
named. See "Insurance Feature" and "Risk Factors_Investing in State
Municipal Obligations" below, and "Dividends, Distributions and Taxes." No
Series will be limited in the maturities of the securities in which it will
invest; currently the longest available maturity of Municipal Obligations
is 40 years.
Municipal Obligations purchased by each Series will be rated no
lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Corporation ("S&P") or Fitch Investors Service, Inc.
("Fitch"). Municipal Obligations rated BBB by S&P or Fitch or Baa by
Moody's are considered investment grade obligations; those rated BBB by
S&P or Fitch are regarded as having an adequate capacity to pay principal
and interest, while those rated Baa by Moody's are considered medium
grade obligations which lack outstanding investment characteristics and
have speculative characteristics. See "Appendix B" in the Statement of
Additional Information. Each Series also may invest in securities which,
while not rated, are determined by The Dreyfus Corporation to be of
comparable quality to the rated securities in which the Series may invest.
Each Series also may invest in Taxable
(7)
Investments of the quality
described below. Under normal market conditions, the weighted average
maturity of each Series' portfolio is expected to exceed ten years.
In addition to usual investment practices, the Fund, on behalf of a
Series, may use speculative investment techniques such as short-selling
and lending portfolio securities. Each Series also may purchase, hold or
deal in futures contracts and options on futures contracts, as permitted
by applicable law. See "Investment Techniques" below, and "Dividends,
Distributions and Taxes."
Each Series may invest more than 25% of the value of its total
assets in Municipal Obligations which are related in such a way that an
economic, business or political development or change affecting one such
security also would affect the other securities; for example, securities
the interest upon which is paid from revenues of similar types of projects
or, with respect to the National Series also, securities whose issuers are
located in the same state. As a result, each Series may be subject to
greater risk as compared to a fund that does not follow this practice.
From time to time, a Series may invest more than 25% of the value of its
total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified
private activity bonds, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such
interest, a proportionate share of any exempt-interest dividend paid by
the investment company may be treated as such a preference item to
shareholders. Each Series may invest without limitation in such Municipal
Obligations if The Dreyfus Corporation determines that their purchase is
consistent with the Fund's investment objective. See "Risk Factors_Other
Investment Considerations."
Each Series also may purchase floating and variable rate demand
notes and bonds, which are tax exempt obligations ordinarily having stated
maturities in excess of one year, but which permit the holder to demand
payment of principal at any time, or at specified intervals. Variable rate
demand notes include master demand notes which are obligations that
permit the Fund to invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these obligations fluctuate
from time to time. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks. Use of
letters of credit or other credit support arrangements will not adversely
affect the tax exempt status of these obligations. Because these
obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be
traded, and there generally is no established secondary market for these
obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other
credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the Fund for a Series will meet the quality
criteria established for the purchase of Municipal Obligations. The Dreyfus
Corporation, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
obligations in each Series' portfolio. No Series will invest more than 15%
of the value of its net assets in floating or variable rate demand
obligations as to which the Series cannot exercise the demand feature on
not more than seven days' notice if there is no secondary market available
for these obligations, and in other illiquid securities.
Each Series may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds
and municipal lease/purchase agreements). A participation interest gives
the Series an undivided interest in the Municipal Obligation in the
proportion that the Series' participation interest bears to the total
principal amount of the Municipal Obligation. These instruments may have
fixed, floating or variable rates of interest. If the participation interest
is unrated, the participation interest will be backed by an irrevocable
letter of credit or guarantee of a bank that the Board of Trustees has
determined meets the pre-
(8)
scribed quality standards for banks set forth
below, or the payment obligation otherwise will be collateralized by U.S.
Government securities. For certain participation interests, the Series will
have the right to demand payment, on not more than seven days' notice, for
all or any part of the Series' participation interest in the Municipal
Obligation, plus accrued interest. As to these instruments, each Series
intends to exercise its right to demand payment only upon a default under
the terms of the Municipal Obligation, as needed to provide liquidity to
meet redemptions, or to maintain or improve the quality of its investment
portfolio. No Series will invest more than 15% of the value of its net
assets in participation interests that do not have this demand feature if
there is no secondary market available for these participation interests,
and in other illiquid securities.
Each Series may purchase tender option bonds. A tender option bond
is a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing interest at a
fixed rate substantially higher than prevailing short-term tax exempt
rates, that has been coupled with the agreement of a third party, such as a
bank, broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial
institution receives periodic fees equal to the difference between the
Municipal Obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period,
that would cause the securities, coupled with the tender option, to trade
at par on the date of such determination. Thus, after payment of this fee,
the security holder effectively holds a demand obligation that bears
interest at the prevailing short-term tax exempt rate. The Dreyfus
Corporation, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligation, of
any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on
the underlying Municipal Obligations and for other reasons. No Series will
invest more than 15% of the value of its net assets in securities that are
illiquid, which would include tender option bonds as to which it cannot
exercise the tender feature on not more than seven days' notice if there is
no secondary market available for these obligations.
Each Series may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment,
the Fund obligates a broker, dealer or bank to repurchase, at the Fund's
option, specified securities at a specified price and, in this respect,
stand-by commitments are comparable to put options. The exercise of a
stand-by commitment therefore, is subject to the ability of the seller to
make payment on demand. A Series will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to exercise its
rights thereunder for trading purposes. The Fund may pay for stand-by
commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors. Each Series also may
acquire call options on specific Municipal Obligations. A Series generally
would purchase these call options to protect the Series from the issuer of
the related Municipal Obligation redeeming, or other holder of the call
option from calling away, the Municipal Obligation before maturity. The
sale by a Series of a call option that it owns on a specific Municipal
Obligation could result in the receipt of taxable income by that Series.
Each Series may purchase custodial receipts representing the right
to receive certain future principal and interest payments on Municipal
Obligations which underlie the custodial receipts. A number of different
arrangements are possible. In a typical custodial receipt arrangement, an
issuer or a third party owner of Municipal Obligations deposits such
obligations with a custodian in exchange for two classes of custodial
receipts. The two classes have different characteristics, but, in each
case, payments on the two classes are based on payments received on the
underlying Municipal Obligations. One class has the characteristics of a
typical auction rate security, where at specified intervals its interest
rate is adjusted, and ownership
(9)
changes, based on an auction mechanism.
This class's interest rate generally is expected to be below the coupon
rate of the underlying Municipal Obligations and generally is at a level
comparable to that of a Municipal Obligation of similar quality and having
a maturity equal to the period between interest rate adjustments. The
second class bears interest at a rate that exceeds the interest rate
typically borne by a security of comparable quality and maturity; this rate
also is adjusted, but in this case inversely to changes in the rate of
interest of the first class. If the interest rate on the first class exceeds
the coupon rate of the underlying Municipal Obligations, its interest rate
will exceed the rate paid on the second class. In no event will the
aggregate interest paid with respect to the two classes exceed the
interest paid by the underlying Municipal Obligations. The value of the
second class and similar securities should be expected to fluctuate more
than the value of a Municipal Obligation of comparable quality and
maturity and their purchase by the Series should increase the volatility of
its net asset value and, thus, its price per share. These custodial receipts
are sold in private placements. Each Series also may purchase directly
from issuers, and not in a private placement, Municipal Obligations having
characteristics similar to custodial receipts. These securities may be
issued as part of a multi-class offering and the interest rate on certain
classes may be subject to a cap or floor.
Each Series may invest up to 15% of the value of its net assets in
securities as to which a liquid trading market does not exist, provided
such investments are consistent with the Fund's investment objective.
Such securities may include securities that are not readily marketable,
such as certain securities that are subject to legal or contractual
restrictions on resale and repurchase agreements providing for settlement
in more than seven days after notice. As to these securities, the Series
investing in such securities is subject to a risk that should the Series
desire to sell them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of such Series' net assets
could be adversely affected. However, if a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain of these securities held by the
Series, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Trustees.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Fund's Board
of Trustees has directed The Dreyfus Corporation to monitor carefully
each Series' investments in such securities with particular regard to
trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to
Rule 144A, the Series' investing in such securities may have the effect of
increasing the level of illiquidity in such Series' investments during such
period.
Each Series may invest in zero coupon securities which are debt
securities issued or sold at a discount from their face value which do not
entitle the holder to any periodic payment of interest prior to maturity or
a specified redemption date (or cash payment date). The amount of the
discount varies depending on the time remaining until maturity or cash
payment date, prevailing interest rates, liquidity of the security and
perceived credit quality of the issuer. Zero coupon securities also may
take the form of debt securities that have been stripped of their
unmatured interest coupons, the coupons themselves and receipts or
certificates representing interests in such stripped debt obligations and
coupons. The market prices of zero coupon securities generally are more
volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities.
See "Risk Factors-Other Investment Considerations" below, and
"Dividends, Distributions and Taxes" in the Statement of Additional
Information.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of a Series' net
assets) or for temporary defensive purposes, each Series may invest in
taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within
the two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities;
(10)
commercial paper rated
not lower than P-1 by Moody's, A-1 by S&P or F-1 by Fitch; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic
banks, with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase
agreements in respect of any of the foregoing. Dividends paid by a Series
that are attributable to income earned by the Series from Taxable
Investments will be taxable to investors. See "Dividends, Distributions
and Taxes." Except for temporary defensive purposes, at no time will more
than 20% of the value of a Series' net assets be invested in Taxable
Investments. When a State Series has adopted a temporary defensive
position, including when acceptable State Municipal Obligations are
unavailable for investment by a State Series, in excess of 35% of such
Series' net assets may be invested in securities that are not exempt from
State personal income taxes, if applicable. Under normal market
conditions, each Series anticipates that not more than 5% of the value of
its total assets will be invested in any one category of Taxable
Investments. In certain states, dividends and distributions paid by a
Series that are attributable to interest income earned by the Series from
direct obligations of the United States may not be subject to state income
tax. Taxable Investments are more fully described in the Statement of
Additional Information, to which reference hereby is made.
INVESTMENT TECHNIQUES
The Fund, on behalf of a Series, may employ, among others, the
investment techniques described below. Use of certain of these techniques
may give rise to taxable income.
WHEN-ISSUED SECURITIES
New issues of Municipal Obligations usually are offered on a when-
issued basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate
that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable, although any gain realized on
such sale would be taxable. The Fund will not accrue income in respect of
a when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made for a Series if more than 20% of
the value of such Series' net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in a Series' portfolio are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased
on a when-issued basis may expose a Series to risk because they may
experience such fluctuations prior to their actual delivery. Purchasing
Municipal Obligations on a when-issued basis can involve the additional
risk that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the when-issued commitments will be
established and maintained at the Fund's custodian bank. Purchasing
Municipal Obligations on a when-issued basis when a Series is fully or
almost fully invested may result in greater potential fluctuation in the
value of such Series' net assets and its net asset value per share.
FUTURES TRANSACTIONS-IN GENERAL
Neither the Fund nor any Series is a commodity pool. However, as a
substitute for a comparable market position in the underlying securities
and for hedging purposes, each Series may engage, to the extent permitted
by applicable regulations, in futures and options on futures transactions,
as described below.
(11)
A Series' commodities transactions must constitute bona fide
hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission. In addition, a
Series may not engage in such transactions if the sum of the amount of
initial margin deposits and premiums paid for unexpired commodity
options, other than for bona fide hedging transactions, would exceed 5% of
the liquidation value of such Series' assets, after taking into account
unrealized profits and unrealized losses on such contracts it has entered
into; provided, however, that in the case of an option that is in-the-money
at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%. Pursuant to regulations and/or published positions of
the Securities and Exchange Commission, a Series may be required to
segregate cash or high quality money market instruments in connection
with its commodities transactions in an amount generally equal to the
value of the underlying commodity.
Initially, when purchasing or selling futures contracts the Fund will
be required to deposit with its custodian in the broker's name an amount
of cash or cash equivalents up to approximately 10% of the contract
amount. This amount is subject to change by the exchange or board of
trade on which the contract is traded and members of such exchange or
board of trade may impose their own higher requirements. This amount is
known as "initial margin" and is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures position, assuming all contractual obligations
have been satisfied. Subsequent payments, known as "variation margin,"
to and from the broker will be made daily as the price of the index or
securities underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process
known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Fund may elect to close the position by taking an
opposite position at the then prevailing price, which will operate to
terminate the Fund's existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond the limit or trading may
be suspended for specified periods during the trading day. Futures contract
prices could move to the limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Series engaging in the futures
transaction to a substantial loss. If it is not possible, or the Fund
determines not, to close a futures position in anticipation of adverse
price movements, the Fund will be required to make daily cash payments
of variation margin. In such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may offset partially or
completely losses on the futures contract. However, no assurance can be
given that the price of the securities being hedged will correlate with the
price movements in a futures contract and thus provide an offset to losses
on the futures contract.
In addition, to the extent a Series is engaging in a futures
transaction as a hedging device, due to the risk of an imperfect
correlation between securities in a Series' portfolio that are the subject
of a hedging transaction and the futures contract used as a hedging device,
it is possible that the hedge will not be fully effective in that, for
example, losses on the portfolio securities may be in excess of gains on
the futures contract or losses on the futures contract may be in excess of
gains on the portfolio securities that were the subject of the hedge. In
futures contracts based on indexes, the risk of imperfect correlation
increases as the composition of a Series' portfolio varies from the
composition of the index. In an effort to compensate for the imperfect
correlation of movements in the price of the securities being hedged and
movements in the price of futures contracts, a Series may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar
amount of the securities being hedged if the historical volatility of the
futures contract has been less or greater than that of the securities. Such
"over hedging" or "under hedging" may adversely affect a Series' net
investment results if market movements are not as anticipated when the
hedge is established.
(12)
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in
the writer's futures margin account which represents the amount by
which the market price of the futures contract, at exercise, exceeds, in
the case of a call, or is less than, in the case of a put, the exercise price
of the option on the futures contract.
Call options sold by a Series with respect to futures contracts will
be covered by, among other things, entering into a long position in the
same contract at a price no higher than the strike price of the call option,
or by ownership of the instruments underlying, or instruments the prices
of which are expected to move relatively consistently with the
instruments underlying, the futures contract. Put options sold by a Series
with respect to futures contracts will be covered when, among other
things, cash or liquid securities are placed in a segregated account to
fulfill the obligation undertaken.
Each Series may utilize municipal bond index futures to protect
against changes in the market value of the Municipal Obligations in the
Series' portfolio or which it intends to acquire. Municipal bond index
futures contracts are based on an index of long-term Municipal
Obligations. The index assigns relative values to the Municipal Obligations
included in an index, and fluctuates with changes in the market value of
such Municipal Obligations. The contract is an agreement pursuant to
which two parties agree to take or make delivery of an amount of cash
based upon the difference between the value of the index at the close of
the last trading day of the contract and the price at which the index
contract was originally written. The acquisition or sale of a municipal
bond index futures contract enables the Fund to protect a Series' assets
from fluctuations in rates on tax exempt securities without actually
buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE
FUTURES CONTRACTS
Each Series may purchase and sell interest rate futures contracts
and options on interest rate futures contracts as a substitute for a
comparable market position, and to hedge against adverse movements in
interest rates.
To the extent the Series has invested in interest rate futures
contracts or options on interest rate futures contracts as a substitute for
a comparable market position, such Series will be subject to the
investment risks of having purchased the securities underlying the
contract.
Each Series may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may purchase
put options on interest rate futures contracts to hedge its portfolio
securities against the risk of rising interest rates.
If, a Series has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in such
Series' portfolio and rates decrease instead, such Series' will lose part or
all of the benefit of the increased value of the securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Series has insufficient cash, it may
have to sell securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. These sales of securities
may, but will not necessarily, be at increased prices which reflect the
decline in interest rates.
Each Series may sell call options on interest rate futures contracts
to partially hedge against declining prices of its portfolio securities. If
the futures price at expiration of the option is below the exercise price,
the Series will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in
such Series' portfolio holdings. Each Series may sell put options on
interest rate futures contracts to hedge against increasing prices of the
securities which are deliverable upon exercise of the futures contract. If
the futures price at expiration of the option is higher than the exercise
price, the Series will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities
(13)
which such Series intends to purchase. If a put or call option sold by a
Series is exercised, the Series will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree of
correlation between changes in the value of its portfolio securities and
changes in the value of its futures positions, such Series' losses from
existing options on futures may to some extent be reduced or increased by
changes in the value of its portfolio securities.
Each Series also may sell options on interest rate futures contracts
as part of closing purchase transactions to terminate such Series' options
positions. No assurance can be given that such closing transactions can be
effected or that there will be a correlation between price movements in
the options on interest rate futures and price movements in the Series'
portfolio securities which are the subject of the hedge. In addition, a
Series' purchase of such options will be based upon predictions as to
anticipated interest rate trends, which could prove to be inaccurate.
SHORT-SELLING
Each Series may make short sales, which are transactions in which
the Series sells a security it does not own in anticipation of a decline in
the market value of that security. To complete such a transaction, the
Series must borrow the security to make delivery to the buyer. The Series
then is obligated to replace the security borrowed by purchasing it at the
market price at the time of replacement. The price at such time may be
more or less than the price at which the security was sold by the Series.
Until the security is replaced, the Series is required to pay to the lender
amounts equal to any interest or other distributions which accrue during
the period of the loan. To borrow the security, the Fund also may be
required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is
closed out.
Until the Series replaces a borrowed security in connection with a
short sale, the Series will: (a) maintain daily a segregated account,
containing cash or U.S. Government securities, at such a level that (i) the
amount deposited in the account plus the amount deposited with the
broker as collateral will equal the current value of the security sold short
and (ii) the amount deposited in the segregated account plus the amount
deposited with the broker as collateral will not be less than the market
value of the security at the time it was sold short; or (b) otherwise cover
its short position.
A Series will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on
which the Series replaces the borrowed security. A Series will realize a
gain if the security declines in price between those dates. This result is
the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the
amount of any loss increased, by the amount of any premium or amounts in
lieu of interest or other distributions the Series may be required to pay in
connection with a short sale.
The Fund anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any
specified portion of a Series' assets, as a matter of practice, will be
invested in short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all
securities sold short would exceed 25% of the value of a Series' net
assets. No Series may sell short the securities of any single issuer listed
on a national securities exchange to the extent of more than 5% of the
value of such Series' net assets. No Series may sell short the securities of
any class of an issuer to the extent, at the time of the transaction, of
more than 5% of the outstanding securities of that class.
In addition to the short sales discussed above, each Series may make
short sales "against the box," a transaction in which a Series enters into
a short sale of a security which such Series owns. The proceeds of the
short sale will be held by a broker until the settlement date at which time
the Series delivers the security to close the short position. The Series
receives the net proceeds from the short sale. At no time will a Series
have more than 15% of the value of its net assets in deposits on short
sales against the box.
(14)
LENDING PORTFOLIO SECURITIES
From time to time, each Series may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. As to each Series,
such loans may not exceed 33-1/3% of the value of such Series' total
assets. In connection with such loans, the Fund will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of
credit which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Each Series can
increase its income through the investment of such collateral. The Series
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned security and receives interest on
the amount of the loan. Such loans will be terminable at any time upon
specified notice. As to each Series, the Fund might experience risk of loss
if the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
CERTAIN FUNDAMENTAL POLICIES
Each Series may (i) borrow money from banks, but only for
temporary or emergency (not leveraging) purposes, in an amount up to 15%
of the value of such Series' total assets (including the amount borrowed)
valued at the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While borrowings
exceed 5% of such Series' total assets, the Series will not make any
additional investments; and (ii) invest up to 25% of the value of its total
assets in the securities of issuers in a single industry, provided that
there is no such limitation on investments in Municipal Obligations and,
for temporary defensive purposes, obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. This paragraph
describes fundamental policies that cannot be changed as to a Series
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of such Series' outstanding voting
shares. See "Investment Objective and Management Policies-Investment
Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Series may (i) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (ii)
invest up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities (which securities could include participation interests
(including municipal lease/purchase agreements) that are not subject to
the demand feature described above, and floating and variable rate demand
obligations as to which the Fund cannot exercise the related demand
feature described above and as to which there is no secondary market).
See "Investment Objective and Management Policies-Investment
Restrictions" in the Statement of Additional Information.
INSURANCE FEATURE
At the time they are purchased by a Series, the Municipal Obligations
held in such Series' portfolio that are subject to insurance will be insured
as to timely payment of principal and interest under an insurance policy
(i) purchased by the Series or by a previous owner of the Municipal
Obligation ("Mutual Fund Insurance") or (ii) obtained by the issuer or
underwriter of the Municipal Obligation ("New Issue Insurance"). The
insurance of principal refers to the face or par value of the Municipal
Obligation and is not affected by nor does it insure the price paid therefor
by the Series or the market value thereof. The value of each Series' shares
is not insured.
New Issue Insurance is obtained by the issuer of the Municipal
Obligations and all premiums respecting such securities are paid in advance by
such issuer. Such policies are non-cancelable and continue in force so long as
the Municipal Obligations are outstanding and the insurer remains in
business.
Certain types of Mutual Fund Insurance obtained by the Fund are
effective only so long as the Fund is in existence, the insurer remains in
business and the Municipal Obligations described in the policy continue to
be held by the Series. The Fund, on behalf of the Series, will pay the
premiums with respect to such insurance. Depending upon the terms of the
policy, in the event of a sale of any Municipal Obligation so insured by a
Series, the Mutual Fund
(15)
Insurance may terminate as to such Municipal
Obligation on the date of sale and in such event the insurer may be liable
only for those payments of principal and interest which then are due and
owing. Other types of Mutual Fund Insurance may not have this termination
feature. Each Series may purchase Municipal Obligations with this type of
insurance from parties other than the issuer and the insurance would
continue for the Series' benefit.
Typically, the insurer may not withdraw coverage on insured
securities held by a Series, nor may the insurer cancel the policy for any
reason except failure to pay premiums when due. The insurer may reserve
the right at any time upon 90 days' written notice to the Fund to refuse to
insure any additional Municipal Obligations purchased by a Series after the
effective date of such notice. The Fund's Board of Trustees has reserved
the right to terminate the Mutual Fund Insurance policy for any Series if it
determines that the benefits to such Series of having its portfolio insured
are not justified by the expense involved. See "Risk Factors_Special
Investment Considerations" below.
Mutual Fund Insurance and New Issue Insurance may be obtained from
Financial Guaranty Insurance Company ("Financial Guaranty"), Municipal
Bond Investors Assurance Corporation ("MBIA"), AMBAC Indemnity
Corporation ("AMBAC Indemnity")and Capital Guaranty Insurance Company
("Capital Guaranty"), although the Fund may purchase insurance from, or
each Series may purchase Municipal Obligations insured by, other insurers.
The following information regarding these insurers has been derived from
information furnished by the insurers. The Fund has not independently
verified any of the information, but the Fund is not aware of facts which
would render such information inaccurate.
Financial Guaranty is a New York stock insurance company regulated
by the New York State Department of Insurance and authorized to provide
insurance in 50 states and the District of Columbia. Financial Guaranty is
a wholly-owned subsidiary of FGIC Corporation, a Delaware holding
company, which is a wholly-owned subsidiary of General Electric Capital
Corporation. Financial Guaranty, in addition to providing insurance for the
payment of interest on and principal of Municipal Obligations held in unit
investment trust and mutual fund portfolios, provides New Issue Insurance
and insurance for secondary market issues of Municipal Obligations and
for portions of new and secondary market issues of Municipal Obligations.
As of September 30, 1993, Financial Guaranty's total capital and surplus
was approximately $745 million (unaudited). The claims-paying ability of
Financial Guaranty is rated "AAA" by S&P, "Aaa" by Moody's and "AAA" by
Fitch.
MBIA is the principal operating subsidiary of MBIA Inc., the principal
shareholders of which are The Aetna Casualty and Surety Company, The
Fund American Companies, Inc., subsidiaries of CIGNA Corporation, and
Credit Locale France, CAECL S.A. Approximately 35% of the outstanding
common stock of MBIA Inc. is owned by such shareholders and the
remainder is publicly-held. Neither MBIA Inc. nor its shareholders are
obligated to pay the debts of or claims against MBIA. MBIA is a limited
liability corporation domiciled in New York and licensed to do business in
50 states and the District of Columbia. As of September 30, 1993, MBIA
had admitted assets of approximately $3.0 billion, total liabilities of
approximately $2.0 billion and total capital and surplus of approximately
$951 million (all figures unaudited). The claims-paying ability of MBIA
is rated "AAA" by S&P and "Aaa" by Moody's.
AMBAC Indemnity is a Wisconsin-domiciled stock insurance company,
regulated by the Office of the Commissioner of Insurance of the State of
Wisconsin and licensed to do business in 50 states, the District of
Columbia and the Commonwealth of Puerto Rico. AMBAC Indemnity is a
wholly-owned subsidiary of AMBAC Inc., a 100% publicly-held company.
AMBAC Indemnity had admitted assets of approximately $1.9 billion
(unaudited) and statutory capital of approximately $1.1 billion (unaudited)
as of September 30, 1993. Statutory capital consists of AMBAC
Indemnity's statutory contingency reserve and policyholders' surplus. The
claims-paying ability of AMBAC Indemnity is rated "AAA" by S&P and
"Aaa" by Moody's.
(16)
Capital Guaranty is an "Aaa/AAA" rated monoline stock insurance
company incorporated in the State of Maryland, and is a wholly-owned
subsidiary of Capital Guaranty Corporation, a Maryland insurance holding
company. Capital Guarantee Corporation is a publicly owned company
whose shares are traded on the New York Stock Exchange. Capital Guaranty
is authorized to provide insurance in 49 states, the District of Columbia,
and three U.S. territories. As of September 30, 1993, the total statutory
policyholders' surplus and contingency reserve of Capital Guaranty was
$181,383,432 (unaudited) and the total admitted assets were
$270,021,126 (unaudited).
Additional information concerning the insurance feature appears in
the Statement of Additional Information to which your attention is
directed.
RISK FACTORS
INVESTING IN STATE MUNICIPAL OBLIGATIONS (STATE SERIES ONLY)
You should consider carefully the special risks inherent in each
State Series' investment in its respective State's Municipal Obligations.
Certain of the States have experienced financial difficulties, the
recurrence of which could result in defaults or declines in the market
values of various Municipal Obligations in which such Series invests. If
there should be a default or other financial crises relating to a State or an
agency or municipality thereof, the market value and marketability of
outstanding State Municipal Obligations in a State Series' portfolio and
interest income to such Series could be adversely affected. You should
obtain and review a copy of the Statement of Additional Information
which more fully sets forth these and other risk factors.
CALIFORNIA SERIES
The special risks inherent in an investment in California Municipal
Obligations result from certain amendments to the California Constitution
and other statutes that limit the taxing and spending authority of
California governmental entities, as well as from the general financial
condition of the State of California. Since the start of the State's 1990-
91 fiscal year, the State has experienced the worst economic, fiscal and
budget conditions since the 1930s. As a result, the State has experienced
recurring budget deficits for four of the last five fiscal years ending with
1991-92. Revenues and expenditures were essentially equal in 1992-93
but the original budget for that year projected revenues exceeding
expenditures by $2.6 billion. By June 30, 1993, according to California's
Department of Finance, the State's Reserve for Economic Uncertainties
had an accumulated deficit, on a budget basis, of approximately $2.8
billion. A further consequence of the large budget imbalances over the last
three fiscal years has been that the State depleted its available cash
resources and has had to use a series of external borrowings to meet its
cash needs. As a result of the deterioration in the State's budget and cash
situation in fiscal years 1991-92 and 1992-93, between October 1991 and
October 1992, the rating on the State's general obligation bonds was
reduced by S&P from AAA to A+, by Moody's from Aaa to Aa and by Fitch
from AAA to AA. These and other factors may have the effect of impairing
the ability of the issuers of California Municipal Obligations to pay
interest on, or repay principal of, such California Municipal Obligations.
CONNECTICUT SERIES-Connecticut's economy relies in part on activities
that may be adversely affected by cyclical change, and recent declines in
defense spending have had a significant impact on unemployment levels.
Although the State recorded General Fund surpluses in its fiscal years
1985 through 1987, Connecticut reported deficits from its General Fund
operations for the fiscal years 1988 through 1991. Together with the
deficit carried forward from the State's 1990 fiscal year, the total
General Fund deficit for the 1991 fiscal year was $965.7 million. The
total deficit was funded by the issuance of General Obligation Economic
Recovery Notes. The Comptroller's annual reports for the fiscal years
ended June 30, 1992 and 1993 reflected General Fund operating surpluses
of $110 million and $113.5 million, respectively. The Comptroller's
monthly report for the period ended August 31, 1993 stated that on a
GAAP basis the cumulative deficit was $484.3 million for fiscal 1993-94.
S&P, Moody's and Fitch currently rate Connecticut's bonds AA-, Aa and
AA+, respectively.
(17)
FLORIDA SERIES-The Florida Constitution and Statutes mandate that the
State budget as a whole, and each separate fund within the State budget,
be kept in balance from currently available revenues each fiscal year.
Florida's Constitution permits issuance of Florida Municipal Obligations
pledging the full faith and credit of the State, with a vote of the electors,
to finance or refinance fixed capital outlay projects authorized by the
Legislature provided that the outstanding principal does not exceed 50% of
the total tax revenues of the State for the two preceding years. Florida's
Constitution also provides that the Legislature shall appropriate monies
sufficient to pay debt service on State bonds pledging the full faith and
credit of the State of Florida as the same becomes due. All State of
Florida tax revenues, other than trust funds dedicated by Florida's
Constitution for other purposes, would be available for such an
appropriation, if required. Revenue bonds may be issued by the State of
Florida or its agencies without a vote of Florida's electors only to finance
or refinance the cost of State fixed capital outlay projects which may be
payable solely from funds derived directly from sources other than State
of Florida tax revenues. Fiscal year 1993-94 total General Revenue and
Working Capital Funds available are estimated to be $13.548 billion,
which will result in estimated unencumbered reserves of $276.3 million
at the end of fiscal 1993-94. The General Revenue and Working Capital
Funds ended the 1992-93 fiscal year with estimated unencumbered
reserves of $441.4 million.
NEW JERSEY SERIES-Although New Jersey enjoyed a period of economic
growth with unemployment levels below the national average during the
mid-1980's, its economy slowed down well before the onset of the
national recession in July 1990. Reflecting the economic downturn, New
Jersey's unemployment rate rose from 3.6% in the first quarter of 1989 to
9.1% in April of 1993. As a result of New Jersey's fiscal weakness, in July
1991, S&P lowered its rating of the State's general obligation debt from
AAA to AA+.
NEW YORK SERIES-The special risks inherent in investing in New York
Municipal Obligations result from the financial condition of New York
State, and certain of its public bodies and municipalities, including New
York City. Beginning in early 1975, New York State, New York City and
other State entities faced serious financial difficulties which jeopardized
the credit standing and impaired the borrowing abilities of such entities
and contributed to high interest rates on, and lower market prices for,
debt obligations issued by them. A recurrence of such financial
difficulties or a failure of certain financial recovery programs could
result in defaults or declines in the market values of various New York
Municipal Obligations in which the New York Series may invest. If there
should be a default or other financial crisis relating to New York State,
New York City, a State or City agency, or a State municipality, the market
value and marketability of outstanding New York Municipal Obligations in
the New York Series' portfolio and the interest income to such Series
could be adversely affected. Moreover, the significant slowdown in the
New York regional economy in the early 1990's added substantial
uncertainty to estimates of the State's tax revenues, which, in part,
caused New York State to overestimate its General Fund tax receipts in
the 1992 fiscal year by $575 million. The 1992 fiscal year was the fourth
consecutive year in which New York State incurred a cash-basis operating
deficit in the General Fund and issued deficit notes. The State's 1992-93
fiscal year was characterized by national and regional economies that
performed better than projected in April 1992. National gross domestic
product, State personal income, and employment and unemployment in the
State are estimated to have performed better than originally projected in
April 1992. After reflecting a 1992-93 year-end deposit to the refund
reserve account of $671 million, reported 1992-93 General Fund receipts
were $45 million higher than originally projected in April 1992. If not for
that year-end transaction, which had the effect of reducing 1992-93
receipts by $671 million and making those receipts available in 1993-94,
General Fund receipts would have been $716 million higher than originally
projected. There can be no assurance that New York will not face
substantial potential budget gaps in future years. In January 1992,
Moody's lowered from A to Baa1 the ratings on certain appropriation-
backed debt of New York State and its agencies. The State's general
obligation, State-guaranteed and New York
(18)
State Local Government
Assistance Corporation bonds continued to be rated A by Moody's. In
January 1992, S&P lowered from A to A- its ratings of New York State
general obligation bonds and stated that it continues to assess the ratings
outlook as negative. The ratings of various agency debt, state moral
obligations, contractual obligations, lease purchase obligations and State
guarantees also were lowered. In February 1991, Moody's lowered its
rating on New York City's general obligation bonds from A to Baa1. The
rating changes reflected the rating agencies' concerns about the financial
condition of New York State and City, the heavy debt load of the State and
City, and economic uncertainties in the region.
SPECIAL INVESTMENT CONSIDERATIONS
The insurance feature is intended to reduce financial risk, but the
cost thereof and the restrictions on investments imposed by the
guidelines in the insurance policy will result in a reduction in the yield on
the Municipal Obligations purchased by a Series.
Because coverage under certain Mutual Fund Insurance policies may
terminate upon sale of a security from a Series' portfolio, insurance with
this termination feature should not be viewed as assisting the
marketability of securities in the Series' portfolio, whether or not the
securities are in default or subject to a serious risk of default. The
Dreyfus Corporation intends to retain any Municipal Obligations subject to
such insurance which are in default or, in the view of The Dreyfus
Corporation, in significant risk of default and to recommend to the Board
of Trustees that the Fund place a value on the insurance which will be
equal to the difference between the market value of the defaulted security
and the market value of similar securities of minimum investment grade
(i.e., rated Baa by Moody's or BBB by S&P or Fitch) which are not in default.
To the extent that a Series holds defaulted securities subject to Mutual
Fund Insurance with this termination feature, it may be limited in its
ability in certain circumstances to purchase other Municipal Obligations.
While a defaulted Municipal Obligation is held in a Series' portfolio, such
Series continues to pay the insurance premium thereon but also is entitled
to collect interest payments from the insurer and retains the right to
collect the full amount of principal from the insurer when the security
comes due.
Unlike certain Mutual Fund Insurance policies, New Issue Insurance
does not terminate with respect to a Municipal Obligation once it is sold
by a Series. Therefore, the Fund expects that the market value, and thus
the marketability, of a defaulted security covered by New Issue Insurance
generally will be greater than the market value of an otherwise
comparable defaulted security covered by Mutual Fund Insurance with the
termination feature. The Fund, at its option, may purchase from Financial
Guaranty secondary market insurance ("Secondary Market Insurance") on
any Municipal Obligation purchased by a Series. By purchasing Secondary
Market Insurance, the Fund would obtain, upon payment of a single
premium, insurance against nonpayment of scheduled principal and
interest for the remaining term of the Municipal Obligation, regardless of
whether the Series then owned such security. Such insurance coverage
would be non-cancelable and would continue in force so long as the
security so insured is outstanding and the insurer remains in business. The
purpose of acquiring Secondary Market Insurance would be to enable a
Series to sell a Municipal Obligation to a third party as a high rated
insured Municipal Obligation at a market price greater than what
otherwise might be obtainable if the security were sold without the
insurance coverage.
OTHER INVESTMENT CONSIDERATIONS
Even though interest-bearing securities are investments which
promise a stable stream of income, the prices of such securities are
inversely affected by changes in interest rates and, therefore, are subject
to the risk of market price fluctuations. Certain securities that may be
purchased by the Series, such as those with interest rates that fluctuate
directly or indirectly based on multiples of a stated index, are designed to
be highly sensitive to changes in interest rates and can subject the
holders thereof to extreme reductions of yield and possibly loss of
principal. The values of fixed-income securities also may be affected by
changes in the credit rating or financial condition of the issuing entities.
Once the rating of a portfolio security has been changed, the
(19)
Fund will
consider all circumstances deemed relevant in determining whether to
continue to hold the security. Certain securities purchased by the Series,
such as those rated Baa by Moody's and BBB by S&P or Fitch, may be
subject to such risk with respect to the issuing entity and to greater
market fluctuations than certain lower yielding, higher rated fixed-
income securities. Obligations which are rated Baa are considered medium
grade obligations; they are neither highly protected nor poorly secured,
and are considered by Moody's to have speculative characteristics. Bonds
rated BBB by S&P are regarded as having adequate capacity to pay interest
and repay principal, and while such bonds normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher rated
categories. Bonds rated BBB by Fitch are considered to be investment
grade and of satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to
have an adverse impact on these bonds and, therefore, impair timely
payment. See "Appendix B" in the Statement of Additional Information.
Each Series' net asset value generally will not be stable and should
fluctuate based upon changes in the value of such Series' portfolio
securities.
Federal income tax law requires the holder of a zero coupon security
or of certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, a Series may be required to distribute such income
accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to
generate cash to satisfy these distribution requirements.
Certain municipal lease/purchase obligations in which the Series
may invest may contain "non-appropriation" clauses which provide that
the municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, The Dreyfus Corporation will
consider, on an ongoing basis, a number of factors including the likelihood
that the issuing municipality will discontinue appropriating funding for
the leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund
and thus reduce the available yield. Shareholders should consult their tax
advisers concerning the effect of these provisions on an investment in the
Fund. Proposals that may restrict or eliminate the income tax exemption
for interest on Municipal Obligations may be introduced in the future. If
any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Fund so as to adversely affect
Fund shareholders, the Fund would reevaluate its investment objective and
policies and submit possible changes in the Fund's structure to
shareholders for their consideration. If legislation were enacted that
would treat a type of Municipal Obligation as taxable, the Fund would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
Each Series' classification as a "non-diversified" investment company
means that the proportion of such Series' assets that may be invested in
the securities of a single issuer is not limited by the Investment Company
Act of 1940. A "diversified" investment company is required by the
Investment Company Act of 1940 generally to invest, with respect to 75%
of its total assets, not more than 5% of such assets in the securities of a
single issuer. However, each Series intends to conduct its operations so as
to qualify as a "regulated investment company" for purposes of the Code,
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of its total assets be invested in cash, U.S.
Government securities, the securities of other regulated investment
companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not
greater than
(20)
5% of the value of such Series' total assets, and (ii) not more
than 25% of the value of its total assets be invested in the securities of
any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies). Since a relatively high percentage
of each Series' assets may be invested in the securities of a limited
number of issuers, the Series' portfolio securities may be more
susceptible to any single economic, political or regulatory occurrence
than the portfolio securities of a diversified investment company.
Investment decisions for the Fund are made independently from
those of other investment companies advised by The Dreyfus Corporation.
However, if such other investment companies are prepared to invest in, or
desire to dispose of, Municipal Obligations or Taxable Investments at the
same time as the Fund, available investments or opportunities for sales
will be allocated equitably to each investment company. In some cases,
this procedure may adversely affect the size of the position obtained for
or disposed of by the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment
adviser. As of December 31, 1993, The Dreyfus Corporation managed or
administered approximately $78 billion in assets for more than 1.9
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. The primary investment officer for
the California Series is Stephen C. Kris, who has been an employee of The
Dreyfus Corporation since 1988. The primary investment officer for each
of the Connecticut Series, the Florida Series, the National Series, the New
Jersey Series and the New York Series will be L. Lawrence Troutman, who
has been an employee of The Dreyfus Corporation since 1985. The Fund's
other investment officers are identified under "Management of the Fund"
in the Fund's Statement of Additional Information. The Dreyfus
Corporation also provides research services for the Fund as well as for
other funds advised by The Dreyfus Corporation through a professional
staff of portfolio managers and security analysts.
Under the terms of the Management Agreement, the Fund has agreed
to pay The Dreyfus Corporation a monthly fee at the annual rate of .55 of
1% of the value of each Series' average daily net assets. From time to
time, The Dreyfus Corporation may waive receipt of its fees and/or
voluntarily assume certain expenses of a Series, which would have the
effect of lowering the overall expense ratio of that Series and increasing
yield to investors at the time such amounts are waived or assumed, as the
case may be. The Fund will not pay The Dreyfus Corporation at a later time
for any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume. For the period August 19,
1993 (commencement of operations) through December 31, 1993, no
management fee was paid by the Fund pursuant to undertakings in effect.
EXPENSES
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, interest and distributions paid on securities sold
short, brokerage fees and commissions, if any, fees of Trustees who are
not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining the
Fund's existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, and any extraordinary expenses. Class
A and Class B shares are subject to an annual service fee for ongoing
personal services relating to shareholder accounts and ser-
(21)
vices related to
the maintenance of shareholder accounts. In addition, Class B shares are
subject to an annual distribution fee for advertising, marketing and
distributing Class B shares pursuant to a distribution plan adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940.
See "Distribution Plan and Shareholder Services Plan." Expenses
attributable to a particular Series are charged against the assets of that
Series; other expenses of the Fund are allocated among the Series on the
basis determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Series.
The Dreyfus Corporation may pay Dreyfus Service Corporation for
shareholder and distribution services from its own monies, including past
profits but not including the management fee paid by the Fund. Dreyfus
Service Corporation may pay part or all of these payments to securities
dealers or others for servicing and distribution.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is
the Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a wholly-
owned subsidiary of The Dreyfus Corporation located at 200 Park Avenue,
New York, New York 10166. The shares it distributes are not deposits or
obligations of The Dreyfus Security Savings Bank, F.S.B. and therefore are
not insured by the Federal Deposit Insurance Corporation.
Fund shares may be purchased only by clients of certain financial
institutions (which may include banks), securities dealers ("Selected
Dealers") and other industry professionals (collectively, "Service
Agents"), except that full-time or part-time employees of The Dreyfus
Corporation or any of its affiliates or subsidiaries, directors of The
Dreyfus Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Fund's Board, or the spouse or
minor child of any of the foregoing may purchase Class A shares directly
through Dreyfus Service Corporation. Subsequent purchases may be sent
directly to the Transfer Agent or your Service Agent. Service Agents may
receive different levels of compensation for selling different Classes of
shares.
Management understands that some Service Agents may impose
certain conditions on their clients which are different from those
described in this Prospectus, and to the extent permitted by applicable
regulatory authority, may charge their clients direct fees which would be
in addition to any amounts which might be received under the Shareholder
Services Plan . Each Service Agent has agreed to transmit to its clients a
schedule of such fees. You should consult your Service Agent in this
regard.
When purchasing Series' shares, you must specify whether the
purchase is for Class A or Class B shares. Share certificates are issued
only upon your written request. No certificates are issued for fractional
shares. It is not recommended that the Fund be used as a vehicle for Keogh,
IRA or other qualified retirement plans. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $1,000. Subsequent investments
must be at least $100. The initial investment must be accompanied by the
Fund's Account Application.
You may purchase Series' shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable
to "Premier Insured Municipal Bond Fund,"and should specify the Series in
which you are investing. Payments to open new accounts which are mailed
should be sent to Premier Insured Municipal Bond Fund, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application indicating which Class of shares is being purchased. For
subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to Premier
Insured Municipal Bond Fund, P.O. Box 105, Newark, New Jersey 07101-
0105. Neither initial nor subsequent investments should be made by third
party check. Wire
(22)
payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York,
together with the applicable Series' DDA# as shown below, for purchase
of Fund shares in your name.
FOR CLASS A SHARES
DDA# 8900088338/Premier Insured Municipal Bond Fund/National
Series-Class A shares
DDA# 8900118172/Premier Insured Municipal Bond Fund/California
Series-Class A Shares
DDA# 8900088346/Premier Insured Municipal Bond Fund/Connecticut
Series-Class A shares
DDA# 8900088362/Premier Insured Municipal Bond Fund/Florida
Series-Class A shares
DDA# 8900088389/Premier Insured Municipal Bond Fund/New Jersey
Series-Class A shares
DDA# 8900088419/Premier Insured Municipal Bond Fund/New York
Series-Class A shares
FOR CLASS B SHARES
DDA# 8900115440/Premier Insured Municipal Bond Fund/National
Series-Class B shares
DDA# 8900115270/Premier Insured Municipal Bond Fund/California
Series-Class B shares
DDA# 8900115459/Premier Insured Municipal Bond Fund/Connecticut
Series-Class B shares
DDA# 8900115467/Premier Insured Municipal Bond Fund/Florida
Series-Class B shares
DDA# 8900115475/Premier Insured Municipal Bond Fund/New Jersey
Series-Class B shares
DDA# 8900115491/Premier Insured Municipal Bond Fund/New York
Series-Class B shares
The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Fund shares is by wire, please call 1-800-645-6561 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank.
All payments should be made in U.S. dollars and, to avoid fees and delays,
should be drawn only on U.S. banks. A charge will be imposed if any check
used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS
"1111."
Shares of each Series are sold on a continuous basis. Net asset value
per share of each Class is determined as of the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York time),
on each day the New York Stock Exchange is open for business. For
purposes of determining net asset value, options and futures contracts
will be valued 15 minutes after the close of trading on the floor of the
New York Stock Exchange. Net asset value per share of each Class is
computed by dividing the value of the net assets of each Series
represented by such Class (i.e., the value of assets of each Series less
liabilities) by the total number of Series' shares of such Class
outstanding. Each Series' investments are valued each business day by an
independent pricing service approved by the Board of Trustees and are
valued at fair value as determined by the pricing service. The pricing
service's procedures are reviewed under the general supervision of the
Board of Trustees. For further information regarding the methods
employed in valuing the Series' investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes"
and the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the
(23)
Fund could subject
you to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
If an order is received in proper form by the Transfer Agent by the
close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time) on any business day, Fund shares will be
purchased at the public offering price determined as of the close of
trading on the floor of the New York Stock Exchange on that day.
Otherwise, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the New York Stock
Exchange on the next business day, except where shares are purchased
through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by the
close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to Dreyfus Service Corporation by the close
of its business day (normally 5:15 p.m., New York time) will be based on
the public offering price per share determined as of the close of trading
on the floor of the New York Stock Exchange on that day. Otherwise, the
orders will be based on the next determined public offering price. It is the
dealer's responsibility to transmit orders so that they will be received by
Dreyfus Service Corporation before the close of its business day.
CLASS A SHARES-The public offering price for Class A shares of each
Series is the net asset value per share of that Class plus a sales load as
shown below:
<TABLE>
<CAPTION>
Total Sales Load
----------------------------------
As a % of As a % of Dealers' Reallowance
offering price net asset value as a % of
Amount of Transaction per share per share offering price
<S> <C> <C> <C>
Less than $50,000...................... 4.50 4.70 4.25
$50,000 to less than $100,000.......... 4.00 4.20 3.75
$100,000 to less than $250,000......... 3.00 3.10 2.75
$250,000 to less than $500,000......... 2.50 2.60 2.25
$500,000 to less than $1,000,000....... 2.00 2.00 1.75
$1,000,000 to less than $3,000,000..... 1.00 1.00 1.00
$3,000,000 to less than $5,000,000..... .50 .50 .50
$5,000,000 and over.................... .25 .25 .25
</TABLE>
Full-time employees of NASD member firms and full-time employees
of other financial institutions that have entered into an agreement with
Dreyfus Service Corporation pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children, at net asset value, provided that they have
furnished Dreyfus Service Corporation with such information as it may
request from time to time in order to verify eligibility for this privilege.
This privilege also applies to full-time employees of financial
institutions affiliated with NASD member firms whose full-time
employees are eligible to purchase Class A shares at net asset value. In
addition, Class A shares are offered at net asset value to full-time or
part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a
fund advised by The Dreyfus Corporation, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing.
The dealer reallowance may be changed from time to time but will
remain the same for all dealers. Dreyfus Service Corporation, at its
expense, may provide additional promotional incentives to dealers that
sell shares of funds advised by The Dreyfus Corporation which are sold
with a sales load, such as the Fund. In some instances, those incentives
may be offered only to certain dealers who have sold or may sell
significant amounts of shares.
CLASS B SHARES-The public offering price for Class B shares of each
Series is the net asset value per share of that Class. No initial sales
charge is imposed at the time of purchase. A CDSC is imposed, however, on
certain redemptions of Class B shares as described under "How
(24)
to Redeem
Fund Shares." Dreyfus Service Corporation compensates certain Service
Agents for selling Class B shares at the time of purchase from Dreyfus
Service Corporation's own assets. The proceeds of the CDSC and the
distribution fee, in part, are used to defray these expenses.
RIGHT OF ACCUMULATION
CLASS A SHARES-Reduced sales loads apply to any purchase of Class A
shares, shares of certain other funds advised by The Dreyfus Corporation
which are sold with a sales load and shares acquired by a previous
exchange of such shares (hereinafter referred to as "Eligible Funds"), by
you and any related "purchaser" as defined in the Statement of Additional
Information, where the aggregate investment, including such purchase, is
$50,000 or more. If, for example, you previously purchased and still hold
Class A shares of the Fund, or of any other Eligible Fund or combination
thereof, with an aggregate current market value of $40,000 and
subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase you or
your Service Agent must notify Dreyfus Service Corporation if orders are
made by wire, or the Transfer Agent if orders are made by mail. The
reduced sales load is subject to confirmation of your holdings through a
check of appropriate records.
TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000
per day) by telephone if you have checked the appropriate box and supplied
the necessary information on the Fund's Account Application or have filed
an Optional Services Form with the Transfer Agent. The proceeds will be
transferred between the bank account designated in one of these
documents and your Fund account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House
member may be so designated. The Fund may modify or terminate this
Privilege at any time or charge a service fee upon notice to shareholders.
No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER purchase by telephoning 1-800-221-4060 or, if you are
calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Service Agents and some Service Agents
may impose certain conditions on their clients which are different from
those in this Prospectus. You should consult your Service Agent in this
regard.
EXCHANGE PRIVILEGE
The Exchange Privilege enables clients of certain Service Agents to
purchase, in exchange for Class A or Class B shares of a Series, shares of
the same Class in one of the other Series, or of the same Class in certain
other funds managed or administered by The Dreyfus Corporation, to the
extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to
you. If you desire to use this Privilege, you should consult your Service
Agent or Dreyfus Service Corporation to determine if it is available and
whether any conditions are imposed on its use.
To use this Privilege, your Service Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing, by wire or by
telephone. If you previously have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306. See "How
to Redeem Fund Shares-Procedures." Before any exchange, you must obtain
and should review a copy of the current prospectus of the fund into which
the exchange is being made. Prospectuses may be obtained from Dreyfus
Service Corporation. Except in the case of Personal Retirement Plans, the
shares being exchanged must have a current value of at least $500;
furthermore,
(25)
when establishing a new account by exchange, the shares
being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
Telephone exchanges may be made only if the appropriate "YES" box has
been checked on the Account Application, or a separate signed Optional
Services Form is on file with the Transfer Agent. Upon an exchange into a
new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made; Exchange Privilege, Check
Redemption Privilege, TELETRANSFER Privilege and the dividend/capital
gain distribution option (except for the Dividend Sweep Privilege)
selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges of Class
A shares into funds sold with a sales load. No CDSC will be imposed on
Class B shares at the time of an exchange; however, Class B shares
acquired through an exchange will be subject on redemption to the higher
CDSC applicable to the exchanged or acquired shares. The CDSC applicable
on redemption of the acquired Class B shares will be calculated from the
date of the initial purchase of the Class B shares exchanged. If you are
exchanging Class A shares into a fund that charges a sales load, you may
qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares from which you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to the
foregoing categories of shares. To qualify, at the time of your exchange
your Service Agent must notify Dreyfus Service Corporation. Any such
qualification is subject to confirmation of your holdings through a check
of appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the
right, upon not less than 60 days' written notice, to charge shareholders a
nominal fee in accordance with rules promulgated by the Securities and
Exchange Commission. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege may be modified or
terminated at any time upon notice to shareholders.
The exchange of shares of one fund or Series for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a semi-
monthly, monthly, quarterly or annual basis), in exchange for Class A or
Class B shares of a Series, in shares of the same Class of one of the other
Series or of other funds in the Premier Family of Funds or certain other
funds in the Dreyfus Family of Funds of which you are currently an
investor. The amount you designate, which can be expressed either in
terms of a specific dollar or share amount ($100 minimum), will be
exchanged automatically on the first and/or fifteenth day of the month
according to the schedule you have selected. Shares will be exchanged at
the then-current net asset value; however, a sales load may be charged
with respect to exchanges of Class A shares into funds sold with a sales
load. No CDSC will be imposed on Class B shares at the time of an
exchange; however, Class B shares acquired through an exchange will be
subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class
B shares will be calculated from the date of the initial purchase of the
Class B shares exchanged. See "Shareholder Services" in the Statement of
Additional Information. The right to exercise this Privilege may be
modified or canceled by the Fund or the Transfer Agent. You may modify or
cancel your exercise of this Privilege at any time by mailing written
notification to Premier Insured Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. The Fund may charge a service fee
for the use of this Privilege. No such fee currently is contemplated. The
exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares
(26)
given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss. For more information concerning this Privilege and
the funds in the Premier Family of Funds or Dreyfus Family of Funds
eligible to participate in this Privilege, or to obtain an Auto-Exchange
Authorization Form, please call toll free 1-800-645-6561.
AUTOMATIC ASSET BUILDER
AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may
be so designated. To establish an AUTOMATIC Asset Builder account, you
must file an authorization form with the Transfer Agent. You may obtain
the necessary authorization form from Dreyfus Service Corporation. You
may cancel your participation in this Privilege or change the amount of
purchase at any time by mailing written notification to Premier Insured
Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587,
and the notification will be effective three business days following
receipt. The Fund may modify or terminate this Privilege at any time or
charge a service fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase Fund
shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
To enroll in Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in the Privilege. The appropriate form may be
obtained from Dreyfus Service Corporation or your Service Agent. Death or
legal incapacity will terminate your participation in this Privilege. You
may elect at any time to terminate your participation by notifying in
writing the appropriate Federal agency. Further, the Fund may terminate
your participation upon 30 days' notice to you.
DIVIDEND SWEEP PRIVILEGE
Dividend Sweep Privilege enables you to invest automatically
dividends or dividends and capital gain distributions, if any, paid by the
Fund in shares of the same Class of another fund in the Premier Family of
Funds or the Dreyfus Family of Funds of which you are a shareholder.
Shares of the other fund will be purchased at the then-current net asset
value; however, a sales load may be charged with respect to investments
in shares of a fund sold with a sales load. If you are investing in a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund that charges a CDSC, the shares purchased will be
subject on redemption to the CDSC, if any, applicable to the purchased
shares. See "Shareholder Services" in the Statement of Additional
Information. For more information concerning this Privilege and the funds
in the Premier Family of Funds or the Dreyfus Family of Funds eligible to
participate in this Privilege, or to request a Dividend Sweep Authorization
Form, please call toll free 1-800-645-6561. You may cancel this Privilege
by mailing written notification to Premier Insured Municipal Bond Fund,
P.O. Box 6587, Providence, Rhode Island 02940-6587. To select a new fund
after cancellation, you must submit a new authorization form. Enrollment
in or cancellation of this Privilege is effective three business days
following receipt. This Privilege is available only for existing accounts
and may not be used to open new accounts. Minimum subsequent
investments do not apply. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal
of a specified dollar
(27)
amount (minimum of $50) on either a monthly or
quarterly basis if you have a $5,000 minimum account. An application for
the Automatic Withdrawal Plan can be obtained from Dreyfus Service
Corporation. There is a service charge of 50 cents for each withdrawal
check. The Automatic Withdrawal Plan may be ended at any time by you,
the Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Class B shares withdrawn pursuant to the Automatic Withdrawal Plan will
be subject to any applicable CDSC. Purchases of additional Class A shares
where a sales load is imposed concurrently with withdrawals of Class A
shares generally are undesirable.
LETTER OF INTENT-CLASS A SHARES
By signing a Letter of Intent form, available from Dreyfus Service
Corporation, you become eligible for the reduced sales load applicable to
the total number of Eligible Fund shares purchased in a 13-month period
pursuant to the terms and conditions set forth in the Letter of Intent. A
minimum initial purchase of $5,000 is required. To compute the applicable
sales load, the offering price of shares you hold (on the date of submission
of the Letter of Intent) in any Eligible Fund that may be used toward
"Right of Accumulation" benefits described above may be used as a credit
toward completion of the Letter of Intent. However, the reduced sales load
will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated
in the Letter of Intent for payment of a higher sales load if you do not
purchase the full amount indicated in the Letter of Intent. The escrow will
be released when you fulfill the terms of the Letter of Intent by
purchasing the specified amount. If your purchases qualify for a further
sales load reduction, the sales load will be adjusted to reflect your total
purchase at the end of 13 months. If total purchases are less than the
amount specified, you will be requested to remit an amount equal to the
difference between the sales load actually paid and the sales load
applicable to the aggregate purchases actually made. If such remittance is
not received within 20 days, the Transfer Agent, as attorney-in-fact
pursuant to the terms of the Letter of Intent, will redeem an appropriate
number of Class A shares held in escrow to realize the difference. Signing
a Letter of Intent does not bind you to purchase, or the Fund to sell, the
full amount indicated at the sales load in effect at the time of signing,
but you must complete the intended purchase to obtain the reduced sales
load. At the time you purchase Class A shares, you must indicate your
intention to do so under a Letter of Intent. Purchases pursuant to a Letter
of Intent will be made at the then-current net asset value plus the
applicable sales load in effect at the time such Letter of Intent was
executed.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your Class A or Class B shares at any
time. Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail to
specify the Class of shares to be redeemed or if you own fewer shares of
the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you or
your Service Agent.
The Fund imposes no charges (other than any applicable CDSC with
respect to Class B shares) when shares are redeemed directly through
Dreyfus Service Corporation. Service Agents may charge a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request.
The value of the shares redeemed may be more or less than their original
cost, depending upon the Series' then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by
(28)
the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND
SHARES BY CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH
AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, THE REDEMPTION
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, TELETRANSFER PURCHASE OR AUTOMATIC
ASSET BUILDER ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR
MORE. IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER
THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM
SHARES PURSUANT TO THE TELETRANSFER PRIVILEGE, FOR A PERIOD OF
EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE
PURCHASE CHECK, THE TELETRANSFER PURCHASE OR THE AUTOMATIC
ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED.
THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO
THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL
ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL
OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon not
less than 30 days' written notice if your account's net asset value is $500
or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE-CLASS B SHARES
A CDSC payable to Dreyfus Service Corporation is imposed on any
redemption of Class B shares of a Series which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares of
such Series held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares
redeemed does not exceed (i) the current net asset value of Class B shares
acquired through reinvestment of dividends or capital gain distributions,
plus (ii) increases in the net asset value of your Class B shares above the
dollar amount of all your payments for the purchase of Class B shares of
such Series held by you at the time of redemption.
If the aggregate value of Class B shares redeemed has declined
below their original cost as a result of the Series' performance, a CDSC
may be applied to the then-current net asset value rather than the
purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased
the Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC:
Year Since CDSC as a % of Amount
Purchase Payment Invested or Redemption
Was Made Proceeds
First............................................ 3.00
Second........................................... 3.00
Third............................................ 2.00
Fourth........................................... 2.00
Fifth............................................ 1.00
Sixth............................................ 0.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible
rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends
and distributions; then of amounts representing the increase in net asset
value of Class B shares above the total amount of payments for the
purchase of Class B shares made during the preceding five years; then of
amounts representing the cost of shares purchased five years prior to the
redemption; and finally, of amounts representing the cost of shares held
for the longest period of time within the applicable five-year period.
(29)
For example, assume an investor purchased 100 shares at $10 per
share for a cost of $1,000. Subsequently, the shareholder acquired five
additional shares through dividend reinvestment. During the second year
after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares would
be $1,260 (105 shares at $12 per share). The CDSC would not be applied to
the value of the reinvested dividend shares and the amount which
represents appreciation ($260). Therefore, $240 of the $500 redemption
proceeds ($500 minus $260) would be charged at a rate of 3% (the
applicable rate in the second year after purchase) for a total CDSC of
$7.20.
WAIVER OF CDSC
The CDSC will be waived in connection with (a) redemptions made
within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in qualified or non-qualified employee benefit plans or other
programs where (i) the employers or affiliated employers maintaining
such plans or programs have a minimum of 250 employees eligible for
participation in such plans or programs, or (ii) such plan's or program's
aggregate initial investment in the Dreyfus Family of Funds or other
products made available through Dreyfus Service Corporation exceeds one
million dollars, (c) redemptions as a result of a combination of any
investment company with the Fund by merger, acquisition of assets or
otherwise, (d) a distribution following retirement under a tax-deferred
retirement plan or upon attaining age 70-1/2 in the case of an IRA or
Keogh plan or custodial account pursuant to Section 403(b) of the Code,
and (e) redemptions by such shareholders as the Securities and Exchange
Commission or its staff may permit. If the Fund's Trustees determine to
discontinue the waiver of the CDSC, the disclosure in the Fund's
prospectus will be revised appropriately. Any Fund shares subject to a
CDSC which were purchased prior to the termination of such waiver will
have the CDSC waived as provided in the Fund's prospectus at the time of
the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you
must notify the Transfer Agent or your Service Agent must notify Dreyfus
Service Corporation. Any such qualification is subject to confirmation of
your entitlement.
PROCEDURES
You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, using the Check Redemption
Privilege with respect to Class A shares only, through the TELETRANSFER
Privilege or, if you are a client of a Selected Dealer, through the Selected
Dealer. If you have given your Service Agent authority to instruct the
Transfer Agent to redeem shares and to credit the proceeds of such
redemptions to a designated account at your Service Agent, you may
redeem shares only in this manner and in accordance with the regular
redemption procedure described below. If you wish to use the other
redemption methods described below, you must arrange with your Service
Agent for delivery of the required application(s) to the Transfer Agent.
Other redemption procedures may be in effect for clients of certain
Service Agents. The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer
facilities.
Your redemption request may direct that the redemption proceeds be
used to purchase shares of other funds advised or administered by The
Dreyfus Corporation that are not available through the Exchange Privilege.
The applicable CDSC will be charged upon the redemption of Class B
shares. Your redemption proceeds will be invested in shares of the other
fund on the next business day. Before you make such a request, you must
obtain and should review a copy of the current prospectus of the fund
being purchased. Prospectuses may be obtained from Dreyfus Service
Corporation. The prospectus will contain information concerning minimum
investment requirements and other conditions that may apply to your
purchase.
You may redeem or exchange Fund shares by telephone if you have
checked the appropriate box on the Fund's Account Application or have
filed an Optional Services Form with the Transfer Agent. If you select the
TELETRANSFER redemption or telephone exchange privilege, you authorize
(30)
the Transfer Agent to act on telephone instructions from any person
representing himself or herself to be you, or a representative of your
Service Agent, and reasonably believed by the Transfer Agent to be
genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures,
the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent instructions. Neither the Fund nor the Transfer
Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a TELETRANSFER redemption or an exchange of Fund shares. In such
cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in
your redemption request being processed at a later time than it would
have been if TELETRANSFER redemption had been used. During the delay,
the Fund's net asset value may fluctuate.
REGULAR REDEMPTION
Under the regular redemption procedure, you may redeem shares by
written request mailed to Premier Insured Municipal Bond Fund, P.O. Box
6587, Providence, Rhode Island 02940-6587. Written redemption requests
must specify the Class of shares being redeemed. Redemption requests
must be signed by each shareholder, including each owner of a joint
account, and each signature must be guaranteed. The Transfer Agent has
adopted standards and procedures pursuant to which signature-guarantees
in proper form generally will be accepted from domestic banks, brokers,
dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations, as
well as from participants in the New York Stock Exchange Medallion
Signature Program, the Securities Transfer Agents Medallion Program
("STAMP") and the Stock Exchanges Medallion Program. If you have any
questions with respect to signature-guarantees, please contact your
Service Agent or call the telephone number listed on the cover of this
Prospectus.
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE-CLASS A SHARES
If you hold Class A shares, you may request on the Account
Application, Optional Services Form or by later written request that the
Fund provide Redemption Checks drawn on the Fund's account. Redemption
Checks may be made payable to the order of any person in the amount of
$500 or more. Potential fluctuations in the net asset value of Class A
shares should be considered in determining the amount of the check.
Redemption Checks should not be used to close your account. Redemption
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current date
when you write them. Please do not postdate your Redemption Checks. If
you do, the Transfer Agent will honor, upon presentment, even if presented
before the date of the check, all postdated Redemption Checks which are
dated within six months of presentment for payment, if they are
otherwise in good order. Class A shares for which certificates have been
issued may not be redeemed by Redemption Check. This Privilege may be
modified or terminated at any time by the Fund or the Transfer Agent upon
notice to holders of Class A shares.
TELETRANSFER PRIVILEGE
You may redeem Fund shares (minimum $500 per day) by telephone if
you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed an Optional
Services Form with the Transfer Agent. The proceeds will be transferred
between your Fund account and the bank account designated in one of these
documents. Only such an account maintained in a domestic financial
institution which is an Automated Clearing House member may be so
designated. Redemption proceeds will be on deposit in your account
(31)
at an Automated Clearing House member bank ordinarily two days after receipt
of the redemption request or, at your request, paid by check (maximum
$150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the TELETRANSFER
Privilege for transfer to their bank account only up to $250,000 within
any 30-day period. The Fund reserves the right to refuse any request made
by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The
Fund may modify or terminate this Privilege at any time or charge a
service fee upon notice to shareholders. No such fee currently is
contemplated.
If you have selected the TELETRANSFER Privilege, you may request a
TELETRANSFER redemption of Fund shares by telephoning 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306. Shares
issued in certificate form are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER
If you are a customer of a Selected Dealer, you may make redemption
requests to your Selected Dealer. If the Selected Dealer transmits the
redemption request so that it is received by the Transfer Agent prior to
the close of trading on the floor of the New York Stock Exchange (currently
4:00 p.m., New York time), the redemption request will be effective on
that day. If a redemption request is received by the Transfer Agent after
the close of trading on the floor of the New York Stock Exchange, the
redemption request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Fund Shares"
for a discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, Dreyfus Service Corporation will accept orders from
Selected Dealers with which it has sales agreements for the repurchase of
shares held by shareholders. Repurchase orders received by dealers by the
close of trading on the floor of the New York Stock Exchange on any
business day and transmitted to Dreyfus Service Corporation prior to the
close of its business day (normally 5:15 p.m., New York time) are effected
at the price determined as of the close of trading on the floor of the New
York Stock Exchange on that day. Otherwise, the shares will be redeemed
at the next determined net asset value. It is the responsibility of the
Selected Dealer to transmit orders on a timely basis. The Selected Dealer
may charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
REINVESTMENT PRIVILEGE-CLASS A SHARES
Upon written request, you may reinvest up to the number of Class A
shares you have redeemed, within 30 days of redemption, at the then-
prevailing net asset value without a sales load, or reinstate your account
for the purpose of exercising the Exchange Privilege. The Reinvestment
Privilege may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A and Class B shares are subject to a Shareholder Services
Plan and Class B shares only are subject to a Distribution Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940, the Fund pays Dreyfus Service
Corporation for advertising, marketing and distributing Class B shares at
an annual rate of .50 of 1% of the value of the average daily net assets of
Class B. Under the Distribution Plan, Dreyfus Service Corporation may
make payments to Service Agents in respect of these services. Dreyfus
Service Corporation determines the amounts to be paid to Service Agents.
Service Agents receive such fees in respect of the average daily value of
Class B shares owned by their clients. From time to time, Dreyfus Service
Corporation may defer or waive receipt of fees under the Distribution Plan
while retaining the ability to be paid by the Fund under the Distribution
Plan thereafter. The fees payable to Dreyfus Service Corporation under the
Distribution Plan for advertising, marketing and distributing Class B
shares and for
(32)
payments to Service Agents are payable without regard to
actual expenses incurred.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays Dreyfus Service
Corporation for the provision of certain services to the holders of Class A
and Class B shares a fee at the annual rate of .25 of 1% of the value of the
average daily net assets of Class A and Class B. The services provided may
include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of
shareholder accounts. Dreyfus Service Corporation may make payments to
Service Agents in respect of these services. Dreyfus Service Corporation
determines the amounts to be paid to Service Agents. Each Service Agent
is required to disclose to its clients any compensation payable to it by the
Fund pursuant to the Shareholder Services Plan and any other
compensation payable by their clients in connection with the investment
of their assets in Class A or Class B shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS - Each Series of the Fund ordinarily
declares dividends from its net investment income on each day the New
York Stock Exchange is open for business. Fund shares begin earning
income dividends on the day immediately available funds ("Federal Funds"
(monies of member banks within the Federal Reserve System which are
held on deposit at a Federal Reserve Bank)) are received by the Transfer
Agent in written or telegraphic form. If a purchase order is not
accompanied by remittance in Federal Funds, there may be a delay between
the time the purchase order becomes effective and the time the shares
purchased start earning dividends. If your payment is not made in Federal
Funds, it must be converted into Federal Funds. This usually occurs within
one business day of receipt of a bank wire and within two business days of
receipt of a check drawn on a member bank of the Federal Reserve System.
Checks drawn on banks which are not members of the Federal Reserve
System may take considerably longer to convert into Federal Funds.
Dividends usually are paid on the last calendar day of each month and
are automatically reinvested in additional shares of the Series and the
Class from which they are paid at net asset value without a sales load or,
at your option, paid in cash. Each Series' earnings for Saturdays, Sundays
and holidays are declared as dividends on the preceding business day. If
you redeem all shares in your account at any time during the month, all
dividends to which you are entitled will be paid to you along with the
proceeds of the redemption. Distributions by each Series from net realized
securities gains, if any, generally are declared and paid once a year, but
the Series may make distributions on a more frequent basis to comply
with the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the Investment Company Act of 1940.
The Fund will not make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or have expired.
You may choose whether to receive dividends and distributions in cash or
to reinvest in additional shares of the Series and the Class from which
they were paid at net asset value without a sales load. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by each Class will be calculated at the same time and in
the same manner and will be of the same amount, except that the expenses
attributable solely to Class A or Class B will be borne exclusively by such
Class. Class B shares will receive lower per share dividends than Class A
shares because of the higher expenses borne by Class B. See "Fee Table."
FEDERAL TAX TREATMENT - Under the Code, each Series of the Fund is
treated as a separate entity for purposes of qualification and taxation as
a regulated investment company. Except for dividends from Taxable
Investments, the Fund anticipates that substantially all dividends paid by
a Series will not be subject to Federal income tax. Dividends derived from
Taxable Investments, together with distributions from any net realized
short-term securities gains and gains from the sale or other disposition
of certain market discount bonds, are taxable as ordinary income whether
or not reinvested. Distributions from net realized long-term securities
(33)
gains of a Series generally are taxable as long-term capital gains for
Federal income tax purposes if you are a citizen or resident of the United
States. Dividends and distributions attributable to gains derived from
securities transactions and from the use of certain of the investment
techniques described under "Description of the Fund - Investment
Techniques," will be subject to Federal income tax. The Code provides that
the net capital gain of an individual generally will not be subject to
Federal income tax at a rate in excess of 28%. Under the Code, interest on
indebtedness incurred or continued to purchase or carry shares of any
Series which is deemed to relate to exempt-interest dividends is not
deductible. No dividend paid by any Series will qualify for the dividends
received deduction allowable to certain U.S. corporations.
The Code provides for the "carryover" of some or all of the sales
load imposed on Class A shares of a Series if you exchange your Class A
shares for shares of another Series or fund advised by The Dreyfus
Corporation within 91 days of purchase and such other Series or fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of the sales load charge for Class
A shares, up to the amount of the reduction of the sales load charge on the
exchange, is not included in the basis of your Class A shares for purposes
of computing gain or loss on the exchange, and instead is added to the
basis of the other Series or fund shares received on the exchange.
Although all or a substantial portion of the dividends paid by each
Series may be excluded by shareholders of the Series from their gross
income for Federal income tax purposes, each Series may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for
purposes of the corporate alternative minimum tax as well as a component
in computing the corporate environmental tax or (iii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If a Series purchases such securities, the portion of the
Series' dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause an investor to be subject to such
taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and gains
from the sale or other disposition of certain market discount bonds, paid
by a Series to a foreign investor generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the foreign investor claims
the benefit of a lower rate specified in a tax treaty. Distributions from
net realized long-term securities gains paid by a Series to a foreign
investor as well as the proceeds of any redemptions from a foreign
investor's account, regardless of the extent to which gain or loss may be
realized, generally will not be subject to U.S. nonresident withholding tax.
However, such distributions may be subject to backup withholding, as
described below, unless the foreign investor certifies his non-U.S.
residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and
distributions from securities gains, if any, paid during the year. These
statements set forth the dollar amount of income exempt from Federal tax
and the dollar amount, if any, subject to Federal tax. These dollar amounts
will vary depending on the size and length of time of your investment in
the Fund. If a Series pays dividends derived from taxable income, it
intends to designate as taxable the same percentage of the day's dividend
as the actual taxable income earned on that day bears to total income
earned on that day. Thus, the percentage of the dividend designated as
taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be
realized, paid to a shareholder if such shareholder fails to certify either
that the TIN furnished in connection with opening an account is correct or
that such shareholder has not received notice from the IRS of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or
(34)
interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding
if the IRS determines a shareholder's TIN is incorrect or if a shareholder
has failed to properly report taxable dividend and interest income on a
Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
It is expected that each Series will qualify as a "regulated
investment company" under the Code so long as such qualification is in the
best interests of its shareholders. Such qualification relieves the Series
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. In
addition, each Series of the Fund is subject to a non-deductible 4% excise
tax, measured with respect to certain undistributed amounts of taxable
investment income and capital gains.
STATE AND LOCAL TAX TREATMENT-Each State Series will invest
primarily in Municipal Obligations of the State after which the Series is
named. Except to the extent specifically noted below, dividends by a State
Series are not subject to an income tax by such State to the extent that
the dividends are attributable to interest on such Municipal Obligations.
However, some or all of the other dividends or distributions by a Series
may be taxable by those States that have income taxes, even if the
dividends or distributions are attributable to income of the Series derived
from obligations of the United States or its agencies or instrumentalities.
The Fund anticipates that a substantial portion of the dividends paid
by each State Series will not be subject to income tax of the State after
which the Series is named. However, to the extent that you are obligated
to pay State or local taxes outside of such State, dividends earned by an
investment in such Series may represent taxable income. Also, all or a
portion of the dividends paid by a Series that are not subject to income
tax of the State after which the Series is named may be a preference item
for such State's alternative minimum tax (where imposed). Finally, you
should be aware that State and local taxes, other than those described
above, may apply to the dividends, distributions or shares of a Series.
The paragraphs below discuss the State tax treatment of dividends
and distributions by each State Series to residents of the State after
which such Series is named. Investors should consult their own tax
advisers regarding specific questions as to Federal, State and local taxes.
CALIFORNIA SERIES-Except for dividends from Taxable Investments, the
Fund anticipates that substantially all dividends paid by the California
Series will not be subject to Federal or State of California personal
income taxes.
If, at the close of each quarter of its taxable year, at least 50% of
the value of the California Series' total assets consists of Federal tax
exempt obligations, then the California Series may designate and pay
Federal exempt-interest dividends from interest earned on all such tax
exempt obligations. Such exempt-interest dividends may be excluded by
shareholders of the California Series from their gross income for Federal
income tax purposes.
If, at the close of each quarter of its taxable year, at least 50% of
the value of the California Series' total assets consists of obligations
which, when held by an individual, the interest therefrom is exempt from
California personal income tax, and if the California Series qualifies as a
management company under the California Revenue and Taxation Code, then
the California Series will be qualified to pay dividends to its shareholders
that are exempt from California personal income tax (but not from
California franchise tax) ("California exempt-interest dividends").
However, the total amount of California exempt-interest dividends paid by
the California Series to a noncorporate shareholder with respect to any
taxable year cannot exceed such shareholder's pro-rata share of interest
received by the California Series during such year that is exempt from
California taxation less any expenses and expenditures deemed to have
been paid from such interest.
Unlike under Federal tax law, the California Series' shareholders
will not be subject to
(35)
California personal income tax, or receive a credit
for California taxes paid by the California Series, on undistributed capital
gains. In addition, California tax law does not consider any portion of the
exempt-interest dividends paid an item of tax preference for the purposes
of computing the California alternative minimum tax.
CONNECTICUT SERIES-Dividends paid by the Connecticut Series that
qualify as exempt-interest dividends for Federal income tax purposes are
not subject to the Connecticut income tax on individuals, trusts and
estates, to the extent that such dividends are derived from income
received by the Series as interest from Connecticut Municipal Obligations
or as interest from obligations the interest with respect to which
Connecticut is prohibited by Federal law from taxing. Dividends derived
from other sources, including distributions that qualify as capital gain
dividends for Federal income tax purposes, are taxable by Connecticut. In
the case of a shareholder subject to the Federal alternative minimum tax,
an exempt-interest dividend treated as a preference item for purposes of
such tax may be subject to the net Connecticut minimum tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes that are distributed by the Connecticut Series to
entities taxed as corporations under the Connecticut corporation business
tax are not exempt from that tax.
The shares of the Connecticut Series are not subject to property
taxation by the State of Connecticut or its political subdivisions.
FLORIDA SERIES-Dividends or distributions paid by the Florida Series to a
Florida individual resident are not taxable by Florida. However, Florida
imposes an intangible personal property tax on shares of the Series owned
by a Florida resident on January 1 of each year unless such shares qualify
for an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes as well as other federally taxable dividends and
distributions that are distributed by the Series to entities taxed as
corporations under Florida law may not be exempt from the Florida
corporate income tax.
The Fund has applied for a Technical Assistance Advisement from
the State of Florida, Department of Revenue, to the effect that Florida
Series' shares owned by a Florida resident will be exempt from the
intangible personal property tax so long as the Series' portfolio includes
only assets, such as notes, bonds, and other obligations issued by the
State of Florida or its municipalities, counties, and other taxing districts,
the United States Government, and its agencies, Puerto Rico, Guam, and
the U.S. Virgin Islands, and other assets which are exempt from that tax.
NEW JERSEY SERIES-The New Jersey Series intends to be a "qualified
investment fund" within the meaning of the New Jersey gross income tax.
The primary criteria for constituting a "qualified investment fund" are
that (i) such Series is an investment company registered with the
Securities and Exchange Commission, which for the calendar year in which
the dividends and distributions (if any) are paid, has no investments other
than interest-bearing obligations, obligations issued at a discount, and
cash and cash items, including receivables, and financial options, futures
and forward contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto and (ii) at the close of each quarter of the taxable
year, the Series has not less than 80% of the aggregate principal amount
of all of its investments, excluding financial options, futures and forward
contracts, or other similar financial instruments related to interest-
bearing obligations, obligations issued at a discount or bond indexes
related thereto, cash and cash items, which cash items shall include
receivables, in New Jersey Municipal Obligations, territorial obligations
and certain other specified securities. Additionally, a qualified
investment fund must comply with certain continuing reporting
requirements.
If the New Jersey Series qualifies as a qualified investment fund
and the New Jersey Series complies with its reporting obligations, (a)
dividends and distributions paid by the Series to a New Jersey resident
individual shareholder will not be subject to New Jersey gross income tax
to the extent that the dividends and distributions are respectively
attributable to income earned by the Series as interest on or gain from
New Jersey Municipal Obligations or
(36)
territorial obligations, and (b) gain
from the sale of shares in the Series by a New Jersey resident individual
shareholder will not be subject to the New Jersey gross income tax.
Shares of the New Jersey Series are not subject to property taxation by
New Jersey or its political subdivisions.
NEW YORK SERIES-Except for dividends from Taxable Investments, the
Fund anticipates that substantially all dividends paid by the New York
Series will not be subject to Federal, New York State or New York City
personal income taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of shares
may be calculated on several bases, including current yield, tax equivalent
yield, average annual total return and/or total return. These total return
figures reflect changes in the price of the shares and assume that any
income dividends and/or capital gains distributions made by the Fund
during the measuring period were reinvested in shares of the same Class.
Class A total return figures include the maximum initial sales charge and
Class B total return figures include any applicable CDSC. These figures
also take into account any applicable service and distribution fees. As a
result, at any given time, the performance of Class B should be expected
to be lower than that of Class A. Performance for each Class will be
calculated separately.
Current yield refers to each Series' annualized net investment
income per share over a 30-day period, expressed as a percentage of the
maximum offering price per share in the case of Class A or the net asset
value per share in the case of Class B at the end of the period. For
purposes of calculating current yield, the amount of net investment
income per share during that 30-day period, computed in accordance with
regulatory requirements, is compounded by assuming that it is reinvested
at a constant rate over a six-month period. An identical result is then
assumed to have occurred during a second six-month period which, when
added to the result for the first six months, provides an "annualized"
yield for an entire one-year period. Calculations of each Series' current
yield may reflect absorbed expenses pursuant to any undertaking that may
be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
current yield calculated as described above.
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in a Series was purchased with
an initial payment of $1,000 and that the investment was redeemed at the
end of a stated period of time, after giving effect to the reinvestment of
dividends and distributions during the period. The return is expressed as a
percentage rate which, if applied on a compounded annual basis, would
result in the redeemable value of the investment at the end of the period.
Advertisements of each Series' performance will include such Series'
average annual total return of Class A and Class B for one, five and ten
year periods, or for shorter periods depending upon the length of time
during which each Series has operated. Computations of average annual
total return for periods of less than one year represent an annualization of
a Series' actual total return for the applicable period. A Series' actual
total return for its first full year of operation cannot be predicted and is
therefore likely to be different from any such annualized computation.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
maximum offering price per share in the case of Class A or the net asset
value per share in the case of Class B at the beginning of the period.
Advertisements may include the percentage rate of total return or may
include the value of a hypothetical investment at the end of the period
which assumes the application of the percentage rate of total return.
Total return also may be calculated by using the net asset value per share
at the beginning of the period instead of the maximum offering price per
share at the beginning of the period for Class A shares or without giving
effect to any applicable CDSC at the end of the period for Class B
(37)
shares. Calculations based on the net asset value per share do not reflect the
deduction of the applicable sales charge which, if reflected, would reduce
the performance quoted.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember
that performance is a function of portfolio management in selecting the
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investments or other
investment companies using a different method of calculating
performance.
Comparative performance information may be used from time to
time in advertising the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman
Brothers Municipal Bond Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under
the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated March
12, 1992, and commenced operations on August 19, 1993. On December 8,
1993, the Fund's name was changed from Premier California Insured
Municipal Bond Fund to Premier Insured Municipal Bond Fund. The Fund is
authorized to issue an unlimited number of shares of beneficial interest,
par value $.001 per share. Each Series' shares are classified into two
classes_Class A and Class B. Each share has one vote and shareholders will
vote in the aggregate and not by class except as otherwise required by law
or when class voting is permitted by the Board of Trustees. However,
holders of Class A and Class B shares will be entitled to vote on matters
submitted to shareholders pertaining to the Shareholder Services Plan and
only holders of Class B shares will be entitled to vote on matters
submitted to shareholders pertaining to the Distribution Plan.
To date, the Trustees have authorized the creation of six Series of
shares. All consideration received by the Fund for shares of one of the
Series and all assets in which such consideration is invested, will belong
to that Series (subject only to the rights of creditors of the Fund) and will
be subject to the liabilities related thereto. The income attributable to,
and the expenses of, one Series would be treated separately from those of
the other Series.
Rule 18f-2 under the Investment Company Act of 1940 provides that
any matter required to be submitted under the provisions of the
Investment Company Act of 1940 or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company
such as the Fund will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of
each Series affected by such matter. Rule 18f-2 further provides that a
Series shall be deemed to be affected by a matter unless it is clear that
the interests of each Series in the matter are identical or that the matter
does not affect any interest of such Series. However, the Rule exempts the
selection of independent accountants and the election of trustees from the
separate voting requirements of the Rule.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed
by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations, a possibility which management
believes is remote. Upon payment of any liability incurred by the Fund, the
shareholder paying such liability will be entitled to reimbursement from
the general assets of the Fund. The Trustees intend to conduct the
operations of the Fund in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
discussed
(38)
under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove
Trustees.
The Transfer Agent maintains a record of your ownership and will
send you confirmations and statements of account.
Shareholder inquiries may be made to your Service Agent or by
writing to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
(39)
__________________________________________________________________________
PREMIER INSURED MUNICIPAL BOND FUND
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 14, 1994
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier Insured Municipal Bond Fund (the "Fund"), dated February 14,
1994, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . B-10
Management Agreement . . . . . . . . . . . . . . . . . . . . B-14
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . B-16
Distribution Plan and Shareholder Services Plan. . . . . . . B-17
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . B-19
Shareholder Services . . . . . . . . . . . . . . . . . . . . B-21
Determination of Net Asset Value . . . . . . . . . . . . . . B-24
Dividends, Distributions and Taxes . . . . . . . . . . . . . B-25
Portfolio Transactions . . . . . . . . . . . . . . . . . . . B-27
Performance Information. . . . . . . . . . . . . . . . . . . B-27
Information About the Fund . . . . . . . . . . . . . . . . . B-29
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . B-30
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . B-31
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . B-70
Financial Statements . . . . . . . . . . . . . . . . . . . . B-76
Report of Independent Auditors . . . . . . . . . . . . . . . B-78
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the California Series for the period from
August 19, 1993 (commencement of operations) to December 31, 1993,
computed on a monthly basis, was as follows:
Fitch Investors Moody's Investors Standard & Poor's
Service, Inc. Service, Inc. Corporation
("Fitch") or ("Moody's") or ("S&P") Percentage of Value
AAA Aaa AAA 100.0%
======
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. Each Series
will seek to minimize these risks by not investing more than 15% of the
value of its net assets in lease obligations that contain
"non-appropriation" clauses, and by investing only in those
"non-appropriation" lease obligations where (1) the nature of the leased
equipment or property is such that its ownership or use is essential to a
governmental function of the municipality, (2) the lease payments will
commence amortization of principal at an early date resulting in an
average life of seven years or less for the lease obligation, (3)
appropriate covenants will be obtained from the municipal obligor
prohibiting the substitution or purchase of similar equipment if lease
payments are not appropriated, (4) the lease obligor has maintained good
market acceptability in the past, (5) the investment is of a size that
will be attractive to institutional investors, and (6) the underlying
leased equipment has elements of portability and/or use that enhance its
marketability in the event foreclosure on the underlying equipment is ever
required. The staff of the Securities and Exchange Commission currently
considers certain lease obligations to be illiquid. Accordingly, no
Series will invest more than 15% of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 11" below.
A Series will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option arrangements, including the
fee payment arrangements, will not adversely affect the tax exempt status
of the underlying Municipal Obligations and that payment of any tender
fees will not have the effect of creating taxable income for the Series.
Based on the tender option bond agreement, the Fund expects to be able to
value the tender option bond at par; however, the value of the instrument
will be monitored to assure that it is valued at fair value.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Fund's Shareholder Services Plan
with respect to Class A and Class B shares and the Distribution Plan with
respect to Class B shares only, will have the effect of reducing the yield
to investors.
Insurance Feature. The Mutual Fund Insurance policies provide for a
policy period of one year which the insurer typically renews for
successive annual periods at the request of the Fund for so long as the
Fund is in compliance with the terms of the relevant policy. The
insurance premiums are payable monthly by the Fund and are adjustable for
purchases and sales of covered Municipal Obligations during the month on a
daily basis. Premium rates for each issue of Municipal Obligations
covered by the Mutual Fund Insurance are fixed for as long as the Fund
owns the security, although similar Municipal Obligations purchased at
different times may have different premiums. In addition to the payment
of premiums, each Mutual Fund Insurance policy requires that the Fund
notify the insurer on a daily basis as to all Municipal Obligations in the
insured portfolio and permits the insurer to audit its records. The
insurer cannot cancel coverage already in force with respect to Municipal
Obligations owned by the Fund and covered by the Mutual Fund Insurance
policy, except for nonpayment of premiums.
Municipal Obligations are eligible for Mutual Fund Insurance if, at
the time of purchase by the Fund, they are identified separately or by
category in qualitative guidelines furnished by the insurer and are in
compliance with the aggregate limitations set forth in such guidelines.
Premium variations are based in part on the rating of the security being
insured at the time the Fund purchases such security. The insurer may
prospectively withdraw particular securities from the classifications of
securities eligible for insurance or change the aggregate amount
limitation of each issue or category of eligible Municipal Obligations but
must continue to insure the full amount of such securities previously
acquired so long as they remain in the Fund's portfolio. The qualitative
guidelines and aggregate amount limitations established by the insurer
from time to time will not necessarily be the same as the Fund or the
Manager would use to govern selection of securities for the Fund's
portfolio. Therefore, from time to time such guidelines and limitations
may affect portfolio decisions.
New Issue Insurance provides that in the event of a municipality's
failure to make payment of principal or interest on an insured Municipal
Obligation, the payment will be made promptly by the insurer. There are
no deductible clauses or cancellation provisions, and the tax exempt
status of the securities is not affected. The premiums, whether paid by
the issuing municipality or the municipal bond dealer underwriting the
issue, are paid in full for the life of the Municipal Obligation. The
statement of insurance is attached to or printed on the instrument
evidencing the Municipal Obligation purchased by the Fund and becomes part
of the Municipal Obligation. The benefits of the insurance accompany the
Municipal Obligations in any resale.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent
that the ratings given by Moody's, S&P or Fitch for Municipal Obligations
may change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
the Series investments in accordance with the investment policies
contained in the Fund's Prospectus and this Statement of Additional
Information. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in
the writer's futures margin account, which represents the amount by which
the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on
the futures contract. The potential loss related to the purchase of
options on futures contracts is limited to the premium paid for the option
(plus transaction costs). Because the value of the option is fixed at the
time of sale, there are no daily cash payments to reflect changes in the
value of the underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset value of
the relevant Series.
Lending Portfolio Securities. To a limited extent, each Series may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, a Series
can increase its income through the investment of the cash collateral.
For purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by
banks whose securities meet the standards for investment by the Series to
be the equivalent of cash. Such loans may not exceed 33 1/3% of the value of
the Series' total assets. From time to time, the Series may return to the
borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(3) the Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as any
interest or other distributions payable on the loaned securities, and any
increase in market value; and (5) the Series may pay only reasonable
custodian fees in connection with the loan. These conditions may be
subject to future modification.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks,
by the right of the issuer to borrow from the U.S. Treasury; others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S. Government -
sponsored agencies or instrumentalities, no assurance can be given that it
will always do so, since it is not so obligated by law. The Fund will
invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating and
variable interest rates.
Repurchase agreements involve the acquisition by the Series of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Series to resell, the instrument at a fixed price,
usually not more than one week after its purchase. The Fund's custodian
or sub-custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and
Exchange Commission to be loans by the Series which enters into them. In
an attempt to reduce the risk of incurring a loss on a repurchase
agreement, a Series will enter into repurchase agreements only with
domestic banks with total assets in excess of one billion dollars or
primary government securities dealers reporting to the Federal Reserve
Bank of New York, with respect to securities of the type in which the
Series may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. The Manager will monitor on an ongoing basis the
value of the collateral to assure that it always equals or exceeds the
repurchase price. Certain costs may be incurred by the Series in
connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition,
if bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Series may be delayed or
limited. The Fund will consider on an ongoing basis the creditworthiness
of the institutions with which the Series enter into repurchase
agreements.
Risk Factors
Investing in State Municipal Obligations (State Series only).
Investors should review Appendix A which sets forth additional information
relating to investing in State Municipal Obligations.
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 7 as fundamental policies which will apply
to each Series. These restrictions cannot be changed as to a Series
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of such Series'
outstanding voting shares. Investment restrictions numbered 8 through 12
are not fundamental policies and may be changed by vote of a majority of
the Trustees at any time. No Series may:
1. Invest more than 25% of the value of its assets in the securities
of issuers in any single industry; provided that there shall be no
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Series'
total assets (including the amount borrowed) based on the lesser of cost
or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of
the Series' total assets, the Series will not make any additional
investments. For purposes of this Investment Restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes shall not constitute
borrowing.
3. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from
investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Fund from purchasing and selling options, forward
contracts, futures contracts, including those relating to indexes, and
options on futures contracts or indexes.
4. Underwrite the securities of other issuers, except that the
Series may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to
take advantage of the lower purchase price available, and except to the
extent the Series may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund
may lend each Series' portfolio securities in an amount not to exceed 33-
1/3% of the value of the Series' total assets. Any loans of portfolio
securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Board of Trustees.
6. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent that the activities permitted in
Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise to
a senior security.
7. Purchase securities on margin, but the Series may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indexes, and options on
futures contracts or indexes.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options
or as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indexes, and options on futures contracts or indexes.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid (which securities could include, if there is no secondary market,
participation interests (including municipal lease/purchase agreements)
that are not subject to the demand feature described in the Fund's
Prospectus, and floating and variable rate demand obligations as to which
the Fund cannot exercise the demand feature described in the Fund's
Prospectus on less than seven days' notice), if, in the aggregate, more
than 15% of the value of the Series' net assets would be so invested.
12. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 1, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."
As a fundamental policy, the Fund may invest, notwithstanding any
other investment restriction (whether or not fundamental), all of a
Series' assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objective, policies and restrictions as such Series. The Fund will notify
shareholders at least 60 days prior to any implementation of such policy.
If a percentage restriction is adhered to at the time of investment,
a later increase in percentage resulting from a change in values or assets
will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Series shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series shares in the
state involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund (as defined in the Act) is indicated by an asterisk.
Trustees and Officers of the Fund
CLIFFORD L. ALEXANDER, JR., Trustee. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981,
Mr. Alexander served as Secretary of the Army and Chairman of the
Board of the Panama Canal Company, and from 1975 to 1977, he was a
member of the Washington, D.C. law firm of Verner, Liipfert,
Bernhard, McPherson and Alexander. He is a director of American Home
Products Corporation, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company
and Equitable Resources, Inc., a producer and distributor of natural
gas and crude petroleum. His address is 400 C Street, N.E.,
Washington, D.C. 20002.
PEGGY C. DAVIS, Trustee. Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served
for three years as a judge in the courts of New York State; was
engaged for eight years in the practice of law, working in both
corporate and non-profit sectors; and served for two years as a
criminal justice administrator in the government of the City of New
York. She writes and teaches in the fields of evidence,
constitutional theory, family law, social sciences and the law, legal
process and professional methodology and training. Her address is
c/o New York University School of Law, 249 Sullivan Street, New York,
New York 10012.
ERNEST KAFKA, Trustee. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. For
more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on subjects
in the field of psychoanalysis. His address is 23 East 92nd Street,
New York, New York 10128.
SAUL B. KLAMAN, Trustee. Chairman and Chief Executive Officer
of SBK Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. His address is 431-B Dedham Street, The Gables,
Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Trustee. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations
of New York City from September 1979 to March 1984 and Commissioner
of the Department of Housing Preservation and Development of New York
City from February 1978 to September 1979. Mr. Leventhal was an
associate and then a member of the New York law firm of Poletti
Freidin Prashker Feldman and Gartner from 1974 to 1978. He was
Commissioner of Rent and Housing Maintenance for New York City from
1972 to 1973. His address is 70 Lincoln Center Plaza, New York, New
York 10023-6583.
*RICHARD J. MOYNIHAN, Trustee, President and Investment Officer.
An employee of the Manager and an officer, director or trustee of
other investment companies advised or administered by the Manager.
His address is 200 Park Avenue, New York, New York 10166.
Each of the "non-interested" Trustees is also a trustee of General
California Municipal Money Market Fund, General New York Municipal Money
Market Fund, Premier California Municipal Bond Fund, Premier GNMA Fund,
Premier Municipal Bond Fund, Premier New York Municipal Bond Fund and
Premier State Municipal Bond Fund and a director of Dreyfus Appreciation
Fund, Inc., General California Municipal Bond Fund, Inc., General
Government Securities Money Market Fund, Inc., General Money Market Fund,
Inc., General Municipal Bond Fund, Inc., General Municipal Money Market
Fund, Inc., General New York Municipal Bond Fund, Inc. and Premier Growth
Fund, Inc. Mr. Alexander is also a director of The Dreyfus Socially
Responsible Growth Fund, Inc. and The Dreyfus Third Century Fund, Inc.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Trustees of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
Ordinarily meetings of shareholders for the purpose of electing
Trustees will not be held unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders,
at which time the Trustees then in office will call a shareholders'
meeting for the election of Trustees. Under the Act, shareholders of
record of not less than two-thirds of the outstanding shares of the Fund
may remove a Trustee through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. Under the Fund's
Agreement and Declaration of Trust, the Trustees are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
The Fund does not pay any remuneration to its officers and Trustees
other than fees and expenses of Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $2,810 for the period from August 19, 1993
(commencement of operations) to December 31, 1993.
Officers of the Fund Not Listed Above
A. PAUL DISDIER, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
ELIE M. GENADRY, Vice President. Vice President--Institutional Sales of
the Manager, Executive Vice President of the Distributor and an
officer of other investment companies advised or administered by the
Manager.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of
the Manager, Secretary of the Distributor and an officer or director
of other investment companies advised or administered by the Manager.
DONALD A. NANFELDT, Vice President. Executive Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager.
JEFFREY N. NACHMAN, Vice President and Treasurer. Vice President--Mutual
Fund Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
GREGORY S. GRUBER, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the
Manager, the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on January 21, 1994.
The following shareholders are known by the Fund to own, of record,
more than 5% of the California Series voting securities outstanding on
January 21, 1994:
J. & H. Garrison, San Diego, California--11.9% of Class A; K. & W.
Parkin, Santa Rosa, California--7.3% of Class A; B. & M. Frederiksen,
Laguna Hills, California--45.0% of Class B (may be deemed to be a "Control
Person" as defined in the Act); G. & L. Wilson, San Francisco, California-
- -7.0% of Class B; J. Moran, San Francisco, California--6.5% of Class B.
The following persons also are officers and/or directors of The
Dreyfus Corporation: Howard Stein, Chairman of the Board and Chief
Executive Officer; Julian M. Smerling, Vice Chairman of the Board of
Directors; Joseph S. DiMartino, President, Chief Operating Officer and a
director; Alan M. Eisner, Vice President and Chief Financial Officer;
David W. Burke, Vice President and Chief Administrative Officer; Robert F.
Dubuss, Vice President; Peter A. Santoriello, Vice President; Robert H.
