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. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 9 [X]
(Check appropriate box or boxes.)
DREYFUS PREMIER 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
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on March 30, 1997 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for the fiscal year ended July 31, 1996 was filed on September 26,
1996.
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 4
4 General Description of Registrant 28
5 Management of the Fund 11
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 25
7 Purchase of Securities Being Offered 12
8 Redemption or Repurchase 20
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-30
13 Investment Objectives and Policies B-2
14 Management of the Fund B-11
15 Control Persons and Principal B-11
Holders of Securities
16 Investment Advisory and Other B-16
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-30
19 Purchase, Redemption and Pricing B-18, B-21
of Securities Being Offered B-26
20 Tax Status *
21 Underwriters B-18
22 Calculations of Performance Data B-28
23 Financial Statements B-38
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-4
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-9
30 Location of Accounts and Records C-12
31 Management Services C-12
32 Undertakings C-12
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
PROSPECTUS MARCH 30, 1997
Dreyfus Premier Insured Municipal Bond Fund (the "Fund") is an
open-end, non-diversified, management investment company, known as a mutual
fund. The Fund's investment objective is to maximize current income exempt
from Federal income tax to the extent consistent with the preservation of
capital. The Fund invests 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.
By this Prospectus, The Fund is offering three Classes of shares --
Class A, Class B and Class C -- which are described herein. See "Alternative
Purchase Methods."
The Fund provides free redemption checks with respect to Class A,
which you can use in amounts of $500 or more for cash or to pay bills. You
continue to earn income on the amount of the check until it clears. You can
purchase or redeem all Classes of shares by telephone using the TELETRANSFER
Privilege.
The Dreyfus Corporation professionally manages the Fund's portfolio.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated March 30, 1997, 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. The Securities and Exchange Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. For a free copy of the Statement of
Additional Information, 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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
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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.
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TABLE OF CONTENTS
Fee Table.................................. 3
Condensed Financial Information............ 4
Alternative Purchase Methods............... 5
Description of the Fund.................... 6
Management of the Fund..................... 11
How to Buy Shares.......................... 12
Shareholder Services....................... 16
How to Redeem Shares....................... 20
Distribution Plan and Shareholder Services Plan 24
Dividends, Distributions and Taxes......... 25
Performance Information.................... 27
General Information........................ 28
Appendix................................... 30
Page 2
<TABLE>
<CAPTION>
FEE TABLE
Class A Class B Class C
--------- --------- ---------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............. 4.50% None None
Maximum Deferred Sales Charge
Imposed on Redemptions
(as a percentage of the
amount subject to charge)...................... None* 4.00% 1.00%
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Management Fees................................. .55% .55% .55%
12b-1 Fees...................................... None .50% .75%
Other Expenses.................................. .75% .76% 1.20%
Total Fund Operating Expenses................... 1.30% 1.81% 2.50%
Example
You 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 C
--------- --------- ---------
1 Year........................................ $58 $58/$18** $35/$25**
3 Years....................................... $84 $87/$57** $78
5 YEARS....................................... $113 $118/$98** $133
10 YEARS...................................... $195 $187*** $284
* A contingent deferred sales charge of 1.00% may be assessed on
certain redemptions of Class A shares purchased without an initial sales
charge as part of an investment of $1 million or more.
** Assuming no redemption of shares.
*** Ten-year figure assumes conversion of Class B shares to Class A
shares at the end of the sixth year following the date of purchase.
</TABLE>
- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY
RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Other Expenses for
Class C are based on estimated amounts for the current fiscal year.
Long-term investors in Class B or Class C 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 Fund shares; such fees are not reflected in the
foregoing table. See "Management of the Fund," "How to Buy Shares," "How
to Redeem Shares" and "Distribution Plan and Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by
Ernst & Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data for each year
indicated. This information has been derived from the Fund's financial
statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
------------------------------ ---------------------------- -----------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
------------------------------ ----------------------------
PER SHARE DATA 1994(1) 1995 1996 1994(1) 1995 1996 JULY 31, 1996(2)
------- ------- ------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.50 $12.94 $13.01 $12.50 $12.95 $13.01 $13.53
------- ------- ------- ------- ------- ------- ------
INVESTMENT OPERATIONS:
Investment income_net. .18 .77 .63 .16 .71 .57 .34
Net realized and unrealized gain
(loss) on investments. .44 .07 .08 .45 .06 .09 (.43)
------- ------- ------- ------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS .62 .84 .71 .61 .77 .66 (.09)
------- ------- ------- ------- ------- ------- ------
DISTRIBUTIONS:
Dividends from investment income--net (.18) (.77) (.63) (.16) (.71) (.57) (.34)
Dividends from net realized gain
on investments........ -- -- (.03) -- -- (.03) (.03)
------- ------- ------- ------- ------- ------- ------
TOTAL DISTRIBUTIONS... (.18) (.77) (.66) (.16) (.71) (.60) (.37)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of year $12.94 $13.01 $13.06 $12.95 $13.01 $13.07 $13.07
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3) 4.99%(4) 6.86% 5.56% 4.94%(4) 6.24% 5.09% (.94%)(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- .08% 1.17% .50%(5) .59% 1.68% 2.08%(5)
Ratio of net investment income
to average net assets ........ 5.44%(5) 6.02% 4.80% 4.90%(5) 5.51% 4.28% 3.84%(5)
Decrease reflected in above
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation
provision of the Management
Agreement) 2.50%(5) 1.25% .13% 2.50%(5) 1.27% .13% 1.17%(5)
Portfolio Turnover Rate -- 9.17% 29.73% -- 9.17% 29.73% 29.73%
Net Assets, end of year
(000's omitted) $2,525 $8,272 $8,409 $3,343 $9,739 $10,860 $1
(1) From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3) Exclusive of sales load.
(4) Not annualized.
(5) Annualized.
</TABLE>
Further information about the Fund's performance is contained
in the Fund's annual report, which may be obtained without charge by
writing to the address or calling the number set forth on the cover page
of this Prospectus.
Page 4
ALTERNATIVE PURCHASE METHODS
The Fund offers you three methods of purchasing Fund 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 Fund share represents
an identical pro rata interest in the Fund's investment portfolio.
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 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."
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 Fund. Class B shares are
subject to a maximum 4% contingent deferred sales charge ("CDSC"), which
is assessed if you redeem Class B shares within six years of purchase.
See "How to Buy Shares_Class B Shares" and "How to Redeem
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." 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 automatically will convert to Class A shares,
based on the relative net asset values for shares of each such 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.
Class C 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 Fund. Class C shares are
subject to a 1% CDSC, which is assessed only if you redeem Class C shares
within one year of purchase. See "How to Buy Shares -- Class C Shares"
and "How to Redeem Shares -- Contingent Deferred Sales Charge -- Class C
Shares." These shares also are subject to an annual service fee at the
rate of .25 of 1%, and an annual distribution fee at the rate of .75 of
1%, of the value of the average daily net assets of Class C. See
"Distribution Plan and Shareholder Services Plan." The distribution fee
paid by Class C will cause such Class to have a higher expense ratio and
to pay lower dividends than Class A.
The decision as to which Class of shares is more beneficial
to you depends on the amount and intended length of time of your
investment. You should consider whether, during the anticipated life of
your investment in the Fund, the accumulated distribution fee and CDSC on
Class B or Class C shares 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. 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 or Class C shares may exceed the initial sales charge on
Class A shares during the life of the invest-
Page 5
ment. Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment
time frame. For example, while Class C shares have a shorter CDSC period
than Class B shares, Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing distribution fee. Thus, Class A and
Class B shares may be more attractive than Class C shares to investors
with long-term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares,
and for investors who invest between $100,000 and $999,999 in Fund shares
with long-term investment outlooks. Class A shares will not be appropriate
for investors who invest less than $50,000 in Fund shares.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to maximize current income
exempt from Federal income tax to the extent consistent with the
preservation of capital. To accomplish its investment objective, the Fund
invests primarily in Municipal Obligations (as described below) that are
insured as to the timely payment of principal and interest by recognized
insurers of Municipal Obligations. The Fund's investment objective cannot
be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities, or multistate agencies or authorities, the interest
from which is, in the opinion of bond counsel to the issuer, exempt from
Federal income tax. Municipal Obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal Obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by
the issuer's pledge of its faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable from the revenue
derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific revenue
source, but not from the general taxing power. Tax exempt industrial
development bonds, in most cases, are revenue bonds 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 or an index, or multiples
thereof, in many cases subject to a maximum and minimum. Certain
Municipal Obligations are subject to redemption at a date earlier than
their stated maturity pursuant to call options, which may be separated
from the related Municipal Obligation and purchased and sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at
least 80% of the value of its net assets (except when maintaining a
temporary defensive position) in Municipal Obligations.
Page 6
Generally, at least 65% of the value of the Fund's net assets (except when
maintaining a temporary defensive position) will be invested in bonds,
debentures and other debt instruments that are insured Municipal
Obligations. See "Insurance Feature" and "Dividends, Distributions and
Taxes."
The Municipal Obligations purchased by the Fund will be rated
no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
by Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service,
L.P. ("Fitch"). Municipal Obligations rated Baa by Moody's or BBB by S&P
or Fitch 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. The Fund also may invest in securities
which, while not rated, are determined by The Dreyfus Corporation to be
of comparable quality to the rated securities in which the Fund may
invest. The Fund also may invest in Taxable Investments of the quality
described under "Appendix -- Certain Portfolio Securities -- Taxable
Investments." Under normal market conditions, the weighted average
maturity of the Fund's portfolio is expected to exceed ten years.
From time to time, the Fund may invest more than 25% of the
value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), issued after August 7, 1986, while
exempt from Federal income tax, is a preference item for the purpose of
the alternative minimum tax. Where a regulated investment company
receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a
preference item to shareholders. The Fund 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
"Investment Considerations and Risks" below.
The Fund's annual portfolio turnover rate is not expected to
exceed 100%. The Fund may engage in various investment techniques, such
as options and futures transactions, lending portfolio securities and
short-selling. Use of certain of these techniques may give rise to
taxable income. See "Dividends, Distributions and Taxes." For a
discussion of the investment techniques and their related risks, see
"Investment Considerations and Risks" and "Appendix -- Investment
Techniques" below and "Investment Objective and Management Policies _
Management Policies" in the Statement of Additional Information.
INSURANCE FEATURE
At the time they are purchased by the Fund, the Municipal
Obligations held in the Fund's portfolio that are subject to insurance
will be insured as to timely payment of principal and interest under an
insurance policy (i) purchased by the Fund or by a previous owner of the
Municipal Obligation ("Mutual Fund Insurance") or (ii) obtained by the
issuer or underwriter of the Municipal Obligation ("New Issue
Insurance"). The insurance of principal refers to the face or par value
of the Municipal Obligation and is not affected by nor does it insure the
price paid therefor by the Fund or the market value thereof. The value of
the Fund's 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.
Page 7
Certain types of Mutual Fund Insurance obtained by the Fund
are effective only so long as the Fund is in existence, the insurer
remains in business and the Municipal Obligations described in the policy
continue to be held by the Fund. The Fund will pay the premiums with
respect to such insurance. Depending upon the terms of the policy, in the
event of a sale of any Municipal Obligation so insured by the Fund, the
Mutual Fund Insurance may terminate as to such Municipal Obligation on
the date of sale and in such event the insurer may be liable only for
those payments of principal and interest which then are due and owing.