Schmidt, Vice President; Kirk V. Stumpp, Vice President--New Product
Development; Philip L. Toia, Vice President; John J. Pyburn, Assistant
Vice President; Katherine C. Wickham, Vice President--Human Resources;
Maurice Bendrihem, Controller; and Mandell L. Berman, Alvin E. Friedman,
Lawrence M. Greene, Abigail Q. McCarthy and David B. Truman, directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated April 21, 1993. As to
each Series, the Agreement is subject to annual approval by (i) the Fund's
Board of Trustees or (ii) vote of a majority (as defined in the Act) of
the outstanding voting securities of such Series, provided that in either
event the continuance also is approved by a majority of the Trustees who
are not "interested persons" (as defined in the Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Agreement was last approved by the Fund's
Board of Trustees, including a majority of the Trustees who are not
"interested persons" of any party to the Agreement, at a meeting held on
January 26, 1994. The Agreement is terminable without penalty, as to each
Series, on 60 days' notice, by the Fund's Board of Trustees or by vote of
the holders of a majority of such Series' shares, or, on not less than 90
days' notice, by the Manager. The Agreement will terminate automatically,
as to the relevant Series, in the event of its assignment (as defined in
the Act).
The Manager manages each Series' portfolio of investments in
accordance with the stated policies of such Series, subject to the
approval of the Fund's Board of Trustees. The Manager is responsible for
investment decisions, and provides the Fund with Investment Officers who
are authorized by the Board of Trustees to execute purchases and sales of
securities. The Fund's Investment Officers are A. Paul Disdier, Karen M.
Hand, Stephen C. Kris, Richard J. Moynihan, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the
Fund as well as for other funds advised by the Manager. All purchases and
sales are reported for the Trustees' review at the meeting subsequent to
such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any, fees of
Trustees who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of the Manager, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing services, costs
of maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings, and any
extraordinary expenses. Class A and Class B shares are subject to an
annual service fee for ongoing personal services relating to shareholder
accounts and services related to the maintenance of shareholder accounts.
In addition, Class B shares are subject to an annual distribution fee for
advertising, marketing and distributing Class B shares pursuant to a
distribution plan adopted in accordance with Rule 12b-1 under the Act.
See "Distribution Plan and Shareholder Services Plan." Expenses
attributable to a particular Series are charged against the assets of that
Series; other expenses of the Fund are allocated among the Series on the
basis determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Series.
The Manager pays the salaries of all officers and employees employed
by both it and the Fund, maintains office facilities and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services.
The Manager also may make such advertising and promotional expenditures,
using its own resources, as it from time to time deems appropriate.
As compensation for the Manager's services to the Fund, the Fund has
agreed to pay the Manager a monthly management fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. No
management fee was paid by the Fund with respect to the California Series
for the period from August 19, 1993 (commencement of operations) to
December 31, 1993.
The Manager has agreed that if in any fiscal year the aggregate
expenses of each Series, exclusive of taxes, brokerage fees, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over such Series, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Series' net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Family of Premier
Funds, for the funds in the Dreyfus Family of Funds and for certain other
investment companies.
Using Federal Funds. The Shareholder Services Group, Inc., the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), or
the Fund may attempt to notify the investor upon receipt of checks drawn
on banks that are not members of the Federal Reserve System as to the
possible delay in conversion into Federal Funds and may attempt to arrange
for a better means of transmitting the money. If the investor is a
customer of a securities dealer ("Selected Dealer") and his order to
purchase Fund shares is paid for other than in Federal Funds, the Selected
Dealer, acting on behalf of its customer, will complete the conversion
into, or itself advance, Federal Funds generally on the business day
following receipt of the customer order. The order is effective only when
so converted and received by the Transfer Agent. An order for the
purchase of Fund shares placed by an investor with sufficient Federal
Funds or a cash balance in his brokerage account with a Selected Dealer
will become effective on the day that the order, including Federal Funds,
is received by the Transfer Agent.
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code of 1986, as amended (the "Code")), although more
than one beneficiary is involved; or a group of accounts established by or
on behalf of the employees of an employer or affiliated employers pursuant
to an employee benefit plan or other program (including accounts
established pursuant to Sections 403(b), 408(k), and 457 of the Code); or
an organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the
purchases are made through a central administration or a single dealer, or
by other means which result in economy of sales effort or expense.
TeleTransfer Privilege. TeleTransfer purchase orders may be made
between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any
business day that the Transfer Agent and the New York Stock Exchange are
open. Such purchases will be credited to the shareholder's Fund account
on the next bank business day. To qualify to use the TeleTransfer
Privilege, the initial payment for purchase of Fund shares must be drawn
on, and redemption proceeds paid to, the same bank and account as are
designated on the Account Application or Optional Services Form on file.
If the proceeds of a particular redemption are to be wired to an account
at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Fund Shares--TeleTransfer
Privilege."
Offering Price. Based upon the California Series' net asset value at
the close of business on December 31, 1993, the maximum offering price of
the Series' shares would have been as follows:
Class A shares:
NET ASSET VALUE per share . . . . . . . . . . . . . . . . . . . $12.75
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5 percent
of offering price
(approximately 4.7 percent of net asset
value per share). . . . . . . . . . . . . . . . . . . . . . . .60
Offering price to public. . . . . . . . . . . . . . . . . . . . $13.35
Class B shares:
NET ASSET VALUE, redemption price and
offering price to public* . . . . . . . . . . . . . . . . . . $12.76
*Class B shares are subject to a contingent deferred sales charge on certain
redemptions. See "How to Redeem Fund Shares" in the Fund's Prospectus.
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
The Class A and Class B shares are subject to a Shareholder Services
Plan and the Class B shares only are subject to a Distribution Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, that
an investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
of Trustees has adopted such a plan (the "Distribution Plan") with respect
to Class B shares of each Series, pursuant to which the Fund pays the
Distributor for advertising, marketing and distributing Class B shares.
Under the Distribution Plan, the Distributor may make payments to certain
Selected Dealers, financial institutions and other financial industry
professionals (collectively, "Service Agents") in respect of these
services. The Fund's Board of Trustees believes that there is a
reasonable likelihood that the Distribution Plan will benefit the Fund and
holders of each Series' Class B shares. In some states, certain financial
institutions effecting transactions in Fund shares may be required to
register as dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Trustees for their review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of Class B shares may bear for distribution pursuant to the
Distribution Plan without the approval of the holders of Class B shares
and that other material amendments of the Distribution Plan must be
approved by the Board of Trustees, and by the Trustees who are not
"interested persons" (as defined in the Act) of the Fund or the Manager
and have no direct or indirect financial interest in the operation of the
Distribution Plan or in any agreements entered into in connection with the
Distribution Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Distribution Plan is subject
to annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Distribution Plan. The
Distribution Plan was approved by the Fund's Board of Trustees, including
a majority of the Trustees who are not "interested persons," at a meeting
held on January 26, 1994. The Distribution Plan is terminable, as to each
Series, at any time by vote of a majority of the Trustees who are not
"interested persons" and have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreements entered into
in connection with the Distribution Plan, or by vote of the holders of a
majority of such Series' Class B shares. For the period from August 19,
1993 (commencement of California Series' operations) through December 31,
1993, $1,663 was charged to the Fund, with respect to Class B, under the
Distribution Plan.
Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A and Class B
shares.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Trustees for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Board of Trustees, and by the Trustees who are not
"interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services Plan
is subject to annual approval by such vote of the Trustees cast in person
at a meeting called for the purpose of voting on the Shareholder Services
Plan. The Shareholder Services Plan was so approved on January 26, 1994.
As to each Series, the Shareholder Services Plan is terminable at any time
by vote of a majority of the Trustees who are not "interested persons" and
who have no direct or indirect financial interest in the operation of the
Shareholder Services Plan or in any agreements entered into in connection
with the Shareholder Services Plan.
For the period from August 19, 1993 (commencement of California
Series' operations) through December 31, 1993, no payment was made by the
Fund under the Shareholder Services Plan pursuant to undertakings in
effect.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege - Class A Shares. An investor may
indicate on the Account Application or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the Fund's account.
Checks will be sent only to the registered owner(s) of the account and
only to the address of record. The Account Application or later written
request must be manually signed by the registered owner(s). Checks may be
made payable to the order of any person in an amount of $500 or more.
When a check is presented to the Transfer Agent for payment, the Transfer
Agent, as the investor's agent, will cause the Fund to redeem a sufficient
number of full and fractional Class A shares in the investor's account to
cover the amount of the Check. Dividends are earned until the Check
clears. After clearance, a copy of the Check will be returned to the
investor. Investors generally will be subject to the same rules and
regulations that apply to checking accounts, although election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected through the Automated Clearing House ("ACH")
system unless more prompt transmittal specifically is requested.
Redemption proceeds will be on deposit in the investor's account at an ACH
member bank ordinarily two business days after receipt of the redemption
request. See "Purchase of Fund Shares--TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians and may accept other
suitable verification arrangements from foreign investors, such as
consular verification.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Series, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Series' net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in excess of
such amount, the Board of Trustees reserves the right to make payments in
whole or in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the Series to
the detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the Series' portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities
and Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services."
Exchange Privilege. Class A and Class B shares of the Fund may be
exchanged for shares of the respective Class of certain other funds
advised or administered by the Manager. Shares of the same Class of such
funds purchased by exchange will be purchased on the basis of relative net
asset value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales load
may be exchanged without a sales load for Class A shares of
other funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load, and additional Class A
shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein
as "Purchased Shares") may be exchanged for Class A shares of
other funds sold with a sales load (referred to herein as
"Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at
the time the Purchased Shares were acquired), without giving
effect to any reduced loads, the difference will be deducted.
D. Class B shares of any fund may be exchanged for Class B shares
of other funds without a sales load. Class B shares of any fund
exchanged for Class B shares of another fund will be subject to
the higher applicable contingent deferred sales charge ("CDSC")
of the two funds and, for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the
date the Class B shares being exchanged were initially
purchased.
To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's account number.
To use this Privilege, the investor's Service Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing, by wire or by telephone. Telephone exchanges may be made only if
the appropriate "YES" box has been checked on the Account Application or a
separate signed Optional Services Form is on file with the Transfer Agent.
By using this Privilege, the investor authorizes the Transfer Agent to act
on telephonic, telegraphic or written exchange instructions from any
person representing himself or herself to be the investor, or a
representative of the investor's Service Agent, and reasonably believed by
the Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for
telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment being required for the shares of the same class of the fund
into which the exchange is being made. For Dreyfus-sponsored Keogh Plans,
IRAs and Simplified Employee Pension Funds ("SEP-IRAs") with only one
participant, the minimum initial investment is $750. To exchange shares
held in Corporate Plans, 403(b)(7) Plans and SEP-IRAs with more than one
participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same class of the funds in the
Dreyfus Family of Funds. To exchange shares held in Personal Retirement
Plans, the shares exchanged must have a current value of at least $100.
Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for Class A or Class B shares of a
Series, shares of the same Class of one of the other Series or another
fund in the Premier Family of Funds or the Dreyfus Family of Funds. This
Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as described above
under "Exchange Privilege." Enrollment in or modification or cancellation
of this Privilege is effective three business days following notification
by the investor. An investor will be notified if his account falls below
the amount designated to be exchanged under this Privilege. In this case,
an investor's account will fall to zero unless additional investments are
made in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are
eligible for this Privilege. Exchanges of IRA shares may be made between
IRA accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
The Exchange Privilege and Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Optional Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege or Auto-Exchange
Privilege may be modified or terminated at any time upon notice to
shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. An Automatic Withdrawal Plan may be
established by completing the appropriate application available from the
Distributor. There is a service charge of $.50 for each withdrawal check.
Automatic Withdrawal may be terminated at any time by the investor, the
Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan. Class B
shares withdrawn pursuant to the Automatic Withdrawal Plan will be subject
to any applicable CDSC.
Dividend Sweep Privilege. The Dividend Sweep Privilege allows
investors to invest on the payment date their dividends or dividends and
capital gain distributions, if any, from the Fund in shares of the same
Class of another fund in the Premier Family of Funds or the Dreyfus Family
of Funds of which the investor is a shareholder. Shares of the same Class
of other funds purchased pursuant to this Privilege will be purchased on
the basis of relative net asset value per share as follows:
A. Dividends and distributions paid with respect to Class A shares
by a fund may be invested without imposition of a sales load in
Class A shares of other funds that are offered without a sales
load.
B. Dividends and distributions paid with respect to Class A shares
by a fund which does not charge a sales load may be invested in
Class A shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and distributions paid with respect to Class A shares
by a fund which charges a sales load may be invested in Class A
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or distributions are
being swept, without giving effect to any reduced loads, the
difference will be deducted.
D. Dividends and distributions paid with respect to Class B shares
by a fund may be invested without imposition of any applicable
CDSC in Class B shares of other funds and the Class B shares of
such other funds will be subject on redemption to any applicable
CDSC.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Each Series' investments are
valued each business day by an independent pricing service (the "Service")
approved by the Board of Trustees. When, in the judgment of the Service,
quoted bid prices for investments are readily available and are
representative of the bid side of the market, these investments are valued
at the mean between the quoted bid prices (as obtained by the Service from
dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other
investments (which constitute a majority of the portfolio securities) are
carried at fair value as determined by the Service, based on methods which
include consideration of: yields or prices of municipal bonds of
comparable quality, coupon, maturity and type; indications as to values
from dealers; and general market conditions. The Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. The Service's procedures are reviewed by the Fund's officers
under the general supervision of the Board of Trustees. Expenses and
fees, including the management fee (reduced by the expense limitation, if
any) and fees pursuant to the Shareholder Services Plan, with respect to
the Class A and Class B shares, and fees pursuant to the Distribution
Plan, with respect to the Class B shares only, are accrued daily and are
taken into account for the purpose of determining the net asset value of
the relevant Class of each Series' shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value
of each Class will differ.
Subject to guidelines established by the Fund's Board of Trustees,
the Manager intends to retain in the Fund's portfolio Municipal
Obligations which are insured under the Mutual Fund Insurance policy and
which are in default or in significant risk of default in the payment of
principal or interest until the default has been cured or the principal
and interest are paid by the issuer or the insurer. In establishing fair
value for these securities the Board of Trustees will give recognition to
the value of the insurance feature as well as the market value of the
securities. Absent any unusual or unforeseen circumstances, the Manager
will recommend valuing these securities at the same price as similar
securities of a minimum investment grade (i.e., rated Baa by Moody's or
BBB by S&P or Fitch).
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
It is expected that each Series will qualify as a "regulated
investment company" under the Code, so long as such qualification is in
the best interests of its shareholders. As a regulated investment
company, a Series will pay no Federal income tax on net investment income
and net realized capital gains to the extent that such income and gains
are distributed to shareholders in accordance with applicable provisions
of the Code. To qualify as a regulated investment company, a Series must
pay out to its shareholders at least 90% of its net income (consisting of
net investment income from tax exempt obligations and taxable obligations,
if any, and net short-term capital gains), must derive less than 30% of
its annual gross income from gain on the sale of securities held for less
than three months, and must meet certain asset diversification and other
requirements. Accordingly, a Series may be restricted in the selling of
securities held for less than three months, and in the utilization of
certain of the investment techniques described in the Prospectus under
"Description of the Fund--Investment Techniques." The Code, however,
allows a Series to net certain offsetting positions making it easier for a
Series to satisfy the 30% test. The term "regulated investment company"
does not imply the supervision of management or investment practices or
policies by any government agency.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a distribution would be a return
on the investment in an economic sense although taxable as stated in
"Dividends, Distributions and Taxes" in the Prospectus. In addition, the
Code provides that if a shareholder has not held his Fund shares for more
than six months (or such shorter period as the Internal Revenue Service
may prescribe by regulation) and has received an exempt-interest dividend
with respect to such shares, any loss incurred on the sale of such shares
will be disallowed to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of the
gain realized from the disposition of market discount bonds will be
treated as ordinary income under Section 1276 of the Code. In addition,
all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258.
"Conversion transactions" are defined to include certain forward, futures,
option and "straddle" transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations
to be issued in the future.
Under Section 1256 of the Code, gain or loss a Series realizes from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures and options
as well as from closing transactions. In addition, such futures and
options remaining unexercised at the end of a Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to a Series characterized in the manner described above.
Offsetting positions held by a Series involving financial futures and
options transactions may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is
governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, overrides or modifies the provisions of Section 1256. As
such, all or a portion of any short or long-term capital gain from certain
"straddle" or conversion transactions may be recharacterized to ordinary
income.
If a Series were treated as entering into "straddles" by reason of
its engaging in certain futures or options transactions, such "straddles"
would be characterized as "mixed straddles" if the futures or options
transactions comprising a part of such "straddles" were governed by
Section 1256 of the Code. A Series may make one or more elections with
respect to "mixed straddles." Depending on which election is made, if
any, the results to a Series may differ. If no election is made to the
extent the "straddle" and conversion transaction rules apply to positions
established by the Fund, losses realized by a Series will be deferred to
the extent of unrealized gain in the offsetting position. Moreover, as a
result of the "straddle" rules, short-term capital losses on "straddle"
positions may be recharacterized as long-term capital losses, and
long-term capital gains may be treated as short-term capital gains or
ordinary income.
Investment by the Series in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, a
Series could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, a Series may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which
it appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked
price. No brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's
Investment Officers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to
supplement its own research and analysis with the views and information of
other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
The California Series' current yield for the 30-day period ended
December 31, 1993 for Class A was 5.32% and for Class B was 5.02%. The
yield for each Class reflects the current absorption of certain Series
expenses by the Manager, without which the Series' 30-day yield for the
period ended December 31, 1993 would have been 3.89% for Class A and 3.52%
for Class B. See "Management of the Fund" in the Prospectus. Current
yield is computed pursuant to a formula which operates as follows: The
amount of each Series' expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and
interest earned computed in accordance with regulatory requirements by the
Series during the period. That result is then divided by the product of:
(a) the average daily number of shares outstanding during the period that
were entitled to receive dividends, and (b) the maximum offering price per
share in the case of Class A or the net asset value per share in the case
of Class B on the last day of the period less any undistributed earned
income per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to
the 6th power, after which 1 is subtracted. The current yield is then
arrived at by multiplying the result by 2.
Based upon a combined 1993 Federal and California income tax rate of
46.24%, the California Series' tax equivalent yield for the 30-day period
ended December 31, 1993 for Class A was 9.90% and for Class B was 9.34%.
Absent the expense absorption and/or fee waiver then in effect, the 30-day
tax equivalent yield for Class A would have been 7.24% and for Class B
would have been 6.55%. Tax equivalent yield is computed by dividing that
portion of the current yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that
portion, if any, of the yield of the Series that is not tax exempt.
The tax equivalent yield quoted above represents the application of
the highest Federal and State of California marginal personal income tax
rates presently in effect. For Federal personal income tax purposes, a
39.6% tax rate has been used. For California personal income tax
purposes, an 11% tax rate has been used. The tax equivalent figure,
however, does not include the potential effect of any local (including,
but not limited to, county, district or city) taxes, including applicable
surcharges. In addition, there may be pending legislation which could
affect such stated tax rates or yield. Each investor should consult its
tax adviser, and consider its own factual circumstances and applicable tax
laws, in order to ascertain the relevant tax equivalent yield.
The California Series' average annual total return for the .370 year
period ended December 31, 1993 for Class A was -1.85%. The average annual
total return for the .370 year period ended December 31, 1993 for Class B
was 2.37%. Average annual total return is calculated by determining the
ending redeemable value of an investment purchased with a hypothetical
$1,000 payment made at the beginning of the period (assuming the
reinvestment of dividends and distributions), dividing by the amount of
the initial investment, taking the "n"th root of the quotient (where "n"
is the number of years in the period) and subtracting 1 from the result.
A Class's average annual total return figures calculated in accordance
with such formula assume that in the case of Class A the maximum sales
load had been deducted from the hypothetical initial investment at the
time of purchase or in the case of Class B the maximum applicable CDSC has
been paid upon redemption at the end of the period.
The California Series' total return for the period August 19, 1993
(commencement of operations), 1993 through December 31, 1993 for Class A
was -.69%. Based on net asset value per share, the total return for Class
A of the Series was 3.99% for this period. The total return for the
period August 19, 1993 (commencement of operations) through December 31,
1993 for Class B was .87%. Without giving effect to the applicable CDSC,
the total return for Class B of the Series was 3.87% for this period.
Total return is calculated by subtracting the amount of the Series'
maximum offering price per share in the case of Class A or the net asset
value per share in the case of Class B at the beginning of a stated period
from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the
period and, in the case of Class B, any applicable contingent deferred
sales charge), and dividing the result by the maximum offering price per
share in the case of Class A or the net asset value per share in the case
of Class B at the beginning of the period. Total return also may be
calculated based on net asset value per share at the beginning of the
period instead of the maximum offering price per share at the beginning of
the period for Class A shares or without giving effect to any applicable
CDSC at the end of the period for Class B shares. In such cases, the
calculation would not reflect the deduction of the sales load with respect
to Class A shares or any applicable CDSC with respect to Class B shares,
which, if reflected, would reduce the performance quoted.
From time to time, the Fund may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not indicative of the
Fund's past or future performance. From time to time, advertising
materials for the Fund also may refer to Morningstar ratings and related
analysis supporting such ratings.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to or arising from actual or proposed tax
legislation, and statistical or other information concerning trends
relating to investment companies, as compiled by industry associations
such as the Investment Company Institute.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series' shares have no preemptive or subscription rights
and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
The Manager's legislative efforts led to the 1976 Congressional
amendment to the Code permitting an incorporated mutual fund to pass
through tax exempt income to its shareholders. The Manager offered to the
public the first incorporated tax exempt fund and currently manages or
administers over $28 billion in tax exempt assets.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of beneficial interest being sold pursuant to the Fund's
Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS - INVESTING
IN STATE MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does
not purport to be a complete description, and is based on information
drawn from official statements relating to securities offerings of the
relevant State and various local agencies, available as of the date of
this Statement of Additional Information. While the Fund has not
independently verified such information, it has no reason to believe that
such information is not correct in all material respects.
California Series . . . . . . . . . . . . . . . . . . B-29
Connecticut Series. . . . . . . . . . . . . . . . . . B-42
Florida Series. . . . . . . . . . . . . . . . . . . . B-45
New Jersey Series . . . . . . . . . . . . . . . . . . B-49
New York Series . . . . . . . . . . . . . . . . . . . B-50
California Series
Recent Developments. Since the start of California's 1990-91
fiscal year, the State has faced the worst economic, fiscal and budget
conditions since the 1930s. Construction, manufacturing (especially
aerospace), exports and financial services, among others, have all been
severely affected. Job losses have been the worst of any post-war
recession. Unemployment reached 10% in November 1992 and is expected to
remain above 9% through 1993 and 1994. According to the State's
Department of Finance, recovery from the recession in California is not
expected in meaningful terms until late 1993 or 1994, notwithstanding
signs of recovery elsewhere in the nation.
The recession has seriously affected State tax revenues, which
basically mirror economic conditions. It has also caused increased
expenditures for health and welfare programs. The State has also been
facing a structural imbalance in its budget with the largest programs
supported by the General Fund--K-12 schools and community colleges, health
and welfare, and corrections--growing at rates higher than the growth
rates for the principal revenue sources of the General Fund. As a result,
the State has experienced recurring budget deficits. The Controller
reports that expenditures exceeded revenues for four of the five fiscal
years ending with 1991-92. Revenues and expenditures were essentially
equal in 1992-93, but the original budget for that year projected revenues
exceeding expenditures by $2.6 billion. By June 30, 1993, according to
the Department of Finance, the State's Reserve for Economic Uncertainties
had a deficit, on a budget basis, of approximately $2.8 billion.
A further consequence of the large budget imbalances over the
last three fiscal years has been that the State depleted its available
cash resources and has had to use a series of external borrowings to meet
its cash needs.
The 1993-94 Budget Act is projected to have $40.6 billion of
General Fund revenues and transfers and $38.5 billion of budgeted
expenditures.
As a result of the deterioration in the State's budget and cash
situation in fiscal years 1991-92 and 1992-93, the rating agencies reduced
the State's credit ratings. Between October 1991 and October 1992 the
rating on the State's general obligation bonds was reduced by S&P from
"AAA" to "A+" and by Moody's from "Aaa" to "Aa."
State Finances. State moneys are segregated into the General
Fund and approximately 400 Special Funds. The General Fund consists of
the revenues received into the State Treasury and earnings from State
investments, which are not required by law to be credited to any other
fund. The General Fund is the principal operating fund for the majority
of governmental activities and is the depository of most major State
revenue sources.
The Special Fund for Economic Uncertainties is funded with
General Fund revenues and was established to protect the State from
unforeseen reduced levels of revenues and/or unanticipated expenditure
increases. Amounts in the Special Fund for Economic Uncertainties may be
transferred by the Controller as necessary to meet cash needs of the
General Fund. The Controller is required to return moneys so transferred
without payment of interest as soon as there are sufficient moneys in the
General Fund. For budgeting and accounting purposes, any appropriation
made from the Special Fund for Economic Uncertainties is deemed an
appropriation from the General Fund. For year-end reporting purposes, the
Controller is required to add the balance in the Special Fund for Economic
Uncertainties to the balance in the General Fund so as to show the total
monies then available for General Fund purposes.
Inter-fund borrowing has been used for many years to meet
temporary imbalances of receipts and disbursements in the General Fund.
As of June 30, 1993, there were outstanding loans in the aggregate
principal amount of $43 million to the General Fund from the Special Fund
for Economic Uncertainties and outstanding loans in the aggregate
principal amount of $3.016 billion to the General Fund from the Special
Funds. On June 30, 1993, the General Fund also had been supplemented with
the proceeds of the sale of $2.0 billion of revenue anticipation warrants
on June 23, 1993.
Articles XIIIA and XIIIB to the State Constitution and Other
Revenue Law Changes. Prior to 1977, revenues of the State government
experienced significant growth primarily as a result of inflation and
continuous expansion of the tax base of the State. In 1978, State voters
approved an amendment to the State Constitution known as Proposition 13,
which added Article XIIIA to the State Constitution, reducing ad valorem
local property taxes by more than 50%. In addition, Article XIIIA
provides that additional taxes may be levied by cities, counties and
special districts only upon approval of not less than a two-thirds vote of
the "qualified electors" of such district, and requires not less than a
two-thirds vote of each of the two houses of the State Legislature to
enact any changes in State taxes for the purpose of increasing revenues,
whether by increased rate or changes in methods of computation.
Primarily as a result of the reductions in local property tax
revenues received by local governments following the passage of
Proposition 13, the Legislature undertook to provide assistance to such
governments by substantially increasing expenditures from the General Fund
for that purpose beginning in the 1978-79 fiscal year. In recent years,
in addition to such increased expenditures, the indexing of personal
income tax rates (to adjust such rates for the effects of inflation), the
elimination of certain inheritance and gift taxes and the increase of
exemption levels for certain other such taxes had a moderating impact on
the growth in State revenues. In addition, the State has increased
expenditures by providing a variety of tax credits, including renters' and
senior citizens' credits and energy credits.
The State is subject to an annual "appropriations limit" imposed
by Article XIIIB of the State Constitution adopted in 1979. Article XIIIB
prohibits the State from spending "appropriations subject to limitation"
in excess of the appropriations limit imposed. "Appropriations subject to
limitations" are authorizations to spend "proceeds of taxes," which
consist of tax revenues, and certain other funds, including proceeds from
regulatory licenses, user charges or other fees to the extent that such
proceeds exceed "the cost reasonably borne by such entity in providing the
regulation, product or service." One of the exclusions from these
limitations is "debt service" (defined as "appropriations required to pay
the cost of interest and redemption charges, including the funding of any
reserve or sinking fund required in connection therewith, on indebtedness
existing or legally authorized as of January 1, 1979 or on bonded
indebtedness thereafter approved" by the voters). In addition,
appropriations required to comply with mandates of courts or the Federal
government and, pursuant to Proposition 111 enacted in June 1990,
appropriations for qualified capital outlay projects and appropriations of
revenues derived from any increase in gasoline taxes and motor vehicle
weight fees above January 1, 1990 levels are not included as
appropriations subject to limitation. In addition, a number of recent
initiatives were structured or proposed to create new tax revenues
dedicated to certain specific uses, with such new taxes expressly exempted
from the Article XIIIB limits (e.g., increased cigarette and tobacco taxes
enacted by Proposition 99 in 1988). The appropriations limit also may be
exceeded in cases of emergency. However, unless the emergency arises from
civil disturbance or natural disaster declared by the Governor, and the
appropriations are approved by two-thirds of the Legislature, the
appropriations limit for the next three years must be reduced by the
amount of the excess.
The State's appropriations limit in each year is based on the
limit for the prior year, adjusted annually for changes in California per
capita personal income and changes in population, and adjusted, when
applicable, for any transfer of financial responsibility of providing
services to or from another unit of government. The measurement of change
in population is a blended average of statewide overall population growth,
and change in attendance at local school and community college ("K-14")
districts. As amended by Proposition 111, the appropriations limit is
tested over consecutive two-year periods. Any excess of the aggregate
"proceeds of taxes" received over such two-year periods above the combined
appropriations limits for those two years is divided equally between
transfers to K-14 districts and refunds to taxpayers.
As originally enacted in 1979, the State's appropriations limit
was based on its 1978-79 fiscal year authorizations to expend proceeds of
taxes and was adjusted annually to reflect changes in cost of living and
population (using different definitions, which were modified by
Proposition 111). Commencing with the 1991-92 fiscal year, the State's
appropriations limit is adjusted annually based on the actual 1986-87
limit, and as if Proposition 111 had been in effect. The State
Legislature has enacted legislation to implement Article XIIIB which
defines certain terms used in Article XIIIB and sets forth the methods for
determining the State's appropriations limit. Government Code Section
7912 requires an estimate of the State's appropriations limit to be
included in the Governor's Budget, and thereafter to be subject to the
budget process and established in the Budget Act.
For the 1990-91 fiscal year, the State appropriations limit was
$32.7 billion, and appropriations subject to limitation were $7.51 billion
under the limit. The limit for the 1991-92 fiscal year was $34.2 billion,
and appropriations subject to limitations were $3.8 billion under the
limit. The limit for the 1992-93 fiscal year was $35.01 billion, and the
appropriations subject to limitation were $4.27 billion under the limit.
The estimated limit for the 1993-94 fiscal year is $36.6 billion, and the
estimated appropriations subject to limitation are $3.44 billion under the
limit.
In November 1988, State voters approved Proposition 98, which
changed State funding of public education below the university level and
the operation of the State's appropriations limit, primarily by
guaranteeing K-14 schools a minimum share of General Fund revenues. Under
Proposition 98 (as modified by Proposition 111, which was enacted in June
1990), K-14 schools are guaranteed the greater of (a) 40.3% of General
Fund revenues ("Test 1"), (b) the amount appropriated to K-14 schools in
the prior year, adjusted for changes in the cost of living (measured as in
Article XIIIB by reference to California per capita personal income) and
enrollment ("Test 2"), or (c) a third test, which would replace the second
test in any year when the percentage growth in per capita General Fund
revenues from the prior year plus .5% is less than the percentage growth
in California per capita personal income ("Test 3"). Under "Test 3,"
schools would receive the amount appropriated in the prior year adjusted
for changes in enrollment and per capita General Fund revenues, plus an
additional small adjustment factor. If "Test 3" is used in any year, the
difference between "Test 3" and "Test 2" would become a "credit" to
schools which would be the basis of payments in future years when per
capita General Fund revenue growth exceeds per capita personal income
growth.
Proposition 98 permits the Legislature by two-thirds vote of
both houses, with the Governor's concurrence, to suspend the K-14 schools'
minimum funding formula for a one-year period. In the fall of 1989, the
Legislature and the Governor utilized this provision to avoid having 40.3%
of revenues generated by a special supplemental sales tax enacted for
earthquake relief go to K-14 schools. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the
Article XIIIB limit to K-14 schools.
The 1991-92 Budget Act, applying "Test 2" of Proposition 98,
appropriated approximately $18.5 billion for K-14 schools pursuant to
Proposition 98. During the course of the fiscal year, revenues proved to
be substantially below expectations. By the time the Governor's Budget
was introduced in January 1992, it became clear that per capita growth in
General Fund revenues for 1991-92 would be smaller than the growth in
California per capita personal income and the Governor's Budget therefore
reflected a reduction in Proposition 98 funding in 1991-92 by applying
"Test 3" rather than "Test 2."
In response to the changing revenue situation and to fully fund
the Proposition 98 guarantee in both the 1991-92 and 1992-93 fiscal years
without exceeding it, the Legislature enacted several bills as part of the
1992-93 budget package which responded to the fiscal crisis in education
funding. Fiscal year 1991-92 Proposition 98 appropriations for K-14
schools were reduced by $1.083 billion. In order to not adversely impact
cash received by school districts, however, a short-term loan was
appropriated from the non-Proposition 98 State General Fund. The
Legislature then appropriated $16.6 billion to K-14 schools for 1992-93
(the minimum guaranteed by Proposition 98), but designated $1.083 billion
of this amount to "repay" the prior year loan, thereby reducing cash
outlays in 1992-93 by that amount. In addition to reducing the 1991-92
fiscal year appropriations for K-14 schools by $1.083 billion and
converting that amount to a loan (the "inter-year adjustment"), Chapter
703, Statutes of 1992 also made an adjustment to "Test 1," based on the
additional $1.2 billion of local property taxes that were shifted to
schools and community colleges. The "Test 1" percentage changed from 40%
to 37%. Additionally, Chapter 703 contained a provision that if an
appellate court should determine that the "Test 1" recalculation or the
inter-year adjustment is unconstitutional, unenforceable or invalid,
Proposition 98 would be suspended for the 1992-93 fiscal year, with the
result that K-14 schools would receive the amount intended by the 1992-93
Budget Act compromise.
The State Controller stated in october 1992 that, because of a
drafting error in Chapter 703, he could not implement the $1.083 billion
reduction of the 1991-92 school funding appropriation, which was part of
the inter-year adjustment. The Legislature ultimately enacted corrective
legislation as part of the 1993-94 Budget package to implement the $1.083
billion inter-year adjustment as originally intended.
On October 29, 1992, because of a special statute of limitations
contained in Chapter 703, litigation was commenced concerning that law.
The Governor filed a civil action to, in effect, enforce the inter-year
adjustment. A second civil action was filed by a teachers' organization,
the Superintendent of Public Instruction and others to declare the inter-
year adjustment and the provision for conditional suspension of
Proposition 98 to be unlawful. A third civil action was filed by
business, local government and taxpayer organizations seeking to enforce
the budget plan for school financing as originally intended in Chapter
703. The first two actions are set for hearing in September 1993. The
effect of the corrective legislation on these actions has not been
determined.
In the 1992-93 Budget Act, a new loan of $732 million was made
to K-12 schools in order to maintain per-average daily attendance ("ADA")
funding at the same level as 1991-92, at $4,187. An additional loan of
$241 million was made to community college districts. These loans are to
be repaid from future Proposition 98 entitlements. (The teachers'
organization lawsuit discussed above also seeks to declare invalid the
provision making the $732 million a loan "repayable" from future years'
Proposition 98 funds). Including both State and local funds, and
adjusting for the loans and repayments, on a cash basis, total Proposition
98 K-12 funding in 1992-93 increased to $21.5 billion, 2.4% more than the
amount in 1992-93 ($21.0 billion).
Based on revised State tax revenues and estimated decreased
reported pupil enrollment, the 1993-94 Budget Act projects that the 1992-
93 Proposition 98 Budget Act appropriations of $16.6 billion exceed a
revised minimum guarantee by $313 million. As a result, the 1993-94
Budget Act reverts $25 million in 1992-93 appropriations to the General
Fund. Limiting the reversion to this amount ensures that per ADA funding
for general purposes will remain at the prior year level. The 1993-94
Budget Act also designates $98 million in 1992-93 appropriations toward
satisfying prior years' guarantee levels, an obligation that resulted
primarily from updating State tax revenues for 1991-92, and designates
$190 million as a loan repayable from 1993-94 funding.
The 1993-94 Budget Act projects the Proposition 98 minimum
funding level at $13.5 billion based on the "Test 3" calculation where the
guarantee is determined by the change in per capita growth in General Fund
revenues, which are projected to decrease on a year-over-year basis. This
amount also takes into account increased property taxes transferred to
school districts from other local governments.
Legislation accompanying the 1993-94 Budget Act (Chapter 66/93)
provides a new loan of $609 million to K-12 schools in order to maintain
per ADA funding at $4,187 and a loan of $178 million to community
colleges. These loans have been combined with the K-14 1992-93 loans into
one loan totalling $1.760 billion. Repayment of this loan would be from
future years' Proposition 98 entitlements, and would be conditioned on
maintaining current funding levels per pupil for K-12 schools. Chapter
66/93 also reduced the "Test 1" percentage to 33% to reflect the property
tax shift among local government agencies.
Sources of Tax Revenue. The California personal income tax,
which in 1991-92 contributed about 42% of General Fund revenues, is
closely modeled after the Federal income tax law. It is imposed on net
taxable income (gross income less exclusions and deductions). The tax is
progressive with rates ranging from 1% to 11%. Personal, dependent, and
other credits are allowed against the gross tax liability. In addition,
taxpayers may be subject to an alternative minimum tax (AMT) which is much
like the Federal AMT. This is designed to ensure that excessive use of
tax preferences does not reduce taxpayers' liabilities below some minimum
level. Legislation enacted in July 1991 added two new marginal tax rates,
at 10% and 11%, effective for tax years 1991 through 1995. After 1995,
the maximum personal income tax rate is scheduled to return to 9.3%, and
the AMT rate is scheduled to drop from 8.5% to 7%.
The personal income tax is adjusted annually by the change in
the consumer price index to prevent taxpayers from being pushed into
higher tax brackets without a real increase in income.
The sales tax is imposed upon retailers for the privilege of
selling tangible personal property in California. Most retail sales and
leases are subject to the tax. However, exemptions have been provided for
certain essentials such as food for home consumption, prescription drugs,
gas, electricity and water. Sales tax accounted for about 39% of General
Fund revenue in 1991-92. Bank and corporation tax revenues comprised
about 11% of General Fund revenue in 1991-92. In 1989, Proposition 99
added a 25 cents per pack excise tax on cigarettes, and a new equivalent
excise tax on other tobacco products.
General Financial Condition of the State. Revenues in the most
recent fiscal years have been unusually difficult to forecast with a high
degree of accuracy due in major part to the volatility in the personal
income tax. The 1986-87 through 1989-90 fiscal years were affected by
both the Federal Tax Reform Act of 1986 and subsequent conforming State
legislation. The difficulty with recent forecasts has occurred because
taxpayers have changed their behavior as a result of these events.
Capital gains are now fully taxed. This revenue component is subject to
taxpayer discretion and is very sensitive to change in tax law, market
conditions and individual circumstances. Capital gains have always been a
volatile item and since it is contributing a greater percentage of total
revenue, it makes these collections subject to greater variance.
Primarily because of changes to the Federal and State tax
statutes, revenues for the fiscal year 1987-88 were approximately $1.1
billion less than originally estimated. This shortfall in revenues was
made up through the application of approximately $900 million from the
Special Fund for Economic Uncertainties and a variety of expenditure
reduction actions initiated by the Governor. As a result, the Special
Fund for Economic Uncertainties was substantially depleted by June 30,
1988.
The State entered the 1988-89 fiscal year with essentially no
budget reserve. The 1988-89 Budget Act called for significant spending
cuts to balance expected revenues and expenditures and to provide an
estimated balance of approximately $600 million in the Special Fund for
Economic Uncertainties at year-end.
Revenues for the 1989-90 fiscal year were approximately $517.7
million less than presented in the Governor's Budget in January 1990 and
$1.021 billion less than estimated in July 1989, primarily owing to lower
than estimated receipts from individual and corporate taxes. The
shortfall in revenues was made up through the transfer of moneys from the
Special Fund for Economic Uncertainties and a variety of expenditure
reduction actions initiated by the Administration. As a result, the
Special Fund for Economic Uncertainties was fully depleted by June 30,
1990.
The California State Controller reported that the State's
General Fund ended the 1990-91 fiscal year with a negative budgetary basis
balance of $1.316 billion. In order to pay necessary cash expenses
through June 1991, including payment of $4.1 billion of 1990 Revenue
Anticipation Notes which were due June 28, 1991, the General Fund borrowed
$1.390 billion from the Special Fund for Economic Uncertainties and $3.266
billion from other Special Funds as of the end of the fiscal year. Data
on General Fund revenues for the 1990-91 fiscal year show that revenues in
all major categories (except insurance taxes) were lower than receipts in
1989-90, the first time this has happened on a year-over-year basis since
the 1930s.
The Governor's 1991-92 Budget originally projected a $7 billion
gap between revenues and program needs (including restoration of a budget
reserve) through June 30, 1992. However, as revenues remained depressed
in early 1991, the estimate of the budget gap eventually increased to
$14.3 billion. The legislature passed the 1991-92 Budget Bill on June 22,
1991, but it was not signed by the Governor until July 16, 1991, as the
balancing of the budget required enactment of dozens of additional bills
to raise revenues and change programs and laws. The 1991-92 Budget Act
projected General Fund expenditures of $43.4 billion and Special Fund
expenditures of $10.6 billion. The Department of Finance estimated that
there would be a balance in the Special Fund for Economic Uncertainty on
June 30, 1992 of $1.2 billion.
The $14.3 billion estimated budget gap between revenues over the
two fiscal years 1990-91 and 1991-92 and estimated program needs based on
existing laws, including restoration of a prudent reserve for economic
uncertainties, were addressed through a combination of temporary and
permanent changes in laws and some one-time budget adjustments. The major
features of the budget solutions are summarized as follows:
1. Program funding reductions totaling $5.1 billion.
2. Increased State revenues of $5.1 billion through increased
taxes, conformity with federal tax laws, deferral of certain corporate tax
deductions, closing of tax loopholes and acceleration of tax collections.
3. Savings of $2.1 billion by returning certain health and
welfare programs to counties to be funded by increased taxes to be given
directly to counties.
4. Additional miscellaneous savings and revenue gains totaling
$1.1 billion.
5. A one-time net increase in resources totaling $900 million
from a change in the accounting treatment for sales taxes and the Medi-Cal
program to a full accrual basis.
The 1992-93 Governor's Budget proposed expenditures of $56.3
billion in the General and Special Funds for the 1992-93 fiscal year, a
1.6% increase over corresponding figures for the 1991-92 fiscal year.
General Fund expenditures were projected at $43.8 billion, an increase of
0.2% over the 1991-92 Revised Governor's Budget. The Budget estimated
$45.7 billion of revenues and transfers for the General Fund (a 4.7%
change over 1991-92) and $12.4 billion for Special Funds (a 9.6% change
over 1991-92). To balance the proposed budget, program reductions
totaling $4.365 billion and revenue and transfer increases of $872 million
were proposed for the 1991-92 and 1992-93 fiscal years. The 1992-93
Governor's Budget eliminated the deficit from 1991-92 and estimated $105.4
million as a year-end balance in the Special Fund for Economic
Uncertainties, representing approximately 0.2% of General Fund
expenditures.
In early 1992, the Director of Finance acknowledged that actual
economic conditions were worse than the projections in the Governor's
Budget. Because the State had accumulated a significant budget deficit
over two consecutive years, and the continuing recession depressed revenue
estimates for the coming year, the State faced a major challenge to enact
a balanced budget. The State also began the 1992-93 fiscal year with
essentially no cash reserves. By June 1992, it was estimated that
approximately $7.9 billion of budget actions would be required to end the
1992-93 fiscal year without a budget deficit. The severity of the budget
actions needed led to a long delay in adopting the budget.
With the failure to enact a budget by July 1, 1992, the State
had no legal authority to pay many of its vendors until the budget was
passed. Starting on July 1, 1992, the Controller was required to issued
"registered warrants" in lieu of normal warrants backed by cash to pay
many State obligations. Available cash was used to pay constitutionally
mandated and priority obligations, such as debt service on bonds and
revenue anticipation warrants. Between July 1 and September 4, 1992, the
Controller issued an aggregate of approximately $3.8 billion of registered
warrants payable from the General Fund, all of which were called for
redemption by September 4, 1992 following enactment of the 1992-93 Budget
Act and issuance by the State of $3.3 billion of interim notes.
The Legislature enacted the 1992-93 Budget Bill on August 29,
1992, and it was signed by the Governor on September 2, 1992. The 1992-93
Budget Act provides for expenditures of $57.4 billion and consists of
General Fund expenditures of $40.8 billion and Special Fund and Bond Fund
expenditures of $16.6 billion. The Department of Finance estimates there
will be a balance in the Special Fund for Economic Uncertainties of $28
million on June 30, 1993.
The $7.9 billion budget gap was closed through a combination of
increased revenues and transfers and expenditure cuts such as:
1. General Fund savings in health and welfare programs
totalling $1.6 billion.
2. General Fund reductions of $1.9 billion for K-12 schools
and community colleges. This was accomplished by requiring
schools to repay $1.1 billion in excess appropriations from
1991-92.
3. Redirecting property taxes from cities ($200 million) and
counties ($525 million) to schools. These shifts are
permanent and will reduce the State General Funds
obligation for schools. The State will also redirect
property taxes from special districts ($375 million) and
redevelopment agencies ($200 million) to schools. The
shift from redevelopment agencies is a one-time shift.
4. Program cuts for higher education totalling $415 million
($246 million for the University of California, $143
million for California State University, and $26 million
Student Aid Commission). These reductions are partially
offset by $141 million in increased student fees.
5. A total of $1.6 billion of transfers and accelerated
collections of State revenues by conforming State schedules
for estimated payments for personal income and bank and
corporate taxes with federal schedules ($105 million),
accelerating settlement of outstanding tax disputes ($300
million), reaching an agreement with the Federal government
to repay federal contractors over a ten-year period
beginning in 1992-93, rather than making a lump sum payment
in 1992-93 ($580 million), accelerating liquidation of
unclaimed properties through the sale of all unclaimed
securities received prior to July 1, 1992, rather than
maintaining them for three years ($70 million), transfers
from Special Funds ($423 million), and other miscellaneous
actions ($122 million).
6. Approximately $1.0 billion from various additional program
reductions.
In May 1993, the Department of Finance projected that the
General Fund would end the fiscal year on June 30, 1993 with an
accumulated budget deficit of about $2.8 billion, and a negative fund
balance of about $2.2 billion (the difference being certain reserves for
encumbrances and school funding costs). As a result, the State issued $5
billion of revenue anticipation notes and warrants.
The Governor's 1993-94 Budget, introduced on January 8, 1993,
proposed General Fund Expenditures of $37.3 billion, with projected
revenues of $39.9 billion. It also proposed Special Fund expenditures of
$12.4 billion and Special Fund revenues of $12.1 billion. The 1993-94
fiscal year represents the third consecutive year the Governor and the
Legislature were faced with a very difficult budget environment, requiring
revenue actions and expenditure cuts totalling multiple billions of
dollars to produce a balanced budget. To balance the budget in the face
of declining revenues, the Governor proposed a series of revenue shifts
from local government, reliance on increased Federal aid and reductions in
state spending.
The "May Revision" of the Governor's Budget, released on May 20,
1993, indicated that the revenue projections of the January Budget
Proposal were tracking well, with the full year 1992-93 about $80 million
higher than the January projection. Personal income tax revenue was
higher than projected, sales tax was close to target, and bank and
corporation taxes were lagging behind projections. The May Revision
projected the State would have an accumulated deficit of about $2.75
billion by June 30, 1993. The Governor proposed to eliminate this deficit
over an 18-month period. He also agreed to retain the 0.5% sales tax
scheduled to expire June 30 for a six-month period, dedicated to local
public safety purposes, with a November election to determine a permanent
extension. Unlike previous years, the Governor's Budget and May Revision
did not calculate a "gap" to be closed, but rather set forth revenue and
expenditure forecasts and proposals designed to produce a balance budget.
The 1993-94 Budget Act was signed by the Governor on June 30,
1993, along with implementing legislation. The Governor vetoed about $71
million in spending. With enactment of the Budget Act, the State is
proceeding with its regular cash flow borrowing program for the fiscal
year, which includes the issuance of approximately $2 billion of revenue
anticipation notes.
The 1993-94 Budget Act is predicated on General Fund revenues
and transfers estimated at $40.6 billion, about $700 million higher than
the January Governor's Budget, but still about $400 million below 1992-93
(and the second consecutive year of actual decline). The principal
reasons for declining revenues are the continued weak economy and the
expiration (or repeal) of three fiscal steps taken in 1991 -- a half cent
temporary sales tax, a deferral of operating loss carryforwards, and
repeal by initiative of a sales tax on candy and snack foods.
The 1993-94 Budget Act also assumes Special Fund revenues of
$11.9 billion, an increase of 2.9% over 1992-1993.
The 1993-94 Budget Act includes General Fund expenditures of
$38.5 billion (a 6.3% reduction from projected 1992-93 expenditures of
$41.1 billion), in order to keep a balanced budget within the available
revenues. The Budget also includes Special Fund expenditures of $12.1
billion, a 4.2% increase.
The 1993-94 Budget Act contains no General Fund tax/revenue
increases other than a two year suspension of the renters' tax credit.
The Administration continues to predict that population growth in the
1990s will keep upward pressure on major State programs, such as K-14
education, health and welfare and corrections, outstripping projected
revenue growth in an economy only very slowly emerging from a deep
recession.