Other types of Mutual Fund Insurance may not have this termination
feature. The Fund may purchase Municipal Obligations with this type of
insurance from parties other than the issuer and the insurance would
continue for the Fund's benefit.
Typically, the insurer may not withdraw coverage on insured
securities held by the Fund, nor may the insurer cancel the policy for
any reason except failure to pay premiums when due. The insurer may
reserve the right at any time upon 90 days' written notice to the Fund to
refuse to insure any additional Municipal Obligations purchased by the
Fund after the effective date of such notice. The Fund's Board has
reserved the right to terminate the Mutual Fund Insurance policy if it
determines that the benefits to the Fund of having its portfolio insured
are not justified by the expense involved. See "Investment Considerations
and Risks -- Investing in Insured Municipal Obligations" below.
Mutual Fund Insurance and New Issue Insurance may be obtained
from Financial Guaranty Insurance Company ("Financial Guaranty"), MBIA
Insurance Corporation ("MBIA"), AMBAC Indemnity Corporation ("AMBAC
Indemnity") and Financial Security Assurance, Inc. ("FSA"), although the
Fund may purchase insurance from, or Municipal Obligations insured by,
other insurers.
The following information regarding these insurers has been
derived from information furnished by the insurers. The Fund has not
independently verified any of the information, but the Fund is not aware
of facts which would render such information inaccurate.
Financial Guaranty is a New York stock insurance company
regulated by the New York State Department of Insurance and authorized to
provide insurance in 50 states and the District of Columbia. Financial
Guaranty is a subsidiary of FGIC Corporation, a Delaware holding company,
which is a subsidiary of General Electric Capital Corporation. Financial
Guaranty, in addition to providing insurance for the payment of interest
on and principal of Municipal Obligations held in unit investment trust
and mutual fund portfolios, provides New Issue Insurance and insurance
for secondary market issues of Municipal Obligations and for portions of
new and secondary market issues of Municipal Obligations. As of December
31, 1996, Financial Guaranty reported total capital and surplus of
approximately $1.1 billion and admitted assets of approximately $2.3
billion. The claims-paying ability of Financial Guaranty is rated "AAA"
by S&P and Fitch and "Aaa" by Moody's.
MBIA, formerly known as Municipal Bond Investors Assurance
Corporation, is the principal operating subsidiary of MBIA Inc., a New
York Stock Exchange listed company.MBIA Inc. is not obligated to pay the
debts of or claims against MBIA. MBIA is domiciled in the State of New
York and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. As of December 31, 1995, MBIA had admitted assets of
$3.8 billion, total liabilities of $2.5 billion, and total capital and
surplus of $1.3 billion, determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. The claims-paying ability of MBIA is rated "AAA" by S&P and
Fitch and "Aaa" by Moody's.
Page 8
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, the Commonwealth of Puerto Rico and the territory of Guam.
AMBAC Indemnity is a wholly-owned subsidiary of AMBAC Inc., a publicly
held company. AMBAC Indemnity had admitted assets of approximately $2.6
billion and statutory capital of approximately $1.5 billion as of
December 31, 1996. Statutory capital consists of AMBAC Indemnity's
statutory contingency reserve and policyholders' surplus. The
claims-paying ability of AMBAC Indemnity is rated "AAA" by S&P and Fitch
and "Aaa" by Moody's.
FSA, which acquired Capital Guaranty Insurance Company in
December 1995, is a wholly-owned subsidiary of Financial Security
Assurance Holdings, Ltd., a New York Stock Exchange listed company. FSA
is authorized to provide insurance in 50 states, the District of Columbia
and three U.S. territories. As of December 31 1995, FSA's statutory
capital was approximately $650 million (unaudited) and total assets were
approximately $1.5 billion (unaudited). The claims-paying ability of FSA
is rated "AAA" by S&P and "Aaa" by Moody's.
Additional information concerning the insurance feature
appears in the Statement of Additional Information.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments
which promise a stable stream of income, the prices of such securities
are inversely affected by changes in interest rates and, therefore, are
subject to the risk of market price fluctuations. Certain securities that
may be purchased by the Fund, such as those with interest rates that
fluctuate directly or indirectly based on multiples of a stated index,
are designed to be highly sensitive to changes in interest rates and can
subject the holders thereof to extreme reductions of yield and possibly
loss of principal. The values of fixed-income securities also may be
affected by changes in the credit rating or financial condition of the
issuing entities. Certain securities purchased by the Fund, such as those
rated Baa by Moody's and BBB by S&P and Fitch, may be subject to such
risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Once the rating of a portfolio security has been changed, the
Fund will consider all circumstances deemed relevant in determining
whether to continue to hold the security. The Fund's net asset value
generally will not be stable and should fluctuate based upon changes in
the value of the Fund's portfolio securities. See "Appendix _ Certain
Portfolio Securities _ Ratings" below and "Appendix B" in the Statement
of Additional Information.
INVESTING IN INSURED MUNICIPAL OBLIGATIONS -- The insurance feature
is intended to reduce financial risk, but the cost thereof and the
restrictions on investments imposed by the guidelines in the insurance
policy will result in a reduction in the yield on the Municipal
Obligations purchased by the Fund.
Because coverage under certain Mutual Fund Insurance policies
may terminate upon sale of a security from the Fund's portfolio,
insurance with this termination feature should not be viewed as assisting
the marketability of securities in the Fund's portfolio, whether or not
the securities are in default or subject to a serious risk of default.