The September 1993 Bulletin of the Department of Finance reports
that General Fund revenues in August, 1993 were $79 million, or about
2.6%, above updated May Revision estimates, but about $65 million of this
was apparently due to an administrative problem in refunds which will
appear next month. July and August 1993 combined revenues were $86
million or 1.7% above projections, with all three major tax sources
tracking projections well. August, 1993 sales tax receipts were 10.5%
above projections, offsetting weak results in June and July. The
Department of Finance continues to report, however, that economic activity
in the State remains sluggish. The Department of Finance also reports
that the State will only receive approximately $450 million in aid from
the Federal Government to offset the health and welfare costs associated
with foreign immigrants living in the State, substantially less than the
$692 million contemplated by the 1993-94 Budget Act.
A key feature of the 1993-94 Budget Act is a plan to retire the
accumulated $2.8 billion prior year budget deficit by December 31, 1994.
The 18 month plan contemplates the use of existing statutory authority to
borrow up to $2.8 billion externally. The 1993-94 Budget Act estimates
that about $1.6 billion of the deficit elimination loan would be repaid by
December 23, 1993 from a portion of the proceeds of the $2 billion Revenue
Anticipation Warrants issued on June 23, 1993. Legislation enacted with
the 1993-94 Budget Act (Chapter 63/93) directs the Controller to issue
$1.2 billion of registered reimbursement warrants in the 1993-94 fiscal
year, to mature in December 1994, to fund the balance of the accumulated
deficit. The law also creates in the State Treasury a Deficit Retirement
Fund. The Controller is directed to transfer from the General Fund to the
Deficit Retirement Fund the sum of $1.2 billion in two equal installments
on September 15, 1994 and December 15, 1994, which moneys will be used to
retire the warrants.
Recent Economic Trends. California is experiencing its deepest
recession since the 1930s. The State's tax revenue experience clearly
reflects sharp declines in employment, income and retail sales on a scale
not seen in over 50 years. However, economic signals remain mixed, and
recovery is still an expectation rather than a reality.
Nonfarm employment in April was essentially unchanged from the
December level. The unemployment rate appears to be moving down, although
the large April drop, from 9.4% to 8.6%, probably exaggerated the
improvement. Personal income growth is improving gradually, from gains of
2% or less in 1991 to slightly over 3% at the beginning of 1993. Taxable
sales are stabilizing after a lengthy decline.
There are still ample signs of weakness. Manufacturing
employment continues to decline, with deep losses in aerospace --
reflecting defense cuts and weak commercial markets. Despite strong
output and sales gains, electronics firms continue to cut payrolls. All
manufacturing industries, with the exception of apparel and textiles, are
posting employment losses. Housing, usually an engine of recovery,
remains in a slump. Permit volume has averaged a 95,000 unit annual rate
in recent months, actually somewhat below last year's 98,000 total.
Nonresidential construction continues to hit new recession lows,
reflecting oversupplied commercial office retail and hotel markets.
Employment continues to decline in such normally stable industries as
banking, the utilities and most segments of wholesale and retail trade.
Food, department and apparel stores are shedding jobs. Government
employment is down 30,000 over the past year.
The May Revision forecast expects this essentially flat pattern
of economic activity to persist throughout 1993, with employment by year
end only marginally higher than in April. Gains in service industries,
mainly health care, temporary agencies (in business services), motion
picture production and amusements were expected to continue.
The forecast predicted the State's economy to improve slowly in
1994 and 1995, but to continue to experience deep defense budget cuts,
overbuilt commercial real estate and high business and living costs,
especially compared to neighboring Western states. Nonfarm employment, on
an annual average basis, was forecast to decline by about 1/2% in 1993,
then increase by 1% in 1994 and a little over 2% in 1995. Personal income
growth was forecast at 3.7% in 1993, 4.7% in 1994 and 6% in 1995. The
California consumer price index was expected to average around a 3-1/2%
advance each year. Home construction was forecast to improve to 108,000
units in 1993, 145,000 in 1994 and nearly 170,000 by 1995.
The Department of Finance Bulletins for July, August, and
September, 1993 reported that California entered the fourth year of
recession in June, 1993 with few signs of any sustained turnaround in the
economy, which remains sluggish. In the year from August, 1992 to August,
1993 an estimated 173,000 more jobs had been lost, principally in
manufacturing. A small gain in nonfarm employment in July, 1993 was
offset by a larger loss of 22,000 jobs in August, 1993. Unemployment has
risen in the last few months to 9.0% in August. Changes in the rate have
been primarily due to changes in the labor force; actual jobs and job-
seekers declined in August, 1993. This was consistent with a report
issued by the Department of Finance indicating that California suffered a
net loss of 150,000 residents to other states in the last fiscal year;
overall population still grew due to births and foreign immigration. Both
residential and nonresidential real estate construction remained in a
sustained slump, and were, in May, 1993 both at or close to the lowest
levels since the start of the recession.
Finally, the Department of Finance noted that California would
be hit hard by the latest round of Federal military base closings and
force realignments, which will be implemented over the remaining years of
the decade. California was estimated to have 22% of the nation's defense
spending, but might suffer 25-30% of the defense spending cuts over the
next five years. The Department also estimates that the recent federal
Budget Reconciliation Act will have a disproportionate and negative impact
on California. California would suffer 19.5% of the outlay reductions,
which rely heavily on defense budget cuts, and the State, with many high
income taxpayers, will pay nearly 14.5% of the tax increases, compared to
12% of the nation's population.
Connecticut Series
Connecticut's economy is diverse, with manufacturing, services
and trade accounting for approximately 70% of total non-agricultural
employment. The State's manufacturing industry is diversified, but from
1970 to 1992 manufacturing employment declined 30.8%, while non-
manufacturing employment increased 60.8%, particularly in the service,
trade and finance categories, resulting in an increase of 27.0% in total
growth in non-agricultural sectors. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms.
In the past ten years, Connecticut ranked from sixth to eleventh among all
states in total defense contract awards, receiving 2.8% of all such
contracts in 1992. In recent years the Federal government has reduced the
amount of defense-related spending and the largest defense-related
employers in the State have announced substantial labor force reductions.
The effect of such future reductions on the Connecticut economy predicts
that the defense sector is not as promising as it once was.
Connecticut has a high level of personal income. According to
Bureau of Economic Analysis figures, personal income of State residents
for calendar year 1992 was $89.4 billion, a 4.6% increase over the
previous year. On a per capita basis, personal income in the State
increased 28.7% from 1987 to 1992 and 11.6% from 1989 to 1992, compared
with national increases of 27.8% and 12.9%, respectively. As of July
1993, the estimated rate of unemployment (on a seasonably adjusted basis)
in the State was 7.1%.
While the State's General Fund ended fiscal 1984-85, 1985-86 and
1986-87 with operating surpluses of approximately $365.5 million, $250.1
million and $365.2 million, respectively, the State recorded operating
deficits of $115.6 million, $28 million, $259.5 million and $808.5 million
for fiscal 1987-88, 1988-89, 1989-90 and 1990-91, respectively. Together
with the deficit carried forward from fiscal 1989-90, the total deficit
for the fiscal year 1990-91 was $965.7 million. The total deficit amount
was funded by the issuance of General Obligation Economic Recovery Notes.
The Comptroller's annual report for the fiscal year ended June 30, 1992
reflected a General Fund operating surplus of $110.2 million., which
surplus was used to retire $110.1 million of the State's Economic Recovery
Notes. The Comptroller's annual report for the fiscal year ended June 30,
1993 reflected a General Fund operating surplus of $113.5 million. The
unappropriated surplus in the General Fund is deemed to be appropriated
for debt service for the fiscal year ending June 30, 1994.
Since 1988, the Comptroller's annual report has reported results
on the basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. The
Comptroller's monthly report for the period ended August 31, 1993 stated
that on a GAAP basis the cumulative deficit was $484.3 million for fiscal
1993-94. The modified cash basis of accounting used for statutory
financial reporting and the modified accrual basis used for GAAP financial
reporting are different and, as a result, often produce varying financial
results, primarily because of differences in the recognition of revenues
and expenditures.
The budget adopted by the General Assembly for fiscal 1993-94
anticipates General Fund expenditures of $7.69 billion and General Fund
revenues of $7.695 billion. For fiscal 1994-95, the adopted budget
anticipates General Fund expenditures of $8.116 billion and General Fund
revenues of $8.117 billion.
On November 3, 1992, Connecticut voters approved a
constitutional amendment which requires a balanced budget for each year
and imposes a cap on the growth of expenditures. The General Assembly is
required by the constitutional amendment to adopt by three-fifths vote
certain spending cap definitions. The statutory spending cap limits the
growth of expenditures to either (1) the rolling five-year average annual
growth in personal income, or (2) the increase in the consumer price index
for urban consumers during the preceding twelve-month period, whichever is
greater. Expenditures for the payment of bonds, notes and other evidences
of indebtedness are excluded from the constitutional and statutory
definitions of general budget expenditures. To preclude shifting
expenditures out of the General Fund to other funds, the spending cap
applies to all appropriated funds combined. For fiscal 1993-94 and for
fiscal 1994-95, permitted growth in capped expenditures is 5.82% and
4.49%, respectively. The adopted Budget for fiscal 1993-94 and 1994-95 is
approximately $58 million and $24 million, respectively, below the
spending cap.
The State finances its operations primarily through the General
Fund. All tax and most non-tax revenues of the State, except for motor
fuels taxes and other transportation related taxes, fees and revenues, are
paid into, and substantially all expenditures pursuant to legislative
appropriations are made out of, the General Fund. The State derives
approximately 70% of its revenues from taxes. Miscellaneous fees,
receipts, transfers and Federal grants account for most of the other State
revenue. The sales and use taxes, the corporation business tax and the
recently enacted broad based personal income tax are the major revenue
raising taxes.
The State has no constitutional or other organic limit on its
power to issue obligations or incur indebtedness other than that it may
only borrow for public purposes. There are no reported court decisions
relating to State bonded indebtedness other than two cases validating the
legislative determination of the public purpose for improving employment
opportunities and related activities. The State Constitution has never
contained provisions requiring submission of the questions of incurring
indebtedness to a public referendum. Therefore, the authorization and
issuance of State debt, including the purpose, amount and nature thereof,
the method and manner of the incurrence of such debt, the maturity and
terms of repayment thereof, and other related matters are statutory.
The General Assembly has empowered, pursuant to bond acts in
effect, the State Bond Commission to authorize general obligation bonds in
the amount of $9,140,275,363. As of October 1, 1993, the State Bond
Commission had authorized $7,384,654,455 in such bonds and the balance of
$1,755,620,908 was available for authorization. From such total
authorizations of $7,384,654,455, bonds in the aggregate of
$6,355,937,637.22 have been issued and the balance of $1,028,716,817.78
remained authorized but unissued as of October 1, 1993.
The State has established a program of temporary note issuances
to cover periodic cash flow requirements. The maximum volume of cash flow
borrowing is determined based upon the State's actual cash needs on a
daily basis. The State, as of April 17, 1990, commenced a program
permitting the issuance of up to $539 million of General Obligation
Temporary Notes (the "April 1990 Program"). Under the April 1990 Program,
the State may issue notes during a five-year period concluding in April of
1995. Additionally, a separate $200 million temporary note program
commenced as of April 30, 1991 and concluded on October 31, 1991. There
are currently no notes outstanding under either program.
General obligation bonds issued by Connecticut municipalities
are payable primarily from ad valorem taxes on property subject to
taxation by the municipality. Certain Connecticut municipalities have
experienced severe fiscal difficulties and have reported operating and
accumulated deficits in recent years. The most notable of these is the
City of Bridgeport.
S&P, Moody's and Fitch rate Connecticut's municipal bonds AA-,
Aa and AA+, respectively.
Florida Series
General. The Florida Constitution and Statutes mandate that the
State budget as a whole, and each separate fund within the State budget,
be kept in balance from currently available revenues each fiscal year.
Florida's Constitution permits issuance of Florida Municipal Obligations
pledging the full faith and credit of the State, with a vote of the
electors, to finance or refinance fixed capital outlay projects authorized
by the Legislature provided that the outstanding principal does not exceed
50% of the total tax revenues of the State for the two preceding years.
Florida's Constitution also provides that the Legislature shall
appropriate monies sufficient to pay debt service on State bonds pledging
the full faith and credit of the State as the same becomes due.
Revenues and Expenditures. Financial operations of the State of
Florida covering all receipts and expenditures are maintained through the
use of three funds - General Revenue Fund, Trust Funds and Working Capital
Fund. The General Revenue Fund receives the majority of State tax
revenues. The Trust Funds consist of monies received by the State which
under law or trust agreement are segregated for a purpose authorized by
law. Revenues in the General Revenue Fund which are in excess of the
amount needed to meet appropriations may be transferred to the Working
Capital Fund. The Florida Constitution and Statutes mandate that the
State budget as a whole, and each separate fund within the State budget,
be kept in balance from currently available revenues each State fiscal
year.
Florida ended fiscal years 1990-91 and 1991-92 with General
Revenue plus Working Capital Funds unencumbered reserves of approximately
$50 million and $184.6 million, respectively. Estimated fiscal year
1992-93 General Revenue plus Working Capital Funds available total $12.256
billion. Total effective appropriations for the 1992-93 fiscal year are
$11.805 billion, resulting in estimated unencumbered reserves of $441.4
million at the end of the fiscal year. Estimated fiscal year 1993-94
General Revenue plus Working Capital Funds available total $13.548
billion, a 10.5% increase over 1992-93. With recommended General Revenue
plus Working Capital Fund appropriations at $13.272 billion, unencumbered
reserves at the end of 1993-94 are estimated at $276.3. The massive
effort to rebuild and replace destroyed or damage property in the wake of
Hurricane Andrew is responsible for the substantial positive revenue
estimates shown. Most of the impact is in the sales tax.
In fiscal year 1991-92, the State derived approximately 64% of
its total direct revenues to the General Revenue Fund, Trust Funds and
Working Capital Fund from State taxes. Federal grants and other special
revenues accounted for the remaining revenues. Major sources of tax
revenues to the General Revenue Fund are the sales and use tax, corporate
income tax, and beverage tax, which amounted to 68%, 7% and 5%,
respectively, of total General Revenue Funds available.
State expenditures are categorized for budget and appropriation
purposes by type of fund and spending unit, which are further subdivided
by line item. In fiscal year 1991-92, expenditures from the General
Revenue Fund for education, health and welfare and public safety amounted
to approximately 53%, 30% and 13.3%, respectively, of total General
Revenues.
Sales and Use Tax. The greatest single source of tax receipts
in Florida is the sales and use tax. The sales tax is 6% of the sales
price of tangible personal property sold at retail in the State. The use
tax is 6% of the cost price of tangible personal property when the same is
not sold but is used, or stored for use, in the State. The use tax also
applies to the use in the State of tangible personal property purchased
outside Florida which would have been subject to the sales tax if
purchased from a Florida dealer. Less than 10% of the sales tax is
designated for local governments and is distributed to the respective
counties in which collected for use by such counties and municipalities
therein. In addition to this distribution, local governments may (by
referendum) assess a .5% or 1% discretionary sales surtax within their
county. Proceeds from this local option sales tax are earmarked for
funding local infrastructure programs and acquiring land for public
recreation or conservation or protection of natural resources. In
addition, non-consolidated counties with populations in excess of 800,000
may levy a local option sales tax to fund indigent health care. This tax
rate may not exceed .5% and the combined levy of the indigent health care
surtax and the infrastructure surtax described above may not exceed 1%.
Furthermore, charter counties which adopted a charter prior to June 1,
1976, and each county with a consolidated county/municipal government, may
(by referendum) assess up to a 1% discretionary sales surtax within their
county. Proceeds from this tax are earmarked for the development,
construction, maintenance and operation of a fixed guideway rapid transit
system or may be remitted to an expressway or transportation authority for
use on county roads and bridges, for a bus system, or to service bonds
financing roads and bridges. The two taxes, sales and use, stand as
complements to each other, and taken together provide a uniform tax upon
either the sale at retail or the use of all tangible personal property
irrespective of where it may have been purchased. This tax also includes
a levy on the following: (i) rentals of tangible personal property,
transient lodging and non-residential real property; (ii) admissions to
places of amusements, most sports and recreation events; (iii) utilities,
except those used in homes; and (iv) restaurant meals. Exemptions
include: groceries; medicines; hospital rooms and meals; fuels used to
produce electricity; purchases by religious, charitable and educational
nonprofit institutions; most professional, insurance and personal service
transactions; apartments used as permanent dwellings; the trade-in value
of motor vehicles; and residential utilities.
All receipts of the sales and use tax, with the exemption of the
tax on gasoline and special fuels, are credited to either the General
Revenue Fund, the Solid Waste Management Trust Fund, or counties and
cities. For the State fiscal year which ended June 30, 1992, receipts
from this source were $8.376 billion, an increase of 2.7% from fiscal year
1990-91.
Motor Fuel Tax. The second largest source of State tax receipts
is the tax on motor fuels. Preliminary data show collections from this
source in the State fiscal year ended June 30, 1992, were $1.476 billion.
However, these revenues are almost entirely dedicated trust funds for
specific purposes and are not included in the State General Revenue Fund.
State and local taxes on motor fuels (gasoline and special fuel)
include several distinct fuel taxes: (i) the State sales tax on motor
fuels, levied at 6% of the average retail price per gallon of fuel, not to
fall below 6.9 cents per gallon; (ii) the State excise tax of four cents
per gallon of motor fuel, proceeds distributed to local governments; (iii)
the State Comprehensive Enhanced Transportation System (SCETS) tax, which
is levied at a rate in each county equal to two-thirds of the sum of the
county's local option motor fuel taxes; and (iv) local option motor fuel
taxes, which may range between one cent to seven cents per gallon.
Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an
excise tax on beer, wine, and liquor. This tax is one of the State's
major tax sources, with revenues totaling $435.2 million in State fiscal
year ended June 30, 1992. Alcoholic beverage receipts declined from the
previous year's total. The revenues collected from this tax are
deposited into the State's General Revenue Fund.
The 1990 Legislature established a surcharge on alcoholic
beverages. This charge is levied on alcoholic beverages sold for
consumption on premises. The surcharge is at ten cents per ounce of
liquor, ten cents per four ounces of wine, four cents per twelve ounces of
beer. Most of these proceeds are deposited into the General Revenue Fund.
In fiscal 1991-92, a total of $92.4 million was collected.
Corporate Income Tax. Pursuant to an amendment to the State
Constitution, the State Legislature adopted, effective January 1, 1972,
the "Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations and other artificial entities
for the privilege of conducting business, deriving income or existing
within the State. This tax does not apply to natural persons who engage
in a trade or business or profession under their own or any fictitious
name, whether individually as proprietorships or in partnerships with
others, estates of decedents or incompetents, or testamentary trusts.
The tax is imposed in an amount equal to 5.5% of the taxpayer's
net corporate income for the taxable year, less a $5,000 exemption, as
defined in such Code. Net income is defined by the Code as that share of
a taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales
(50%), property (25%) and payroll (25%). All business income is
apportioned and non-business income is allocated to a single jurisdiction,
usually the state of commercial domicile.
All receipts of the corporate income tax are credited to the
General Revenue Fund. For the fiscal year ended June 30, 1992, receipts
from this source were $801.3 million, an increase of 14.2% from fiscal
year 1990-91.
Documentary Stamp Tax. Deeds and other documents relating to
realty are taxed at 70 cents per $100 of consideration, while corporate
shares, bonds, certificates of indebtedness, promissory notes, wage
assignments and retail charge accounts are taxed at 35 cents per $100 of
consideration. Documentary stamp tax collections totalled $472.4 million
during fiscal year 1991-92, posting a .5% increase from the previous
fiscal year. The General Revenue Fund receives approximately 71% of
documentary stamp tax collections.
Gross Receipts Tax. Effective July 1, 1992, the tax rate was
increased from 2.25% to 2.5% of the gross receipts of electric, natural
gas and telecommunications services. All gross receipts utilities
collections are credited to the Public Education Capital Outlay and Debt
Service Trust Fund. In fiscal year 1991-92, gross receipts utilities tax
collections totalled $392.1 million, an increase of 17.6% over the
previous fiscal year.
Intangible Personal Property Tax. This tax is levied on two
distinct bases: i) stocks, bonds, including bonds secured by Florida
realty, notes, government leaseholds, interests in limited partnerships
registered with the SEC, and other miscellaneous intangible personal
property not secured by liens on Florida realty are taxed annually at a
rate of 2 mills, ii) mortgages and other obligations secured by liens on
Florida realty, taxed with a non-recurring 2 mill tax.
Of the tax proceeds, 33.5% is distributed to the Municipal
Revenue Sharing Trust Fund. The remainder is distributed to the General
Revenue Fund.
Fiscal year 1991-92 total intangible personal property tax
collections were $586.2 million, a 13% increase over the prior year.
Severance Taxes. The severance tax includes the taxation of
oil, gas and sulfur production and a tax on the severance of primarily
phosphate rock and other solid minerals. Total collections from severance
taxes totalled $67.2 million during fiscal year 1991-92, down 6.9% from
the previous fiscal year.
Lottery. The 1987 Legislature created the Department of the
Lottery to operate the State Lottery and setting forth the allocation of
the revenues. Of the revenues generated by the Lottery, 50% is to be
returned to the public as prices; at least 38% is to be deposited in the
Educational Enhancement Trust Fund (for public education); and no more
than 12% can be spent on the administrative cost of operating the lottery.
Fiscal year 1991-92 produced ticket sales of $2.19 billion of
which education received approximately $835.4 million.
New Jersey Series
New Jersey's economic base is diversified, consisting of a
variety of manufacturing, construction and service industries,
supplemented by rural areas with selective commercial agriculture. New
Jersey's principal manufacturing industries produce chemicals, pharmaceu-
ticals, electrical equipment and instruments, machinery, services,
wholesale and retail trade, food products, and printing. Other economic
activities include services, wholesale and retail trade, insurance,
tourism, petroleum refining and truck farming.
While New Jersey's economy continued to expand during the late
1980s, the level of growth slowed considerably after 1987. Initially,
this slowdown was an expected response to the State's tight labor market
and the decrease in the number of persons entering the labor force. Late
in the decade, a decline in construction demand and in the rate of growth
in consumer spending as well as continued softness in the State's
manufacturing sector set the stage for the current recession in New
Jersey. The State's average annual unemployment rate was below the
national average from 1981 through 1990. In 1988, unemployment dropped to
its lowest level since 1969, averaging 3.8% for the year. Unemployment,
however, began to rise during 1989 and 1990, averaging 5.0% of the labor
force in New Jersey and 5.5% nationally in 1990. By August 1992, the
State unemployment rate moved above the national average for the first
time in a decade, registering 9.4%. In April 1993, the State unemployment
rate was 9.1%. As a result of the State's fiscal weakness, S&P, in July
1991, lowered its rating of the State's general obligation debt from AAA
to AA+.
The fiscal 1992 estimated budget gap of $1.5 billion was closed
through a combination of one-time and recurring actions. The State's
General Fund ended fiscal 1992 with an undesignated fund balance of $836
million.
The fiscal year 1993 Appropriations Act forecasts Sales and Use
Tax collections of $3.647 billion, a decrease from receipts of $4.038
billion for fiscal year 1992, Gross Income Tax collections of $4.35
billion, an increase from receipts of $4.102 billion for fiscal year 1992,
and Corporation Business Tax collections of $1.06 million, an increase
from receipts of $910.7 million for fiscal year 1992.
The State appropriated approximately $12.639 billion and $14.960
billion for fiscal 1991 and 1992, respectively. Estimated 1993 and 1994
State appropriations total $14.770 billion and $15.650 billion,
respectively. Of the $14.770 billion appropriated in fiscal year 1993
from the General Fund, the Property Tax Relief Fund, the Casino Control
Fund and the Casino Revenue Fund, $6.290 billion (42.6%) is appropriated
for State aid to local governments, $3.390 billion (22.9%) is appropriated
for grants-in-aid (payments to individuals or public or private agencies
for benefits to which a recipient is entitled by law or for the provision
of service on behalf of the State), $4.478 billion (30.4%) for direct
State services, $444.3 million (3.0%) for debt service on State general
obligation bonds and $167.5 million (1.1%) for capital construction.
As of December 31, 1992, the outstanding general obligation
bonded indebtedness of the State was approximately $3.6 billion. In
fiscal year 1992, the State initiated a program under which it issued tax
and revenue anticipation notes to aid in providing effective cash flow
management to fund imbalances which occur in the collection and
disbursement of the General Fund and Property Tax Relief Fund revenues.
On October 1, 1992, the State issued $1.6 billion of tax and revenue
anticipation notes.
Such tax and revenue anticipation notes do not constitute a
general obligation of the State or a debt or liability within the meaning
of the State Constitution. Such notes constitute special obligations of
the State payable solely from moneys on deposit in the General Fund and
Property Tax Relief Fund which are attributable to the State's fiscal year
1993 and legally available for such payment.
New York Series
The financial condition of New York State (the "State") and
certain of its public bodies (the "Agencies") and municipalities,
particularly New York City (the "City"), could affect the market values
and marketability of New York Municipal Obligations which may be held by
the New York Series.
A national recession commenced in mid-1990. The downturn
continued through the remainder of the 1990-91 fiscal year, and was
followed by a period of weak economic growth during the remainder of the
1991 calendar year. For the calendar year 1992, the national economy
continued to recover, although at a rate below all post-war recoveries.
For calendar year 1993, the economy is expected to grow faster than in
1992, but still at a very moderate rate, as compared to other recoveries.
The recession has been more severe in the State than in other parts of the
nation, owing to a significant retrenchment in the financial services
industry, cutbacks in defense spending, and an overbuilt real estate
market. The forecast made by the Division of the Budget for the overall
rate of growth of the national economy during calendar year 1993 is
similar to the "consensus" of a widely followed survey of forecasters.
The State's 1993-94 budget (the "1993-94 State Financial Plan")
is based on an economic projection that the State will perform more poorly
than the nation as a whole. Although real gross domestic product grew
modestly during calendar year 1992 and is expected to show increased
growth in calendar year 1993, preliminary data indicate that the State's
economy, as measured by employment, began to grow during the first part of
calendar year 1993. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward
spending, Federal financial and monetary policies, the availability of
credit and the condition of the world economy, which could have an adverse
effect on the State. There can be no assurance that the State economy
will not experience worse-than-predicted results in the 1993-94 fiscal
year, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
The Governor released the recommended Executive Budget for the
1993-94 fiscal year on January 19, 1993 and amended it on February 18,
1993. The recommended 1993-94 State Financial Plan projected a balanced
General Fund. General Fund receipts and transfers from other funds were
projected at $31.556 billion, including $184 million expected to be
carried over from the 1993-94 fiscal year. Disbursements and transfer to
other funds were projected at $31.489 billion, not including a $67 million
repayment to the State's Tax Stabilization Reserve Fund.
The 1993-94 State Financial Plan projects General Fund receipts
and transfers from other funds at $32.367 billion and disbursements and
transfers to other funds at $32.300 billion. Excess receipts of $67
million will be used for a required repayment to the State's Tax
Stabilization Reserve Fund. In comparison to the recommended 1993-94
Executive Budget, the 1993-94 State budget, as enacted, reflects increases
in both receipts and disbursements in the General Fund of $811 million.
The $811 million increase in projected receipts reflects (i) an
increase of $487 million, from $184 million to $671 million, in the
positive year-end margin at March 31, 1993, which resulted primarily from
improving economic conditions and higher-than-expected tax collections,
(ii) an increase of $269 million in projected receipts, $211 million
resulting from the improved 1992-93 results and the expectation of an
improving economy and the balance from improved auditing and enforcement
measures and other miscellaneous items, (iii) additional payments of $200
million from the Federal government to reimburse the State for the cost of
providing indigent medical care, and (iv) the payment of an additional $50
million of personal income tax refunds in the 1992-93 fiscal year which
would otherwise have been paid in fiscal year 1993-94; offset by (v) $195
million of revenue-raising recommendations in the Executive Budget that
were not enacted and thus are not included in the 1993-94 State Financial
Plan.
The $811 million increase in projected disbursements reflects
(i) an increase of $252 million in projected school-aid payments, after
applying projected receipts from the State Lottery allocated to school
aid, (ii) an increase of $194 million in projected payments for Medicaid
assistance and other social service programs, (iii) additional spending on
the judiciary ($56 million) and criminal justice ($48 million), (iv) a net
increase in projected disbursements for all other programs and purposes,
including mental hygiene and capital projects, of $161 million, after
reflecting certain re-estimates in spending, and (v) the transfer of $100
million to a newly-established contingency reserve.
There can be no assurance that the State will not face
substantial potential budget gaps in future years resulting from a
significant disparity between tax revenues projected from a lower
recurring receipts base and the spending required to maintain State
programs at current levels. To address any potential budgetary imbalance,
the State may need to take significant actions to align recurring receipts
and disbursements in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's
outstanding general obligation bonds from AA- to A and from A to A-,
respectively. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New
York State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the
mid-1970s, some of the Agencies and municipalities (in particular, the
City) faced extraordinary financial difficulties, which affected the
State's own financial condition. These events, including a default on
short-term notes issued by the New York State Urban Development
Corporation ("UDC") in February 1975, which default was cured shortly
thereafter, and a continuation of the financial difficulties of the City,
created substantial investor resistance to securities issued by the State
and by some of its municipalities and Agencies. For a time, in late 1975
and early 1976, these difficulties resulted in a virtual closing of public
credit markets for State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92
million that actually resulted was financed by issuing notes that were
paid during the first quarter of the State's 1978 fiscal year). In
addition, legislation was enacted limiting the occurrence of additional
so-called "moral obligation" and certain other Agency debt, which
legislation does not, however, apply to debt of the Municipal Assistance
Corporation for the City of New York ("MAC").
State Financial Results. During the fiscal years ended March
31, 1987, 1988, 1989 and 1990, the State experienced significant
unanticipated variations in the result of the State Financial Plan,
particularly with respect to revenue projections, which it believes
resulted principally from changes in taxpayer behavior caused by the
Federal Tax Reform Act of 1986 (the "Tax Reform Act"). The Tax Reform Act
substantially altered definitions of income and deductions in the
computation of taxable income and substantially lowered tax rates used in
the computation of Federal taxes. In 1987, the State enacted legislation
that conformed State law to most of those definitional changes and also
lowered tax rates. Those changes "broadened" the income tax base through
such devices as full inclusion of capital gains, restrictions on certain
losses and adjustments to income. Those changes in the Federal tax law
are expected to continue to influence taxpayer behavior during the next
several years. For State personal income taxes, the net effect of those
changes is to make estimates and forecasts of adjusted gross income less
reliable than they had been in the past and to add substantial uncertainty
to estimates of State tax liability based on such estimates and forecasts.
In large part because of these uncertainties, the State's Financial Plan
overestimated General Fund tax receipts in the 1988-89, 1989-90 and 1990-
91 fiscal years by $1.9 billion, $1.6 billion and $1.72 billion,
respectively.
During its 1989-90, 1990-91 and 1991-92 fiscal years, the State
incurred cash-basis operating deficits in the General Fund of $775
million, $1.081 billion and $575 million, respectively, prior to the
issuance of short-term tax and revenue anticipation notes ("TRANs"), owing
to lower-than-projected receipts due to the significant slowdown in the
New York and regional economy.
For its 1992-93 fiscal year the State had a balanced budget on a
cash basis with a positive margin of $671 million in the General Fund that
was deposited in the refund reserve account.
The State's 1992-93 fiscal year was characterized by national
and regional economies that performed better than projected in April 1992.
National gross domestic product, State personal income, and employment and
unemployment in the State are estimated to have performed better than
originally projected in April 1992.
After reflecting a 1992-93 year-end deposit to the refund
reserve account of $671 million, reported 1992-93 General Fund receipts
were $45 million higher than originally projected in April 1992. If not
for that year-end transaction, which had the effect of reducing 1992-93
receipts by $671 million and making those receipts available in 1993-94,
General Fund receipts would have been $716 million higher than originally
projected.
The favorable performance was primarily attributable to personal
income tax collections that were more than $700 million higher than
originally projected (before reflecting the refund reserve transaction).
The withholding and estimated payment components of the personal income
tax exceeded original estimates by more than $800 million combined,
reflecting both stronger economic activity, particularly at year's end,
and the tax-induced one-time acceleration of income into 1992. Modest
shortfalls were experienced in other components of the income tax.
There were large, but largely offsetting, variances in other
categories. Significantly higher-than-projected business tax collections
and the receipt of unbudgeted payments from the Medical Malpractice
Insurance Association and the New York Racing Association approximately
offset the loss of an anticipated $200 million Federal reimbursement, the
loss of certain budgeted hospital differential revenue as a result of
unfavorable court decisions, and shortfalls in certain miscellaneous
revenue sources.
Disbursements and transfers to other funds totaled $30.829
billion, an increase of $45 million above projections in April 1992.
After adjusting for the impact of a $150 million payment from the Medical
Malpractice Insurance Association to health insurers made pursuant to
legislation passed in January 1993, actual disbursements were $105 million
lower than projected. This reduction primarily reflected higher-than-
anticipated costs for educational programs, as offset by lower costs in
virtually all other categories of spending, including Medicaid, local
health programs, agency operations, fringe benefits, capital projects and
debt service.
The 1991-92 State Financial Plan was initially formulated on
June 10, 1991 and included increased taxes and other revenues, deferral of
scheduled personal income tax reductions, significant reductions from
previously projected levels in aid to localities and State operations and
other budgetary actions that were expected to maintain many items of
General Fund disbursements at or below the 1990-91 fiscal year levels.
Personal income tax receipts were projected at $15.203 billion
in June 1991 and at $15.353 billion in July 1991. Actual receipts in the
1991-92 fiscal year were $14.913 billion, a decrease of $290 million and
$440 million as compared to the June and July projections, respectively.
The shortfall in personal income tax receipts was the result of a weaker-
than expected economy. User tax and fee receipts were $6.353 billion, $75
million and $104 million below the June and July projections,
respectively. The primary reason for this shortfall was a weaker-than-
projected economy and lower spending on consumer durables than projected.
Business tax receipts of $5.072 billion were up $399 million and $274
million as compared to the June and July projections, respectively. The
reasons for these increases were higher-than-expected payments by banks
and general business corporations against their current-year income.
Receipts from other taxes were $1.108 billion, a reduction of $21 million
from the June and July projections. This reduction was attributable to a
sharp drop in real estate transactions and values caused by the weak
economy, which was only partially offset by higher estate and gift tax
revenues. Miscellaneous receipts of $1.372 billion were down $221 million
and $298 million from the June and July projections, respectively. The
primary reason for this shortfall was the inability of the State to
complete certain planned non-recurring transactions. Transfers to the
General Fund from other funds totalled $1.574 billion, an increase of $43
million and $27 million as compared to the June and July projections,
respectively.
Disbursements and transfers to other funds totaled $29.842
billion, an increase of $448 million from the June projections, resulting
from the actions on the budget taken in July 1991. Actual disbursements
were $10 million higher than the July projections. Increased
disbursements were the result of higher-than-anticipated costs for
Medicaid and income maintenance as a result of the economic downturn and
significant job losses during 1991, offset by reduced disbursements of
$347 million achieved through administrative actions.
Total General Fund receipts and transfers from other funds in
the 1990-91 fiscal year were $28.6 billion, a decline of $1.9 billion from
projections made in the initial 1990-91 financial plan formulated May 23,
1990, immediately after adoption of the 1990-91 budget. General Fund tax
receipts were $27.4 billion, down $1.7 billion from projections made in
May 1990. The State implemented a deficit-reduction plan in December
1990, which had the effect of reducing the General Fund cash-basis
operating deficit to $1.081 billion. The State met the deficit through
two issuances of tax and revenue anticipation notes: a public sale of
$905 million on February 28, 1991 and a sale of $176.5 million to the
State's Short-Term Investment Pool on March 29, 1991.
Personal income tax receipts totalled $14.516 billion, a decline
of $1.044 billion from the $15.560 billion projected in the 1990-91 State
Financial Plan formulated in May 1990, primarily as a result of the
recession. User taxes and fees were down $509 million, as adjusted, from
May 1990 projections to $7.695 billion. Business taxes fell $124 million
from the May 1990 projection to $4.017 billion. The major cause was a
drop of $114 million in collections from banks reflecting the continued
poor financial results of the banking industry. Other taxes totalled
$1.199 billion, a reduction of $43 million from the May 1990 projections.
Real estate-based taxes were down $151 million to $410 million, primarily
due to a sharp drop in real estate transactions caused by the recession.
Estate and gift tax revenues were up $108 million, to $789 million,
resulting from a larger number of settlements of extra-large estates.
Disbursements and transfers to other funds totalled $28.898 billion, a
reduction of $876 million from the financial plan formulated in May 1990.
General Fund receipts and transfers from other funds increased
from $28.6 billion in the State's 1990-91 fiscal year to $30.4 billion in
its 1991-92 fiscal year and to $31.4 billion in its 1992-93 fiscal year.
Similarly, disbursements and transfers to other funds increased from $28.9
billion in its 1990-91 fiscal year to $29.8 billion in its 1991-92 fiscal
year to $30.8 billion in its 1992-93 fiscal year.
Borrowings by the State in the public credit markets during the
1990-91 and 1991-92 fiscal years totalled $6.0 billion and $5.3 billion,
respectively. Of these amounts, $4.1 billion and $3.9 billion,
respectively, were annual seasonal borrowings. In 1992-93, State
borrowings in the public credit markets totalled $3.3 billion, including
annual seasonal borrowings of $2.3 billion. The State issued $757.2
million of bonds and notes, exclusive of bonds issued to redeem bond
anticipation notes, during the 1992-93 fiscal year to finance capital
projects.
The principal operating fund of the State is the General Fund.
It receives all State income that is not required by law to be deposited
in another fund. General Fund receipts, excluding transfers from other
funds, totalled $28.818 billion in the State's 1991-92 fiscal year (before
repayment of $1.081 billion in deficit notes issued to close the State's
1990-91 fiscal year General Fund cash basis deficit and before issuance of
$531 million in deficit notes to close the 1991-92 fiscal year General
Fund cash basis operating deficit). General Fund receipts in the State's
1992-93 fiscal year totalled $29.950 billion (before the repayment of $531
million in 1992 of such deficit notes). General Fund receipts in the
State's 1993-94 fiscal year are estimated in the 1993-94 State Financial
Plan at $30.765 billion. Taxes account for 96% of estimated 1993-94
General Fund receipts, with the balance comprised of miscellaneous
receipts. Excluding transfers to other funds, total General Fund
disbursements in the 1992 fiscal year were $28.058 billion, and $29.068
billion in the State's 1992-93 fiscal year and are estimated to total
$30.346 billion in the State's 1993-94 fiscal year.
The Special Revenue Funds account for State receipts from
specific sources that are legally restricted in use to specified purposes
and include all moneys received from the Federal government. Total
receipts in Special Revenue Funds are projected at $23.126 billion in the
State's 1993-94 fiscal years. Federal grants are projected to account for
78% of the total projected receipts in Special Revenue Funds in the
State's 1993-94 fiscal year.
Disbursements from Special Revenue Funds are projected to be
$23.328 billion for the State's 1993-94 fiscal year. Grants to local
governments disbursed from this fund type are projected to account for 76%
of disbursements from this fund for the 1993-94 fiscal year.
The Capital Projects Funds are used to finance the acquisition
and construction of major capital facilities and to aid local government
units and Agencies in financing capital constructions. Federal grants for
capital projects, largely highway-related, are projected to account for
35% of the $2.768 billion in total projected receipts in Capital Projects
Funds in the State's 1993-94 fiscal year. Total disbursements for capital
projects are projected to be $3.559 billion during the State's 1993-94
fiscal year. Of total disbursements from Capital Projects Funds,
approximately 54% is for various transportation purposes, including
highways and mass transportation facilities; 4% is for programs of the
Department of Correctional Services and other public protection
activities; 16% is for health and mental hygiene facilities; 13% is for
environmental and recreational programs; 5% is for educational programs;
and 5% is for housing and economic development programs. The balance is
for the maintenance of State office facilities and various other capital
programs.
The Debt Service Funds serve to fulfill State debt service on
long-term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Total receipts in Debt
Service Funds are projected to reach $2.242 billion in the State's 1993-94
fiscal year. Total disbursements from Debt Service Funds for debt
service, lease/purchase and contractual obligation financing commitments
are projected to be $2.118 billion for the 1993-94 fiscal year.
The State issued $850 million in TRANs on May 4, 1993 to fund
its day-to-day operations and certain local assistance payments to its
municipalities and school districts. As of July 1, 1993, all of these
TRANs remain outstanding and will mature on December 31, 1993.
The State anticipates that its 1993-94 borrowings for capital
purposes will consist of approximately $770 million in general obligation
bonds and $140 million in new commercial paper issuances. In addition,
the State expects to issue $140 million of its general obligation bonds
for the purpose of redeeming outstanding bond anticipation notes. The
Legislature also has authorized the issuance of up to $185 million in
certificates of participation for real property and equipment acquisitions
during the State's 1993-94 fiscal year. The projections of the State
regarding its borrowings for the 1993-94 fiscal year may change if actual
receipts fall short of State projections or if other circumstances
require.
The Governor's 1993-94 Executive Budget contained an update to
the GAAP-basis 1992-93 State Financial Plan based on the cash-basis
projections in the 1992-93 State Financial Plan, as revised on January 19,
1993. The update showed a General Fund operating surplus of $945 million.
For all governmental funds, the update reflected an overall operating
surplus of $1.287 billion. This included the General Fund operating
surplus of $945 million and operating surpluses of $62 million in the
Capital Projects Fund and $295 million in Debt Service Funds, as offset,
in part, by an operating deficit of $15 million in the Special Revenue
Funds.
The Governor's 1993-94 Executive Budget included a projection of
the GAAP-basis 1993-94 State Financial Plan. The projection showed a
General Fund operating surplus of $448 million. On February 18, 1993 the
projected General Fund operating surplus was reduced by $5 million to $443
million to reflect the changes made in the amendments to the 1993-94
Executive Budget. The projected GAAP results for the other governmental
fund types were not revised. For all governmental funds, a surplus of
$592 million was projected, including the General Fund operating surplus
of $443 million and operating surpluses of $196 million in the Capital
Projects Funds and $92 million in the Debt Service Funds, as partially
offset by an operating deficit of $139 million in the Special Revenue
Funds.
The State's financial position as shown in its Combined Balance
Sheet as of March 31, 1992 included an accumulated deficit in its combined
governmental funds of $3.315 billion represented by liabilities of $14.166
billion and assets of $10.851 billion available to liquidate such
liabilities. The accumulated governmental fund type deficit includes a
$4.616 billion accumulated General Fund deficit, consisting of a $6.284
billion accumulated deficit (as restated) at April 1, 1991, plus the
$1.668 billion operating surplus in the General Fund for the 1991-92
fiscal year, in addition to a net accumulated surplus of $1.301 billion
for all other governmental funds.
The use of New York Local Government Assistance Corporation
("LGAC") bond proceeds to make payments to local governmental units,
otherwise made by the State, reduces the State's future liabilities.
Therefore, the projected 1992-93 General Fund GAAP-basis operating surplus
reflected above includes $881 million and the 1993-94 General Fund GAAP-
basis operating surplus reflected above includes $700 million, to reflect
payment by LGAC to local governmental units.
State Agencies. The fiscal stability of the State is related,
at least in part, to the fiscal stability of its localities and various of
its Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1992, there were 18 Agencies that had
outstanding debt of $100 million or more. The aggregate outstanding debt,
including refunding bonds, of these 18 Agencies, was $62.2 billion as of
September 30, 1992, of which approximately $8.2 billion was moral
obligation debt and approximately $17.1 billion was financed under
lease/purchase or contractual-obligation financing arrangements. Debt
service on the outstanding Agency obligations normally is paid out of
revenues generated by the Agencies' projects or programs, but in recent
years the State has provided special financial assistance, in some cases
on a recurring basis, to certain Agencies for operating and other expenses
and for debt service pursuant to moral obligation indebtedness provisions
or otherwise. Additional assistance is expected to continue to be
required in future years.
Several Agencies have experienced financial difficulties in the
past. Certain Agencies continue to experience financial difficulties
requiring financial assistance from the State. Failure of the State to
appropriate necessary amounts or to take other action to permit certain
Agencies to meet their obligations could result in a default by one or
more of such Agencies. If a default were to occur, it would likely have a
significant effect on the marketability of obligations of the State and
the Agencies. These Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides
financing for multifamily housing, State University construction, hospital
and nursing home development and other programs. In general, HFA depends
upon mortgagors in the housing programs it finances to generate sufficient
funds from rental income, subsidies and other payments to meet their
respective mortgage repayment obligations to HFA, which provide the
principal source of funds for the payment of debt service on HFA bonds, as
well as to meet operating and maintenance costs of the projects financed.
From January 1, 1976 through March 31, 1987, the State was called upon to
appropriate a total of $162.8 million to make up deficiencies in the debt
service reserve funds of HFA pursuant to moral obligation provisions. The
State has not been called upon to make such payments since the 1986-87
fiscal year and no payments are anticipated during the 1993-94 fiscal
year.
UDC has experienced, and expects to continue to experience,
financial difficulties with the housing programs it had undertaken prior
to 1975, because a substantial number of these housing program mortgagors
are unable to make full payments on their mortgage loans. Through a
subsidiary, UDC is currently attempting to increase its rate of collection
by accelerating its program of foreclosures and by entering into
settlement agreements. UDC has been, and will remain, dependent upon the
State for appropriations to meet its operating expenses. The State also
has appropriated money to assist in the curing of a default by UDC on
notes which did not contain the State's moral obligation provision.
The Metropolitan Transportation Authority (the "MTA") oversees
New York City's subway and bus lines by its affiliates, the New York City
Transit Authority and the Manhattan and Bronx Surface Transit Operating
Authority (collectively, the "TA"). Through MTA's subsidiaries, the Long
Island Rail Road Company, the Metro-North Commuter Railroad Company and
the Metropolitan Suburban Bus Authority, the MTA operates certain commuter
rail and bus lines in the New York metropolitan area. In addition, the
Staten Island Rapid Transit Authority, an MTA subsidiary, operates a rapid
transit line on Staten Island. Through its affiliated agency, the
Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates
certain toll bridges and tunnels. Because fare revenues are not
sufficient to finance the mass transit portion of these operations, the
MTA has depended and will continue to depend for operating support upon a
system of State, local government and TBTA support and, to the extent
available, Federal operating assistance, including loans, grants and
operating subsidies.
The TA and the commuter railroads, which are on a calendar
fiscal year, ended 1992 with their budgets balanced on a cash basis. The
TA had a closing cash balance of approximately $25 million, and the
commuter railroads had a closing cash balance of approximately $237
million.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. The
surcharge, which expires in November 1995, yielded $507 million in
calendar year 1992, of which the MTA was entitled to receive approximately
90%, or approximately $456 million.
For 1993, the TA originally projected a budget gap of about $266
million. On January 31, 1993, the TBTA increased the tolls on its
facilities. Since TBTA operating surpluses help subsidize TA operations,
the TBTA toll increase and other developments reduced the TA's budget gap
to approximately $241 million.
A subway fire on December 28, 1990 and a subway derailment on
August 28, 1991, each of which caused fatalities and many injuries, have
given rise to substantial claims for damages against both the TA and the
City.
In 1981, the State Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan for the capital
program designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities and
equipment, and also granted certain additional bonding authorization
therefor.
On April 5, 1993, the Legislature approved, and the Governor
subsequently signed into law, legislation authorizing a five-year $9.56
billion capital plan for the MTA for 1992-1996. The MTA has submitted a
1992-1996 Capital Program based on this legislation for the approval of
the MTA Capital Program Review Board (the "CPRB"), as State law requires.
On July 1, 1993, the CPRB indicated that it was withholding approval
pending the resolution of certain related issues. If approved, the 1992-
1996 Capital Program would succeed two previous five-year capital programs
of the periods covering 1982-1986 and 1987-1991. The 1987-1991 Capital
Program totalled approximately $8.0 billion, including $6.2 billion for TA
capital projects.
The 1992-1996 Capital Program would supersede a one-year program
adopted in 1992. State budget legislation for the 1992-93 fiscal year had
required the MTA to submit a one-year capital program for 1992 instead of
a five-year program. The one-year program, which contained $1.635 billion
of projects for transit and commuter facilities combined, was approved by
the CPRB in May 1992, but the five-year program for 1992-1996, required to
be submitted subsequently by the MTA as an amendment to the one-year plan,
was disapproved without prejudice by the CPRB in December 1992.
There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1992-1996 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.
The cities, towns, villages and school districts of the State
are political subdivisions of the State with the powers granted by the
State Constitution and statutes. As the sovereign, the State retains
broad powers and responsibilities with respect to the government, finances
and welfare of these political subdivisions, especially in education and
social services. In recent years the State has been called upon to
provide added financial assistance to certain localities.
Other Localities. Certain localities in addition to the City
could have financial problems leading to requests for additional State
assistance during the State's 1993-94 fiscal year and thereafter. The
potential impact on the State of such actions by localities is not
included in the projections of the State receipts and disbursements in the
State's 1993-94 fiscal year.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1991, the total indebtedness of
all localities in the State was approximately $32.2 billion, of which
$16.8 billion was debt of the City (excluding $6.7 billion in MAC debt).
A small portion (approximately $39.0 million) of this indebtedness
represented borrowing to finance budgetary deficits and was issued
pursuant to enabling State legislation. State law requires the
Comptroller to review and make recommendations concerning the budgets of
those local government units other than the City authorized by State law
to issue debt to finance deficits during the period that such deficit
financing is outstanding. Fifteen localities had outstanding indebtedness
for deficit financing at the close of their fiscal year ending in 1991.
In 1992, an unusually large number of local government units
requested authorization for deficit financing. According to the
Comptroller, ten local government units were authorized to issue deficit
financing in the aggregate amount of $131.1 million, including Nassau
County for $65 million in six-year deficit bonds and Suffolk County for
$36 million in six-year deficit bonds. Although the Comptroller has
indicated that the level of deficit financing requests is unprecedented,
such developments are not expected to have a material adverse effect on
the financial condition of the State.
Certain proposed Federal expenditure reductions would reduce, or
in some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to
suffer serious financial difficulties jeopardizing their respective access
to the public credit markets, the marketability of notes and bonds issued
by localities within the State could be adversely affected. Localities
also face anticipated and potential problems resulting from certain
pending litigation, judicial decisions and long-range economic trends.
The longer-range, potential problems of declining city population,
increasing expenditures and other economic trends could adversely affect
localities and require increasing State assistance in the future.
Because of significant fiscal difficulties experienced from time
to time by the City of Yonkers, a Financial Control Board was created by
the State in 1984 to oversee Yonkers' fiscal affairs. Future actions
taken by the Governor or the State Legislature to assist Yonkers in this
crisis could result in the allocation of State resources in amounts that
cannot yet be determined.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession
of certain funds taken pursuant to the State's Abandoned Property law;
(vii) alleged responsibility of State officials to assist in remedying
racial segregation in the City of Yonkers; (viii) an action, in which the
State is a third party defendant, for injunctive or other appropriate
relief, concerning liability for the maintenance of stone groins
constructed along certain areas of Long Island's shoreline; (ix) actions
challenging the constitutionality of legislation enacted during the 1990
legislative session which changed the actuarial funding methods for
determining contributions to State employee retirement systems; (x) an
action against State and City officials alleging that the present level of
shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (xi) an action challenging
legislation enacted in 1990 which had the effect of deferring certain
employer contributions to the State Teachers' Retirement System and
reducing State aid to school districts by a like amount; (xii) a challenge
to the constitutionality of financing programs of the Thruway Authority
authorized by Chapters 166 and 410 of the Laws of 1991 (described below in
this Part); (xiii) a challenge to the constitutionality of financing
programs of the Metropolitan Transportation Authority and the Thruway
Authority authorized by Chapter 56 of the Laws of 1993 (described below in
this Part); (xiv) challenges to the delay by the State Department of
Social Services in making two one-week Medicaid payments to the service
providers; (xv) challenges by commercial insurers, employee welfare
benefit plans, and health maintenance organizations to provisions of
Section 2807-c of the Public Health Law which impose 13%, 11%, 9%
surcharges on inpatient hospital bills and a bad debt and charity care
allowance on all hospital bills paid by such entities; (xvi) challenges to
the promulgation of the State's proposed procedure to determine the
eligibility for and nature of home care services for Medicaid recipients;
(xvii) a challenge to State implementation of a program which reduces
Medicaid benefits to certain home-relief recipients; and (xviii)
challenges to the rationality and retroactive application of State
regulations recalibrating nursing home Medicaid rates.
Adverse developments or decisions in such cases could affect the
ability of the State to maintain a balanced 1993-94 State Financial Plan.
(2) New York City. In the mid-1970s, the City had large
accumulated past deficits and until recently was not able to generate
sufficient tax and other ongoing revenues to cover expenses in each fiscal
year. However, the City's operating results for the fiscal year ending
June 30, 1992 were balanced in accordance with GAAP, the eleventh
consecutive year in which the City achieved balanced operating results in
accordance with GAAP. The City's ability to maintain balanced operating
results in future years is subject to numerous contingencies and future
developments.
The City's economy, whose rate of growth slowed substantially
over the past three years, is currently in recession. During the 1990 and
1991 fiscal years, as a result of the slowing economy, the City has
experienced significant shortfalls in almost all of its major tax sources
and increases in social services costs, and has been required to take
actions to close substantial budget gaps in order to maintain balanced
budgets in accordance with the Financial Plan.
Since the stock market crash, the City's tax revenues have been
below expected levels, and the revised local employment data available
since January 1989 have confirmed that the City's economy has been
severely affected by the stock market crash, and that the impact of
layoffs in the finance, insurance and real estate sector is greater than
had been believed earlier.
In 1975, the City became unable to market its securities and
entered a period of extraordinary financial difficulties. In response to
this crisis, the State created MAC to provide financing assistance to the
City and also enacted the New York State Financial Emergency Act for the
City of New York (the "Emergency Act") which, among other things, created
the Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of
approval over the City Financial Plan were suspended pursuant to the
Emergency Act. However, the Control Board, MAC and OSDC continue to
exercise various monitoring functions relating to the City's financial
condition. The City prepares and operates under a four-year financial
plan which is submitted annually to the Control Board for review and which
the City periodically updates.
The City's independently audited operating results for each of
its fiscal years from 1981 through 1992 show a General Fund surplus
reported in accordance with GAAP. The City has eliminated the cumulative
deficit in its net General Fund position. In addition, the City's
financial statements for the 1992 fiscal year received an unqualified
opinion from the City's independent auditors, the tenth consecutive year
the City has received such an opinion.
On June 11, 1992, the City submitted to the Control Board a new
four-year Financial Plan covering fiscal years 1993 through 1996 (the
"1993-1996 Financial Plan"). The 1993-1996 Financial Plan was based on
the City's adopted expense budget for the 1993 fiscal year, which includes
actions intended to close a previously projected budget gap of $1.2
billion. The 1993-1996 Financial Plan projected a balanced budget for
fiscal year 1993 based upon revenues of $29.508 billion, but budget gaps
of $1.6 billion, $1.7 billion and $2.3 billion in fiscal years 1994, 1995,
and 1996, respectively. The 1993-1996 Financial Plan proposed to
eliminate these gaps through a program of City, State and Federal actions.
On April 27, 1993, OSDC issued a report analyzing New York
City's economy. The report found that the City is emerging from a severe
recession that has plagued its economy for four years. It found that the
huge job losses had ended, wages and salaries were rising and business
earnings were stronger. However, it cautioned that a sustained economic
recovery had not yet taken hold and that the City's economy remained far
from healthy. Among the effects of the recession noted in the report were
the loss of 360,000 jobs (seasonally adjusted), a total drop in retail
sales of 8.5 percent, the addition of more than 250,000 recipients to the
welfare rolls, and a weakened real estate market.
On May 3, 1993, the Major released his Executive Budget for
fiscal year 1994 and revised projections for fiscal years 1993 through
1997 (the "Revised Financial Plan"). The Revised Financial Plan projects
a balanced budget for fiscal year 1993 based upon revenues of $30.659
billion, after the prepayment in fiscal year 1993 of $345 million in
expenditures previously planned for fiscal year 1994. After taking the
prepayment into account, the Revised Financial Plan also projects a
balanced budget for fiscal year 1994 based upon revenues of $31.399
billion. Budget balance in that year is dependent upon the success of the
Revised Financial Plan's fiscal year 1994 revenue enhancement and cost
reduction program, the major elements of which include agency initiatives
valued at $791 million, the receipt of 4530 million of anticipated but as
yet unidentified State and Federal aid, and the completion of a sale of
real estate tax receivables which is expected to generate $215 million.
For City fiscal years 1995, 1996, and 1997, the Revised Financial Plan
projects gaps of $1.7 billion, $2.2 billion and $2.6 billion,
respectively, after taking into account the recurring impact of the fiscal
year 1994 revenue enhancement and cost reduction program. The Revised
Financial Plan proposes to close these gaps through a combination of City,
State and Federal actions.
On May 28, 1993, the staff of the Control Board, in reporting on
its review of the City's budget for fiscal year 1993, concluded that the
City would achieve a balanced budget for that year.
On June 4, 1993, OSDC issued a report on the Revised Financial
Plan. The report concluded that budget balance for fiscal year 1994 will
be difficult to achieve. The report found that expenditures could be $280
million higher, due to higher estimates for payments to the Health and
Hospitals Corporation (HHC) and for overtime in the uniformed services.
In addition, the report noted that revenues could be $111 million lower,
in part, because it is unlikely that resources from a sale or
restructuring of the Off-Track Betting Corporation will be realized as
planned. The report also found that much of the anticipated budget relief
of $530 million from the Federal and State governments was unlikely to
materialize and that it was uncertain whether the City would be able to
realize a one-time gain of $215 million from the proposed sale of certain
real estate tax receivables.
For fiscal years 1995 through 1997, the OSDC report found that
the budget gaps faced by the City could be greater than in the Revised
Financial Plan by $349 million in fiscal year 1995, $350 million in fiscal
year 1996 and $322 million in fiscal year 1997. These estimates reflect
higher payments to HHC and the expectation that receipts form a City-run
lottery will not materialize. The report noted that the Revised Financial
Plan makes no provision for collective bargaining costs after the
expiration of current contracts in mid-fiscal year 1995 and estimated that
each annual wage increase of one percent would cause the projected budget
gaps to widen by $56 million, $209 million and $363 million in fiscal
years 1995 through 1997, respectively. Finally, the report concluded that
with City spending growing faster than revenues, the challenge of
balancing future budgets is formidable.
On June 13, 1993, the City Council adopted a budget for fiscal
year 1994 which projects balanced operations based upon revenues of
$31.269 billion (the "Adopted Budget"). The Adopted Budget eliminates
$300 million of anticipated aid from the State and Federal governments
that was included in the Revised Financial Plan as it related to fiscal
year 1994. The impact of the elimination is offset in the Adopted Budget
by a larger program of agency spending reductions and revenue
enhancements, as well as various re-estimates of revenues and
expenditures.
On June 23, 1993, the City submitted to the Control Board a
fourth quarter modification to the Revised Financial Plan as it relates to
fiscal year 1993. The modification projects a balanced budget based on
revenues of $30.653 billion after taking into account a discretionary
transfer of surplus fiscal year 1993 funds to fiscal year 1994. The
modification also includes an unallocated reserve of $40 million, which
the City believes should be adequate to provide for any adjustments
required by the year-end audit of its fiscal year 1993 operating results.
Such audited results are expected to be known on or about October 31,
1993.
The City requires certain amounts of financing for seasonal and
capital spending purposes. The City expects to issue $1.4 billion of
notes for seasonal financing purposes during its 1994 fiscal year. The
City's capital financing program projects long-term financing requirements
of approximately $16.9 billion for the City's fiscal years 1994 through
1997 before taking into account capital program reductions totalling $3.2
billion proposed by the Mayor on July 2, 1993. The major capital
requirements include expenditures for the City's water supply system,
sewer and waste disposal systems, roads, bridges, mass transit, schools,
hospitals and housing.
(3) State Economic Trends. The City accounts for approximately
41% of the State's population and personal income, and the City's
financial health affects the State in numerous ways. The State has long
been one of the wealthiest states in the nation. For decades, however,
the State economy has grown more slowly than that of the nation as a
whole, resulting in the gradual erosion of its relative economic
affluence. The causes of this relative decline are varied and complex, in
many cases involving national and international developments beyond the
State's control. In recent years, the State's economic position has
improved in a manner consistent with that of the Northeast as a whole.
Part of the reason for the long-term relative decline in the
State's economy has been attributed to the combined State and local tax
burden, which is among the highest in the United States. The burdens of
State and local taxation, in combination with many other causes of
regional economic dislocation, may have contributed to the decision of
businesses and individuals to relocate outside, or not locate within, the
State. In 1987, the State enacted a major personal income tax reduction
and reform program and also reduced the tax rate on corporation income.
In addition, the State has provided various tax incentives to encourage
business relocation and expansion. The State, however, in its 1989-90,
1990-91 and 1991-92 fiscal years substantially increased taxes and fees to
help close projected budget gaps in those years, and in 1990-91, 1991-92
and 1992-93 delayed and restructured the remainder of the personal income
tax reduction program originally enacted in 1987. Under legislation
proposed with the 1993-94 budget, the rules for calculating tax liability
for the 1993 tax year will be the same as those for the 1992 tax year
(deferring for a fourth year a previously scheduled tax reduction), and
the tax reduction program will be frozen at current rates. Also, in July
1991 State legislation was enacted to phase out the benefit of graduated
income tax tables for taxpayers with adjusted gross income above $100,000.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the
issuer or obtained by S&P from other sources it considers reliable, and
will include: (1) likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in a small
degree.
A
Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for
payment of debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not
exceptional. Stability of the pledged revenues could show some variations
because of increased competition or economic influences on revenues.
Basic security provisions, while satisfactory, are less stringent.
Management performance appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions,
several of the above factors could contribute to a lesser capacity for
payment of debt service. The difference between "A" and "BBB" rating is
that the latter shows more than one fundamental weakness, or one very
substantial fundamental weakness, whereas the former shows only one
deficiency among the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions
are no more than adequate. Management performance could be stronger.
Plus (+) or minus (-): The ratings from AA to BBB may be
modified by the addition of a plus or minus designation to show relative
standing within the major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus sign (+)
designation.
SP-2
The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days. Issues assigned an A rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with
a plus sign (+) designation.
A-2
Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa
Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to show
relative standing within the major rating categories, except in the Aaa
category. The modifier 1 indicates a ranking for the security in the
higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a
rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade (MIG). Such
ratings recognize the differences between short-term credit risk and
long-term risk. Factors affecting the liquidity of the borrower and
short-term cyclical elements are critical in short-term ratings, while
other factors of major importance in bond risk, long-term secular trends
for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a
demand feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR.
Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment
Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies,
when Moody's assigns a MIG or VMIG rating, all categories define an
investment grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability
to meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years,
including commercial paper, certificates of deposit, medium-term notes,
and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for timely
payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues
rated F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payments, but the margin of
safety is not as great as the F-1+ and F-1 categories.
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES
Statement of Assets and Liabilities
August 11, 1993
ASSETS
Cash $100,000.00
Deferred organization expenses 52,000.00
__________
Total Assets $152,000.00
==========
LIABILITIES
Accrued organization expenses $ 52,000.00
__________
NET ASSETS applicable to 4,000 shares of
Class A shares of beneficial interest
and 4,000 shares of Class B
shares of beneficial interest
($.001 par value) issued and
outstanding (an unlimited number of
Class A and Class B shares authorized) . . . . . . . . .$100,000.00
==========
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
NET ASSET VALUE and redemption price per
share ($50,000/4,000 shares of beneficial
interest issued and outstanding) $ 12.50
Sales Charge--4.5% of public offering price .59
_________
Maximum offering price $ 13.09
==========
Class B Shares
NET ASSET VALUE and redemption price per
share ($50,000/4,000 shares of beneficial
interest issued and outstanding) $ 12.50
==========
NOTE - Premier Insured Municipal Bond Fund (the "Fund") was organized as
an unincorporated business trust under the laws of the Commonwealth of
Massachusetts on March 12, 1992 and has had no operations since that date
other than matters relating to its organization and registration as a non-
diversified, open-end investment company under the Investment Company Act
of 1940 and the Securities Act of 1933 and the sale and issuance of 4,000
Class A shares and 4,000 Class B shares of beneficial interest of the
California Series to The Dreyfus Corporation ("Initial Shares"). On December
8, 1993 the Fund's name was changed from Premier California Insured Municipal
Bond Fund to Premier Insured Municipal Bond Fund. Any organization expenses
payable by the Fund have been deferred and will be amortized from the date
operations commence over a period which it is expected that a benefit will
be realized, not to exceed five years. If any of the Initial Shares are
redeemed during the amortization period by any holder thereof, the redemption
proceeds will be reduced by any unamortized organization expenses in the same
proportion as the number of Initial Shares being redeemed bears to the number
of Initial Shares outstanding at the time of the redemption.
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Trustees
Premier California Insured Municipal Bond Fund
(Currently, Premier Insured Municipal
Bond Fund--California Series)
We have audited the accompanying statement of assets and liabilities of
Premier California Insured Municipal Bond Fund as of August 11, 1993.
This statement of assets and liabilities is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether this statement of assets and
liabilities is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of assets and liabilities. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall statement
of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of
Premier California Insured Municipal Bond Fund at August 11, 1993, in
conformity with generally accepted accounting principles.
New York, New York
August 11, 1993
Ernst & Young
Premier Insured Municipal Bond Fund, California Series
<TABLE>
<CAPTION>
Statement of Investments December 31, 1993 (Unaudited)
Principal
Municipal Bonds--100.0% Amount Value
------------ ----------
<S> <C> <C>
Anaheim Public Financing Authority, Electric Utility Revenue (San Juan 4)
5.75%, 10/1/2022 (Insured; FGIC)............................................................... $ 100,000 $ 103,125
California Public Works Board, Department of Corrections, Lease Revenue
(State Prison-Coalinga) 5.375%, 12/1/2019 (Insured; MBIA)...................................... 100,000 99,097
California Statewide Communities Development Authority, COP, Revenue
(Sutter Health Obligated Group) 5.50%, 8/15/2013 (Insured; MBIA)............................... 200,000 202,040
Calleguas - Las Virgines Public Financing Authority, Installment Purpose Revenue
5.125%, 7/1/2021 (Insured; FGIC)............................................................... 100,000 97,059
Central Union High School District, Imperial County
5.50%, 8/1/2017 (Insured; AMBAC)............................................................... 195,000 196,484
Eastern Municipal Water District, Water and Sewer Revenue, COP
5.25%, 7/1/2023 (Insured; FGIC)................................................................ 100,000 98,087
Glendale Redevelopment Agency, Tax Allocation Revenue, Refunding
(Central Glendale Redevelopment Project) 5.50%, 12/1/2014 (Insured; AMBAC)..................... 205,000 207,220
Los Angeles Convention and Exhibition Center Authority, Lease Revenue, Refunding
5.125%, 8/15/2013 (Insured; MBIA).............................................................. 100,000 98,113
Los Angeles Metropolitan Transportation Authority, Sales Tax Revenue, Refunding
5%, 7/1/2021 (Insured; FGIC)................................................................... 200,000 190,528
Moulton-Niguel Water District, Refunding (Consolidated Improvement District)
5.25%, 9/1/2013 (Insured; MBIA)................................................................ 100,000 99,748
Northern, Transmission Revenue, Refunding (Ore Transmission)
5.25%, 5/1/2020 (Insured; MBIA)................................................................ 100,000 98,171
Oxnard Financing Authority, Wastewater Revenue, Refunding
5.25%, 6/1/2020 (Insured; FGIC)................................................................ 200,000 196,346
Sacramento Municipal Utility District, Electric Revenue, Refunding
5.25%, 11/15/2020 (Insured; MBIA).............................................................. 200,000 196,312
San Diego, Sewer Revenue 5%, 5/15/2013 (Insured; AMBAC).......................................... 100,000 96,975
San Jose Redevelopment Agency, Tax Allocation, Refunding
(Merged Area Redevelopment Project) 5.25%, 8/1/2016 (Insured; MBIA)............................ 200,000 197,902
Southern Public Power Authority, Transmission Project Revenue, Refunding
5%, 7/1/2022 (Insured; MBIA)................................................................... 100,000 95,190
University of California, Revenue, Refunding (Housing Systems)
5.25%, 11/1/2012 (Insured; MBIA)............................................................... 200,000 199,036
----------
TOTAL INVESTMENTS (cost $2,467,149).............................................................. $2,471,433
==========
</TABLE>
Summary of Abbreviations
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Corporation
COP Certificate of Participation MBIA Municipal Bond Insurance Association
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Summary of Combined Ratings
- -----------------------------------------------------------------------------
Standard Percentage
Fitch (a) or Moody's or & Poor's of Value
- ----------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 100.0%
=====
<FN>
Notes to Statement of Investments:
(a) Fitch currently provides creditworthiness information for a limited
amount of investments.
(b) At December 31, 1993, 27.7% of the Fund's net assets are insured by FGIC
and 52.0% of the Fund's net assets are insured by MBIA.
</TABLE>
<TABLE>
Premier Insured Municipal Bond Fund, California Series
Statement of Assets and Liabilities December 31, 1993 (Unaudited)
<S> <C>
ASSETS:
Investments in securities, at value
(cost $2,467,149)--see statement........................................ $2,471,433
Receivable for shares of Beneficial Interest subscribed................... 1,874
Interest receivable....................................................... 35,466
Prepaid expenses--Note 1(e)............................................... 45,363
Due from The Dreyfus Corporation.......................................... 32,510
----------
2,586,646
LIABILITIES;
Accrued expenses.......................................................... 115,763
----------
NET ASSETS................................................................... $2,470,883
==========
REPRESENTED BY:
Paid-in capital........................................................... $2,466,599
Accumulated net unrealized appreciation on investments--Note 3............ 4,284
----------
NET ASSETS at value.......................................................... $2,470,883
==========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................. 82,237
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)................. 111,509
==========
NET ASSET VALUE per share:
Class A Shares
($1,048,555 / 82,237 shares)............................................ $12.75
======
Class B Shares
($1,422,328 / 111,509 shares)........................................... $12.76
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
from August 19, 1993 (commencement of operations) to December 31, 1993 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME:
Interest Income.................................................. $ 30,294
Expenses:
Management fee--Note 2(a)...................................... $ 3,266
Auditing fees.................................................. 6,667
Legal fees..................................................... 5,833
Shareholder servicing costs--Note 2(c)......................... 5,337
Prospectus and shareholders' reports........................... 4,875
Registration fees.............................................. 3,771
Organization expenses--Note 1(e)............................... 3,750
Trustees' fees and expenses--Note 2(d)......................... 2,810
Distribution fees (Class B shares)--Note 2(b).................. 1,663
Custodian fees................................................. 369
Miscellaneous.................................................. 939
----------
39,280
Less--expense reimbursement from Manager due to
undertakings--Note 2(a)...................................... 37,617
----------
Total Expenses............................................ 1,663
----------
INVESTMENT INCOME--NET.............................................. 28,631
NET UNREALIZED APPRECIATION ON INVESTMENTS.......................... 4,284
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 32,915
==========
</TABLE>
See notes to financial statements.
<TABLE>
Premier Insured Municipal Bond Fund, California Series
Statement of Changes in Net Assets
from August 19, 1993 (commencement of operations) to December 31, 1993 (Unaudited)
<S> <C>
OPERATIONS:
Investment income--net............................................................... $ 28,631
Net unrealized appreciation on investments for the period............................ 4,284
----------
Net Increase In Net Assets Resulting From Operations............................. 32,915
----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net:
Class A shares..................................................................... (13,175)
Class B shares..................................................................... (15,456)
----------
(28,631)
----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 1,688,062
Class B shares..................................................................... 2,053,625
Dividends reinvested:
Class A shares..................................................................... 9,892
Class B shares..................................................................... 13,734
Cost of shares redeemed:
Class A shares..................................................................... (699,632)
Class B shares..................................................................... (699,082)
----------
Increase In Net Assets From Beneficial Interest Transactions..................... 2,366,599
----------
Total Increase In Net Assets................................................... 2,370,883
NET ASSETS:
Beginning of period.................................................................. 100,000
----------
End of period........................................................................ $2,470,883
==========
</TABLE>
<TABLE>
<CAPTION>
Shares
------------------------------
Period Ended December 31, 1993
------------------------------
Class A Class B
---------- ----------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................................... 133,353 162,246
Shares issued for dividends reinvested........................... 784 1,087
Shares redeemed.................................................. (55,900) (55,824)
---------- ---------
Net Increase In Shares Outstanding........................... 78,237 107,509
========== =========
See notes to financial statements.
</TABLE>
Premier Insured Municipal Bond Fund, California Series
Financial Highlights (Unaudited)
Reference is made to page 5 of the Prospectus dated February 14, 1994.
See notes to financial statements.
<PAGE>
Premier Insured Municipal Bond Fund, California Series
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Premier Insured Municipal Bond Fund (the "Fund") was organized as a
Massachusetts business trust on March 12, 1992 and operates as a series
company currently offering one series, the California Series ("the Series").
The Series had no operations until to August 19, 1993 (commencement of
operations) other than matters relating to its organization and registration
as a non-diversified open-end management investment company under the
Investment Company Act of 1940 ("Act") and the Securities Act of 1933 and the
sale and issuance of 4,000 Class A shares and 4,000 Class B shares of
Beneficial Interest ("Initial Shares") to The Dreyfus Corporation ("Manager").
Dreyfus Service Corporation ("Distributor") acts as the distributor of the
Fund's shares. As of December 31, 1993, the Manager held 10,078 shares for
Class A and 10,070 shares for Class B. The Distributor is a wholly-owned
subsidiary of the Manager. The Fund's fiscal year ends on July 31.
The Fund accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them.
The Series offers both Class A and Class B shares. Class A shares are subject
to a sales charge imposed at the time of purchase and Class B shares are
subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(a) Portfolio valuation: The Series' investments (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 in the judgment of
the Service are readily available and are representative of the bid side of the
market 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, when appropriate, 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 Series 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 Series.
(c) Dividends to shareholders: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series 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 Series not to distribute such
gain.
(d) Federal income taxes: It is the policy of the Series to qualify as a
regulated investment company, which can distribute tax exempt dividends, by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to make
distributions of income and net realized capital gain sufficient to relieve it
from all, or substantially all, Federal income taxes.
(e) Other: Organization expenses paid by the Series are included in prepaid
expenses and are being amortized to operations from August 19, 1993, the date
operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At December 31, 1993, the
unamortized balance of such expenses amounted to $41,250. In the event that
any of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of such shares being redeemed bears to
the number of such shares outstanding at the time of such redemption.
NOTE 2--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("Agreement") with the Manager, the
management fee is computed at the annual rate of .55 of 1% of the average daily
value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses (exclusive
of distribution expenses and certain expenses as described above) exceed
2 1/2% of the first $30 million, 2% of the next $70 million and 1 1/2% of the
excess over $100 million of the average value of the Series' net assets in
accordance with California "blue sky" regulations. However, the Manager has
undertaken from August 19, 1993 through July 1, 1994 or until such time as the
net assets of the series exceed $25 million, regardless of whether they remain
at that level, to reimburse all fees and expenses of the Series (excluding
12b-1 distribution plan fee and certain expenses as described above). The
expense reimbursement, pursuant to the undertaking, amounted to $37,617 for
the period ended December 31, 1993.
The undertaking may be modified by the Manager from time to time, provided
that the resulting expense reimbursement would not be less than the amount
required pursuant to the Agreement.
The Distributor retained $2,282 during the period ended December 31, 1993
from commissions earned on sales of the Series' Class A shares.
(b) Under the Distribution Plan ("Class B Distribution Plan") adopted pursuant
to Rule 12b-1 under the Act, the Series pays the Distributor at an annual rate
of .50 of 1% of the value of the Series' Class B shares average daily net
assets, for the costs and expenses in connection with advertising, marketing
and distributing the Series' Class B shares. The Distributor may make payments
to one or more Service Agents (a securities dealer, financial institution, or
other industry professional) based on the value of the Series' Class B shares
owned by clients of the Service Agent.
During the period ended December 31, 1993, $1,663 was charged to the Series
pursuant to the Class B Distribution Plan.
(c) Under the Shareholder Services Plan, the Series pays the Distributor, at
an annual rate of .25 of 1% of the value of the average daily net assets of
Class A and Class B shares for servicing shareholder accounts. The services
provided may include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Series and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. For the period ended December 31, 1993, $653 and $832 were charged to
the Class A and Class B shares, respectively, pursuant to the Shareholder
Services Plan.
(d) Certain officers and trustees of the Fund are "affiliated persons," as
defined in the Act, of the Manager and/or the Distributor. Each trustee who is
not an "affiliated person" receives from the Fund an annual fee of $1,000 and
an attendance fee of $250 per meeting.
(e) On December 5, 1993, the Manager entered into an Agreement and Plan of
Merger providing for the merger of the Manager with a subsidiary of Mellon Bank
Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including the receipt of certain regulatory approvals and
the approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in mid-1994, but could occur significantly later.
Because the merger will constitute an "assignment" of the Fund's Management
Agreement with the Manager under the Investment Company Act of 1940, and thus a
termination of such Agreement, the Manager will seek prior approval from the
Fund's Board and shareholders.
NOTE 3--Securities Transactions:
The aggregate amount of purchases of investment securities, amounted to
$2,467,130, for the period ended December 31, 1993, and consisted entirely of
municipal bonds and short-term municipal investments.
At December 31, 1993, accumulated net unrealized appreciation on investments
was $4,284 consisting of $16,383 gross unrealized appreciation and $12,099
gross unrealized depreciation.
At December 31, 1993, 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).
PREMIER INSURED MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the California Series for
the period from August 19, 1993 (commencement of operations)
to December 31, 1993 (unaudited).
Included in Part B of the Registration Statement:
Statement of Assets & Liabilities -- as of August 11,
1993.
Report of Ernst & Young, Independent Auditors, dated
August 11, 1993.
Statement of Investments -- December 31, 1993
(unaudited).
Statement of Assets and Liabilities -- December 31, 1993
(unaudited).
Statement of Operations -- for the period from August
19, 1993 (commencement of operations) to December 31,
1993 (unaudited).
Statement of Changes in Net Assets -- for the period
from August 19, 1993 (commencement of operations) to
December 31, 1993 (unaudited).
Notes to Financial Statements (unaudited).
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Amended and Restated Agreement and Declaration of Trust.
(1)(b) Articles of Amendment to Amended and Restated Agreement and
Declaration of Trust.
(2) By-Laws.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(6)(b) Distribution Plan Agreement is incorporated by reference to
Exhibit 6(b) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on July 16, 1993.
(6)(c) Shareholder Services Plan Agreement is incorporated by reference
to Exhibit 6(c) of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A, filed on July 16, 1993.
(8)(a) Custody Agreement.
(8)(b) Sub-Custodian Agreements.
(9) Shareholder Services Plan.
(10) Opinion and consent of Stroock & Stroock & Lavan.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Schedules of Computation of Performance Data.
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and officers are
incorporated by reference to the Registration Statement
on Form N-1A, filed on April 27, 1993.
(b) Certificate of Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of January 21, 1994
______________ ______________________________
Shares of beneficial
interest, $.001 per share
National Series -
California Series 64
Connecticut Series -
Florida Series -
New Jersey Series -
New York Series -
Item 27. Indemnification
_______ _______________
Reference is made to Article EIGHTH of the Registrant's Amended and
Restated Agreement and Declaration of Trust to be filed as Exhibit
1(a) hereto. The application of these provisions is limited by
Article 10 of the Registrant's By-Laws to be filed as Exhibit (2)
hereto and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Item 27. Indemnification (continued)
_______ _______________
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference also is made to the Distribution Agreement to be filed as
Exhibit 6(a) hereto.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for sponsored
investment companies registered under the Investment Company Act
of 1940 and as an investment adviser to institutional and
individual accounts. Dreyfus also serves as sub-investment
adviser to and/or administrator of other investment companies.
Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as distributor of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Director of Independence One Investment
Services, Inc.
Division of Michigan National Corp.
27777 Inkster Road
Farmington Hills, Michigan 48018;
Past Chairman of the Board of Trustees of
Skillman Foundation
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.
767 Fifth Avenue
New York, New York 10153
ABIGAIL Q. McCARTHY Author, lecturer, columnist and educational
Director consultant
2126 Connecticut Avenue
Washington, D.C. 20008
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board, President and Investment
Chairman of the Board and Officer:
Chief Executive Officer The Dreyfus Leverage Fund, Inc.++;
Chairman of the Board and Investment Officer:
The Dreyfus Fund Incorporated++;
HOWARD STEIN Dreyfus New Leaders Fund, Inc.++;
(cont'd) The Dreyfus Third Century Fund, Inc.++;
Chairman of the Board:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund++++;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company (N.J.)++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
President, Managing General Partner and
Investment Officer:
The Dreyfus Convertible Securities Fund,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Managing General Partner:
Dreyfus Investors GNMA Fund, L.P.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Strategic World Investing, L.P.++;
Director, President and Investment Officer:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Premier Growth Fund, Inc.++;
Director and President:
Dreyfus Life Insurance Company*;
Director and Investment Officer:
Dreyfus Growth and Income Fund, Inc.++;
President:
Dreyfus Consumer Life Insurance Company*;
President and Investment Officer:
Dreyfus Growth Allocation Fund, Inc.++;
Director:
Avnet, Inc.**;
Comstock Partners Strategy Fund, Inc.***;
Dreyfus A Bonds Plus, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
The Dreyfus Fund International
Limited++++++;
Dreyfus Global Investing, Inc.++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
HOWARD STEIN Dreyfus Money Market Instruments, Inc.++;
(cont'd) Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus Partnership Management, Inc.*;
Dreyfus Personal Management, Inc.**;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
Dreyfus Strategic Governments Income,
Inc.++;
The Dreyfus Trust Company++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
FN Network Tax Free Money Market Fund,
Inc.++;
Seven Six Seven Agency, Inc.*;
World Balanced Fund++++;
Trustee and Investment Officer:
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Strategic Investing++;
Dreyfus Variable Investment Fund++;
Trustee:
Corporate Property Investors
New York, New York;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term Treasury
Fund++;
Dreyfus Strategic Income++
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Consumer Life Insurance Company*;
Dreyfus Land Development Corporation*;
Dreyfus Life Insurance Company*;
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, Chief Operating The Dreyfus Trust Company++;
Officer and Director Director, President and Investment Officer:
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus-Lincoln, Inc.*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Trustee, President and Investment Officer:
Dreyfus Cash Management++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Premier GNMA Fund++;
Trustee and President:
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
Trustee, Vice President and Investment Officer:
Dreyfus Institutional Short Term
Treasury Fund++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director, Vice President and Investment
Officer:
Dreyfus Balanced Fund, Inc.++;
Dreyfus International Equity Fund, Inc.++;
JOSEPH S. DiMARTINO Director and Vice President:
(cont'd) Dreyfus Life Insurance Company*;
Dreyfus Service Organization, Inc.*;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
Director and Investment Officer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
The Dreyfus Convertible Securities Fund,
Inc.++;
Dreyfus Short-Term Income Fund, Inc.++;
Premier Growth Fund, Inc.++;
Director and Corporate Member:
Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
Director:
Dreyfus Management, Inc.**;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
President and Investment Officer:
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Vice President:
Dreyfus Consumer Life Insurance Company*;
Investment Officer:
The Dreyfus Fund Incorporated++;
Dreyfus Investors GNMA Fund, L.P.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
McDonald Money Market Fund, Inc.++;
McDonald U.S. Government Money Market
Fund, Inc.++;
President, Chief Executive Officer and
Director:
Dreyfus Personal Management, Inc.*;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Consumer Bank+;
Director Director and President:
Dreyfus Land Development Corporation*;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Life Insurance Company*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus America Fund++++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Management, Inc.**;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
Vice President:
The Dreyfus Convertible Securities Fund,
Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus-Lincoln, Inc.*;
Trustee:
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Investment Officer:
The Dreyfus Fund Incorporated++
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Life Insurance Company*;
The Truepenny Corporation*;
Vice President:
Dreyfus Consumer Life Insurance Company*;
Treasurer:
Dreyfus Management, Inc.**;
Dreyfus Personal Management, Inc.**;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Assistant Treasurer:
The Dreyfus Fund Incorporated++;
Controller:
Dreyfus Land Development Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ALAN M. EISNER Director and President:
Vice President and Chief The Truepenny Corporation*;
Financial Officer Director, Vice President and Chief Financial
Officer:
Dreyfus Life Insurance Company*;
Vice President and Chief Financial Officer:
Dreyfus Acquisition Corporation*;
Dreyfus Consumer Life Insurance Company*;
Treasurer:
Dreyfus Realty Advisors, Inc.+++;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
Dreyfus Thrift & Commerce****;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*
DAVID W. BURKE Vice President and Director:
Vice President and Chief The Dreyfus Trust Company++;
Administrative Officer Formerly, President:
CBS News, a division of CBS, Inc.
524 West 57th Street
New York, New York 10019
ELIE M. GENADRY President:
Vice President - Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Executive Vice President:
Dreyfus Service Corporation*;
Senior Vice President:
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
ELIE M. GENADRY Dreyfus Edison Electric Index Fund,
(cont'd) Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus Tax Exempt Cash Management++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus-Wilshire Target Funds, Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Vice President:
The Dreyfus Trust Company++;
Premier California Insured Municipal
Bond Fund++;
Premier California Municipal Bond Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
Treasurer:
Pacific American Fund+++++
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Personal Management, Inc.**;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
McDonald Money Market Fund, Inc.++;
McDonald Tax Exempt Money Market Fund,
Inc.++;
McDonald U.S. Government Money Market
Fund, Inc.++;
The Truepenny Corporation+;
Director:
Dreyfus America Fund++++;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Life Insurance Company*;
The Dreyfus Trust Company++;
Vice President:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
DANIEL C. MACLEAN Dreyfus California Tax Exempt Money Market
(cont'd) Fund++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund, L.P.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
DANIEL C. MACLEAN Dreyfus Treasury Prime Cash Management++;
(cont'd) Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
First Prairie Tax Exempt Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier California Insured Municipal
Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Secretary:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
The Dreyfus Convertible Securities Fund,
Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Investing, Inc.++;
DANIEL C. MACLEAN Dreyfus Growth Allocation Fund,
(cont'd) Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Land Development Corporation+;
The Dreyfus Leverage Fund, Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic World Investing, L.P.++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Seven Six Seven Agency, Inc.*;
Director and Assistant Secretary:
The Dreyfus Fund International
Limited++++++
JEFFREY N. NACHMAN Vice President-Financial:
Vice President - Mutual Dreyfus A Bonds Plus, Inc.++;
Fund Accounting Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
JEFFREY N. NACHMAN Dreyfus California Tax Exempt Bond Fund,
(cont'd) Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Convertible Securities Fund,
Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund, L.P.++;
The Dreyfus Leverage Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
JEFFREY N. NACHMAN Dreyfus 100% U.S. Treasury Intermediate
(cont'd) Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic World Investing, L.P.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
First Prairie Tax Exempt Money Market
Fund++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
McDonald Money Market Fund, Inc.++;
McDonald Tax Exempt Money Market Fund,
Inc.++;
JEFFREY N. NACHMAN McDonald U.S. Government Money Market
(cont'd) Fund, Inc.++;
Peoples Index Fund, Inc.++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Vice President and Treasurer:
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Global Investing, Inc.++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Growth Fund, Inc.++;
Premier California Insured Municipal
Bond Fund++;
Assistant Treasurer:
Pacific American Fund+++++
PETER A. SANTORIELLO Director, President and Investment
Vice President Officer:
Dreyfus Balanced Fund, Inc.++;
Director and President:
Dreyfus Management, Inc.**;
Vice President:
Dreyfus Personal Management, Inc.*
ROBERT H. SCHMIDT President and Director:
Vice President Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
Formerly, Chairman and Chief Executive
Officer:
Levine, Huntley, Schmidt & Beaver
250 Park Avenue
New York, New York 10017
KIRK V. STUMPP Senior Vice President and
Vice President - Director of Marketing:
New Product Development Dreyfus Service Corporation*
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice President and Dreyfus Thrift & Commerce****;
Director of Fixed- The Dreyfus Consumer Bank;
Income Research Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Vice President:
Assistant Vice President - Dreyfus Consumer Life Insurance
Human Resources Company++;
Formerly, Assistant Commissioner:
Department of Parks and Recreation of the
City of New York
830 Fifth Avenue
New York, New York 10022
JOHN J. PYBURN Vice President and Treasurer:
Assistant Vice President McDonald Money Market Fund, Inc.++;
McDonald Tax Exempt Money Market Fund,
Inc.++;
McDonald U.S. Government Money Market
Fund, Inc.++;
Treasurer and Assistant Secretary:
The Dreyfus Fund International
Limited++++++;
Treasurer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund, Inc.++;
JOHN J. PYBURN Dreyfus Cash Management++;
(cont'd) Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Convertible Securities Fund,
Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund, L.P.++;
The Dreyfus Leverage Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
JOHN J. PYBURN Dreyfus 100% U.S. Treasury Money Market
(cont'd) Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic World Investing, L.P.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
First Prairie Tax Exempt Money Market
Fund++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++
MAURICE BENDRIHEM Formerly, Vice President-Financial Planning,
Controller Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019;
Treasurer:
Dreyfus Acquisition Corporation*;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Land Development Corporation*;
Dreyfus Life Insurance Company*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
MARK N. JACOBS Vice President:
Secretary and Deputy Dreyfus A Bonds Plus, Inc.++;
General Counsel Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
The Dreyfus Convertible Securities Fund,
Inc. ++;
Dreyfus Edison Electric Index Fund,
Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Investing, Inc.++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
The Dreyfus Leverage Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
MARK N. JACOBS Dreyfus New Jersey Intermediate Municipal
(cont'd) Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic World Investing, L.P.++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Director:
World Balanced Fund++++;
Director and Secretary:
Dreyfus Life Insurance Company*;
Secretary:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
MARK N. JACOBS Dreyfus Insured Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund, L.P.++;
Dreyfus Management, Inc.**;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Personal Management, Inc.**;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
First Prairie Tax Exempt Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Money Market
Fund++;
MARK N. JACOBS General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Pacific American Fund+++++;
Premier California Insured Municipal
Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund, Inc.++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Intermediate
Municipal Bond Fund++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Convertible Securities Fund,
Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
CHRISTINE PAVALOS Dreyfus Florida Intermediate Municipal
(cont'd) Bond Fund++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Investing, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Investors GNMA Fund, L.P.++;
Dreyfus Land Development Corporation*;
The Dreyfus Leverage Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Management, Inc.**;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
CHRISTINE PAVALOS Dreyfus New York Tax Exempt Money Market
(cont'd) Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund, L.P.++;
Dreyfus 100% U.S. Treasury Long Term Fund,
L.P.++;
Dreyfus 100% U.S. Treasury Money Market
Fund, L.P.++;
Dreyfus 100% U.S. Treasury Short Term
Fund, L.P.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Service Corporation*;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic World Investing, L.P.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
First Prairie Tax Exempt Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
CHRISTINE PAVALOS General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
McDonald Money Market Fund, Inc.++;
McDonald Tax Exempt Money Market Fund,
Inc.++;
McDonald U.S. Government Money Market
Fund, Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier California Insured Municipal
Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 767 Fifth Avenue, New
York, New York 10153.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
++++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ _____________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Money Market Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) The Dreyfus Fund Incorporated
21) Dreyfus Global Investing, Inc.
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Institutional Money Market Fund
27) Dreyfus Institutional Short Term Treasury Fund
28) Dreyfus Insured Municipal Bond Fund, Inc.
29) Dreyfus Intermediate Municipal Bond Fund, Inc.
30) Dreyfus International Equity Fund, Inc.
31) Dreyfus Investors GNMA Fund, L.P.
32) The Dreyfus Leverage Fund, Inc.
33) Dreyfus Life and Annuity Index Fund, Inc.
34) Dreyfus Liquid Assets, Inc.
35) Dreyfus Massachusetts Intermediate Municipal Bond Fund
36) Dreyfus Massachusetts Municipal Money Market Fund
37) Dreyfus Massachusetts Tax Exempt Bond Fund
38) Dreyfus Michigan Municipal Money Market Fund, Inc.
39) Dreyfus Money Market Instruments, Inc.
40) Dreyfus Municipal Bond Fund, Inc.
41) Dreyfus Municipal Cash Management Plus
42) Dreyfus Municipal Money Market Fund, Inc.
43) Dreyfus New Jersey Intermediate Municipal Bond Fund
44) Dreyfus New Jersey Municipal Bond Fund, Inc.
45) Dreyfus New Jersey Municipal Money Market Fund, Inc.
46) Dreyfus New Leaders Fund, Inc.
47) Dreyfus New York Insured Tax Exempt Bond Fund
48) Dreyfus New York Municipal Cash Management
49) Dreyfus New York Tax Exempt Bond Fund, Inc.
50) Dreyfus New York Tax Exempt Intermediate Bond Fund
51) Dreyfus New York Tax Exempt Money Market Fund
52) Dreyfus Ohio Municipal Money Market Fund, Inc.
53) Dreyfus 100% U.S. Treasury Intermediate Term Fund, L.P.
54) Dreyfus 100% U.S. Treasury Long Term Fund, L.P.
55) Dreyfus 100% U.S. Treasury Money Market Fund, L.P.
56) Dreyfus 100% U.S. Treasury Short Term Fund, L.P.
57) Dreyfus Pennsylvania Municipal Money Market Fund
58) Dreyfus Short-Intermediate Government Fund
59) Dreyfus Short-Intermediate Municipal Bond Fund
60) Dreyfus Short-Term Income Fund, Inc.
61) Dreyfus Strategic Growth, L.P.
62) Dreyfus Strategic Income
63) Dreyfus Strategic Investing
64) Dreyfus Strategic World Investing, L.P.
65) Dreyfus Tax Exempt Cash Management
66) The Dreyfus Third Century Fund, Inc.
67) Dreyfus Treasury Cash Management
68) Dreyfus Treasury Prime Cash Management
69) Dreyfus Variable Investment Fund
70) Dreyfus-Wilshire Target Funds, Inc.
71) Dreyfus Worldwide Dollar Money Market Fund, Inc.
72) First Prairie Cash Management
73) First Prairie Diversified Asset Fund
74) First Prairie Money Market Fund
75) First Prairie Tax Exempt Bond Fund, Inc.
76) First Prairie Tax Exempt Money Market Fund
77) First Prairie U.S. Treasury Securities Cash Management
78) FN Network Tax Free Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacific American Fund
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier California Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier GNMA Fund
93) Premier Growth Fund, Inc.
94) Premier Municipal Bond Fund
95) Premier New York Municipal Bond Fund
96) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Howard Stein* Chairman of the Board None
Robert H. Schmidt* President and Director None
Joseph S. DiMartino* Executive Vice President and Director None
Lawrence M. Greene* Executive Vice President and Director None
Julian M. Smerling* Executive Vice President and Director None
Elie M. Genadry* Executive Vice President Vice
President
Hank Gottmann* Executive Vice President None
Donald A. Nanfeldt* Executive Vice President Vice
President
Kevin Flood* Senior Vice President None
Roy Gross* Senior Vice President None
Irene Papadoulis** Senior Vice President None
Kirk Stumpp* Senior Vice President None
and Director of Marketing
Diane M. Coffey* Vice President None
Walter T. Harris* Vice President None
William Harvey* Vice President None
Adwick Pinnock** Vice President None
George Pirrone* Vice President/Trading None
Karen Rubin Waldmann* Vice President None
Peter D. Schwab* Vice President/New Products None
Michael Anderson* Assistant Vice President None
Carolyn Sobering* Assistant Vice President-Trading None
Daniel C. Maclean* Secretary Vice
President
Robert F. Dubuss* Treasurer None
Maurice Bendrihem* Controller None
Michael J. Dolitsky* Assistant Controller None
Susan Verbil Goldgraben* Assistant Treasurer None
Christine Pavalos* Assistant Secretary Assistant
Secretary
Broker-Dealer Division of Dreyfus Service Corporation
=====================================================
Positions and offices with Positions and
Name and principal Broker-Dealer Division of offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Elie M. Genadry* President Vice
President
Craig E. Smith* Executive Vice President None
Peter Moeller* Vice President and Sales Manager None
Kristina Williams
Pomano Beach, FL Vice President-Administration None
Edward Donley
Latham, NY Regional Vice President None
Glenn Farinacci* Regional Vice President None
Peter S. Ferrentino
San Francisco, CA Regional Vice President None
William Frey
Hoffman Estates, IL Regional Vice President None
Suzanne Haley
Tampa, FL Regional Vice President None
Philip Jochem
Warrington, PA Regional Vice President None
Fred Lanier
Atlanta, GA Regional Vice President None
Beth Presson
Colchester, VT Regional Vice President None
Joseph Reaves
New Orleans, LA Regional Vice President None
Christian Renninger
Germantown, MD Regional Vice President None
Kurt Wiessner
Minneapolis, MN Regional Vice President None
Mary Rogers** Assistant Vice President None
Institutional Services Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Institutional Services Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President Vice
President
Donald A. Nanfeldt* Executive Vice President Vice
President
Charles Cardona** Senior Vice President None
Stacy Alexander* Vice President None
Eric Almquist* Vice President None
James E. Baskin+++++++ Vice President None
Kenneth Bernstein
Boca Raton, FL Vice President-Institutional Sales None
Stephen Burke* Vice President None
Laurel A. Diedrick
Burrows*** Vice President None
Daniel L. Clawson++++ Vice President None
Michael Caraboolad
Gates Mills, OH Vice President-Institutional Sales None
Laura Caudillo++ Vice President-Institutional Sales None
Steven Faticone***** Vice-President-Institutional Sales None
William E. Findley**** Vice President None
Mary Genet***** Vice President None
Melinda Miller Gordon* Vice President None
Christina Haydt++ Vice President-Institutional Sales None
Carol Anne Kelty* Vice President-Institutional Sales None
Gwenn Kessler***** Vice President-Institutional Sales None
Nancy Knee++++ Vice President-Institutional Sales None
Bradford Lange* Vice President-Institutional Sales None
Kathleen McIntyre
Lewis++ Vice President None
Eva Machek***** Vice President-Institutional Sales None
Mary McCabe*** Vice President-Institutional Sales None
James McNamara***** Vice President-Institutional Sales None
James Neiland* Vice President None
Susan M. O'Connor* Vice President-Institutional
Seminars None
Andrew Pearson+++ Vice President-Institutional Sales None
Jean Heitzman Penny***** Vice President-Institutional Sales None
Dwight Pierce+ Vice President None
Lorianne Pinto* Vice President-Institutional Sales None
Douglas Rentschler
Grosse Point Park, MI Vice President-Institutional Sales None
Leah Ryan**** Vice President-Institutional Sales None
Emil Samman* Vice President-Institutional
Marketing None
Edward Sands* Vice President-Institutional
Administration None
William Schalda* Vice President None
Sue Ann Seefeld++++ Vice President-Institutional Sales None
Elizabeth Biordi Vice President-Institutional
Wieland* Administration None
Jeanne Butler* Assistant Vice President-
Institutional Operations None
Roberta Hall***** Assistant Vice President-
Institutional Servicing None
Tracy Hopkins** Assistant Vice President-
Institutional Operations None
Lois Paterson* Assistant Vice President-
Institutional Operations None
Karen Markovic
Shpall++++++ Assistant Vice President None
Patrick Synan** Assistant Vice President-
Institutional Support None
Emilie Tongalson** Assistant Vice President-
Institutional Servicing None
Carolyn Warren++ Assistant Vice President-
Institutional Servicing None
Tonda Watson**** Assistant Vice President-
Institutional Sales None
Group Retirement Plans Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Group Retirement Plans Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President Vice
President
Robert W. Stone* Executive Vice President None
Paul Allen* Executive Vice President-
National Sales None
Leonard Larrabee* Vice President and Senior Counsel None
George Anastasakos* Vice President None
Bart Ballinger++ Vice President-Sales None
Paula Cleary* Vice President-Marketing None
Ellen S. Dinas* Vice President-Marketing/Communications None
Wendy Holcomb++ Vice President-Sales None
William Gallagher* Vice President-Sales None
Brent Glading* Vice President-Sales None
Gerald Goz* Vice President-Sales None
Jeffrey Lejune
Dallas, TX Vice President-Sales None
Samuel Mancino** Vice President-Installation None
Joanna Morris* Vice President-Sales None
Joseph Pickert++ Vice President-Sales None
Alison Saunders** Vice President-Enrollment None
Scott Zeleznik* Vice President-Sales None
Alana Zion* Vice President-Sales None
Jeffrey Blake* Assistant Vice President-Sales None
_____________________________________________________
* The address of the offices so indicated is 200 Park Avenue, New
York, New York 10166
** The address of the offices so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
*** The address of the offices so indicated is 580 California Street,
San Francisco, California 94104.