The Dreyfus Corporation intends to retain any Municipal Obligations
subject to such insurance which are in default or, in the view of The
Dreyfus Corporation, in significant risk of default and to recommend to
the Fund's Board that the Fund place a value on the insurance which will
be equal to the difference between the market value of the defaulted
security and the market value of similar securities of minimum investment
grade (i.e., rated Baa by Moody's or BBB by S&P or Fitch) which are not
in default. To the extent the Fund holds defaulted securities subject to
Mutual
Page 9
Fund Insurance with this termination feature, it may be limited in
its ability in certain circumstances to purchase other Municipal
Obligations. While a defaulted Municipal Obligation is held in the Fund's
portfolio, the Fund continues to pay the insurance premium thereon but
also is entitled to collect interest payments from the insurer and
retains the right to collect the full amount of principal from the
insurer when the security comes due.
INVESTING IN MUNICIPAL OBLIGATIONS -- The Fund may invest more than
25% of the value of its total assets in Municipal Obligations which are
related in such a way that an economic, business or political development
or change affecting one such security also would affect the other
securities; for example, securities the interest upon which is paid from
revenues of similar types of projects, or securities whose issuers are
located in the same state. As a result, the Fund may be subject to
greater risk as compared to a fund that does not follow this practice.
Certain municipal lease/purchase obligations in which the
Fund may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by
the leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus
Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions
could be to increase the cost of the Municipal Obligations available for
purchase by the Fund and thus reduce 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.
ZERO COUPON 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, the Fund 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.
USE OF DERIVATIVES -- The Fund may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Fund may use include
options and futures. While Derivatives can be used effectively in
furtherance of the Fund's investment objective, under certain market
conditions, they can increase the volatility of the Fund's net asset
value, can decrease the liquidity of the Fund's portfolio and make more
difficult the accurate pricing of the Fund's portfolio. See "Appendix--
Investment Techniques -- Use of Derivatives"below, and "Investment
Objective and Management Policies -- Management Policies -- Derivatives"
in the Statement of Additional Information.
Page 10
NON-DIVERSIFIED STATUS -- The classification of the Fund as a
"non-diversified" investment company means that the proportion of the
Fund's assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total
assets, to invest not more than 5% of such assets in the securities of a
single issuer. Since a relatively high percentage of the Fund's assets may
be invested in the securities of a limited number of issuers, the Fund's
portfolio may be more sensitive to changes in the market value of a single
issuer. However, to meet Federal tax requirements, at the close of each
quarter the Fund may not have more than 25% of its total assets invested
in any one issuer and, with respect to 50% of total assets, not more than
5% of its total assets invested in any one issuer. These limitations do
not apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of other investment companies advised by The
Dreyfus Corporation. If, however, such other investment companies desire
to invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to
each investment company. In some cases, this procedure may adversely
affect the size of the position obtained for or disposed of by the Fund
or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves as the
Fund's investment adviser. The Dreyfus Corporation is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation ("Mellon"). As of January 31, 1997, The Dreyfus
Corporation managed or administered approximately $85 billion in assets
for approximately 1.7 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the authority of the Fund's Board in accordance with
Massachusetts law. The Fund's primary portfolio manager is Joseph P.
Darcy. He has held that position since October 1996, and has been an
employee of The Dreyfus Corporation since May 1994. For more than five
years prior to joining The Dreyfus Corporation, Mr. Darcy was a Vice
President and Portfolio Manager for Merrill Lynch Asset Management. The
Fund's other portfolio managers are identified in the Statement of
Additional Information. The Dreyfus Corporation also provides research
services for the Fund and for other funds advised by The Dreyfus
Corporation through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
Mellon's principal wholly-owned subsidiaries are Mellon Bank, N.A.,
Mellon Bank (DE) National Association, Mellon Bank (MD), The Boston
Company, Inc., AFCO Credit Corporation and a number of companies known as
Mellon Financial Services Corporations. Through its subsidiaries,
including The Dreyfus Corporation, Mellon managed more than $233 billion
in assets as of December 31, 1996, including approximately $86 billion in
proprietary mutual fund assets. As of December 31, 1996, Mellon, through
various subsidiaries, provided non-investment services, such as custodial
or administration services, for more than $1.046 trillion in assets
including approximately $57 billion in mutual fund assets.
Page 11
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 the Fund's average daily net assets. For the
fiscal year ended July 31, 1996, the Fund paid The Dreyfus Corporation a
monthly management fee at the effective annual rate of .42 of 1% of the
Fund's average daily net assets pursuant to undertakings in effect. From
time to time, The Dreyfus Corporation may waive receipt of its fees
and/or voluntarily assume certain expenses of the Fund, which would have
the effect of lowering the expense ratio of the Fund and increasing yield
to investors. The Fund will not pay The Dreyfus Corporation at a later
time for any amounts it may waive, nor will the Fund reimburse The
Dreyfus Corporation for any amounts it may assume.
In allocating brokerage transactions, The Dreyfus Corporation
seeks to obtain the best execution of orders at the most favorable net
price. Subject to this determination, The Dreyfus Corporation may
consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or
administered by The Dreyfus Corporation as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. See
"Portfolio Transactions" in the Statement of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service
Agents in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at 60 State Street, Boston,
Massachusetts 02109. The Distributor's ultimate parent is Boston
Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York,
90 Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY SHARES
GENERAL -- 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 the Distributor. Subsequent purchases may be sent
directly to the Transfer Agent or your Service Agent.
When purchasing Fund shares, you must specify which Class is
being purchased. 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.
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. You should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Account Application. The Fund reserves the right to
vary the initial and subsequent investment minimum requirements at any
time.
Page 12
You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"The Dreyfus Family of Funds." Payments which are mailed should be sent
to Dreyfus Premier Insured Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. If you are opening a new account,
please enclose 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.
Neither initial nor subsequent investments should be made by third party
check.
Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or any
other bank having a correspondent bank in New York City. Immediately
available funds may be transmitted by wire to The Bank of New York, DDA#
8900088311/Dreyfus Premier Insured Municipal Bond Fund, for purchase of
Fund shares in your name. The wire must include your Fund account number
(for new accounts, your Taxpayer Identification Number ("TIN") should be
included instead), account registration and dealer number, if applicable,
and must indicate the Class of shares being purchased. If your initial
purchase of Fund shares is by wire, please call 1-800-554-4611 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Account Application and promptly
mail the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank.
All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if
any check used for investment in your account does not clear. The Fund
makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark and the Government Direct Deposit
Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be
aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
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."
Fund shares 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 Fund's net assets represented by
such Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. The Fund's investments are
valued each business day by an independent pricing service approved by
the Fund's Board and are valued at fair value as determined by the
pricing service. The pricing service's procedures are reviewed under the
general supervision of the Fund's Board. For further information
regarding the methods employed
Page 13
in valuing Fund investments, see "Determination of Net Asset Value" in the
Statement of Additional Information.
If an order is received in proper form by the Transfer Agent
or other 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 the Distributor or its designee 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 the Distributor or its designee before the
close of its business day.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
CLASS A SHARES--The public offering price for Class A shares
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 or more.. -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year of
purchase. The Distributor may pay Service Agents an amount up to 1% of the
net asset value of Class A shares purchased by their clients that are
subject to a CDSC. The terms contained in the section of the Prospectus
entitled "How to Redeem Shares -- Contingent Deferred Sales Charge" (other
than the amount of the CDSC and its time periods) are applicable to the
Class A shares subject to a CDSC. Letter of Intent and Right of
Accumulation apply to such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions that have entered into an
agreement with the Distributor 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 the Distributor 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
Page 14
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.
Class A shares also may be purchased at net asset value
through certain broker-dealers and other financial institutions which
have entered into an agreement with the Distributor, which includes a
requirement that such shares be sold for the benefit of clients
participating in a "wrap account" or a similar program under which such
clients pay a fee to such broker-dealer or other financial institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by
The Dreyfus Corporation or its affiliates. The purchase of Class A shares
of the Fund must be made within 60 days of such redemption and the
shareholder must have either (i) paid an initial sales charge or a
contingent deferred sales charge or (ii)been obligated to pay at any time
during the holding period, but did not actually pay on redemption, a
deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumentality thereof, (iii) a charitable organization (as defined in
Section 501(c)(3) of the Code investing $50,000 or more in Fund shares,
and (iv) a charitable remainder trust (as defined in Section 501(c)(3) of
the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its own
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 Class A shares. 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 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 to Redeem
Shares." The Distributor compensates certain Service Agents for selling
Class B and Class C shares at the time of purchase from the Distributor's
own assets. The proceeds of the CDSC and the distribution fee, in part,
are used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C
shares 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
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares" above and "How to Redeem Shares."
RIGHT OF ACCUMULATION--CLASS A SHARES -- Reduced sales loads apply to
any purchase of Class A shares, shares of other funds in the Dreyfus
Premier Family of Funds, 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
Page 15
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 the Distributor 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 shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-554-4611 or,
if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those in this Prospectus. You should consult your Service Agent in
this regard.
FUND EXCHANGES
Clients of certain Service Agents may purchase, in exchange
for Class A, Class B or Class C shares of the Fund, shares of the same
Class of certain other funds managed or administered by The Dreyfus
Corporation, to the extent such shares are offered for sale in your state
of residence. These funds have different investment objectives which may
be of interest to you. You also may exchange your Fund shares that are
subject to a CDSC for shares of Dreyfus Worldwide Dollar Money Market
Fund, Inc. The shares so purchased will be held in a special account
created solely for this purpose ("Exchange Account"). Exchanges of shares
from an Exchange Account only can be made into certain other funds
managed or administered by The Dreyfus Corporation. No CDSC is charged
when an investor exchanges into an Exchange Account; however, the
applicable CDSC will be imposed when shares are redeemed from an Exchange
Account or other applicable Fund account. Upon redemption, the applicable
CDSC will be calculated without regard to the time such shares were held
in an Exchange Account. See "How to Redeem Shares." Redemption proceeds
for Exchange Account shares are paid by Federal wire or check only.
Exchange Account shares also are eligible for Dividend Sweep and the
Automatic Withdrawal Plan. To use this service, you should consult your
Service Agent or call 1-800-554-4611 to determine if it is available and
whether any conditions are imposed on its use.
To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the
Page 16
exchange is being made. Prospectuses may be obtained by calling
1-800-554-4611. Except in the case of personal retirement plans, the
shares being exchanged must have a current value of at least $500;
furthermore, when establishing a new account by exchange, the shares being
exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made. The ability
to issue exchange instructions by telephone is given to all Fund
shareholders automatically,unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this
Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request signed by all shareholders on the
account, by a separate signed Shareholder Services Form, available by
calling 1-800-554-4611, or by oral request from any of the authorized
signatories on the account by calling 1-800-554-4611. If you have
established the Telephone Exchange Privilege, you may telephone exchange
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) by calling 1-800-554-4611. If you are calling from
overseas, call 516-794-5452. See "How to Redeem Shares_Procedures." Upon
an exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically
carried over to the fund into which the exchange is made: Telephone
Exchange Privilege, Check Redemption Privilege, TELETRANSFER Privilege and
the dividend/capital gain distribution option (except for Dividend Sweep)
selected by the investor.
Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C 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 or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged, as the case may be. 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 you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from
shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your
Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal
administrative fee in accordance with rules promulgated by the Securities
and Exchange Commission. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges
may be modified or terminated at any time upon notice to shareholders.
See "Dividends, Distributions and Taxes."