**** The address of the offices so indicated is 3384 Peachtree Road,
Suite 100, Atlanta, Georgia 30326-1106.
***** The address of the offices so indicated is 190 South LaSalle
Street, Suite 2850, Chicago, Illinois 60603.
+ The address of the offices so indicated is P.O. Box 1657, Duxbury,
Massachusetts 02331.
++ The address of the offices so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
+++ The address of the offices so indicated is 11 Berwick Lane,
Edgewood, Rhode Island 02905.
++++ The address of the offices so indicated is 1700 Lincoln Street,
Suite 3940, Denver, Colorado 80203.
+++++ The address of the offices so indicated is 6767 Forest Hill
Avenue, Richmond, Virginia 23225.
++++++ The address of the offices so indicated is 2117 Diamond Street,
San Diego, California 92109.
+++++++ The address of the offices so indicated is P.O. Box 757,
Holliston, Massachusetts 01746.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
Registrant hereby undertakes
(b)(1) With respect to the Florida Series, the Connecticut Series, the
National Series, the New Jersey Series and the New York Series,
to file a post-effective amendment, using financial statements
which need not be certified, within four to six months from the
effective date of this Registration Statement.
(2) to call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(3) To furnish each person to whom a prospectus is delivered with a
copy of its latest annual report to shareholders, upon request
and without charge, beginning with the annual report to
shareholders for the fiscal year ending July 31, 1994.
SIGNATURES
---------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 4th day of February, 1994.
PREMIER INSURED MUNICIPAL BOND FUND
BY: /s/Richard J. Moynihan*
RICHARD J. MOYNIHAN, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
/s/Richard J. Moynihan * President (Principal Executive 2/4/94
Richard J. Moynihan Officer) and Trustee
/s/Jeffrey N. Nachman * Treasurer (Principal Financial 2/4/94
Jeffrey N. Nachman Officer)
/s/Clifford L. Alexander * Trustee 2/4/94
Clifford L. Alexander
/s/Peggy C. Davis * Trustee 2/4/94
Peggy C. Davis
/s/Saul B. Klaman * Trustee 2/4/94
Saul B. Klaman
/s/Nathan Leventhal * Trustee 2/4/94
Nathan Leventhal
/s/Ernest Kafka * Trustee 2/4/94
Ernest Kafka
BY: /s/Robert R. Mullery*
_____________________
Robert R. Mullery,
Attorney-in-Fact
Index of Exhibits
Page
(1)(a) Amended and Restated Agreement and Declaration of Trust. . . .
(1)(b) Articles of Amendment to Amended and Restated Agreement
and Declaration of Trust . . . . . . . . . . . . . . . . . . .
(2) By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Management Agreement . . . . . . . . . . . . . . . . . . . . .
(6)(a) Distribution Agreement . . . . . . . . . . . . . . . . . . . .
(8)(a) Custody Agreement. . . . . . . . . . . . . . . . . . . . . . .
(8)(b) Sub-Custodian Agreements . . . . . . . . . . . . . . . . . . .
(9) Shareholder Services Plan . . . . . . . . . . . . . . . . . .
(10) Opinion of Stroock & Stroock & Lavan . . . . . . . . . . . . .
(11) Consent of Independent Auditors. . . . . . . . . . . . . . . .
(15) Distribution Plan. . . . . . . . . . . . . . . . . . . . . . .
(16) Schedules of Computation of Performance Data . . . . . . . . .
Other Exhibits
(b) Secretary's Certificate. . . . . . . . . . . . . . . . . . . .
EXHIBIT (1)(a)
PREMIER CALIFORNIA INSURED MUNICIPAL BOND FUND
(formerly, D 1992-9 Trust)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF
TRUST, made this 14th day of April, 1993, hereby amends and
restates in its entirety the Agreement and Declaration of Trust
made at Boston, Massachusetts, dated March 12, 1992, by the
Trustee hereunder (hereinafter with any additional and successor
trustees referred to as the "Trustees") and by the holders of
shares of beneficial interest to be issued hereunder as
hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts business
trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they
will hold all cash, securities and other assets, which they may
from time to time acquire in any manner as Trustees hereunder IN
TRUST to manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Premier
California Insured Municipal Bond Fund."
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The term "Commission" shall have the meaning
provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business
trust established by this Agreement and Declaration of Trust, as
amended from time to time;
(c) "Shareholder" means a record owner of Shares of the
Trust;
(d) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the Trust
shall be divided from time to time or, if more than one series or
class of Shares is authorized by the Trustees, the equal
proportionate transferable units into which each series or class
of Shares shall be divided from time to time, and includes a
fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act
of 1940, and the Rules and Regulations thereunder, all as amended
from time to time;
(f) The term "Manager" is defined in Article IV, Sec-
tion 5;
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other
enterprise;
(h) "Declaration of Trust" shall mean this Agreement
and Declaration of Trust as amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as
amended from time to time;
(j) The term "series" or "series of Shares" refers to
the one or more separate investment portfolios of the Trust into
which the assets and liabilities of the Trust may be divided and
the Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the
division of Shares representing any series into two or more
classes as provided in Article III, Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or
purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer, lend,
write options on, exchange, distribute or otherwise dispose of and
deal in and with securities of every nature, kind, character, type
and form, including, without limitation of the generality of the
foregoing, all types of stocks, shares, futures contracts, bonds,
debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of
interest, certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or evidences
of indebtedness issued or created by or guaranteed as to principal
and interest by any state or local government or any agency or
instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession
thereof, by any foreign government or any agency, instrumentality,
territory, district or possession thereof, by any corporation
organized under the laws of any state, the United States or any
territory or possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time deposits,
bankers' acceptances and commercial paper; to pay for the same in
cash or by the issue of stock, including treasury stock, bonds or
notes of the Trust or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest in respect
of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise
act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any said
instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares including Shares in fractional
denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or
other assets of the appropriate series or class of Shares, whether
capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of The Commonwealth of Massachu-
setts;
(e) to conduct its business, promote its purposes, and
carry on its operations in any and all of its branches and
maintain offices both within and without The Commonwealth of
Massachusetts, in any and all States of the United States of
America, in the District of Columbia, and in any other parts of
the world; and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion, and attainment
of any of the businesses and purposes herein specified or which at
any time may be incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust
organized under the Massachusetts General Laws, and to have and
exercise all of the powers conferred by the laws of The Common-
wealth of Massachusetts upon a Massachusetts business trust.
The foregoing provisions of this Article II shall be
construed both as purposes and powers and each as an independent
purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares
of the Trust shall be issued in one or more series as the Trustees
may, without Shareholder approval, authorize. Each series shall
be preferred over all other series in respect of the assets
allocated to that series and shall represent a separate investment
portfolio of the Trust. The beneficial interest in each series at
all times shall be divided into Shares, with or without par value
as the Trustees may from time to time determine, each of which
shall, except as provided in the following sentence, represent an
equal proportionate interest in the series with each other Share
of the same series, none having priority or preference over
another. The Trustees may, without Shareholder approval, divide
Shares of any series into two or more classes, Shares of each such
class having such preferences and special or relative rights and
privileges (including conversion rights, if any) as the Trustees
may determine. The number of Shares authorized shall be
unlimited, and the Shares so authorized may be represented in part
by fractional shares. From time to time, the Trustees may divide
or combine the Shares of any series or class into a greater or
lesser number without thereby changing the proportionate
beneficial interests in the series or class.
Section 2. Ownership of Shares. The ownership of
Shares will be recorded in the books of the Trust or a transfer
agent. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders of
Shares of each series and class and as to the number of Shares of
each series and class held from time to time by each. No
certificates certifying the ownership of Shares need be issued
except as the Trustees may otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are
authorized, from time to time, to issue or authorize the issuance
of Shares at not less than the par value thereof, if any, and to
fix the price or the minimum price or the consideration (in cash
and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum
consideration for such Shares. Anything herein to the contrary
notwithstanding, the Trustees may issue Shares pro rata to the
Shareholders of a series at any time as a stock dividend, except
to the extent otherwise required or permitted by the preferences
and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders
of a particular class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such class held
by each of them.
All consideration received by the Trust for the issue or
sale of Shares of each series, together with all income, earnings,
profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall belong irrevocably to the
series of Shares with respect to which the same were received by
the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of
the Trust and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to the
same extent as whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of whole
Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to
participate upon liquidation of the Trust or of a particular
series of Shares.
Section 4. No Preemptive Rights; Derivative Suits.
Shareholders shall have no preemptive or other right to subscribe
for any additional Shares or other securities issued by the Trust.
No action may be brought by a Shareholder on behalf of the Trust
or a series unless a prior demand regarding such matter has been
made on the Trustees and the Shareholders of the Trust or such
series.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder by
virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same
nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but only to the rights of said decedent
under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall
have any power to bind any Shareholder or Trustee personally or to
call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder at any
time personally may agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a
recitation limiting the obligation represented thereby to the
Trust and its assets or the assets of a particular series (but the
omission of such a recitation shall not operate to bind any Share-
holder or Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either
by the Trustees or the Shareholders. The Trustees named herein
shall serve until the first meeting of the Shareholders or until
the election and qualification of their successors. Prior to the
first meeting of Shareholders the initial Trustees hereunder may
elect additional Trustees to serve until such meeting and until
their successors are elected and qualified. The Trustees also at
any time may elect Trustees to fill vacancies in the number of
Trustees. The number of Trustees shall be fixed from time to time
by the Trustees and, at or after the commencement of the business
of the Trust, shall be not less than three. Each Trustee, whether
named above or hereafter becoming a Trustee, shall serve as a
Trustee during the lifetime of this Trust, until such Trustee
dies, resigns, retires, or is removed, or, if sooner, until the
next meeting of Shareholders called for the purpose of electing
Trustees and the election and qualification of his successor.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect
their own successors and, pursuant to this Section, may appoint
Trustees to fill vacancies.
Section 2. Powers. The Trustees shall have all powers
necessary or desirable to carry out the purposes of the Trust,
including, without limitation, the powers referred to in Article
II hereof. Without limiting the generality of the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business of the Trust
and may amend and repeal them to the extent that they do not
reserve that right to the Shareholders; they may fill vacancies in
their number, including vacancies resulting from increases in
their own number, and may elect and remove such officers and
employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and
terminate any one or more committees; they may employ one or more
custodians of the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of
securities, retain a transfer agent and a Shareholder servicing
agent, or both, provide for the distribution of Shares through a
principal underwriter or otherwise, set record dates, and in
general delegate such authority as they consider desirable
(including, without limitation, the authority to purchase and sell
securities and to invest funds, to determine the net income of the
Trust for any period, the value of the total assets of the Trust
and the net asset value of each Share, and to execute such deeds,
agreements or other instruments either in the name of the Trust or
the names of the Trustees or as their attorney or attorneys or
otherwise as the Trustees from time to time may deem expedient) to
any officer of the Trust, committee of the Trustees, any such
employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the
Trustees shall have full power and authority:
(a) To invest and reinvest cash and to hold cash
uninvested;
(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not
indicating any trust whether in bearer, unregistered or other
negotiable form or in the name of the Trust or a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by
such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting
through a committee, depositary, voting trustee or otherwise, and
in that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including, but not limited to, claims for taxes;
(g) Subject to the provisions of Article III, Section
3, to allocate assets, liabilities, income and expenses of the
Trust to a particular series of Shares or to apportion the same
among two or more series, provided that any liabilities or
expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series; and to the extent
necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of
Shares, to allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of that
series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate
for the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and payment of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or Managers, principal
underwriters, or independent contractors of the Trust individually
against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or Manager, principal
underwriter, or independent contractor, including any action taken
or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such
person against such liability; and
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts
and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
Further, without limiting the generality of the
foregoing, the Trustees shall have full power and authority to
incur and pay out of the principal or income of the Trust such
expenses and liabilities as may be deemed by the Trustees to be
necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred by or arising
in connection with a particular series of Shares, as determined by
the Trustees, shall be payable solely out of the assets of that
series.
Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the authority
granted by the Trustees, as to the amount of the assets, debts,
obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and
the propriety thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged); the price or
closing bid or asked price of any investment owned or held by the
Trust or a particular series; the market value of any investment
or fair value of any other asset of the Trust or a particular
series; the number of Shares outstanding; the estimated expense to
the Trust or a particular series in connection with purchases of
its Shares; the ability to liquidate investments in an orderly
fashion; and the extent to which it is practicable to deliver a
cross-section of the portfolio of the Trust or a particular series
in payment for any such Shares, or as to any other matters
relating to the issue, sale, purchase and/or other acquisition or
disposition of investments or Shares of the Trust or a particular
series, shall be final and conclusive, and shall be binding upon
the Trust or such series and its Shareholders, past, present and
future, and Shares are issued and sold on the condition and
understanding that any and all such determinations shall be
binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a
majority of the Trustees then in office shall constitute a quorum.
Any meeting may be adjourned from time to time by a majority of
the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further
notice.
When a quorum is present at any meeting, a majority of
the Trustees present may take any action, except when a larger
vote is required by this Declaration of Trust, the By-Laws or the
1940 Act.
Any action required or permitted to be taken at any
meeting of the Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed
by a majority of the Trustees or members of any such committee
then in office, as the case may be, and such written consent is
filed with the minutes of proceedings of the Trustees or any such
committee.
The Trustees or any committee designated by the Trustees
may participate in a meeting of the Trustees or such committee by
means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by
such means shall constitute presence in person at a meeting.
Section 4. Ownership of Assets of the Trust. Title to
all of the assets of each series of Shares of the Trust at all
times shall be considered as vested in the Trustees.
Section 5. Investment Advice and Management Services.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. The Trustees from time to time may enter into a written
contract or contracts with any person or persons (herein called
the "Manager"), including any firm, corporation, trust or
association in which any Trustee or Shareholder may be interested,
to act as investment advisers and/or managers of the Trust and to
provide such investment advice and/or management as the Trustees
from time to time may consider necessary for the proper management
of the assets of the Trust, including, without limitation,
authority to determine from time to time what investments shall be
purchased, held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments. Any such contract shall be
subject to the requirements of the 1940 Act with respect to its
continuance in effect, its termination and the method of
authorization and approval of such contract, or any amendment
thereto or renewal thereof.
Any Trustee or any organization with which any Trustee
may be associated also may act as broker for the Trust in making
purchases and sales of securities for or to the Trust for its
investment portfolio, and may charge and receive from the Trust
the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as
broker for the Trust shall be responsible only for the proper
execution of transactions in accordance with the instructions of
the Trust and shall be subject to no further liability of any sort
whatever.
The Manager, or any affiliate thereof, also may be a
distributor for the sale of Shares by separate contract or may be
a person controlled by or affiliated with any Trustee or any
distributor or a person in which any Trustee or any distributor is
interested financially, subject only to applicable provisions of
law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving
compensation for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The
Trustees or the Shareholders (by vote of 66-2/3% of the
outstanding Shares entitled to vote thereon) may remove at any
time any Trustee with or without cause, and any Trustee may resign
at any time as Trustee, without penalty by written notice to the
Trust; provided that sixty days' advance written notice shall be
given in the event that there are only three or fewer Trustees at
the time a notice of resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have
power to vote only (i) for the election of Trustees as provided in
Article IV, Section 1, of this Declaration of Trust; provided,
however, that no meeting of Shareholders is required to be called
for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in
Article IV, Section 6, (iii) with respect to any Manager as pro-
vided in Article IV, Section 5, (iv) with respect to any amendment
of this Declaration of Trust as provided in Article IX, Section 8,
(v) with respect to the termination of the Trust or a series of
Shares as provided in Article IX, Section 5, and (vi) with respect
to such additional matters relating to the Trust as may be
required by law, by this Declaration of Trust, or the By-Laws of
the Trust or any registration of the Trust with the Commission or
any state, or as the Trustees may consider desirable. Each whole
Share shall be entitled to one vote as to any matter on which it
is entitled to vote (except that in the election of Trustees said
vote may be cast for as many persons as there are Trustees to be
elected), and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matter submitted to
a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted in the aggregate as a single class without
regard to series or classes of Shares, except (i) when required by
the 1940 Act or when the Trustees shall have determined that the
matter affects one or more series or classes differently Shares
shall be voted by individual series or class and (ii) when the
Trustees have determined that the matter affects only the
interests of one or more series or classes then only Shareholders
of such series or classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect
to Shares held in the name of two or more persons shall be valid
if executed by any one of them, unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Whenever no Shares of
any series or class are issued and outstanding, the Trustees may
exercise with respect to such series or class all rights of Share-
holders and may take any action required by law, this Declaration
of Trust or any By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. Meetings of the Shareholders may
be called by the Trustees or such other person or persons as may
be specified in the By-Laws and shall be called by the Trustees
upon the written request of Shareholders owning at least 30% of
the outstanding Shares entitled to vote. Shareholders shall be
entitled to at least ten days' prior notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent
(30%) of the outstanding Shares shall be a quorum for the
transaction of business at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust permits
or requires that holders of any series or class shall vote as a
series or class, then thirty percent (30%) of the aggregate number
of Shares of that series or class entitled to vote shall be
necessary to constitute a quorum for the transaction of business
by that series or class. Any lesser number, however, shall be
sufficient for adjournment and any adjourned session or sessions
may be held within 90 days after the date set for the original
meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of
Trust or the By-Laws of the Trust and subject to any applicable
requirements of law, a majority of the Shares voted shall decide
any question and a plurality shall elect a Trustee, provided that
where any provision of law or of this Declaration of Trust permits
or requires that the holders of any series or class shall vote as
a series or class, then a majority of the Shares of that series or
class voted on the matter (or a plurality with respect to the
election of a Trustee) shall decide that matter insofar as that
series or class is concerned.
Section 4. Action by Written Consent. Any action
required or permitted to be taken at any meeting may be taken
without a meeting if a consent in writing, setting forth such
action, is signed by a majority of Shareholders entitled to vote
on the subject matter thereof (or such larger proportion thereof
as shall be required by any express provision of this Declaration
of Trust) and such consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall
distribute periodically to the Shareholders of each series of
Shares an amount approximately equal to the net income of that
series, determined by the Trustees or as they may authorize and as
herein provided. Distributions of income may be made in one or
more payments, which shall be in Shares, cash or otherwise, and on
a date or dates and as of a record date or dates determined by the
Trustees. At any time and from time to time in their discretion,
the Trustees also may cause to be distributed to the Shareholders
of any one or more series as of a record date or dates determined
by the Trustees, in Shares, cash or otherwise, all or part of any
gains realized on the sale or disposition of the assets of the
series or all or part of any other principal of the Trust
attributable to the series. Each distribution pursuant to this
Section 1 shall be made ratably according to the number of Shares
of the series held by the several Shareholders on the record date
for such distribution, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of that series, and any
distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them. No
distribution need be made on Shares purchased pursuant to orders
received, or for which payment is made, after such time or times
as the Trustees may determine.
Section 2. Determination of Net Income. In determining
the net income of each series or class of Shares for any period,
there shall be deducted from income for that period (a) such
portion of all charges, taxes, expenses and liabilities due or
accrued as the Trustees shall consider properly chargeable and
fairly applicable to income for that period or any earlier period
and (b) whatever reasonable reserves the Trustees shall consider
advisable for possible future charges, taxes, expenses and
liabilities which the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier
period. The net income of each series or class for any period may
be adjusted for amounts included on account of net income in the
net asset value of Shares issued or redeemed or repurchased during
that period. In determining the net income of a series or class
for a period ending on a date other than the end of its fiscal
year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as
income, and losses shall not be charged against income unless
appropriate under applicable accounting principles, except in the
exercise of the discretionary powers of the Trustees. Any amount
contributed to the Trust which is received as income pursuant to a
decree of any court of competent jurisdiction shall be applied as
required by the said decree.
Section 3. Redemptions. Any Shareholder shall be
entitled to require the Trust to redeem and the Trust shall be
obligated to redeem at the option of such Shareholder all or any
part of the Shares owned by said Shareholder, at the redemption
price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be
presented for redemption in proper form for transfer to the Trust
or the agent of the Trust appointed for such purpose, and these
shall be presented with a written request that the Trust redeem
all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net
asset value per Share when next determined by the Trust at such
time or times as the Trustees shall designate, following the time
of presentation of certificates for Shares, if issued, and an
appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the
1940 Act, or any rule or regulation made or adopted by any
securities association registered under the Securities Exchange
Act of 1934, as determined by the Trustees, less any applicable
charge or fee imposed from time to time as determined by the
Trustees.
(c) Net asset value of each series or class of Shares
(for the purpose of issuance of Shares as well as redemptions
thereof) shall be determined by dividing:
(i) the total value of the assets of such series
or class determined as provided in paragraph (d) below less, to
the extent determined by or pursuant to the direction of the
Trustees in accordance with generally accepted accounting
principles, all debts, obligations and liabilities of such series
or class (which debts, obligations and liabilities shall include,
without limitation of the generality of the foregoing, any and all
debts, obligations, liabilities, or claims, of any and every kind
and nature, fixed, accrued and otherwise, including the estimated
accrued expenses of management and supervision, administration and
distribution and any reserves or charges for any or all of the
foregoing, whether for taxes, expenses, or otherwise, and the
price of Shares redeemed but not paid for) but excluding the
Trust's liability upon its Shares and its surplus, by
(ii) the total number of Shares of such series or
class outstanding.
The Trustees are empowered, in their absolute
discretion, to establish other methods for determining such net
asset value whenever such other methods are deemed by them to be
necessary to enable the Trust to comply with applicable law, or
are deemed by them to be desirable, provided they are not
inconsistent with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration
of Trust the total value of the assets of each series or class of
Shares at any time, investments and any other assets of such
series or class shall be valued in such manner as may be
determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may be
made either in cash or in securities or other assets at the time
owned by the Trust or partly in cash and partly in securities or
other assets at the time owned by the Trust. The value of any
part of such payment to be made in securities or other assets of
the Trust shall be the value employed in determining the
redemption price. Payment of the redemption price shall be made
on or before the seventh day following the day on which the Shares
are properly presented for redemption hereunder, except that
delivery of any securities included in any such payment shall be
made as promptly as any necessary transfers on the books of the
issuers whose securities are to be delivered may be made and,
except as postponement of the date of payment may be permissible
under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may
deduct from the payment made for any Shares redeemed a liquidating
charge not in excess of an amount determined by the Trustees from
time to time.
(f) The right of any holder of Shares redeemed by the
Trust as provided in this Article VI to receive dividends or
distributions thereon and all other rights of such Shareholder
with respect to such Shares shall terminate at the time as of
which the redemption price of such Shares is determined, except
the right of such Shareholder to receive (i) the redemption price
of such Shares from the Trust in accordance with the provisions
hereof, and (ii) any dividend or distribution to which such Share-
holder previously had become entitled as the record holder of such
Shares on the record date for such dividend or distribution.
(g) Redemption of Shares by the Trust is conditional
upon the Trust having funds or other assets legally available
therefor.
(h) The Trust, either directly or through an agent, may
repurchase its Shares, out of funds legally available therefor,
upon such terms and conditions and for such consideration as the
Trustees shall deem advisable, by agreement with the owner at a
price not exceeding the net asset value per Share as determined by
or pursuant to the order of the Trustees at such time or times as
the Trustees shall designate, less any applicable charge, if and
as fixed by the Trustees from time to time, and to take all other
steps deemed necessary or advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be
cancelled or held by the Trust for reissue, as the Trustees from
time to time may determine.
(j) The obligations set forth in this Article VI may be
suspended or postponed, (1) for any period (i) during which the
New York Stock Exchange is closed other than for customary weekend
and holiday closings, or (ii) during which trading on the New York
Stock Exchange is restricted, (2) for any period during which an
emergency exists as a result of which (i) the disposal by the
Trust of investments owned by it is not reasonably practicable, or
(ii) it is not reasonably practicable for the Trust fairly to
determine the value of its net assets, or (3) for such other
periods as the Commission or any successor governmental authority
by order may permit.
Notwithstanding any other provision of this Section 3 of
Article VI, if certificates representing such Shares have been
issued, the redemption or repurchase price need not be paid by the
Trust until such certificates are presented in proper form for
transfer to the Trust or the agent of the Trust appointed for such
purpose; however, the redemption or repurchase shall be effective,
in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The
Trust shall have the right at its option and at any time to redeem
Shares of any Shareholder at the net asset value thereof as
determined in accordance with Section 3 of Article VI of this
Declaration of Trust: (i) if at such time such Shareholder owns
fewer Shares than, or Shares having an aggregate net asset value
of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns Shares
of a particular series or class of Shares equal to or in excess of
a percentage of the outstanding Shares of that series or class
determined from time to time by the Trustees; or (iii) to the
extent that such Shareholder owns Shares of the Trust representing
a percentage equal to or in excess of such percentage of the
aggregate number of outstanding Shares of the Trust or the
aggregate net asset value of the Trust determined from time to
time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or
of any series) with respect to, nor any redemption or repurchase
of, the Shares of any series shall be effected by the Trust other
than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be
entitled to reasonable compensation from the Trust and may fix the
amount of their compensation.
Section 2. Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee or Manager of the
Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office.
Every note, bond, contract, instrument, certificate,
share, or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust, shall be deemed
conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers,
Employees and Agents. Each person who is or was a Trustee,
officer, employee or agent of the Trust or who serves or has
served at the Trust's request as a director, officer or trustee of
another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to
indemnification out of the assets of the Trust to the extent
provided in, and subject to the provisions of, the By-Laws,
provided that no indemnification shall be granted by the Trust in
contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of
this Article VIII references to "the Trust" include any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or
agents as well as the resulting or surviving entity; so that any
person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the request
of such a constituent corporation as a trustee, director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VIII with respect to
the resulting or surviving entity as he would have with respect to
such a constituent corporation if its separate existence had
continued.
Section 3. Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by
reason of his being or having been a Shareholder and not because
of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled out of the assets of the particular series of Shares of
which he is or was a Shareholder to be held harmless from and
indemnified against all losses and expenses arising from such
liability. Upon request, the Trust shall cause its counsel to
assume the defense of any claim which, if successful, would result
in an obligation of the Trust to indemnify the Shareholder as
aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby
expressly declared that a trust and not a partnership is created
hereby. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind
personally either the Trust's Trustees or officers or any Share-
holders. All persons extending credit to, contracting with or
having any claim against the Trust or a particular series of
Shares shall look only to the assets of the Trust or the assets of
that particular series for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees or agents, whether past, present
or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any
liability to which such Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety. The exercise by the Trustees of their powers
and discretion hereunder under the circumstances then prevailing,
shall be binding upon everyone interested. A Trustee shall be
liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust,
and subject to the provisions of Section 1 of this Article IX
shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with
Trustees. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made
or to be made by the Trustees pursuant hereto or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not Personally
Liable; Notice. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the assets
of that particular series of Shares for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor.
Section 5. Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of
time. The Trust may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of each
series entitled to vote or by the Trustees by written notice to
the Shareholders. Any series of Shares may be terminated at any
time by vote of Shareholders holding at least a majority of the
Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more
series of Shares, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued
or anticipated as may be determined by the Trustees, the Trust
shall reduce, in accordance with such procedures as the Trustees
consider appropriate, the remaining assets to distributable form
in cash or shares or other securities, or any combination thereof,
and distribute the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of such series
held by the several Shareholders of such series on the date of
termination, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges
of any classes of Shares of that series, provided that any
distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them.
Section 6. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each amendment hereto
and of each Declaration of Trust supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any Share-
holder. A copy of this instrument and of each such amendment and
supplemental Declaration of Trust shall be filed by the Trust with
the Secretary of State of The Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office
where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such amendments or supplemental
Declarations of Trust have been made and as to matters in
connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any
such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration of
Trust, references to this instrument, and all expressions like
"herein," "hereof," and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such amendment or
supplemental Declaration of Trust. Headings are placed herein for
convenience of reference only and in case of any conflict, the
text of this instrument, rather than the headings, shall control.
This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 7. Applicable Law. The Trust set forth in this
instrument is made in The Commonwealth of Massachusetts, and it is
created under and is to be governed by and construed and
administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by
such a trust.
Section 8. Amendments. This Declaration of Trust may
be amended at any time by an instrument in writing signed by a
majority of the then Trustees when authorized so to do by a vote
of Shareholders holding a majority of the Shares outstanding and
entitled to vote, except that an amendment which shall affect the
holders of one or more series or class of Shares but not the
holders of all outstanding series or classes of Shares shall be
authorized by vote of the Shareholders holding a majority of the
Shares entitled to vote of the series or classes affected and no
vote of Shareholders of a series or class not affected shall be
required. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by
Shareholder vote.
IN WITNESS WHEREOF, the undersigned Trustee has hereunto
set his hand and seal for himself and his assigns as of the day
and year first above written.
/s/ Mark N. Jacobs
Mark N. Jacobs, Trustee
c/o The Dreyfus Corporation
200 Park Avenue, New York, NY 10166
Address of the Trust:
c/o The Dreyfus Corporation
200 Park Avenue Clifford L. Alexander, Jr., Trustee
New York, NY 10166 400 C Street NE
Washington, D.C. 20002
Resident Agent:
CT Corp. Peggy C. Davis, Trustee
2 Oliver Street New York University School of Law
Boston, MA 02109 249 Sullivan Street
New York, NY 10021
Saul B. Klaman, Trustee
431-B Dedham Street The Gables
Newton Center, MA 02159
Nathan Leventhal, Trustee
70 Lincoln Center Plaza
New York, NY 10166
Richard J. Moynihan, Trustee
200 Park Avenue
New York, NY 10166
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 14th day of April 1993, before me personally
came the above-named Trustee of the Fund, to me known, and known
to me to be the person described in and who executed the foregoing
instrument, and who duly acknowledged to me that he had executed
the same.
Notary Public
EXHIBIT (1)(b)
PREMIER CALIFORNIA INSURED MUNICIPAL BOND FUND
ARTICLES OF AMENDMENT
Premier California Insured Municipal Bond Fund, a business
trust formed by an Agreement and Declaration of Trust dated March 12, 1992,
pursuant to the laws of the Commonwealth of Massachusetts (the "Trust"),
hereby certifies to the Secretary of State of the Commonwealth of
Massachusetts that:
FIRST: The Agreement and Declaration of Trust of the Trust
is hereby amended by striking out Article I, Section 1 and inserting in lieu
thereof the following:
"Section 1. Name. This Trust shall
be known as 'Premier Insured Municipal Bond Fund.'"
SECOND: The amendment to the Agreement and Declaration of
Trust herein made was duly approved by a majority of the Board of Trustees
of the Trust as of December 15, 1993 pursuant to Article IX, Section 8 of
the Agreement and Declaration of Trust.
IN WITNESS WHEREOF, Premier California Insured Municipal
Bond Fund has caused these Articles to be signed in its name and on its
behalf by its Board of Trustees.
PREMIER CALIFORNIA INSURED
MUNICIPAL BOND FUND
By: /s/ Clifford L. Alexander, Jr.
Clifford L. Alexander, Jr., Trustee
/s/ Peggy C. Davis
Peggy C. Davis, Trustee
/s/ Ernest Kafka
Ernest Kafka, Trustee
/s/ Saul B. Klaman
Saul B. Klaman, Trustee
/s/ Nathan Levanthal
Nathan Levanthal, Trustee
/s/ Richard J. Moynihan
Richard J. Moynihan, Trustee STATE OF NEW YORK)
: ss:
COUNTY OF NEW YORK )
On this 15th day of December 1993, before me personally
came Peggy C. Davis, Ernest Kafka, Saul B. Klaman, Nathan
Leventhal and Richard J. Moynihan, Trustees of the Fund, to me
known, and known to me to be the persons described in and who
executed the foregoing instrument, and who duly acknowledged to
me that they had executed the same.
_______________________
Notary Public
EXHIBIT (2)
BY-LAWS
OF
PREMIER INSURED MUNICIPAL BOND FUND
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. Agreement and Declaration of Trust. These By-Laws
shall be subject to the Agreement and Declaration of Trust, as
from time to time in effect (the "Declaration of Trust"), of the
above-captioned Massachusetts business trust established by the
Declaration of Trust (the "Trust").
1.2. Principal Office of the Trust. The principal
office of the Trust shall be located in New York, New York. Its
resident agent in Massachusetts shall be CT Corporation System, 2
Oliver Street, Boston, Massachusetts, or such other person as the
Trustees from time to time may select.
ARTICLE 2
Meetings of Trustees
2.1. Regular Meetings. Regular meetings of the
Trustees may be held without call or notice at such places and at
such times as the Trustees from time to time may determine,
provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2. Special Meetings. Special meetings of the
Trustees may be held at any time and at any place designated in
the call of the meeting when called by the President or the
Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or the Trustees calling the meeting.
2.3. Notice of Special Meetings. It shall be
sufficient notice to a Trustee of a special meeting to send notice
by mail at least forty-eight hours or by telegram at least twenty-
four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-
four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by
him or her before or after the meeting, is filed with the records
of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice
to him or her. Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.
2.4. Notice of Certain Actions by Consent. If in
accordance with the provisions of the Declaration of Trust any
action is taken by the Trustees by a written consent of less than
all of the Trustees, then prompt notice of any such action shall
be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. Enumeration; Qualification. The officers of the
Trust shall be a President, a Treasurer, a Secretary, and such
other officers, if any, as the Trustees from time to time may in
their discretion elect. The Trust also may have such agents as
the Trustees from time to time may in their discretion appoint.
Officers may be but need not be a Trustee or shareholder. Any two
or more offices may be held by the same person.
3.2. Election. The President, the Treasurer and the
Secretary shall be elected by the Trustees upon the occurrence of
any vacancy in any such office. Other officers, if any, may be
elected or appointed by the Trustees at any time. Vacancies in
any such other office may be filled at any time.
3.3. Tenure. The President, Treasurer and Secretary
shall hold office in each case until he or she sooner dies,
resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the
pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as commonly are incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation or such other duties and powers as the
Trustees may from time to time designate.
3.5. President. Unless the Trustees otherwise provide,
the President shall preside at all meetings of the shareholders
and of the Trustees. Unless the Trustees otherwise provide, the
President shall be the chief executive officer.
3.6. Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and, subject to the
provisions of the Declaration of Trust and to any arrangement made
by the Trustees with a custodian, investment adviser or manager,
or transfer, shareholder servicing or similar agent, shall be in
charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7. Secretary. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be
kept therefor, which books or a copy thereof shall be kept at the
principal office of the Trust. In the absence of the Secretary
from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a
temporary Secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books.
3.8. Resignations and Removals. Any Trustee or officer
may resign at any time by written instrument signed by him or her
and delivered to the President or Secretary or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless
specified to be effective at some other time. The Trustees may
remove any officer elected by them with or without cause. Except
to the extent expressly provided in a written agreement with the
Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following
his or her resignation or removal, or any right to damages on
account of such removal.
ARTICLE 4
Committees
4.1. Appointment. The Trustees may appoint from their
number an executive committee and other committees. Except as the
Trustees otherwise may determine, any such committee may make
rules for conduct of its business.
4.2. Quorum; Voting. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may be
taken at a meeting by a vote of a majority of the members present
(a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any
applicable law. Officers and Committees shall render such
additional reports as they may deem desirable or as may from time
to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall
be subject to change, by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts," together with the name of the Trust
and the year of its organization cut or engraved thereon but,
unless otherwise required by the Trustees, the seal shall not be
necessary to be placed on, and in its absence shall not impair the
validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases
may authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the
Trustees shall be signed by the President, any Vice President, or
by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. Sale of Shares. Except as otherwise determined by
the Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
By-Laws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with the
provisions for determining value of assets of the Trust as stated
in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may
be necessary or desirable to carry out this Section 9.1.
9.2. Share Certificates. In lieu of issuing
certificates for shares, the Trustees or the transfer agent either
may issue receipts therefor or may keep accounts upon the books of
the Trust for the record holders of such shares, who shall in
either case, for all purposes hereunder, be deemed to be the
holders of certificates for such shares as if they had accepted
such certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees at any time may authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by
him, in such form as shall be prescribed from time to time by the
Trustees. Such certificate shall be signed by the President or
Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued,
it may be issued by the Trust with the same effect as if he or she
were such officer at the time of its issue.
9.3. Loss of Certificates. The Trust, or if any
transfer agent is appointed for the Trust, the transfer agent with
the approval of any two officers of the Trust, is authorized to
issue and countersign replacement certificates for the shares of
the Trust which have been lost, stolen or destroyed subject to the
deposit of a bond or other indemnity in such form and with such
security, if any, as the Trustees may require.
9.4. Discontinuance of Issuance of Certificates. The
Trustees at any time may discontinue the issuance of share
certificates and by written notice to each shareholder, may
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
Indemnification
10.1. Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including persons who
serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including
but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil
or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such person may be
or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, except
with respect to any matter as to which such Covered Person shall
have been finally adjudicated in a decision on the merits in any
such action, suit or other proceeding not to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and except that no Covered
Person shall be indemnified against any liability to the Trust or
its Shareholders to which such Covered Person would otherwise be
subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including
counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust in
advance of the final disposition or any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article, provided that (a) such Covered
Person shall provide security for his undertaking, (b) the Trust
shall be insured against losses arising by reason of such Covered
Person's failure to fulfill his undertaking, or (c) a majority of
the Trustees who are disinterested persons and who are not
Interested Persons (as that term is defined in the Investment
Company Act of 1940) (provided that a majority of such Trustees
then in office act on the matter), or independent legal counsel in
a written opinion, shall determine, based on a review of readily
available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled
to indemnification.
10.2. Compromise Payment. As to any matter disposed of
(whether by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication in a decision on the merits by
a court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust or (b) is liable to the
Trust or its Shareholders by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best
interest of the Trust, after notice that it involves such
indemnification, by at least a majority of the Trustees who are
disinterested persons and are not Interested Persons (provided
that a majority of such Trustees then in office act on the
matter), upon a determination, based upon a review of readily
available facts (but not a full trial-type inquiry) that such
Covered Person acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust and is not liable to the Trust or its Shareholders by reason
of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of
readily available facts (but not a full trial-type inquiry) to the
effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and that such
indemnification would not protect such Covered Person against any
liability to the Trust to which such Covered Person would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. Any approval pursuant to this Section
shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with this Section
as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's
action was in the best interests of the Trust or to have been
liable to the Trust or its shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.
10.3. Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which any such Covered Person may be
entitled. As used in this Article 10, the term "Covered Person"
shall include such person's heirs, executors and administrators,
and a "disinterested person" is a person against whom none of the
actions, suits or other proceedings in question or another action,
suit, or other proceeding on the same or similar grounds is then
or has been pending. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
such person.
10.4. Limitation. Notwithstanding any provisions in
the Declaration of Trust and these By-Laws pertaining to
indemnification, all such provisions are limited by the following
undertaking set forth in the rules promulgated by the Securities
and Exchange Commission:
In the event that a claim for
indemnification is asserted by a Trustee, officer or controlling
person of the Trust in connection with the registered securities
of the Trust, the Trust will not make such indemnification unless
(i) the Trust has submitted, before a court or other body, the
question of whether the person to be indemnified was liable by
reason of wilful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final decision on
the merits that such person was not liable by reason of such
conduct or (ii) in the absence of such decision, the Trust shall
have obtained a reasonable determination, based upon a review of
the facts, that such person was not liable by virtue of such
conduct, by (a) the vote of a majority of Trustees who are neither
interested persons as such term is defined in the Investment Com-
pany Act of 1940, nor parties to the proceeding or (b) an
independent legal counsel in a written opinion.
The Trust will not advance attorneys'
fees or other expenses incurred by the person to be indemnified
unless the Trust shall have (i) received an undertaking by or on
behalf of such person to repay the advance unless it is ultimately
determined that such person is entitled to indemnification and one
of the following conditions shall have occurred: (x) such person
shall provide security for his undertaking, (y) the Trust shall
be insured against losses arising by reason of any lawful advances
or (z) a majority of the disinterested, non-party Trustees of the
Trust, or an independent legal counsel in a written opinion, shall
have determined that based on a review of readily available facts
there is reason to believe that such person ultimately will be
found entitled to indemnification.
ARTICLE 11
Shareholders
11.1. Meetings. A meeting of the shareholders shall be
called by the Secretary whenever ordered by the Trustees, or
requested in writing by the holder or holders of at least 10% of
the outstanding shares entitled to vote at such meeting. If the
meeting is a meeting of the shareholders of one or more series or
class of shares, but not a meeting of all shareholders of the
Trust, then only the shareholders of such one or more series or
classes shall be entitled to notice of and to vote at the meeting.
If the Secretary, when so ordered or requested, refuses or
neglects for more than five days to call such meeting, the
Trustees, or the shareholders so requesting may, in the name of
the Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary.
11.2. Access to Shareholder List. Shareholders of
record may apply to the Trustees for assistance in communicating
with other shareholders for the purpose of calling a meeting in
order to vote upon the question of removal of a Trustee. When ten
or more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 or
at least 1% of the outstanding shares, whichever is less, so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on the books
of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate cost of
mailing material to them and, within a reasonable time thereafter,
mail, materials submitted by the applicants, to all such
shareholders of record. The Trustees shall not be obligated to
mail materials which they believe to be misleading or in violation
of applicable law.
11.3. Record Dates. For the purpose of determining the
shareholders of any series or class who are entitled to vote or
act at any meeting or any adjournment thereof, or who are entitled
to receive payment of any dividend or of any other distribution,
the Trustees from time to time may fix a time, which shall be not
more than 90 days before the date of any meeting of shareholders
or the date of payment of any dividend or of any other
distribution, as the record date for determining the shareholders
of such series or class having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right
notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer
books for all or part of such period.
11.4. Place of Meetings. All meetings of the
shareholders shall be held at the principal office of the Trust or
at such other place within the United States as shall be
designated by the Trustees or the President of the Trust.
11.5. Notice of Meetings. A written notice of each
meeting of shareholders, stating the place, date and hour and the
purposes of the meeting, shall be given at least ten days before
the meeting to each shareholder entitled to vote thereat by
leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the
Trust. Such notice shall be given by the Secretary or an
Assistant Secretary or by an officer designated by the Trustees.
No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or
after the meeting by such shareholder or his attorney thereunto
duly authorized, is filed with the records of the meeting.
11.6. Ballots. No ballot shall be required for any
election unless requested by a shareholder present or represented
at the meeting and entitled to vote in the election.
11.7. Proxies. Shareholders entitled to vote may vote
either in person or by proxy in writing dated not more than six
months before the meeting named therein, which proxies shall be
filed with the Secretary or other person responsible to record the
proceedings of the meeting before being voted. Unless otherwise
specifically limited by their terms, such proxies shall entitle
the holders thereof to vote at any adjournment of such meeting but
shall not be valid after the final adjournment of such meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting
of the Trustees, or by one or more writings signed by such a
majority.
Dated: April 14, 1993
As Amended, January 26, 1994
EXHIBIT (5)
MANAGEMENT AGREEMENT
PREMIER INSURED MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
April 21, 1993
As Amended, January 26 , 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
Premier Insured Municipal Bond Fund, a Massachusetts
business trust (the "Fund"), consisting of the series named on
Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you
as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its Declaration of Trust and in
its Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from
time to time may be approved by the Fund's Board. The Fund
desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist you
in the performance of this Agreement. Such person or persons may
be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid by
you and no obligation may be incurred on the Fund's behalf in any
such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct a
continuous program of investment, evaluation and, if appropriate,
sale and reinvestment of such Series' assets. You will furnish to
the Fund such statistical information, with respect to the
investments which each Series may hold or contemplate purchasing,
as the Fund may reasonably request. The Fund wishes to be
informed of important developments materially affecting any
Series' portfolio and shall expect you, on your own initiative, to
furnish to the Fund from time to time such information as you may
believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series'
shareholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities;
calculate the net asset value of each Series' shares; and
generally assist in all aspects of the Fund's operations.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund agrees
as an inducement to your undertaking the same that you shall not
be liable hereunder for any error of judgment or mistake of law or
for any loss suffered by one or more Series, provided that nothing
herein shall be deemed to protect or purport to protect you
against any liability to a Series or to its security holders to
which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of each
month a fee at the rate set forth opposite each Series' name on
Schedule 1 hereto. Net asset value shall be computed on such days
and at such time or times as described in the Fund's then-current
Prospectus and Statement of Additional Information. The fee for
the period from the date of the commencement of the initial public
sale of a Series' shares to the end of the month during which such
sale shall have been commenced shall be pro-rated according to the
proportion which such period bears to the full monthly period, and
upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you, the
value of each Series' net assets shall be computed in the manner
specified in the Fund's Declaration of Trust for the computation
of the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be borne
by the Fund, except to the extent specifically assumed by you.
The expenses to be borne by the Fund include, without limitation,
the following: organizational costs, taxes, interest, interest
paid on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not your officers, directors or
employees or holders of 5% or more of your outstanding voting
securities, Securities and Exchange Commission fees and state Blue
Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of
maintaining the Fund's existence, costs attributable to investor
services (including, without limitation, telephone and personnel
expenses), costs of preparing, printing and distributing certain
prospectuses and statements of additional information, costs of
shareholders' reports and meetings, and any extraordinary
expenses.
As to each Series, if in any fiscal year the aggregate
expenses of the Series (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over the Series, the Fund may deduct from the
fees to be paid hereunder, or you will bear, such excess expense
to the extent required by state law. Your obligation pursuant
hereto will be limited to the amount of your fees hereunder. Such
deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly
basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other managed
accounts, and the Fund has no objection to your so acting,
provided that when purchase or sale of securities of the same
issuer is suitable for the investment objectives of two or more
companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a
manner believed by you to be equitable to each company or account.
It is recognized that in some cases this procedure may adversely
affect the price paid or received by one or more Series or the
size of the position obtainable for or disposed of by one or more
Series.
In addition, it is understood that the persons employed
by you to assist in the performance of your duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict your right or the
right of any of your affiliates to engage in and devote time and
attention to other businesses or to render services of whatever
kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for a
loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under
this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee, or agent or one under your control or direction even
though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1 hereto
(the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically
approved at least annually by (i) the Fund's Board or (ii) vote of
a majority (as defined in the Investment Company Act of 1940) of
such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the
Fund's Board members who are not "interested persons" (as defined
in said Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such
approval. As to each Series, this Agreement is terminable without
penalty, on 60 days' notice, by the Fund's Board or by vote of
holders of a majority of such Series' shares or, upon not less
than 90 days' notice, by you. This Agreement also will terminate
automatically, as to the relevant Series, in the event of its
assignment (as defined in said Act).
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall only
be binding upon the assets and property of the Fund and shall not
be binding upon any Trustee, officer or shareholder of the Fund
individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PREMIER INSURED MUNICIPAL BOND FUND
By:_________________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
California Series .55 of 1% April 21, 1995 April 21
Connecticut Series .55 of 1% April 21, 1995 April 21
Florida Series .55 of 1% April 21, 1995 April 21
National Series .55 of 1% April 21, 1995 April 21
New Jersey Series .55 of 1% April 21, 1995 April 21
New York Series .55 of 1% April 21, 1995 April 21
EXHIBIT (6)(a)
DISTRIBUTION AGREEMENT
PREMIER INSURED MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
April 21, 1993
As Amended, January 26, 1994
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Premier Insured Municipal Bond Fund,
a Massachusetts business trust (the "Fund"), has agreed that you shall be,
for the period of this agreement, the distributor of shares of beneficial
interest of each Series of the Fund set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series").
1. Services as Distributor
1.1 You will act as agent for the distribution of shares of
each Series covered by, and in accordance with, the registration statement
and prospectus then in effect under the Securities Act of 1933, as amended,
and will transmit promptly any orders received by you for purchase or
redemption of shares of each Series to the Transfer and Dividend Disbursing
Agent for the Fund of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit orders
for the sale of shares of each Series. It is contemplated that you will
enter into sales or servicing agreements with securities dealers, financial
institutions and other industry professionals, such as investment advisers,
accountants and estate planning firms, and in so doing you will act only on
your own behalf as principal.
1.3 You shall act as distributor of each Series' shares in
compliance with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted pursuant to
the Investment Company Act of 1940, as amended, by the Securities and Ex-
change Commission or any securities association registered under the Securi-
ties Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by
market, economic or political conditions, or by abnormal circumstances of
any kind, the Fund's officers may decline to accept any orders for, or make
any sales of, any Series' shares until such time as they deem it advisable
to accept such orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of its shares under the Securities Act of
1933, as amended, and all expenses in connection with maintaining facilities
for the issue and transfer of a Series' shares and for supplying
information, prices and other data to be furnished by the Fund hereunder,
and all expenses in connection with the preparation and printing of the
Fund's prospectuses and statements of additional information for regulatory
purposes and for distribution to shareholders; provided however, that
nothing contained herein shall be deemed to require the Fund to pay any of
the costs of advertising the sale of the Series' shares.
1.6 The Fund agrees to execute any and all documents and to
furnish any and all information and otherwise to take all actions which may
be reasonably necessary in the discretion of the Fund's officers in connec-
tion with the qualification of the Fund's shares for sale in such states as
you may designate to the Fund and the Fund may approve, and the Fund agrees
to pay all expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your own
qualification as a dealer under state or Federal laws and, except as
otherwise specifically provided in this agreement, all other expenses
incurred by you in connection with the sale of each Series' shares as
contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for use
in connection with the sale of each Series' shares, such information with
respect to such Series and its shares as you may reasonably request, all of
which shall be signed by one or more of the Fund's duly authorized officers;
and the Fund warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and correct. The Fund
also shall furnish you upon request with: (a) semi-annual reports and
annual audited reports of the Fund's books and accounts made by independent
public accountants regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of the
securities in each Series' portfolio, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition as you may
reasonably request.
1.8 The Fund represents to you that all registration state-
ments and prospectuses filed by the Fund with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Series' shares have been carefully prepared in conformity with the
requirements of said Act and rules and regulations of the Securities and Ex-
change Commission thereunder. As used in this agreement the terms "regis-
tration statement" and "prospectus" shall mean any registration statement
and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time
shall have been filed with said Commission. The Fund represents and
warrants to you that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements
required to be stated therein in conformity with said Act and the rules and
regulations of said Commission; that all statements of fact contained in any
such registration statement and prospectus will be true and correct when
such registration statement becomes effective; and that neither any regis-
tration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Fund may but shall not be
obligated to propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus
as, in the light of future developments, may, in the opinion of the Fund's
counsel, be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the
Fund's securities until such amendments are made. The Fund shall not file
any amendment to any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance; provided, however,
that nothing contained in this agreement shall in any way limit the Fund's
right to file at any time such amendments to any registration statement
and/or supplements to any prospectus, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the
form furnished to you from time to time, in connection with the sale of each
Series' shares. The Fund agrees to indemnify, defend and hold you, your
several officers and directors, and any person who controls you within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under
common law or otherwise, arising out of or based upon any untrue statement,
or alleged untrue statement, of a material fact contained in any registra-
tion statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be
stated in either any registration statement or any prospectus or necessary
to make the statements in either thereof not misleading; provided, however,
that the Fund's agreement to indemnify you, your officers or directors, and
any such controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement or prospectus in reliance upon and in conformity with
written information furnished to the Fund by you specifically for use in the
preparation thereof. The Fund's agreement to indemnify you, your officers
and directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Fund at
its office in Uniondale, New York within ten days after the summons or other
first legal process shall have been served. The failure so to notify the
Fund of any such action shall not relieve the Fund from any liability which
the Fund may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's indemnity agree-
ment contained in this paragraph 1.9. The Fund will be entitled to assume
the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of
good standing chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel of good
standing approved by you, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them; but in case the Fund does not elect to assume the defense of any such
suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. The Fund's indemnification
agreement contained in this paragraph 1.9 and the Fund's representations and
warranties in this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of you, your
officers and directors, or any controlling person, and shall survive the
delivery of any Series' shares. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your several officers and
directors, and their respective estates, and to the benefit of any control-
ling persons and their successors. The Fund agrees promptly to notify you
of the commencement of any litigation or proceedings against the Fund or any
of its officers or Board members in connection with the issue and sale of
any Series' shares.
1.10 You agree to indemnify, defend and hold the Fund, its
several officers and Board members, and any person who controls the Fund
within the meaning of Section 15 of the Securities Act of 1933, as amended,
free and harmless from and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under
common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its officers or Board members, or such con-
trolling person resulting from such claims or demands, shall arise out of or
be based upon any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such information
not misleading. Your agreement to indemnify the Fund, its officers and
Board members, and any such controlling person, as aforesaid, is expressly
conditioned upon your being notified of any action brought against the Fund,
its officers or Board members, or any such controlling person, such
notification to be given by letter or telegram addressed to you at your
principal office in New York, New York within ten days after the summons or
other first legal process shall have been served. You shall have the right
to control the defense of such action, with counsel of your own choosing,
satisfactory to the Fund, if such action is based solely upon such alleged
misstatement or omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any
such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to the Fund, its officers
or Board members, or to such controlling person by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
paragraph 1.10.
1.11 No shares of a Series shall be offered by either you
or the Fund under any of the provisions of this agreement and no orders for
the purchase or sale of such shares hereunder shall be accepted by the Fund
if and so long as the effectiveness of the registration statement then in
effect or any necessary amendments thereto shall be suspended under any of
the provisions of the Securities Act of 1933, as amended, or if and so long
as a current prospectus as required by Section 10 of said Act, as amended,
is not on file with the Securities and Exchange Commission; provided,
however, that nothing contained in this paragraph 1.11 shall in any way
restrict or have an application to or bearing upon the Fund's obligation to
repurchase any Series' shares from any shareholder in accordance with the
provisions of the Fund's prospectus or Agreement and Declaration of Trust.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement or prospectus then
in effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes untrue
any statement of a material fact made in the registration statement or
prospectus then in effect or which requires the making of a change in such
registration statement or prospectus in order to make the statements therein
not misleading; and
(d) of all actions of the Securities and Exchange
Commission with respect to any amendments to any registration statement or
prospectus which may from time to time be filed with the Securities and
Exchange Commission.
2. Sales Load; CDSC
Class A shares of the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") approximately
equal to (a) their net asset value (determined in the manner set forth in
the Fund's Agreement and Declaration of Trust) plus, except to those persons
set forth in the then-current prospectus, (b) a sales charge which shall be
the percentage of the offering price of such shares as set forth in the
Fund's then-current prospectus. The offering price, if not an exact
multiple of one cent, shall be adjusted to the nearest cent. Class B shares
of the Fund offered for sale by you shall be offered for sale at the price
per share set forth in clause (a) above, subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
3. Term
As to each Series, this agreement shall continue until the
date set forth opposite such Series' name on Exhibit A hereto (the
"Reapproval Date"), and thereafter shall continue automatically for
successive annual periods ending on the day of each year set forth opposite
such Series' name on Exhibit A hereto (the "Reapproval Day"), provided such
continuance is specifically approved at least annually by (i) the Fund's
Board or (ii) vote of a majority (as defined in the Investment Company Act
of 1940) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Board
members who are not "interested persons" (as defined in said Act) of any
party to this agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This agreement is terminable without
penalty, on 60 days' notice, by vote of holders of a majority of the Fund's
shares, and, as to each Series, by the Fund's Board, or by you. This agree-
ment also will terminate automatically, as to the relevant Series, in the
event of its assignment (as defined in said Act).
4. Miscellaneous
This agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any Trustee,
officer or shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below,
whereupon it shall become a binding agreement between us.
Very truly yours,
PREMIER INSURED MUNICIPAL BOND FUND
By:
Accepted:
DREYFUS SERVICE CORPORATION
By:________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
California Series April 21, 1995 April 21
Connecticut Series April 21, 1995 April 21
Florida Series April 21, 1995 April 21
National Series April 21, 1995 April 21
New Jersey Series April 21, 1995 April 21
New York Series April 21, 1995 April 21
EXHIBIT (8)(a)
CUSTODY AGREEMENT
Custody Agreement made as of April 23, 1993, as
amendedJanuary 26, 1994, between PREMIER INSURED MUNICIPAL BOND FUND, a
business trust organized and existing under the laws of the Commonwealth of
Massachusetts, having its principal office and place of business at 144
Glenn Curtiss Boulevard, Uniondale,New York 11556-0144 (hereinafter called
the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to
do a banking business, having its principal office and place of business at
110 Washington Street, New York, New York 10286 (hereinafter called the
"Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafterset forth
the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
1. "Authorized Person" shall be deemed to include
theTreasurer, the Controller or any other person, whether or notany such
person is an Officer or employee of the Fund, duly authorized by the
Trustees of the Fund to give Oral Instructionsand Written Instructions on
behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time.
2. "Available Balance" shall mean for any given dayduring a
calendar year the aggregate amount of Federal Funds held in the Fund's
custody account(s) at The Bank of New York, or its successors, as of the
close of such day or, if such day is not a business day, the close of the
preceding business day.
3. "Bankruptcy" shall mean with respect to a party such
party's making a general assignment, arrangement or composition with or for
the benefit of its creditors, or instituting or having instituted against it
a proceeding seekinga judgment of insolvency or bankruptcy or the entry of
anorder for relief under the Federal bankruptcy law or any otherrelief under
any bankruptcy or insolvency law or other similar law affecting creditors'
rights, or if a petition is presented for the winding up or liquidation of
the party or a resolution is passed for its winding up or liquidation, or it
seeks, or becomes subject to, the appointment of an administrator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all of its assets orits taking any action in furtherance of,
or indicating its consent to approval of, or acquiescence in, any of the
foregoing.
4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federalagency
securities, its successor or successors and its nominee or nominees.
5. "Call Option" shall mean an exchange traded optionwith
respect to Securities other than Stock Index Options,Futures Contracts and
Futures Contract Options entitlingthe holder, upon timely exercise and
payment of the exercise price, as specified therein, to purchase from the
writer thereof the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by thisAgreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Fund by any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-dealer
which is a clearing member under the rules of O.C.C. and a member of a
national securities exchange qualified to act as acustodian for an
investment company, or any broker-dealerreasonably believed by the Custodian
to be such a clearingmember.
8. "Collateral Account" shall mean a segregated account so
denominated and pledged to the Custodian as security for, and in
consideration of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article V herein, or
(b) any receiptdescribed in Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S. ConsumerPrice
Index, all items and all urban consumers, U.S. city average l982-84 equals
100, as first published without seasonal adjustment by the Bureau of Labor
Statistics, the Department of Labor, without regard to subsequent revisions
or corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchasefrom the writer thereof the
specified Securities (excluding Futures Contracts) which are owned by the
writer thereof and subject to appropriate restrictions.
11. "Depository" shall mean The Depository TrustCompany
("DTC"), a clearing agency registered with the Securities and Exchange
Commission, its successor or successors and its nominee or nominees,
provided the Custodian has receiveda certified copy of a resolution of the
Fund's Trustees specifically approving deposits in DTC. The term
"Depository" shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940, its successor
or successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Fund's Trustees specifically approving
deposits therein by the Custodian.
12. "Earnings Credit" shall mean for any given dayduring a
calendar year the product of (a) the Federal Funds Rate for such date minus
.25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately availablesame
day funds.
14. "Federal Funds Rate" shall mean, for any day,
theFederal Funds (Effective) interest rate so denominated aspublished in
Federal Reserve Statistical Release H.15 (519) and applicable to such day
and each succeeding day which is not a business day.
15. "Financial Futures Contract" shall mean the
firmcommitment to buy or sell fixed income securities, including, without
limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds,
domestic bank certificates of deposit, and Eurodollar certificates of
deposit, during a specified month at an agreed upon price.
16. "Futures Contract" shall mean a Financial
FuturesContract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
18. "Margin Account" shall mean a segregated account in the
name of a broker, dealer, futures commission merchant orClearing Member, or
in the name of the Fund for the benefit ofa broker, dealer, futures
commission merchant or Clearing Member, or otherwise, in accordance with an
agreement between the Fund, the Custodian and a broker, dealer, futures
commissionmerchant or Clearing Member (a "Margin Account Agreement"),
separate and distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from time to time
in connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or the Depository
shallbe deemed to have been deposited in, or withdrawn from, a Margin
Account upon the Custodian's effecting an appropriate entry on its books and
records.
19. "Merger" shall mean with respect to a party,
theconsolidation or amalgamation with, merger into, or transfer of all or
substantially all of such party's assets to, anotherentity, where such party
is not the surviving entity.
20. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to principal
and interest by the government of theUnited States or agencies or
instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of
such securities ordinarily requires settlement in Federal funds on the same
date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation, a
clearing agency registered under Section 17A of the SecuritiesExchange Act
of 1934, its successor or successors, andits nominee or nominees.
22. "Officers" shall be deemed to include thePresident, any
Vice President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasureror any other person or persons duly
authorized by the Trustees of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in
the Certificate annexed hereto as Appendix B or such other Certificate as
may be received by the Custodian from time to time.
23. "Option" shall mean a Call Option, Covered CallOption,
Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal
instructionsactually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an Authorized
Person.
25. "Put Option" shall mean an exchange traded optionwith
respect to Securities other than Stock Index Options,Futures Contracts, and
Futures Contract Options entitling the holder, upon timely exercise and
tender of the specified underlying Securities, to sell such Securities to
the writer thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean anagreement
pursuant to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specifieddate and price.
27. "Security" shall be deemed to include,
withoutlimitation, Money Market Securities, Call Options, Put Options, Stock
Index Options, Stock Index Futures Contracts, Stock Index Futures Contract
Options, Financial Futures Contracts, Financial Futures Contract Options,
Reverse Repurchase Agreements, common stock and other instruments or rights
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities (including, without limitation, general obligation bonds,
revenue bonds and industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and anycertificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing any
other rights or interest therein, or any property or assets.
28. "Segregated Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated account, by
recordation or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund shall be deposited and withdrawn
from time to time in accordance with Certificates received by the Custodian
in connection with such transactions as the Fund may from time to time
determine.
29. "Series" shall mean the Series of the Fundspecified on
Appendix D hereto, or, where the context requires each such Series.
30. "Shares" shall mean the shares of Common Stock ofany
Series of the Fund, each of which is allocated to a particular Series.
31. "Stock Index Futures Contract" shall mean abilateral
agreement pursuant to which the parties agree to takeor make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the value of a particular stock index at the close of the last
business day of the contract and the price at which the futures contract is
originally struck.
32. "Stock Index Option" shall mean an exchange
tradedoption entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference between the
exercise price and the value of the indexon the date of exercise.
33. "Written Instructions" shall mean writtencommunications
actually received by the Custodian from anAuthorized Person or from a person
reasonably believed by theCustodian to be an Authorized Person by telex or
any other such system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints theCustodian as
custodian of all the Securities and moneys at any time owned by the Fund
during the period of this Agreement, except that (a) if the Custodian fails
to provide for the custody of any of the Fund's Securities and moneys
located or tobe located outside the United States in a manner satisfactory
to the Fund, the Fund shall be permitted to arrange for the custody of such
Securities and moneys located or to be located outside the United States
other than through the Custodian at rates to be negotiated and borne by the
Fund and (b) if the Custodian fails to continue any existing sub-custodial
or similar arrangements on substantially the same terms as exist onthe date
of this Agreement, the Fund shall be permitted to arrange for such or
similar services other than through the Custodian at rates to be negotiated
and borne by the Fund. The Custodian shall not charge the Fund for any such
terminated services after the date of such termination.
2. The Custodian hereby accepts appointment as
suchcustodian and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
thisArticle and in Article VIII, the Fund will deliver or cause to be
delivered to the Custodian all Securities and all moneys owned by any
Series, including cash received for the issuance ofsuch Series' shares, at
any time during the period of this Agreement and shall specify the Series to
which the same are to be specifically allocated. The Custodian will not be
responsible for such Securities and such moneys until actually received by
it. The Custodian will be entitled to reverse any credits made on a Series'
behalf where such credits have been previously made and moneys are not
finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Trustees of the Fund approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit in
the Book-Entry System all Securities eligible for deposit therein and to
utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of a Series in the Depository, the Fund shall deliverto the
Custodian a certified resolution of the Trustees of the Fund approving,
authorizing and instructing the Custodianon a continuous and on-going basis
until instructed to the contrary by a Certificate actually received by the
Custodianto deposit in the Depository all Securities eligiblefordeposit
therein and to utilize the Depository to the extent possible in connection
with its performance hereunder, including, without limitation, in connection
with settlements ofpurchases and sales of Securities, loans of Securities,
and deliveries and returns of Securities collateral. Securities andmoneys
of such Series deposited in either the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity. Prior to the
Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options as provided in this
Agreement, the Custodian shall have received a certified resolution of the
Fund's Board of Trustees approving, authorizing and instructing the
Custodian on a continuous and on-going basis, until instructed to the
contrary by a Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement.
2. The Custodian shall credit to a separate account inthe
name of the Fund for each Series all moneys received by itfor the account of
the Fund, with respect to such Series. Money credited to the separate
account for a Series shall be disbursed by the Custodian only:
(a) In payment for Securities purchased, as provided in
Article IV hereof;
(b) In payment of dividends or distributions, asprovided in
Article XI hereof;
(c) In payment of original issue or other taxes, asprovided
in Article XII hereof;
(d) In payment for Shares redeemed by it, as providedin
Article XII hereof;
(e) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, theSeries account
from which payment is to be made and the purpose for which payment is to be
made; or
(f) In payment of the fees and in reimbursement of
theexpenses and liabilities of the Custodian, as provided in Article XV
hereof.
3. Promptly after the close of business on each day,the
Custodian shall furnish the Fund with confirmations and a summary of all
transfers to or from the account of each Seriesduring said day. Where
Securities are transferred to the account of a Series, the Custodian shall
also by book-entry or otherwise identify as belonging to such Series a
quantity of Securities in a fungible bulk of Securities registered in the
name of the Custodian (or its nominee) or shown on the Custodian's account
on the books of the Book-Entry System or theDepository. At least monthly
and from time to time, the Custodian shall furnish the Fund with a detailed
statement of the Securities and moneys held for each Series under this
Agreement.
4. Except as otherwise provided in paragraph 7 of
thisArticle and in Article VIII, all Securities held for a Series, which are
issued or issuable only in bearer form, exceptsuch Securities as are held in
the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held for a Series may be registered in the name of such
Series, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or the Depository or their successor or successors,
or their nominee ornominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee or
in the name of the Book-Entry System or the Depository, any Securities which
it may hold for the account of a Series and which may from time to time be
registered in the name of such Series. The Custodian shall holdall such
Securities which are not held in the Book-Entry System or in the Depository
in a separate account in the name ofsuch Series physically segregated at all
times from those of any other person or persons.
5. Except as otherwise provided in this Agreement andunless
otherwise instructed to the contrary by a Certificate,the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all
Securities held foreach Series in accordance with this Agreement:
(a) Collect all income due or payable and, in anyevent, if
the Custodian receives a written notice from the Fund specifying that an
amount of income should have been received by the Custodian within the last
90 days, the Custodianwill provide a conditional payment of income within 60
days from the date the Custodian received such notice, unless the Custodian
reasonably concludes that such income was not due or payable to the Fund,
provided that the Custodian may reverse any such conditional payment upon
its reasonably concluding thatall or any portion of such income was not due
or payable, and provided further that the Custodian shall not be liable for
failing to collect on a timely basis the full amount of income due or
payable in respect of a "floating rate instrument" or "variable rate
instrument" (as such terms are defined under Rule2a-7 under the Investment
Company Act of l940, as amended) if it has acted in good faith, without
negligence or willful misconduct.
(b) Present for payment and collect the amount payableupon
such Securities which are called, but only if either(i) the Custodian
receives a written notice of such call, or (ii) notice of such call appears
in one or more of the publications listed in Appendix C annexed hereto,
which may be amended at any time by the Custodian upon five business days'
prior notification to the Fund;
(c) Present for payment and collect the amount payableupon
all Securities which may mature;
(d) Surrender Securities in temporary form fordefinitive
Securities;
(e) Execute, as Custodian, any necessary declarationsor
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System orthe
Depository with respect to Securities therein deposited, for the account of
each Series all rights and similar securitiesissued with respect to any
Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
(a) Execute and deliver to such persons as may bedesignated
in such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any Securities may
be exercised;
(b) Deliver any Securities held for the Series inexchange
for other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, orthe exercise of any conversion
privilege;
(c) Deliver any Securities held for the Series to
anyprotective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of deposit, interim
receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets ofthe
Series and take such other steps as shall be stated in said order to be for
the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payableupon
Securities not described in preceding paragraph 5(b)of this Article which
may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere containedherein,
the Custodian shall not be required to obtain possession of any instrument
or certificate representing any Futures Contract, Option or Futures Contract
Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or
certificatesare available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the availability of any
such instrument or certificate. Prior to such availability, the Custodian
shall comply with Section 17(f) of the Investment Company Act of 1940,as
amended, in connection with the purchase, sale, settlement, closing out or
writing of Futures Contracts, Optionsor Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodianinconnection with any such purchase, sale, writing, settlement or
closing out upon its receipt from a broker, dealeror futures commission
merchant of a statement or confirmation reasonably believed by the Custodian
to be in the form customarily used by brokers, dealers, or futures
commissionmerchants with respect to such Futures Contracts, Options or
Futures Contract Options, as the case may be, confirming that such Security
is held by such broker, dealer or futures commission merchant, in book-entry
form or otherwise, inthe name of the Custodian (or any nominee of the
Custodian) ascustodian for the Fund, provided, however, that payments to
ordeliveries from the Margin Account shall be made in accordancewith the
terms and conditions of the Margin AccountAgreement. Whenever any such
instruments or certificatesare available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or suchcertificate, and deliver
any Futures Contract, Option or Futures Contract Option for which such
instruments or such certificates are available only against receipt by the
Custodianof payment therefor. Any such instrument or certificate delivered
to the Custodian shall be held by the Custodian hereunder in accordance
with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by theFund,
other than a purchase of any Option, Futures Contract,Futures Contract
Option or Reverse Repurchase Agreement, the Fund shall deliver to the
Custodian (i) with respect to each purchase of Securities which are not
Money Market Securities, a Certificate, and (ii) with respect to each
purchase of Money Market Securities, a Certificate, Oral Instructions or
Written Instructions, specifying with respect toeach such purchase: (a) the
Series to which the Securities purchased are to be specifically allocated;
(b) the name of the issuer and the title of the Securities; (c) the number
of sharesor the principal amount purchased and accrued interest, ifany; (d)
the date of purchase and settlement; (e) the purchaseprice per unit; (f) the
total amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the purchase was made, and the name of the
clearingbroker, if any; and (h) the name of the broker to which payment is
to be made. The Custodian shall, upon receipt of Securities purchased by or
for such Series, pay out of the moneys held for the account of such Series
the total amount payable to the person from whom, or the broker through
whom, thepurchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, OralInstructions or Written
Instructions.
2. Promptly after each sale of Securities by the Fund,other
than a sale of any Option, Futures Contract, FuturesContract Option or
Reverse Repurchase Agreement, the Fundshall deliver to the Custodian (i)
with respect to each saleof Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each sale of Money
Market Securities, a Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the Series to which such
Securities sold were specifically allocated; (b) the name of the issuer and
the title of the Security; (c) the number of shares or principal amount
sold, andaccrued interest, if any; (d) the date of sale; (e) the sale price
per unit; (f) the total amount payable to such Series uponsuch sale; (g) the
name of the broker through whom or the person to whom the sale was made, and
the name of the clearing broker, if any; and (h) the name of the broker to
whom the Securities are to be delivered. The Custodian shall deliver
theSecurities upon receipt of the total amount payable to theFund for the
account of such Series upon such sale, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions
or Written Instructions. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by theFund,
the Fund shall deliver to the Custodian a Certificatespecifying with respect
to each Option purchased: (a) the Series to which the Option purchased is
to be specifically allocated; (b) the type of Option (put or call); (c) the
name of the issuer and the title and number of shares subject to such Option
or, in the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund for the account of
suchSeries in connection with such purchase; (h) the name of theClearing
Member through which such Option was purchased; and (i) the name of the
broker to whom payment is to be made. The Custodian shall pay, upon receipt
of a Clearing Member's statement confirming the purchase of such Option held
by such Clearing Member for the account of the Custodian (or any
dulyappointed and registered nominee of the Custodian) as custodian for the
Fund, out of moneys held for the account of such Series, the total amount
payable upon such purchase to the Clearing Member through whom the purchase
was made, provided that the same conforms to the total amount payable as set
forth in such Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) the
Series to which the Option sold was specifically allocated; (b) the type of
Option (put or call); (c) the name of the issuer and the title and number of
shares subject to such Option or, in the case of a Stock Index Option, the
stock index to which such Option relates and the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the account of such
Series upon such sale; and (h) the name of the Clearing Member through which
the sale was made. The Custodian shall consent to the delivery of the
Optionsold by the Clearing Member which previously supplied the confirmation
described in preceding paragraph 1 of this Article with respect to such
Option against payment to the Custodian of the total amount payable to the
Fund for the account of such Series, provided that the same conforms to the
total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
CallOption purchased by the Fund pursuant to paragraph 1 hereof,the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which the Call Option exercised was
specifically allocated; (b) the name of the issuer and the title and number
of shares subject to the Call Option; (c) the expiration date; (d) the date
of exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which such Call
Option was exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the moneys held
for the account of such Series the total amount payable to the Clearing
Member through whom the Call Option was exercised, provided that the same
conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any PutOption
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifyingwith respect to such Put Option:
(a) the Series to which the Put Option exercised was specifically allocated;
(b) the name of the issuer and the title and number of shares subject to the
Put Option; (c) the expiration date; (d) the dateof exercise and settlement;
(e) the exercise price per share; (f) the total amount to be paid to the
Fund for the account of such Series upon such exercise; and (g) the name of
the Clearing Member through which such Put Option was exercised. The
Custodian shall, upon receipt of the amount payable upon theexercise of the
Put Option, deliver or direct the Depository to deliver the Securities,
provided the same conforms to the amount payable to the Fund for the account
of such Series as setforth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series to which the Stock Index Option
exercised was specifically allocated; (b) the type of Stock Index Option
(put or call); (c) the number of Options being exercised; (d) the stock
index to which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund for the
account of such Series in connection with such exercise; and (h) the
Clearing Member from which such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, theFund
shall promptly deliver to the Custodian a Certificatespecifying with respect
to such Covered Call Option: (a) the Series to which the Covered Call Option
written is to bespecifically allocated; (b) the name of the issuer and the
title and number of shares for which the Covered Call Option waswritten and
which underlie the same; (c) the expiration date;(d) the exercise price;
(e) the premium to be received by the Fund for the account of such Series;
(f) the date such Covered Call Option was written; and (g) the name of the
Clearing Member through which the premium is to be received. The Custodian
shall deliver or cause to be delivered, in exchange for receipt of the
premium specified in the Certificatewith respect to such Covered Call
Option, suchreceipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call Options and shall
impose, or direct the Depository to impose, upon the underlying Securities
specified in the Certificate suchrestrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the right,
uponprior written notification to the Fund, at any time to refuse to issue
any receipts for Securities in the possession ofthe Custodian and not
deposited with the Depository underlyinga Covered Call Option.
7. Whenever a Covered Call Option written by the Fundand
described in the preceding paragraph of this Article isexercised, the Fund
shall promptly deliver to the Custodian aCertificate instructing the
Custodian to deliver, or to direct the Depository to deliver, the Securities
subject to such Covered Call Option and specifying: (a) the Series to which
theCovered Call Option exercised was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the Covered Call
Option; (c) the Clearing Member to whom the underlying Securities are to be
delivered; and (d) the total amount payable to the Fund for the account of
such Series upon such delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the underlying
Securities as specified in the Certificate for the amount to be received as
set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fundshall
promptly deliver to the Custodian a Certificate specifying with respect to
such Put Option: (a) the Series to which the Put Option written is to be
specifically allocated; (b) the name of the issuer and the title and number
of shares for which the Put Option is written and which underlie the
same;(c) the expiration date; (d) the exercise price; (e) the premium to be
received by the Fund for the account of such Series; (f) the date such Put
Option is written; (g) the name ofthe Clearing Member through which the
premium is to be received and to whom a Put Option guarantee letter is to be
delivered; (h) the amount of cash, and/or the amount and kind ofSecurities,
if any, to be deposited in the Segregated SecurityAccount; and (i) the
amount of cash and/or the amount and kind of Securities to be deposited into
the Collateral Account. The Custodian shall, after making the deposits into
the Collateral Account specified in the Certificate, issue a PutOption
guarantee letter substantially in the form utilized bythe Custodian on the
date hereof, and deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund anddescribed
in the preceding paragraph is exercised, the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the Series to which the Put
Option exercised was specifically allocated; (b) the name of the issuer and
titleand number of shares subject to the Put Option; (c) the Clearing Member
from which the underlying Securities are to be received; (d) the total
amount payable by the Fund upon such delivery; (e) the amount of cash and/or
the amount and kind of Securities to be withdrawn from the Collateral
Account; and (f) the amount of cash and/or the amount and kind of
Securities,if any, to be withdrawn from the Segregated Security Account.
Upon the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put Option,
the Custodian shall pay out of the moneys held for the account of such
Series the total amount payable to the Clearing Member specified in the
Certificate as set forth in such Certificate, and shall make the withdrawals
specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, theFund
shall promptly deliver to the Custodian a Certificatespecifying with respect
to such Stock Index Option: (a) the Series to which the Stock Index Option
written is to bespecifically allocated; (b) whether such Stock Index Option
isa put or a call; (c) the number of Options written; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the exercise price;
(g) the Clearing Member through which such Option was written; (h) the
premium to be received bythe Fund for the account of such Series; (i) the
amount of cash and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; (j) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in the Collateral
Account; and (k) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in a Margin Account, and the name in
which such account is to be or has been established. The Custodian shall,
upon receipt of the premium specified in the Certificate, make the deposits,
if any, into the Segregated Security Account specified in the Certificate,
and either (1) deliver such receipts, if any, which the Custodian has
specifically agreed toissue, which are in accordance with the customs
prevailing among Clearing Members in Stock Index Options and make the
deposits into the Collateral Account specified in theCertificate, or (2)
make the deposits into the Margin Accountspecified in the Certificate.
11. Whenever a Stock Index Option written by the Fundand
described in the preceding paragraph of this Article isexercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Stock Index Option:(a) the Series to which the Stock Index
Option exercised was specifically allocated; (b) such information as may be
necessary to identify the Stock Index Option being exercised; (c) the
Clearing Member through which such Stock Index Option isbeing exercised; (d)
the total amount payable upon such exercise, and whether such amount is to
be paid by or to the Fund for the account of such Series; (e) the amount of
cash and/or amount and kind of Securities, if any, to be withdrawn from the
Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security Account and
the amount of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,delivered
pursuant to the preceding paragraph of this Article, the Custodian shall pay
to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a
previously written Option described in paragraphs 6, 8 or 10 of this Article
in a transaction expressly designated as a "Closing Purchase Transaction" in
order to liquidate its position as a writer of an Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to
the Option being purchased: (a) the Series to which the Option purchased is
to be specifically allocated; (b) that the transaction is a Closing Purchase
Transaction; (c) the name of the issuer and the title and number of shares
subject to the Option, or, in the case of a Stock Index Option, the stock
indexto which such Option relates and the number of Options held; (d) the
exercise price; (e) the premium to be paid by the Fund for the account of
such Series; (f) the expiration date; (g) the type of Option (put or call);
(h) the date of such purchase; (i) the name of the Clearing Member to which
the premium is to be paid; and (j) the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the Collateral Account, a
specified Margin Account or the SegregatedSecurity Account. Upon the
Custodian's payment of thepremium and the return and/or cancellation of any
receiptissued pursuant to paragraphs 6, 8 or 10 of this Article with respect
to the Option being liquidated through the ClosingPurchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration or exercise of, or consummation of
a Closing Purchase Transaction with respect to, any Option purchased or
written by the Fund and described in this Article, the Custodian shall
delete such Option from the statements delivered to the Fund for the account
of a Series pursuant to paragraph 3 of Article III herein, and upon the
return and/or cancellation of any receipts issued by the Custodian, shall
make such withdrawals from the Collateral Account, the Margin Account and/or
the Segregated Security Account as may be specified in a Certificate
received in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a FuturesContract,
the Fund shall deliver to the Custodian a Certificate specifying with
respect to such Futures Contract (orwith respect to any number of identical
Futures Contract(s)): (a) the Series to which the Futures Contract entered
into is to be specifically allocated; (b) the category of Futures Contract
(the name of the underlying stock index or financial instrument); (c) the
number of identical Futures Contracts entered into; (d) the delivery or
settlement date of the FuturesContract(s); (e) the date the Futures
Contract(s) was (were) entered into and the maturity date; (f) whether the
Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security Account; (h)
the name of the broker, dealer or futures commission merchant through which
the Futures Contract wasentered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker, dealer or futures
commission merchant to whom such amount is to be paid. The Custodian shall
make the deposits, if any, to the Margin Accountin accordance with the terms
and conditions of the MarginAccount Agreement. The Custodian shall make
payment of the fee or commission, if any, specified in the Certificate and
deposit in the Segregated Security Account the amount of cash and/or the
amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund for the account of a Series to a broker,
dealer or futures commission merchant with respect to an outstanding Futures
Contract shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer or futures commission merchant to the Fund with
respect to an outstanding Futures Contract shall be received and dealt with
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the
Custodianhereunder is retained by the Fund until delivery or settlement is
made on such Futures Contract, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series to which the Futures Contract
retained is to be specifically allocated; (b) the Futures Contract; (c) with
respect to a Stock Index Futures Contract, the total cash settlement amount
to be paid or received, and with respect to a Financial Futures Contract,
the Securities and/or amount of cashto be delivered or received; (d) the
broker, dealer or futures commission merchant to or from which payment or
deliveryis to be made or received; and (e) the amount of cashand/or
Securities to be withdrawn from the Segregated Security Account. The
Custodian shall make the payment or delivery specified in the Certificate
and delete such Futures Contract from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a FuturesContract to
offset a Futures Contract held by the Custodian hereunder, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the Series to which
the offsetting Futures Contract is to be specifically allocated; (b) the
items of information required in a Certificate described in paragraph 1 of
this Article, and (c) the Futures Contract being offset. The Custodian
shall make payment of the fee or commission, if any, specified in the
Certificate and delete the Futures Contract being offset from the statements
delivered to the Fund for the account of such Series pursuant to paragraph 3
of Article III herein, and make such withdrawals from the Segregated
Security Account as may be specified in such Certificate. The withdrawals,
if any, to be made from the Margin Account shall be made by the Custodian in
accordance withthe terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
ContractOption by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which the Futures Contract Option purchased is to be
specifically allocated; (b) the type of Futures Contract Option (put or
call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
ContractOption purchased; (d) the expiration date; (e) the exercise price;
(f) the dates of purchase and settlement; (g) the amount of premium to be
paid by the Fund for the account of such Series upon such purchase; (h) the
name of the broker or futures commission merchant through which such option
was purchased; and (i) the name of the broker or futures commission merchant
to whom payment is to be made. The Custodian shall paythe total amount to
be paid upon such purchase to the broker or futures commission merchant
through whom the purchase was made, provided that the same conforms to the
amount set forth insuch Certificate.
2. Promptly after the sale of any Futures ContractOption
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) the Series to which the Futures Contract Option sold
was specifically allocated; (b) the type of Futures Contract Option (put or
call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contractunderlying the Futures Contract
Option; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the account of such
Series upon such sale; and (h) the name of the broker or futures commission
merchant through which the sale was made. The Custodian shall consent to
the cancellation of the Futures Contract Option being closed against payment
to the Custodian ofthe total amount payable to the Fund for the account of
such Series, provided the same conforms to the total amount payable as set
forth in such Certificate.
3. Whenever a Futures Contract Option purchased by theFund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to which
the Futures Contract Option exercised was specifically allocated; (b) the
particular FuturesContract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission merchant
through which the Futures Contract Option isexercised; (f) the net total
amount, if any, payable by the Fund; (g) the amount, if any, to be received
by the Fund for theaccount of such Series; and (h) the amount of cash and/or
theamount and kind of Securities to be deposited in the Segregated Security
Account. The Custodian shall make the payments, if any, and the deposits,
if any, into the Segregated Security Account as specified in the
Certificate. The deposits,if any, to be made to the Margin Account shall be
madeby the Custodian in accordance with the terms and conditionsof the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,the
Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series to which the
Futures Contract Option written is to be specifically allocated; (b) the
type of FuturesContract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) thepremium to be received by the Fund for
the account of such Series; (g) the name of the broker or futures commission
merchant through which the premium is to be received; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in
the Segregated Security Account. The Custodian shall, upon receipt of the
premium specified in the Certificate, make the deposits into the Segregated
Security Account, if any, as specified in the Certificate. The deposits,if
any, to be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by theFund
which is a call is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which the Futures
Contract Option exercised was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the name of the broker or
futures commission merchant through which such Futures Contract Option was
exercised; (e) the net total amount, if any, payable to the Fund for the
account of such Series upon such exercise; (f) the net total amount, if any,
payable by the Fund for the account of such Series upon such exercise; and
(g) the amount ofcash and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The Custodian shall, upon its
receipt of the net total amount payable to the Fund for the account of such
Series, if any, specified in such Certificate make the payments, if any, and
the deposits, if any, into the Segregated Security Account as specified in
the Certificate. The deposits, if any, to be made to the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is writtenby
the Fund and which is a Put Option is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to which
the Futures Contract Optionexercised was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of Futures
Contract underlying such Futures Contract Option; (d) the name of the broker
or futures commission merchant through which such Futures Contract Option is
exercised; (e) the net total amount, if any, payable to the Fund for the
account of such Series upon such exercise; (f) the net total amount, if any,
payable by the Fund for the account of such Series upon such exercise; and
(g) the amount and kind of Securities and/or cash to be withdrawn from or
deposited in the Segregated Security Account, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund for the account
of such Series, if any, specified in the Certificate, make the payments, if
any, and thedeposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance with
the terms and conditions of theMargin Account Agreement.
7. Whenever the Fund purchases any Futures ContractOption
identical to a previously written Futures Contract Option described in this
Article in order to liquidate its position as a writer of such Futures
Contract Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which the Futures Contract Option purchased is
to be specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the exercise price; (e) the premium to be paid by the
Fund for the account of such Series; (f) the expiration date; (g) the name
of the broker or futures commission merchant to which the premium is to be
paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to bewithdrawnfrom the Segregated Security Account. The
Custodianshall effect the withdrawals from the Segregated Security Account
specified in the Certificate. The withdrawals,if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or consummationof a
closing transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall (a)
delete such Futures Contract Option from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein, and (b) makesuch
withdrawals from, and/or, in the case of an exercise, such deposits into,
the Segregated Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through
theexercise of a Futures Contract Option described in this Article shall be
subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shalldeliver to
the Custodian a Certificate specifying: (a) theSeries to which the short
sale is to be specifically allocated; (b) the name of the issuer and the
title of the Security; (c) the number of shares or principal amount sold,
andaccrued interest or dividends, if any; (d) the dates of the sale and
settlement; (e) the sale price per unit; (f) the total amount credited to
the Fund for the account of such Series upon such sales, if any; (g) the
amount of cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated
Security Account; and (i) the name of the broker through which such short
sale was made. The Custodian shall upon its receipt of a statement from
such broker confirming suchsale and that the total amount credited to the
Fund upon such sale, if any, as specified in the Certificate is held by such
broker for the account of the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or makethe deposits into the Margin
Account and the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any shortsale, the
Fund shall promptly deliver to the Custodian aCertificate specifying with
respect to each such closing-out: (a) the Series to which the short sale
being closed-out wasspecifically allocated; (b) the name of the issuer and
the title of the Security; (c) the number of shares or the principalamount,
and accrued interest or dividends, if any, required to effect such closing-
out to be delivered to the broker; (d) the dates of the closing-out and
settlement; thepurchase price per unit; (f) the net total amount payable
to the Fund for the account of such Series upon such closing-out; (g) the
net total amount payable to the broker upon such closing-out; (h) the amount
of cash and the amount and kind of Securities to be withdrawn, if any, from
the Margin Account; (i)the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Segregated Security Account;
and (j) the name of the broker through which the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund for the account of such Series upon such closing-out and
the return and/orcancellation of the receipts, if any, issued by the
custodian with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Series to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account and
the Segregated Security Account, as the same are specified in the
Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf of a Series,enters
into a Reverse Repurchase Agreement with respect to Securities and money
held by the Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate or in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or Written Instructions
specifying: (a) the Series to which the Reverse Repurchase Agreement is to
be specifically allocated; (b) the total amount payable to the Fund for the
account of such Series in connection with such Reverse Repurchase Agreement;
(c) the broker or dealer through or with which the Reverse Repurchase
Agreement is entered; (d) the amount and kind of Securities to be delivered
by the Fund to such broker or dealer; (e) the date of such Reverse
Repurchase Agreement; and (f) the amount of cashand/or the amount and kind
of Securities, if any, to be deposited in a Segregated Security Account in
connection with such Reverse Repurchase Agreement. The Custodian shall,
upon receipt of the total amount payable to the Fund specified in
theCertificate, Oral Instructions or Written Instructions make the delivery
to the broker or dealer, and the deposits, if any, to the Segregated
Security Account, specified in such Certificate, Oral Instructions or
Written Instructions.
2. Upon the termination of a Reverse RepurchaseAgreement
described in paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or Written Instructions to
the Custodian specifying: (a) the Series to which the Reverse Repurchase
Agreement terminated was specifically allocated; (b) the Reverse Repurchase
Agreement being terminated; (c) the totalamount payable by the Fund for the
account of such Series in connection with such termination; (d) the amount
and kind of Securities to be received by the Fund for the account of such
Series in connection with such termination; (e) the date of termination; (f)
the name of the broker or dealer with or through which the Reverse
Repurchase Agreement is to be terminated; and (g) the amount of cash and/or
the amount and kind of Securities to be withdrawn from the Segregated
Security Account. The Custodian shall, upon receipt of the amount and kind
of Securities to be received by the Fund specified in the Certificate, Oral
Instructions or Written Instructions, make thepayment to the broker or
dealer, and the withdrawals, if any,from the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make
suchdeposits to, or withdrawals from, a Segregated Security Account as
specified in a Certificate received by the Custodian. Such Certificate shall
specify the amount of cash and/or the amount and kind of Securities to be
deposited in, or withdrawn from, the Segregated Security Account. In the
event that the Fund fails to specify in a Certificate the designated Series,
the name of the issuer, the title and the number of shares or the principal
amount of any particular Securities to be deposited by the Custodian into,
or withdrawn from, a SegregatedSecurities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so
notify the Fund.
2. The Custodian shall make deliveries or payments from a
Margin Account to the broker, dealer, futures commissionmerchant or Clearing
Member in whose name, or for whose benefit, the account was established as
specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments
ordistributions with respect to Securities deposited in any Margin Account
shall be dealt with in accordance with the terms and conditions of the
Margin Account Agreement.
4. The Custodian shall have a continuing lien andsecurity
interest in and to any property at any time held by the Custodian in any
Collateral Account described herein. Inaccordance with applicable law, the
Custodian may enforce its lien and realize on any such property whenever the
Custodian hasmade payment or delivery pursuant to any Put Option
guaranteeletter or similar document or any receipt issued hereunder by the
Custodian. In the event the Custodian should realize on any such property
net proceeds which are less than the Custodian's obligations under any Put
Option guarantee letter or similar document or any receipt, such deficiency
shallbe a debt owed the Custodian by the Fund within the scope of
Article XIII herein.
5. On each business day, the Custodian shall furnishthe
Fund with respect to each Series a statement with respect to each Margin
Account in which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the Margin Account;
(b) the amount and kind of Securities held therein; and (c) the amount of
money held therein. The Custodian shall make available upon request to any
broker, dealer or futures commission merchant specified in the name of a
Margin Account a copy of the statement furnished the Fund with respect to
such Margin Account.
6. Promptly after the close of business on eachbusiness day
in which cash and/or Securities are maintained in a Collateral Account, the
Custodian shall furnish the Fund with a Statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind
of Securities held therein. No later than the close of business next
succeeding the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions specifying
the then market value of the securities described in such statement. In the
event such then market value is indicated to be less than the Custodian's
obligation with respect to any outstanding Put Option, guarantee letter or
similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account
to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to theCustodian
a copy of the resolution of the Trustees, certifiedby the Secretary or any
Assistant Secretary, either (i)setting forth the date of the declaration of
a dividend or distribution, the date of payment thereof, the record date as
ofwhich shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as ofthat date and the total
amount payable to the Dividend Agent of the Fund on the payment date, or
(ii) authorizing the declaration of dividends and distributions on a daily
basis and authorizing the Custodian to rely on Oral Instructions, Written
Instructions or a Certificate setting forth the date of the declaration of
such dividend or distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date and the
total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,Oral
Instructions, Written Instructions or Certificate, as the case may be, the
Custodian shall pay out of the moneys held for the account of the Series the
total amount payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES OF BENEFICIAL INTEREST
1. Whenever the Fund shall sell any Series' Shares, the
Fund shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and price;and
(b) The amount of money to be received by the Custodian for
the sale of such Shares.
2. Upon receipt of such money from the Transfer Agent,the
Custodian shall credit such money to the account of such Series.
3. Upon issuance of any Series' Shares in accordancewith
the foregoing provisions of this Article, the Custodian shall pay, out of
the money held for the account of such Series, all original issue or other
taxes required to be paid by the Fund for the account of such Series in
connection with such issuance upon the receipt of a Certificate specifying
the amount to be paid.
4. Except as provided hereinafter, whenever the Fundshall
hereafter redeem any Series' Shares, the Fund shall furnish to the Custodian
a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advicesetting
forth the number of a Series' Shares received by the Transfer Agent for
redemption and that such Shares are validand in good form for redemption,
the Custodian shall make payment to the Transfer Agent out of the moneys
held for the account of such Series of the total amount specified in the
Certificate issued pursuant to the foregoing paragraph 4 of thisArticle.
6. Notwithstanding the above provisions regarding
theredemption of any of Series' Shares, whenever a Series' Shares are
redeemed pursuant to any check redemption privilege which may from time to
time be offered by the Fund, the Custodian, unless otherwise instructed by a
Certificate, shall, upon receipt of an advice from the Fund or its agent
setting forth that the redemption is in good form for redemption in
accordance with the check redemption procedure, honor the check presented as
part of such check redemption privilege out of the money held in the account
of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretionadvance
funds on behalf of a Series which results in an overdraft because the moneys
held by the Custodian for the account of such Series shall be insufficient
to pay the total amount payable upon a purchase of Securities as set forth
in a Certificate or Oral Instructions issued pursuant to Article IV, or
which results in an overdraft in the account for such Series for some other
reason, or if a Series is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency purposes
using Securities as collateral pursuant to a separate agreement and subject
to the provisions of paragraph 2 of this Article XIII), such overdraft or
indebtedness shall be deemed to be a loan made by the Custodian to such
Series payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days
involved) equal to the Federal Funds Rate plus l/2%, such rate to be
adjusted on the effective date of any change in such Federal Funds Rate but
in no event to be less than 6% per annum, except that anyoverdraft resulting
from an error by the Custodian shall bearno interest. Any such overdraft or
indebtedness shall be reduced by an amount equal to the total of all amounts
due such Series which have not been collected by the Custodian on behalf of
such Series when due because of the failure of the Custodian to make timely
demand or presentment for payment. In addition, the Fund hereby agrees that
the Custodian shall have a continuing lien and security interest in and to
any property at any time held by it for the benefit of such Series or in
which such Series may have an interest which is then in the Custodian's
possession or control or in possession or control ofany third party acting
in the Custodian's behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time tocharge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to such
Series' credit on the Custodian's books. For purposes of this Section 1 of
Article XIII, "overdraft" shall mean a negative Available Balance.