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares
of the Fund, in shares of the same Class of other funds in the Dreyfus
Premier Family of Funds or certain other funds in the Dreyfus Family of
Funds of which you are a shareholder. 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
Page 17
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 or Class C
shares at the time of an exchange; however, Class B or Class C 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 or Class C shares will be calculated
from the date of the initial purchase of the Class B or Class C 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
Dreyfus 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. For more
information concerning this Privilege and the funds in the Dreyfus 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 1-800-554-4611. See "Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the 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 a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization
form with the Transfer Agent. You may obtain the necessary authorization
form by calling 1-800-554-4611. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing written
notification to Dreyfus 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 your Service Agent or by calling 1-800-554-4611. 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 OPTIONS
Dividend Sweep 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 Dreyfus 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
Page 18
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. Dividend ACH permits you to transfer electronically
dividends or dividends and capital gain distributions, if any, from the
Fund to a designated bank account. Only an account maintained at a
domestic financial institution which is an Automated Clearing House
member may be so designated. Banks may charge a fee for this service.
For more information concerning these privileges or to
request a Dividend Options Form, please call toll free 1-800-554-4611.
You may cancel these privileges by mailing written notification to
Dreyfus 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 Dividend Options Form. Enrollment in or cancellation of
these privileges is effective three business days following receipt.
These privileges are available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply
for Dividend Sweep. The Fund may modify or terminate these privileges 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 amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-554-4611. 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.
No CDSC with respect to Class B shares will be imposed on
withdrawals made under the Automatic Withdrawal Plan, provided that the
amounts withdrawn under the plan do not exceed on an annual basis 12% of
the account value at the time the shareholder elects to participate in
the Automatic Withdrawal Plan. Withdrawals with respect to Class B shares
under the Automatic Withdrawal Plan that exceed on an annual basis 12% of
the value of the shareholder's account will be subject to a CDSC on the
amounts exceeding 12% of the initial account value. Class C shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to
any applicable CDSC. Purchases of additional Class A shares where the
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, which can be obtained by
calling 1-800-554-4611, 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
Page 19
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 SHARES
GENERAL
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value 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)
when shares are redeemed. Service Agents may charge their clients a fee
for effecting redemptions of Fund shares. Any certificates representing
Fund shares being redeemed must be submitted with the redemption request.
The value of the shares redeemed may be more or less than their original
cost, depending upon the Fund's then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark 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 DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT
HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL
REJECT REQUESTS TO REDEEM SHARES 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 DREYFUS-AUTOMATIC
ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE
PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT,
OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT
TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU
WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received
your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption of Class B shares 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 the Fund held
by you at the time of redemption. No CDSC will be
Page 20
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 the Fund 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 Fund's 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 for
Class B shares, except for Class B shares purchased by shareholders who
beneficially owned Class B shares on November 30, 1996:
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
------------------- ------------------------
First............................. 4.00
Second............................ 4.00
Third............................. 3.00
Fourth............................ 3.00
Fifth............................. 2.00
Sixth............................. 1.00
The following table sets forth the rates of the CDSC for
Class B shares purchased by shareholders who beneficially owned Class B
shares on November 30, 1996:
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 six years
(five years for shareholders beneficially owning Class B shares on
November 30, 1996); then of amounts representing the cost of shares
purchased six years (five years for shareholders beneficially owning
Class B shares on November 30, 1996) prior to the redemption; and finally,
of amounts representing the cost of shares held for the longest period of
time within the applicable six-year period (five-year period for
shareholders beneficially owning Class B shares on November 30, 1996).
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 rein-
Page 21
vestment. 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 4% (the applicable rate in the second year after purchase)
for a total CDSC of $9.60.
CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.
WAIVER OF CDSC -- The CDSC may 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 investment in the Dreyfus Family
of Funds or other products made available by the Distributor exceeds
$1,000,000, (c) redemptions as a result of a combination of any
investment company with one or more Series by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 701\2 in the case of
an IRA or Keogh plan or custodial account pursuant to Section 403(b) of
the Code, and (e) redemptions made pursuant to the Automatic Withdrawal
Plan, as described in the Fund's Prospectus. If the Fund's Board
determines 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 the Distributor. 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, or, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent, through the Check Redemption Privilege with respect to Class A
shares only, or the TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. 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.
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 any redemption Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
Shares for which certificates have been issued are not eligible for the
Check Redemption or TELETRANSFER Privilege.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent.
Page 22
If you select the TELETRANSFER redemption privilege or telephone exchange
privilege (which is granted automatically unless you refuse it), you
authorize the Transfer Agent to act on telephone instructions (including
over The Dreyfus TouchRegistration Mark automated telephone system) from
any person representing himself or herself to be you, or a representative
of your Service Agent, and reasonably believed by the Transfer Agent to be
genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a redemption or exchange of Fund shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Dreyfus 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 -- You may write
Redemption Checks drawn on your Fund account. Redemption Checks may be
made payable to the order of any person in the amount of $500 or more.
Potential fluctuations in the net asset value of 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. This Privilege will be terminated immediately, without notice,
with respect to any account which is, or becomes, subject to backup
withholding on redemptions (see "Dividends, Distributions and Taxes").
Any Redemption Check written on an account which has become subject to
backup withholding on redemptions will not be honored by the Transfer
Agent.
Page 23
TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your
Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House
member may be designated. Redemption proceeds will be on deposit in your
account at an Automated Clearing House member bank ordinarily two days
after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the
TELETRANSFER Privilege for transfer to their bank account not more than
$250,000 within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of shares by calling 1-800-554-4611 or,
if you are calling from overseas, call 516-794-5452.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent 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 Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor 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 the
Distributor or its designee by 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 dealer to transmit orders on a
timely basis. The 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
Upon written request, you may reinvest up to the number of
Class A or Class B shares you have redeemed, within 45 days of
redemption, at the then-prevailing net asset value without a sales load,
or reinstate your account for the purpose of exercising Fund Exchanges.
Upon reinvestment, with respect to Class B shares or Class A shares if
such shares were subject to a CDSC, the shareholder's account will be
credited with an amount equal to the CDSC previously paid upon redemption
of the Class A or Class B shares reinvested. The Reinvestment Privilege
may be exercised only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN -- Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor for
distributing the Fund's Class B and Class C shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B and .75
of 1% of the value of the average daily net assets of Class C.
Page 24
SHAREHOLDER SERVICES PLAN -- Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of each such
Class. 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. The Distributor may
make payments to Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES
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 Class
from which they were paid at net asset value without a sales load or, at
your option, paid in cash. The Fund's 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. If you are an omnibus account-holder and
indicate in a partial redemption request that a portion of any accrued
dividends to which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account, such
portion of the accrued dividends will be paid to you along with the
proceeds of the redemption. Distributions by the Fund from net realized
securities gains, if any, generally are declared and paid once a year,
but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Code, in all events in a manner
consistent with the provisions of 1940 Act. The Fund will not make
distributions from its 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 Class from which they were paid at net asset
value. 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 a particular Class will
be borne exclusively by such Class. Class B and Class C shares will
receive lower per share dividends than Class A shares because of the
higher expenses borne by the relevant Class. See "Fee Table."
Except for dividends from Taxable Investments, the Fund
anticipates that substantially all dividends paid by the Fund from net
investment income will not be subject to Federal income tax. Dividends
derived from Taxable Investments, together with distributions from
Page 25
any net realized short-term securities gains and all or a portion of any
gains realized from the sale or other disposition of certain market
discount bonds, paid by the Fund are subject to Federal income tax as
ordinary income whether received in cash or reinvested in additional
shares. Distributions from net realized long-term securities gains of the
Fund generally are subject to Federal income tax as long-term capital
gains if you are a citizen or resident of the United States. Dividends and
distributions attributable to income or gain derived from securities
transactions and from the use of certain of the investment techniques
described under "Appendix_Investment Techniques" will be subject to
Federal income tax. No dividend paid by the Fund will qualify for the
dividends received deduction allowable to certain U.S. corporations. The
Code provides that the net capital gain of an individual generally will
not be subject to Federal income tax at a rate in excess of 28%. Under
the Code, interest on indebtedness incurred or continued to purchase or
carry Fund shares which is deemed to relate to exempt-interest dividends
is not deductible.
Although all or a substantial portion of the dividends paid
by the Fund may be excluded by shareholders of the Fund from their gross
income for Federal income tax purposes, the Fund may purchase specified
private activity bonds, the interest from which may be (i) a preference
item for purposes of the alternative minimum tax, or (ii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If the Fund purchases such securities, the portion of the
Fund's dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause an investor to be subject to such
taxes.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt
from Federal tax and the dollar amount, if any, subject to Federal tax.
These dollar amounts will vary depending on the size and length of time
of your investment in the Fund. If the Fund pays dividends derived from
taxable income, it intends to designate as taxable the same percentage of
the day's dividend as the actual taxable income earned on that day bears
to total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares of the Fund if you exchange your
Class A shares for shares of another fund advised or administered by The
Dreyfus Corporation within 91 days of purchase and such other fund
reduces or eliminates its otherwise applicable sales load for the purpose
of the exchange. In this case, the amount of your 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 fund shares received on the
exchange.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains and the
proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished in connection with opening an
account is correct or that such shareholder has not
Page 26
received notice from the IRS of being subject to backup withholding as a
result of a failure to properly report taxable dividend or interest income
on a Federal income tax return. Furthermore, the IRS may notify the Fund
to institute backup withholding if the IRS determines a shareholder's TIN
is incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or 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.
Management of the Fund believes that the Fund has qualified
for the fiscal year ended July 31, 1996 as a "regulated investment
company" under the Code. The Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income taxes
to the extent its earnings are distributed in accordance with applicable
provisions of the Code. 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, if any.
You should consult your tax adviser regarding specific
questions as to Federal, state or local 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. These figures also take into account any applicable service
and distribution fees. As a result, at any given time, the performance of
Class B and Class C should be expected to be lower than that of Class A.
Performance for each Class will be calculated separately.
Current yield refers to the Fund's annualized net investment
income per share over a 30-day period, expressed as a percentage of the
net asset value (or maximum offering price in the case of Class A) per
share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is
compounded by assuming that it is reinvested at a constant rate over a
six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire one-year
period. Calculations of the Fund's current yield may reflect absorbed
expenses pursuant to any undertaking that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in the Fund was
purchased with an initial payment of $1,000 and that the investment was
redeemed at the end of a stated period of time, after giving effect to
the reinvestment of dividends and distributions during the period. The
return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one,
five and ten year periods, or for shorter periods depending upon the
length of time during which the Fund has operated.
Page 27
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (maximum offering price in the case of Class A) per share
at the beginning of the period. Advertisements may include the percentage
rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return. 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 or Class C shares. Calculations
based on the net asset value per share do not reflect the deduction of
the applicable sales charge on Class A shares 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 or marketing 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. Before December 8, 1993, the Fund's name was Premier California
Insured Municipal Bond Fund, and from December 8, 1993 to the date of
this prospectus its name was Premier Insured Municipal Bond Fund. The
Fund is authorized to issue an unlimited number of shares of beneficial
interest, par value $.001 per share. The Fund's shares are classified
into three classes_Class A, Class B and Class C. Each share has one vote
and shareholders will vote in the aggregate and not by class except as
otherwise required by law. Only holders of Class B or Class C shares, as
the case may be, will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan.
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 Fund intends to
conduct its operations in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
discussed under "Management of the Fund" in the Statement of Additional
Page 28
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
sends 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.
Page 29
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- The Fund is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets. The
Fund currently intends to borrow money only for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the value of the
Fund's 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 the
value of the Fund's total assets, the Fund will not make any additional
investments.