2. The Fund will cause to be delivered to the Custodian by
any bank (including, if the borrowing is pursuant to a separate agreement,
the Custodian) from which it borrows money for investment or for temporary
or emergency purposes using Securities in a Series' portfolio as collateral
for such borrowings, a notice or undertaking in the form currently employed
by any such bank setting forth the amount which such bank will loan to the
Fund against delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodiana Certificate specifying with respect to
each such borrowing: (a) the Series to which the borrowing relates; (b) the
name of the bank; (c) the amount and terms of the borrowing,which may be set
forth by incorporating by reference an attached promissory note, duly
endorsed by the Fund, or otherloan agreement; (d) the time and date, if
known, on whichthe loan is to be entered into; (e) the date on which the
loan becomes due and payable; (f) the total amount payable to the Fund for
the account of such Series on the borrowing date; (g) the market value of
Securities to be delivered as collateralfor such loan, including the name of
the issuer, the title and the number of shares or the principal amount of
any particular Securities; and (h) a statement specifying whether such loan
is for investment purposes or for temporary or emergency purposes and that
such loan is in conformance with theInvestment Company Act of 1940 and the
Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in aCertificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank ofthe total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in theCertificate. The Custodian may, at the
option of the lendingbank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall deliver
such Securities as additional collateral as may be specified in a
Certificate to collateralizefurther any transaction described in this para-
graph. The Fund shall cause all Securities released from collateral status
to be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it. In
the event that the Fundfails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount
of any particular Securities to be delivered ascollateralby the Custodian,
the Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of itsDeclaration
of Trust and as disclosed in its most recent andcurrently effective
prospectus to lend the portfolio Securities of a Series, within 24 hours
after each loan of portfolio Securities the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with respectto each
such loan: (a) the Series to which the Securities to be loaned are
specifically allocated; (b) the nameof the issuer and the title of the
Securities; (c) the number of shares or the principal amount loaned; (d) the
date ofloan and delivery; (e) the total amount to be delivered to
theCustodian against the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately identified; and (f) the
name of the broker, dealer or financial institution to which the loan was
made. The Custodian shall deliver the Securities thus designated to the
broker, dealer or financial institution to which the loan was made upon
receipt ofthe total amount designated as to be delivered against the loan of
Securities. The Custodian may accept payment in connection with a delivery
otherwise than through the Book-EntrySystem or Depository only in the form
of a certified or bank cashier's check payable to the order of the Fund or
the Custodian drawn on New York Clearing House funds and may
deliverSecurities in accordance with the customs prevailing among dealers in
securities.
2. Promptly after each termination of the loan ofSecurities
by the Fund, the Fund shall deliver or cause to bedelivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the Securities to be returned
are specifically allocated; (b) the name of the issuer and the titleof the
Securities to be returned; (c) the number of shares or the principal amount
to be returned; (d) the date of termination; (e) the total amount to be
delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate);
and (f) the name of the broker, dealer or financial institution from which
the Securities will be returned. The Custodian shallreceive all Securities
returned from the broker, dealer, orfinancial institution to which such
Securities were loaned andupon receipt thereof shall pay, out of the moneys
held for the account of the Series specified in the Certificate, the total
amount payable upon such return of Securities as set forthin the
Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither theCustodian nor
its nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either hereunder
or under any Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Custodian may,
with respect to questions of law arising hereunder or under any Margin
Account Agreement, apply for and obtain the advice and opinion of counsel to
the Fund or of its own counsel, at the expense of the Fund, and shall be
fully protected with respect to anything done or omitted by it in goodfaith
in conformity with such advice or opinion. The Custodian shall be liable to
the Fund for any loss or damage resulting from the use of the Book-Entry
System or anyDepositoryarising by reason of any negligence, misfeasance
orwillful misconduct on the part of the Custodian or any of itsemployees or
agents.
2. Without limiting the generality of the foregoing,the
Custodian shall be under no obligation to inquire into, and shall not be
liable for:
(a) The validity of the issue of any Securitiespurchased,
sold or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the issue or sale of any of theFund's
Shares, or the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's
Shares, or the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of
anydividend by the Fund;
(e) The legality of any borrowing by the Fund
usingSecurities as collateral;
(f) The legality of any loan of portfolio
Securitiespursuant to Article XIV of this Agreement, nor shall the Custodian
be under any duty or obligation to see to it that any cash collateral
delivered to it by a broker, dealer or financial institution or held by it
at any time as a result of such loan of portfolio Securities of the Fund is
adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by wayof
limitation, shall not be under any duty or obligation periodically to check
or notify the Fund that the amount of suchcash collateral held by it for the
Fund is sufficient collateral for the Fund, but such duty or obligation
shall be the sole responsibility of the Fund. In addition, the
Custodianshall be under no duty or obligation to see that any broker, dealer
or financial institution to which portfolio Securities of the Fund are lent
pursuant to Article XIV of this Agreement makes payment to it of any
dividends or interest whichare payable to or for the account of the
applicable Seriesof the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall
promptly notify the Fund in the event that such dividends or interest are
not paid and received when due; or
(g) The sufficiency or value of any amounts of moneyand/or
Securities held in any Margin Account, Segregated Security Account or
Collateral Account in connection with transactions by the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer, futures commission merchant or Clearing Member makes payment
to the Fund of any variation margin payment or similar payment which the
Fund may be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify the Fund
ofthe Custodian's receipt or non-receipt of any such payment; provided
however that the Custodian, upon the Fund's written request, shall, as
Custodian, demand from any broker, dealer, futures commission merchant or
Clearing Member identified by theFund the payment of any variation margin
payment or similar payment that the Fund asserts it is entitled to receive
pursuantto the terms of a Margin Account Agreement or otherwisefrom such
broker, dealer, futures commission merchant or Clearing Member.
3. The Custodian shall not be liable for, or considered to
be the Custodian of, any money, whether or not represented by any check,
draft or other instrument for the payment of money, received by it on behalf
of the Fund until theCustodian actually receives and collects such money
directly or by the final crediting of the account representing the
Fund'sinterest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not
be liable for ascertaining or acting upon any calls,conversions, exchange,
offers, tenders, interest rate changes or similar matters relating to
Securities held in the Depository, unless the Custodian shall have actually
received timely notice from the Depository. In no event shall the Custodian
have any responsibility or liability for the failure of the Depository to
collect, or for the late collection or latecrediting by the Depository of
any amount payable upon Securities deposited in the Depository which may
mature or be redeemed, retired, called or otherwise become payable.
However,upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in the Depository, the Custodian shall make a claim against
the Depository on behalf ofthe Fund, except that the Custodian shall not be
under any obligation to appear in, prosecute or defend any action, suit
orproceeding in respect to any Securities held by the Depositorywhich in its
opinion may involve it in expense orliability, unless indemnity satisfactory
to it against all expense and liability be furnished as often as may be
required.
5. The Custodian shall not be under any duty orobligation
to take action to effect collection of any amount due to the Fund from the
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by the Transfer Agent of the Fund of any amount paid by the
Custodian to the Transfer Agent of the Fund in accordance with this
Agreement.
6. The Custodian shall not be under any duty orobligation
to take action to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is refused after
due demand or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured to
itssatisfaction of reimbursement of its costs and expenses in connection
with any such action.
7. The Custodian may appoint one or more
bankinginstitutions as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, including, but not limited to, banking institutions located
in foreign countries, of Securitiesand moneys at any time owned by the Fund,
upon terms and conditions approved in the Certificate, which shall, if
requested by the Custodian, be accompanied by an approving resolution of the
Fund's Board of Trustees adopted in accordancewith Rule 17f-5 under the
Investment Company Act of 1940, as amended. Notwithstanding anything to the
contrary contained in this Agreement, the Custodian shall hold harmless and
indemnify the Fund from and against any losses, actions, claims, demands,
expenses and proceedings, including counsel fees, that occur as a result of
any act or omission of any Foreign Sub-Custodian or Depository with respect
to the safekeeping of moneys and securities of the Fund.
8. The Custodian shall not be under any duty orobligation
to ascertain whether any Securities at any timedelivered to or held by it
for the account of the Fund are such as properly may be held by the Fund
under the provisions ofits Declaration of Trust.
9. (a) The Custodian shall be entitled to receive andthe
Fund agrees to pay to the Custodian all reasonable out-of-pocket expenses
and such compensation and fees as are specified on Schedule A hereto. The
Custodian shall not deem amounts payable in respect of foreign custodial
services to be out-of-pocket expenses, it being the parties' intention that
allfees for such services shall be as set forth on Schedule B hereto and
shall be provided for the term of this Agreement without any automatic or
unilateral increase. The Custodian shall have the right to unilaterally
increase the figures on Schedule A on or after March 1, 1994 and on or after
each succeeding March 1 thereafter by an amount equal to 50% of the increase
in the Consumer Price Index for the calendar year ending on the December 31
immediately preceding the calendar year in which such March 1 occurs,
provided, however, that during each such annual period commencing on a
March 1, the aggregate increase during such period shall not be in excess of
10%. Any increase by the Custodian shall be specified in a written notice
delivered to the Fund at least thirty days prior to the effective date of
the increase. The Custodian may chargesuch compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to
suchagreement against any money held by it for the account of the Fund. The
Custodian shall also be entitled to charge against any money held by it for
the account of the Fund the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The expenses which
the Custodian may charge against the account of the Fund include, but are
not limited to, the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City transactions
involving the purchase and sale ofSecurities of the Fund.
(b) The Fund shall receive a credit for eachcalendar
month against such compensation and fees of the Custodian as may be payable
by the Fund with respect to such calendar month in an amount equal to the
aggregate of its Earnings Credit for such calendar month. In no event may
any Earnings Credits be carried forward to any fiscal year other than the
fiscal year in which it was earned, or, unless permitted by applicable law,
transferred to, or utilized by, anyother person or entity, provided that any
such transferred Earnings Credit can be used only to offset compensation and
feesof the Custodian for services rendered to such transferee and cannot be
used to pay the Custodian's out-of-pocket expenses. For purposes of this
sub-section (b), the Fund is permitted to transfer Earnings Credits only to
The Dreyfus Corporation, its affiliates and/or any investment company now
orin the future sponsored by The Dreyfus Corporation or any of its
affiliates or for which The Dreyfus Corporation or any of its affiliates
acts as the sole investment adviser or as the principal distributor. For
purposes of this sub-section (b), a fiscal year shall mean the twelve-month
period commencing on theeffective date of this Agreement and on each
anniversary thereof.
10. The Custodian shall be entitled to rely upon
anyCertificate, notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be a Certificate. The
Custodian shall be entitled to rely upon anyOral Instructions and any
Written Instructions actually received by the Custodian pursuant to Article
IV or XI hereof. The Fund agrees to forward to the Custodian a Certificate
or facsimile thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof is
received by the Custodian, whether by hand delivery, telex or otherwise, by
the close of business of the same day that such Oral Instructions or Written
Instructions aregiven to the Custodian. The Fund agrees that the fact that
such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Fund. The Fund agrees that the
Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon
anyinstrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance with the
terms and conditions of any Margin Account Agreement. Without limiting the
generality of the foregoing, theCustodian shall be under no duty to inquire
into, and shall not be liable for, the accuracy of any statements or
representations contained in any such instrument or other noticeincluding,
without limitation, any specification of any amount to be paid to a broker,
dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund whichare
in the possession of the Custodian shall be the property of the Fund. Such
books and records shall be prepared and maintained as required by the
Investment Company Act of 1940, as amended, and other applicable securities
laws and rulesand regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by the Custodian to
the Fund or the Fund's authorized representative at the Fund's expense.
13. The Custodian shall provide the Fund with anyreport
obtained by the Custodian on the system of internalaccounting control of the
Book-Entry System or the Depository, or O.C.C., and with such reports on its
own systems of internal accounting control as the Fund may reasonably
request from time to time.
14. The Fund agrees to indemnify the Custodian againstand
save the Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising or incurred because
of or in connection with the Custodian's payment or non-payment of checks
pursuant to paragraph 6 of Article XII as part of any check redemption
privilege program of the Fund, except for any such liability, claim, loss
and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of thisAgreement,
the Custodian may deliver and receive Securities,and receipts with respect
to such Securities, and arrange for payments to be made and received by the
Custodian inaccordance with the customs prevailing from time to time
amongbrokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant orobligation shall be implied in
this Agreement against theCustodian.
ARTICLE XVI
TERMINATION
1. (a) Any termination may be effected only by
theterminating party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than two
hundred seventy (270) days after the date of giving of such notice.
(b) The Fund may at any time terminate thisAgreement
if the Custodian has materially breached its obligations under this
Agreement and such breach has remained uncured for a period of thirty days
after the Custodian's receipt from the Fund of written notice specifying
such breach.
(c) Either party, immediately upon written noticeto
the other party, may terminate this Agreement upon the Merger or Bankruptcy
of the other party.
(d) The Fund may at any time terminate thisAgreement
if the Custodian has materially breached its obligations under the
"Amendment to Transfer Agency Agreements" dated August 18, 1989 and has not
cured such breach as promptly as practicable and in any event within seven
days of its receiptof written notice of such breach, provided that the
Custodian shall not be permitted to cure any such material breach arising
from the willful misconduct of the Custodian.
In the event notice of termination is given by the Fund, it
shall be accompanied by a copy of a resolution of the Trustees of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than
$2,000,000aggregate capital, surplus and undivided profits. In the event
notice of termination is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of a resolution
of its Trustees, certified by the Secretary or any Assistant Secretary,
designating a successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a successorcustodian
which shall be a bank or trust company havingnot less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth
in such notice, thisAgreement shall terminate and the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, onthat date
deliver directly to the successor custodian all Securities and moneys then
owned by the Fund and held by it as Custodian, after deducting all fees,
expenses and other amounts for the payment or reimbursement of which it
shall then be entitled.
2. If a successor custodian is not designated by theFund or
the Custodian in accordance with the preceding paragraph, the Fund shall,
upon the date specified in the noticeof termination of this Agreement and
upon the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Fund)
andmoneys then owned by the Fund, be deemed to be its own custodian, and the
Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to Securities
held in the Book-Entry System, in any Depository or by a Clearing Member
which cannot be delivered to the Fund, to hold such Securities hereunder in
accordance with this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificatesetting
forth the names of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event that
any such present Authorized Person ceases to be an Authorized Person or in
the event that other or additional Authorized Persons are elected
orappointed. Until such new Certificate shall be received, the Custodian
shall be fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized Persons as
set forth in thelast delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by
two of the present Officers of the Fund setting forth the names of the
present Officers of the Fund. The Fund agrees to furnish to the Custodian a
new Certificate in similar form inthe event any such present Officer ceases
to be an Officer of the Fund, or in the event that other or additional
Officers are elected or appointed. Until such new Certificate shall be
received, the Custodian shall be fully protected in acting underthe
provisions of this Agreement upon the signatures of theOfficers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing,authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to theCustodian and mailed or delivered to
it at its offices at 110Washington Street, 13th Floor, New York, New York
10286, or at such other place as the Custodian may from time to time
designate in writing.
4. Any notice or other instrument in writing,authorized or
required by this Agreement to be given to the Fund, shall be sufficiently
given if addressed to the Fund and mailed or delivered to it at its offices
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or at such
other place as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with the same
formality as this Agreement and approved by a resolution of the Board of
Trustees of the Fund.
6. This Agreement shall extend to and shall be bindingupon
the parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not beassignable by the Fund without the
written consent of the Custodian, or by the Custodian without the written
consent of the Fund, authorized or approved by a resolution of its Board
ofTrustees.
7. This Agreement shall be construed in accordance with the
laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
9. This Agreement has been executed on behalf of theFund by
the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any Trustee,
officer or shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused
thisAgreement to be executed by their respective Officers, thereunto duly
authorized, as of the day and year first above written.
PREMIER INSURED MUNICIPAL BOND FUND
By:
Attest:
THE BANK OF NEW YORK
By:
Attest:
Appendix A
PREMIER INSURED MUNICIPAL BOND FUND
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN ACCOUNT
FOR PORTFOLIO SECURITIES TRANSACTIONS
Group I Group II
All current Fund officers, Paul Casti, Jr. Alan Eisner
Michael Condon, Frank Jeffrey N. Nachman Lawrence Greene
Greene, Phyllis Meinder John Pyburn Julian Smerling
and Richard Cassaro Joseph DiMartino Thomas Durante
Robert Dubuss James Windels
Joseph Connolly Paul Molloy
Gregory Gruber
Cash Account
1. Fees payable to The Bank of New York pursuant to writtenagreement with
the Fund for services rendered in its capacity as Custodian or agent of the
Fund, or to The Shareholder Services Group, Inc. in its capacity as
TransferAgent or agent of the Fund:
Two (2) signatures required, one of which must be fromGroup II, except
that an officer of the Fund who also is listed in Group II shall sign only
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either GroupI or Group II,
or both such Groups, except that anofficer of the Fund who also is listed in
Group II shall sign only once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be fromGroup II, except
that an officer of the Fund who also is listed in Group II shall sign only
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or GroupII, including
any one of the following: Paul Casti, Jr., James Windels, Jeffrey Nachman,
John Pyburnor Alan Eisner, except that no individual shall be
authorized to sign more than once. Custodian Account for Portfolio Securities
Transactions
Two (2) signatures required from any of the following:
All current Fund officers, and Joseph DiMartino,Robert Dubuss,
Alan Eisner, Lawrence Greene, Julian Smerling, Michael Condon, Paul Disdier,
Gregory Gruber, Richard Cassaro, Alan Brown, Linda Lionetti, Richard Weiner
and Colleen Brennan.
PREMIER INSURED MUNICIPAL BOND FUND
CUSTODY AGREEMENT
APPENDIX B
The undersigned Officers of the Fund do hereby certifythat
the following individuals, whose specimen signaturesare on file with The
Bank of New York, have been duly elected or appointed by the Fund's Board to
the position set forth opposite their names and have qualified therefor:
Name Position
Richard J. Moynihan President
A. Paul Disdier Vice President and
Investment Officer
Karen M. Hand Vice President and
Investment Officer
Stephen C. Kris Vice President and
Investment Officer
L. Lawrence Troutman Vice President and
Investment Officer
Samuel J. Weinstock Vice President and
Investment Officer
Monica S. Wieboldt Vice President and
Investment Officer
Elie M. Genadry Vice President
Donald A. Nanfeldt Vice President
Daniel C. Maclean Vice President
Jeffrey N. Nachman Vice President and
Treasurer
Gregory S. Gruber Controller
Mark N. Jacobs Secretary
Steven F. Newman Assistant Secretary
Christine Pavalos Assistant Secretary
Title: Title:
CUSTODY AGREEMENT
APPENDIX C
The following are designated publications for purposesof
paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
CUSTODY AGREEMENT
APPENDIX D
Name of Series
California Series
Connecticut Series
Florida Series
National Series
New Jersey Series
New York Series
Schedule A
The fees payable to the Custodian with respect tosecurities
held in domestic custody are annexed hereto.
PREMIER INSURED MUNICPAL BOND FUND
Domestic Custody Fees
Basic Fee: 1/100 of 1% per annum of the first $500, and 1/200of 1% of
the excess over $500 per annum of the total market value of domestic
securities held.
Custodial Transactions:
$8.00 per transaction for each receipt and delivery of
book entry securities through DTC/FRB.
$20.00 per transaction for physical
settlements,municipal sub-custodian settlements, writing options
(preparation of depository or escrow receipts) and initial futures
transactions.
$5.00 for futures variation margin maintenance.
Schedule B
The fees payable to the Custodian with respect tosecurities
held in foreign custody are as set forth in a letter dated September 21,
1993 from Jerome P. Isoldi of The Bank of New York to Jeffrey N. Nachman of
The Dreyfus Corporation.
THE BANK OF NEW YORK
110 Washington Street
New York, New York 10286
September 21, 1993
Mr. Jeffrey N. Nachman
Vice President - Financial
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Re: Global Custody Fees
Dear Jeff:
This letter is an update of my May 14, 1993 globalcustody
fee schedule letter addressed to you for the Dreyfus Family of Funds.
Safekeeping charges and transaction fees will be applied per
country, as indicated in the attached schedule.
Warmest regards.
Sincerely,
Jerome P. Isoldi
Senior Vice President
JPI/nd
Enclosure
bcc: S. Newman GLOBAL CUSTODY FEE PROPOSAL
THE DREYFUS FAMILY OF FUNDS
AUSTRALIA MEXICO (BONDS)
CANADA NETHERLANDS
FRANCE NEW ZEALAND
GERMANY SWEDEN
IRELAND SWITZERLAND
JAPAN
SAFEKEEPING FEE
12 b.p. PER ANNUM ON FIRST 250MM MARKET VALUE OF ASSETS
10 b.p. PER ANNUM ON NEXT 500MM
8 b.p. PER ANNUM ON EXCESS
TRANSACTION FEE
$50 FOR EACH TRANSACTION
CEDEL
SAFEKEEPING FEE
5 b.p. PER ANNUM ON MARKET VALUE OF ASSETS HELD
TRANSACTION FEE
$25 FOR EACH TRANSACTION
GLOBAL CUSTODY FEE PROPOSAL
THE DREYFUS FAMILY OF FUNDS
SAFEKEEPING TRANSACTIONS
ARGENTINA 30 b.p. $ 75
AUSTRIA 8 b.p. 60
BELGIUM 8 b.p. 75
BRAZIL * 45 b.p. 75
CHILE 35 b.p. 90
COLUMBIA 45 b.p. 125
DENMARK 15 b.p. 75
FINLAND 10 b.p. 75
HONG KONG 15 b.p. 100
INDIA 45 b.p. 125
INDONESIA 15 b.p. 75
ITALY 18 b.p. 75
KOREA 12.5 b.p. 25
MALAYSIA 15 b.p. 100
MEXICO (EQUITIES) 25 b.p. 60
NORWAY 25 b.p. 125
PAKISTAN 40 b.p. 150
PHILIPPINES 12.5 b.p. 150
PORTUGAL 25 b.p. 220
SINGAPORE 15 b.p. 150
SOUTH AFRICA 12.5 b.p. 150
SPAIN 8 b.p. 50
SRI LANKA 20 b.p. 60
TAIWAN 15 b.p. 150
THAILAND 18 b.p. 95
TURKEY 25 b.p. 60
UNITED KINGDOM 8 b.p. 50
URUGUAY ** 55 b.p. 75
VENEZUELA 45 b.p. 75
* Includes Local Administrator
** $4,000 Per Year, Per Account.
OUT-OF-POCKET EXPENSES
TELEX, TELEPHONE, SECURITIES REGISTRATION, ETC., ARE IN ADDITIONTO THE
ABOVE.
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "custodian") for the
investment company identified below (the "Fund") hereby appoints
on the following terms and conditions Bankers Trust Company as
subcustodian (the "Subcustodian") for it and the Subcustodian
hereby accepts such appointment on the following terms and con-
ditions as of the date set forth below.
1. QUALIFICATION. The Custodian and the Subcustodian
each represents to the other and to the Fund that it is
qualified to act as a custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. SUBCUSTODY. The Subcustodian agrees to maintain a
separate account and to hold segregated at all times from
the Subcustodian's securities and from all other customers'
securities held by the Subcustodian, all the Fund's
securities and evidence of rights thereto ("Fund
Securities") deposited, from time to time by the Custodian
with the Subcustodian. The Subcustodian will accept, hold or
dispose of and take other actions with respect to Fund
Securities in accordance with the Instructions of the
Custodian given in the manner set forth in Section 4 and
will take certain other actions as specified in Section 3.
The Subcustodian hereby waives any claim against or lien on
any Fund Securities. The Subcustodian may take steps to
register and continue to hold Fund Securities in the name of
the Subcustodian's nominee and shall take such other steps
as the Subcustodian believes necessary or appropriate to
carry out efficiently the terms of this Agreement. To the
extent that ownership of Fund Securities may be recorded by
a book entry system maintained by any transfer agent or
registrar for such Fund Securities or by Depository Trust
Company, the Subcustodian may hold Fund Securities as a book
entry reflecting the ownership of such Fund Securities by
its nominee and need not possess certificates or any other
evidence of ownership of Fund Securities.
3. SUBCUSTODIAN'S ACTS WITHOUT INSTRUCTIONS. Except
as otherwise instructed pursuant to Section 4, the
Subcustodian will (i) present all Fund Securities requiring
presentation for any payment thereon, (ii) distribute to the
Custodian cash received thereon, (iii) collect and
distribute to the Custodian interest and any dividends and
distributions on Fund Securities, (iv) at the request of the
Custodian, or on its behalf, execute any necessary
declarations or certificates of ownership (provided by the
Custodian or on its behalf) under any tax law now or here-
after in effect, (v) forward to the Custodian, or notify it
by telephone of, confirmations, notices, proxies or proxy
soliciting materials relating to the Fund Securities
received by it as registered holder (and the Custodian
agrees to forward same to the Fund), and (vi) promptly
report to the Custodian any missed payment or other default
upon any Fund Securities known to it as Subcustodian
hereunder (the Subcustodian shall be deemed to have
knowledge of any payment default on any Fund Securities in
respect of which it acts as paying agent). All cash
distributions from the Subcustodian to the Custodian will be
in same day funds, on the same day that same day funds are
received by the Subcustodian unless such distribution
required instructions from the Custodian which were not
timely received. Promptly after the Subcustodian is
furnished with any report of its independent public
accountants on an examination of its internal accounting
controls and procedures for safeguarding securities held in
its custody as subcustodian under this Agreement or under
similar agreements, the Subcustodian will furnish a copy
thereof to the Custodian.
4. INSTRUCTIONS, OTHER COMMUNICATIONS. Any officer of
the Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President
and any Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Custodian, as an officer of the
Custodian authorized to give instructions to the
Subcustodian with respect to Fund Securities (an "Authorized
Officer"), shall be authorized to instruct the Subcustodian
as to the acceptance, holding, presentation, disposition or
any other action with respect to Fund Securities from time
to time by telephone, or in writing signed by such
Authorized Officer and delivered by tested telex, tested
computer printout or such other reasonable method as the
Custodian and Subcustodian shall agree is designed to
prevent unauthorized officer's instructions; provided,
however, the Subcustodian is authorized to accept and act
upon orders from the Custodian, whether given orally, by
telephone or otherwise, which the Subcustodian reasonably
believes to be given by an authorized person. The
Subcustodian will promptly transmit to the Custodian all
receipts and transaction confirmations in respect of Fund
Securities as to which the Subcustodian has received any
instructions. The Authorized Officers shall be as set forth
on Exhibit A attached hereto and, as amended from time to
time, made a part hereof.
5. LIABILITIES. (i) The Subcustodian shall not be
liable for any action taken or omitted to be taken in
carrying out the terms and provision of this Agreement if
done without willful malfeasance, bad faith, gross
negligence or reckless disregard of its obligations and
duties under this Agreement. Except as otherwise set forth
herein, the Subcustodian shall have no responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities (except at the instructions
of the Custodian), nor for informing the Custodian with
respect thereto, whether or not the Subcustodian has, or is
deemed to have, knowledge of the aforesaid. The Subcustodian
is under no duty to supervise or to provide investment
counseling or advice to the Custodian or to the Fund
relative to the purchase, sale, retention or other
disposition of any Fund Securities held hereunder. The
Subcustodian shall for the benefit of the Custodian and the
Fund use the same care with respect to receiving,
safekeeping, handling and delivery of Fund Securities as it
uses in respect of its own securities.
(ii) The Subcustodian will indemnify, defend and save
harmless the Custodian and the Fund from and against all
loss, liability, claims and demands incurred by the
Custodian or the Fund arising out of or in connection with
the Subcustodian's willful malfeasance, bad faith, gross
negligence or reckless disregard of its obligations and
duties under this Agreement.
(iii) The Custodian agrees to be responsible for and
indemnify the Subcustodian and any nominee in whose name the
Fund Securities are registered, from and against all loss,
liability, claims and demands incurred by the Subcustodian
and the nominee in connection with the performance of any
activity pursuant to this Agreement, done in good faith and
without negligence, including any expenses, taxes or other
charges which the Subcustodian is required to pay in
connection therewith.
6. Each party may terminate this Agreement at any time
by not less than ten (10) business days' prior written
notice. In the event that such notice is given, the
Subcustodian shall make delivery of the Fund Securities held
in the Subcustodian account to the Custodian or to any third
party within the Borough of Manhattan, specified by the
Custodian in writing within ten (10) days of receipt of the
termination notice, at the Custodian's expense.
7. All communications required or permitted to be given
under this Agreement, unless otherwise agreed by the
parties, shall be addressed a follows:
(i) to the Subcustodian:
Bankers Trust Company
1 Bankers Trust Plaza
14th Floor
New York, NY 10015
Attention: Barbara Walter
RMO Safekeeping Unit
(ii) to the Custodian:
The Bank of New York
110 Washington Street
New York, New York 10286
8. MISCELLANEOUS: this Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each
of which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended by
the parties hereto in writing.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated:
THE BANK OF NEW YORK
Custodian
By: ______________________________________
Title: ____________________________________
As Custodian For
PREMIER INSURED
MUNICIPAL BOND FUND
BANKERS TRUST COMPANY
As Subcustodian
By: ___________________________________
Title: ___________________________________
EXHIBIT A
TO SUBCUSTODIAN AGREEMENT
DATED:
The Authorized Officers pursuant to Section 4 of the
Agreement shall be:
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
_________________________ __________________________
Dated:
THE BANK OF NEW YORK
As Custodian
By: ___________________________
Title: ________________________
SUBCUSTODIAN AGREEMENT
The undersigned custodian (the "Custodian") for the
investment company identified in Schedule A attached
(collectively, the "Funds") hereby appoints on the following
terms and conditions Chemical Bank as subcustodian (the
"Subcustodian") for it and the Subcustodian hereby accepts such
appointment on the following terms and conditions as of the date
set forth below.
1. QUALIFICATION. The Custodian and the Subcustodian
each represent to the other and to each Fund that it is
qualified to act as custodian for a registered investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act").
2. SUBCUSTODY. The Subcustodian agrees to hold in a
separate account, segregated at all times from all other
accounts maintained by the Subcustodian, all securities and
evidence of rights thereto of each of the Funds
(collectively, "Fund Securities") deposited, from time to
time by the Custodian with the Subcustodian. The
Subcustodian will accept, hold or dispose of and take such
other reasonable actions with respect to Fund Securities, in
addition to those specified in Section 3, in accordance with
the instructions of the Custodian relating to Fund
Securities given in the manner set forth in Section 4
("Instructions"). The Subcustodian hereby waives any claim
against, or lien on, any Fund Securities for any claim
hereunder. Registered Fund Securities may be held in the
name of the Subcustodian or nominee. To the extent that
ownership of Fund Securities may be recorded by a book entry
system maintained by any transfer agent or registrar for
such Fund Securities (including, but not limited to, any
such system operated by the Subcustodian) or by Depositary
Trust Company, the Subcustodian may hold Fund Securities as
a book entry reflecting the ownership of such Fund
Securities by it or its nominee and need not possess
certificates or any other evidence of ownership.
3. SUBCUSTODIAN'S ACTS WITHOUT INSTRUCTIONS. Except
as otherwise instructed pursuant to Section 4, the
Subcustodian will (i) present all Fund Securities requiring
presentation for any payment thereon, (ii) distribute to the
Custodian cash received thereupon, (iii) collect and
distribute to the Custodian interest and any dividends and
distributions on Fund Securities, (iv) forward to the
Custodian all confirmations, notices, proxies or proxy
soliciting materials relating to the Fund Securities
received by it (and the Custodian agrees to forward same to
the Fund), (v) report to the Custodian any missed payment or
other default upon any Fund Securities known to it as
Subcustodian hereunder, (the Subcustodian shall be deemed to
have knowledge of any payment default on any Fund Securities
in respect of which it acts as paying agent); all cash
distributions from the Subcustodian to the Custodian will be
on same day funds, or the same day that same day funds are
received by the Subcustodians unless such distribution
required instructions from the Custodian which were not
timely received, and (vi) at the request of the Custodian,
or on its behalf, execute any necessary declarations or
certificates of ownership (provided by the Custodian or on
its behalf) under any tax law nor or hereafter in effect.
The Subcustodian will furnish to the Custodian, upon the
Custodian's request, any report of the Subcustodian's
independent public accountants on an examination of its
internal accounting controls and procedures for safeguarding
securities held in its custody for the account of others.
4. INSTRUCTIONS, OTHER COMMUNICATIONS. Any officer of
the Custodian designated from time to time by letter to the
Subcustodian, signed by the President or any Vice President
and any Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Custodian, as an officer of the
Custodian authorized to give Instructions to the
Subcustodian with respect to Fund Securities (an "Authorized
Officer") shall be authorized to instruct the Subcustodian
as to the acceptance, holding, voting, presentation,
disposition or any other action with respect to Fund
Securities from time to time in writing signed by such
Authorized Officer and delivered by hand, mail, telecopier,
tested telex, tested computer printout or such other
reasonable method as the Custodian and Subcustodian shall
agree is designed to prevent unauthorized officer's
instructions. The Subcustodian is also authorized to accept
an act upon Instructions regardless of the manner in which
given (whether orally, by telephone or otherwise) if the
Subcustodian reasonably believes such Instructions are given
by an Authorized Officer. The Subcustodian will promptly
transmit to the Custodian all receipts, confirmations or
other transactional evidence received by it in respect of
Fund Securities as to which the Subcustodian has received
any Instructions. Instructions and other communications to
the Subcustodian shall be given to Chemical Bank, 55 Water
Street, Room 504, New York, New York, Attention: Debt
Securities Administration, Phone: (212)820-5616 Telex:
(212)269-8510 (or to such other address as the Custodian
or the Fund or Funds giving such notice, shall specify by
notice to the Subcustodian.
5. THE SUBCUSTODIAN. The Subcustodian shall not be
liable for any action taken or omitted to be taken in
carrying out the terms and provisions of this Agreement if
done without willful malfeasance, bad faith, negligence or
reckless disregard of its obligations and duties under this
Agreement.
The Subcustodian shall not have any responsibility for
ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes or similar matters
relating to the Fund Securities, except upon Instructions
from the Custodian, nor for informing the Custodian with
respect thereto, unless the Subcustodian has knowledge or is
deemed to have knowledge of the aforesaid. The Subcustodian
shall be deemed to have knowledge in circumstances where it
is acting as tender agent or paying agent for the Fund
Securities. The Subcustodian shall not be under a duty to
supervise or to provide advice (other than notice) to the
Custodian or any of the Funds relative to any purchase,
sale, retention or other disposition of any Fund Securities
held hereunder. The Subcustodian shall for the benefit of
the Custodian and the Funds be required to exercise the same
care with respect to the receiving, safekeeping, handling
and delivery of Fund Securities than it customarily
exercises in respect of its own securities.
The Subcustodian will indemnify, defend and save
harmless the Custodian and the Funds from any loss or
liability incurred by the Custodian arising out of or in
connection with the Subcustodian's willful malfeasance, bad
faith, negligence or reckless disregard of its obligations
and duties under this Agreement; PROVIDED, HOWEVER, that the
Subcustodian shall in no event be liable for any special,
indirect or consequential damages.
The Custodian agrees to be responsible for, and will
indemnify, defend and save harmless the Subcustodian (or any
nominee in whose name any Fund Securities are registered)
for, any loss or liability incurred by the Subcustodian (or
such nominee) arising out of or in connection with any
action taken by the Subcustodian (or such nominee) in
accordance with any Instructions or any other action taken
by the Subcustodian (or such nominee) in good faith and
without negligence pursuant to this Agreement, including any
expenses, taxes or other charges which the Subcustodian (or
such nominee) is required to incur or pay in connection
therewith.
6. RESIGNATION. The Subcustodian may resign as such
at any time upon not less than five business days' prior
written notice to the Custodian. In the event of such
resignation or any other termination of this Agreement, the
Subcustodian shall deliver all Fund Securities then held by
it to the Custodian, or as otherwise directed by the
Custodian pursuant to Instructions received by the
Subcustodian, at the Custodian's expense; PROVIDED, HOWEVER,
that the Subcustodian shall not be required to effect any
such delivery outside the Borough of Manhattan.
7. MISCELLANEOUS. This Agreement (i) shall be
governed by and construed in accordance with the laws of the
State of New York, (ii) may be executed in counterparts each
of which shall be deemed an original but all of which shall
constitute the same instrument, and (iii) may be amended
only by written agreement executed by the parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth below.
Dated: ______________________________
By: ______________________________
[Address]
Telephone:
Telex:
As Custodian for the Funds Listed
in Schedule A attached
CHEMICAL BANK
By: ______________________________
EXHIBIT (9)
PREMIER INSURED MUNICIPAL BOND FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Shareholder Services Plan (the
"Plan") under which the Fund, in respect of the series named on Schedule 1
hereto, as such Schedule may be revised from time to time (each, a
"Series"), would pay the Fund's distributor, Dreyfus Service Corporation
(the "Distributor"), for providing personal services and/or maintaining
shareholder accounts. The Distributor would be permitted to pay certain
financial institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. The Plan is
not to be adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Act"), and the fee under the Plan is intended to be a
"service fee" as defined in Article III, Section 26, of the NASD Rules of
Fair Practice.
The Fund's Board, in considering whether the Fund should implement
a written plan, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Series for
such purposes.
In voting to approve the implementation of such a plan, the Board
has concluded, in the exercise of its reasonable business judgment and in
light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit each Series and its shareholders.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor a fee at an annual rate
of .25 of 1% of the value of each Series' average daily net assets
attributable to each class of Series' shares, in respect of the provision of
personal services to shareholders and/or the maintenance of shareholder
accounts. The Distributor shall determine the amounts to be paid to Service
Agents and the basis on which such payments will be made. Payments to a
Service Agent are subject to compliance by the Service Agent with the terms
of any related Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable under this
Plan, the value of the net assets attributable to each class of Series'
shares shall be computed in the manner specified in the Fund's Declaration
of Trust for the computation of the value of the Series' net assets
attributable to such class.
3. The Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan. The report
shall state the purpose for which the amounts were expended.
4. This Plan will become effective immediately with respect to
each Series upon approval by a majority of the Board members, including a
majority of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting called for
the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year from its
effective date with respect to each Series, unless earlier terminated in
accordance with its terms, and thereafter shall continue automatically for
successive annual periods ending September 5th, provided such continuance is
approved at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board, provided
that any material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 4 hereof.
7. This Plan is terminable without penalty with respect to each
Series at any time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan.
8. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
Dated: April 21, 1993
Amended: January 26, 1994 SCHEDULE 1
Name of Series
California Series
Connecticut Series
Florida Series
National Series
New Jersey Series
New York Series
[LETTERHEAD OF STROOCK & STROOCK & LAVAN]
EXHIBIT 10
August 12, 1993
Premier California Insured Municipal Bond Fund
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
Gentlemen:
We have acted as counsel to Premier California Insured Municipal Bond Fund
(the "Fund") in connection with the preparation of a Registration Statement
on Form N-1A, Registration No. 33-61738 (the "Registration Statement"),
covering shares of beneficial interest (the "Shares") of the Fund.
We have examined copies of the Agreement and Declaration of Trust and By-
Laws of the Fund, the Registration Statement and such other documents,
records, papers, statutes and authorities as we deemed necessary to form a
basis for the opinion hereinafter expressed. In our examination of such
material, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to
various questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of the Fund and
others.
Attorneys involved in the preparation of this opinion are admitted only to
the bar of the State of New York. As to various questions arising under the
laws of the Commonwealth of Massachusetts, we have relied on the opinion of
Messrs. Ropes & Gray, a copy of which is attached hereto. Qualifications
set forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the Fund is authorized
to issue an unlimited number of Shares, and that, when the Shares are issued
and sold and the authorized consideration therefor is received by the Fund,
they will be validly issued, fully paid and nonassessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included
in the Registration Statement, and to the filing of this opinion as an
exhibit to any application made by or on behalf of the Fund or any
distributor or dealer in connection with the registration and qualification
of the Fund or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby that we
come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
August 12, 1993
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with the proposedoffer and
sale from time to time by Premier California Insured Municipal Bond Fund (the
"Trust") of an indefinite numberofshares of beneficial interest (the "Shares")
of the Trustpursuant to the Trust's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of theTrust to
authorize the issuance of the Shares. We have examinedthe Trust's records of
Trustee action, its By-Laws and itsAgreement and Declaration of Trust, as
amended to date, on fileat the Office of the Secretary of State of The
Commonwealth ofMassachusetts. We have examined copies of such
RegistrationStatement in the form filed with the Securities and Exchange
Commission, and such other documents as we deem necessaryfor the purposes of
this opinion.
We assume that, upon sale of the Shares, the Trust willreceivethe net
asset value thereof which will be at least equalto the par value thereof. We
also assume that, in connectionwith any offer and sale of the Shares, the Trust
will take proper steps to effect compliance with applicable federal andstate
laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that the Trustis
authorized to issue an unlimited number of Shares, and that, when the Shares
are issued and sold and the authorizedconsideration therefor is received by the
Trust, they will be validly issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a"Massachusetts
business trust". Under Massachusetts law,shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, theAgreement and Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation orinstrument entered into or
executed by the Trust or the Trustees. The Agreement and Declaration of Trust
provides for indemnificationout of the Trust property for all loss and
expenseofany shareholder held personally liable for the obligationsof the
Trust. Thus, the risk of a shareholder incurringfinancial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unableto meet its obligations.
We consent to the filing of this opinion as an exhibit to theaforesaid
Registration Statement.
Sincerely,
Ropes & Gray
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Custodian,
Transfer and Dividend Disbursing Agent, Counsel and Independent
Auditors" and to the use of our report on Premier Insured Municipal
Bond Fund - California Series dated August 11, 1993, in this
Registration Statement (Form N-1A No. 33-61738) of Premier Insured
Municipal Bond Fund.
ERNST & YOUNG
New York, New York
February 9, 1994
EXHIBIT (15)
PREMIER INSURED MUNICIPAL BOND FUND
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Distribution Plan (the "Plan")
relating to its Class B shares in accordance with Rule 12b-1 promulgated
under the Investment Company Act of 1940, as amended (the "Act"), in respect
of each of the series named on Schedule 1 hereto, as such Schedule may be
revised from time to time (each, a "Series"). Under the Plan, the Fund
would pay the Fund's distributor, Dreyfus Service Corporation (the
"Distributor"), for advertising, marketing and distributing the Series'
Class B shares. The Distributor would be permitted to pay certain financial
institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. If the
proposal is to be implemented, the Act and Rule 12b-1 require that a written
plan describing all material aspects of the proposed financing be adopted by
the Fund with respect to each Series.
The Fund's Board, in considering whether the Fund should implement
a written plan, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets attributable to the
Class B shares of each Series for such purposes.
In voting to approve the implementation of such a plan, the Board
has concluded, in the exercise of its reasonable business judgment and in
light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit each Series and its Class B
shareholders.
The Plan: The material aspects of this Plan are as follows:
1. (a) The Fund shall pay to the Distributor a fee at an annual
rate of .50 of 1% of the value of each Series' average daily net assets
attributable to Class B for advertising, marketing and distributing the
Series' Class B shares. The Distributor may pay one or more Service Agents
a fee in respect of these services. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such payments
will be made. Payments to a Service Agent are subject to compliance by the
Service Agent with the terms of any related Plan agreement between the
Service Agent and the Distributor.
(b) The Fund shall pay all costs of preparing and printing
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders. The Fund also shall
pay an amount of the costs and expenses in connection with (a) preparing,
printing and distributing the Fund's prospectuses used for other purposes
and (b) implementing and operating this Plan not to exceed in any fiscal
year of the Fund the greater of $100,000 or .005 of 1% of the average daily
value of the Fund's net assets for such fiscal year.
2. For the purposes of determining the fees payable under this
Plan, the value of the net assets attributable to Class B of each Series
shall be computed in the manner specified in the Fund's Declaration of Trust
for the computation of the value of each Series' net assets attributable to
such class.
3. The Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan. The report
shall state the purpose for which the amounts were expended.
4. This Plan will become effective immediately with respect to
each Series upon approval by (a) holders of a majority of such Series'
outstanding Class B shares, and (b) a majority of the Board members,
including a majority of the Board members who are not "interested persons"
(as defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into in
connection with this Plan, pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year from its
effective date with respect to each Series, unless earlier terminated in
accordance with its terms, and thereafter shall continue automatically for
successive annual periods ending September 5th, provided such continuance is
approved at least annually in the manner provided in paragraph 4(b) hereof.
6. This Plan may be amended at any time by the Board, provided
that (a) any amendment to increase materially the costs which a Series may
bear pursuant to this Plan shall be effective only upon approval by a vote
of holders of a majority of such Series' outstanding Class B shares, and
(b) any material amendments of the terms of this Plan shall become effective
only upon approval as provided in paragraph 4 hereof.
7. This Plan is terminable without penalty with respect to each
Series at any time by (a) vote of a majority of the Board members who are
not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in the operation of this Plan or in
any agreements entered into in connection with this Plan, or (b) vote of
holders of a majority of such Series' outstanding Class B shares.
8. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
Dated: April 21, 1993
Amended: January 26, 1994 SCHEDULE 1
Name of Series
California Series
Connecticut Series
Florida Series
National Series
New Jersey Series
New York Series
Exhibit (16)
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS A
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from inception through 12/31/93
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 12/31/93 of a $1,000
hypothetical investment made on 8/19/93 (inception)
0.370
1000( 1 + T ) = 993.07
T = -1.85%
==========
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS A
TOTAL RETURN COMPUTATION
Total return computation from inception through 12/31/93
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.75 + ( 12.75 x 0.01955 ) ] - 12.50
--------------------------------------------
12.50
T = 3.99%
========
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS A
SEC 30 DAY YIELD CALCULATION
INCOME 12/2/93 - 12/31/93 $3,651.15
EXPENSES 12/2/93 - 12/31/93 $0.00
Average Shares Entitled to Dividend
12/2/93 - 12/31/93 62,426.242
Maximum Offering Price per share 12/31/93 $13.35
x = 3,651.15 - 0.00
------------------------------------------
62,426.242 x 13.35
x = 0.004381
6
30 Day yield = 2 [( 1 + x) -1]
6
30 Day yield = 2 [ ( 1 + 0.004381 ) -1]
30 Day yield = 5.32%
=================
TAX EQUIVALENT YIELD
Taxable portion of yield = 0.00%
Tax exempt portion of yield = 5.32%
----------------
Yield = 5.32%
================
Federal & State Tax Bracket = 46.24%
================
5.32
Tax Equivalent Yield = -------------------- = 9.90%
( 1 - 0.4624 ) ================
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS A
TOTAL RETURN COMPUTATION
Total return computation from inception through 12/31/93
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = Maximum Offering Price at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.75 + ( 12.75 x 0.01955 ) ] - 13.09
--------------------------------------------
13.09
T = -0.69%
========
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS B
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from inception through 12/31/93
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 12/31/93 of a $1,000
hypothetical investment made on 8/19/93 (inception)
0.370
1000( 1 + T ) = 1,008.72
T = 2.37%
==========
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS B
TOTAL RETURN COMPUTATION
Total return computation from inception through 12/31/93
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.76 + ( 12.76 x 0.01755 ) ] - 12.50
--------------------------------------------
12.50
T = 3.87%
========
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS B
SEC 30 DAY YIELD CALCULATION
INCOME 12/2/93 - 12/31/93 $6,394.00
EXPENSES 12/2/93 - 12/31/93 $594.54
Average Shares Entitled to Dividend
12/2/93 - 12/31/93 109,738.663
NAV per share 12/31/93 $12.76
x = 6,394.00 - 594.54
------------------------------------------
109,738.663 x 12.76
x = 0.004142
6
30 Day yield = 2 [( 1 + x) -1]
6
30 Day yield = 2 [ ( 1 + 0.004142 ) -1]
30 Day yield = 5.02%
=================
TAX EQUIVALENT YIELD
Taxable portion of yield = 0.00%
Tax exempt portion of yield = 5.02%
----------------
Yield = 5.02%
================
Federal & State Tax Bracket = 46.24%
================
5.02
Tax Equivalent Yield = -------------------- = 9.34%
( 1 - 0.4624 ) ================
PREMIER INSURED MUNICIPAL BOND FUND
CALIFORNIA SERIES - CLASS B
TOTAL RETURN COMPUTATION
Total return computation from inception through 12/31/93
based upon the following formula:
[ C + ( C x B ) ] - A D x ( E x F )
--------------------- --- -------------
T = A G
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
D = Applicable CDSC
E = Lower of A or C
F = Original shares
G = Original investment
T = Total return
T = [ 12.76 + (12.76 x 0.01755 ) ] - 12.50 -- 0.03 x ( 12.50 x 80.000 )
----------------------------------------- ------------------------
12.50 1000
T = 0.87%
======
OTHER EXHIBITS (b)
PREMIER INSURED MUNICIPAL BOND FUND
Certificate of Secretary
The undersigned, Christine Pavalos, Assistant Secretary of Premier
Insured Municipal Bond Fund (the "Fund"), hereby certifies that set forth
below is a copy of the resolution adopted by the Fund's Board of Trustees
authorizing the signing of Mark N. Jacobs, Steven F. Newman and Robert R.
Mullery on behalf of the Fund pursuant to a power of attorney.
RESOLVED, that the Registration Statement and any and
all amendments and supplements thereto, may be signed by any one of Mark
N. Jacobs, Steven F. Newman and Robert R. Mullery, as the attorney-in-fact
for the proper officers of the Fund, with full power of substitution and
resubstitution; and that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in connection with such Registration Statement and any and all
amendments and supplements thereto, as fully to all intents and purposes
as the officer, for whom he is acting as attorney-in-fact, might or could
do in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Fund on February 8, 1994.
_______________________________
Christine Pavalos
Assistant Secretary