SHORT-SELLING -- The Fund may make short sales of securities. In
these transactions, the Fund sells a security it does not own in
anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make
delivery to the buyer. The Fund is obligated to replace the security
borrowed by purchasing it subsequently 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 Fund, which would result in a loss or
gain, respectively.
Securities will not 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 the Fund's net assets. The Fund may
not 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 the
Fund's net assets. The Fund may not make a short sale which results in the
Fund having sold short in the aggregate more than 5% of the outstanding
securities of any class of an issuer.
The Fund also may make short sales "against the box," in
which the Fund enters into a short sale of a security it owns in order to
hedge an unrealized gain on the security. At no time will the Fund have
more than 15% of the value of its net assets in deposits on short sales
against the box.
USE OF DERIVATIVES -- The Fund may invest in the types of Derivatives
enumerated under "Description of the Fund -- Investment Considerations
and Risks -- Use of Derivatives." These instruments and certain related
risks are described more specifically under "Investment Objective and
Management Policies -- Management Policies -- Derivatives" in the
Statement of Additional Information.
Derivatives may entail investment exposures that are greater
than their cost would suggest, meaning that a small investment in
Derivatives could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or
judges the market conditions incorrectly, such investments may lower the
Fund's return or result in a loss. The Fund also could experience losses
if its Derivatives were poorly correlated with its other investments, or
if the Fund were unable to liquidate its position because of an illiquid
secondary market. The market for many Derivatives is, or suddenly can
become, illiquid. Changes in liquidity may result in significant, rapid
and unpredictable changes in the prices for Derivatives.
Although the Fund is not a commodity pool, certain
Derivatives subject the Fund to the rules of the Commodity Futures Trading
Commission which limit the extent to which the Fund can invest in such
Derivatives. The Fund may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, the Fund may
not invest in such contracts and options for other purposes if the sum
of the amount of initial margin deposits and premiums paid for unexpired
options with respect to such contracts, other than bona fide hedging
purposes, exceeds 5% of the liquidation value of the Fund's assets, after
Page 30
taking into account unrealized profits and unrealized losses on such
contracts and options; 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% limitation.
The Fund may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. The Fund may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. When required by the Securities and Exchange Commission, the Fund
will set aside permissible liquid assets in a segregated account to cover
its obligations relating to its transactions in Derivatives. To maintain
this required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate
a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to
be entitled to payments in amounts equal to the interest or other
distributions payable on the loaned securities which affords the Fund an
opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed
331\3% of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned
securities. Such loans are terminable at any time upon specified notice.
the Fund might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its agreement with
the Fund.
FORWARD COMMITMENTS -- The Fund may purchase Municipal Obligations
and other securities on a forward commitment or when-issued basis, which
means that delivery and payment take place a number of days after the
date of the commitment to purchase. The payment obligation and the
interest rate receivable on a forward commitment or when-issued security
are fixed when the Fund enters into the commitment, but the Fund does not
make payment until it receives delivery from the counterparty. The Fund
will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
before the settlement date if it is deemed advisable. A segregated account
of the Fund consisting of permissible liquid assets at least equal at all
times to the amount of the commitments will be established and maintained
at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- The Fund may purchase floating and
variable rate demand notes and bonds, which are tax exempt obligations
ordinarily having stated maturities in excess of one year, but which
permit the holder to demand payment of principal at any time or at
specified intervals. Variable rate demand notes include master demand
notes which are obligations that permit the Fund to invest fluctuating
amounts at varying rates of interest, pursuant to direct arrangements
between the Fund, as lender, and the borrower. These obligations permit
daily changes in the amount borrowed. Because these obligations are
direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased will meet the quality criteria
established for the purchase of Municipal Obligations.
Page 31
TAX EXEMPT PARTICIPATION INTERESTS --The Fund may purchase from
financial institutions participation interests in Municipal Obligations
(such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the Fund an undivided interest
in the Municipal Obligation in the proportion that the Fund's
participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated, or
has been given a rating below that which otherwise is permissible for
purchase by the Fund, it will be backed by an irrevocable letter of credit
or guarantee of a bank that the Fund's Board has determined meets
prescribed quality standards for banks, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For
certain participation interests, the Fund will have the right to demand
payment, on not more than seven days' notice, for all or any part of the
Fund's participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, the Fund intends to exercise its right
to demand payment only upon a default under the terms of the Municipal
Obligation, as needed to provide liquidity to meet redemptions, or to
maintain or improve the quality of its investment portfolio.
TENDER OPTIONS BONDS -- The Fund may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to
a custodial arrangement) having a relatively long maturity and bearing
interest at a fixed rate substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the agreement of a third
party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the option,
at periodic intervals, to tender their securities to the institution
and receive the face value thereof. As consideration for providing the
option, the financial institution receives periodic fees equal to the
difference between the Municipal Obligation's fixed coupon rate and the
rate, as determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities, coupled
with the tender option, to trade at par on the date of such determination.
Thus, after payment of this fee, the security holder effectively holds
a demand obligation that bears interest at the prevailing short-term
tax exempt rate. The Dreyfus Corporation, on behalf of the Fund, will
consider on an ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligations, 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.
CUSTODIAL RECEIPTS -- The Fund may purchase custodial receipts
representing the right to receive certain future principal and interest
payments on Municipal Obligations which underlie the custodial receipts.
A number of different arrangements are possible. In a typical custodial
receipt arrangement, an issuer or a third party owner of Municipal
Obligations deposits such obligations with a custodian in exchange for
two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based
on payments received on the underlying Municipal Obligations. One class
has the characteristics of a typical auction rate security, where at
specified intervals its interest rate is adjusted, and ownership changes,
based on an auction mechanism. This class's interest rate generally is
expected to be below the coupon rate of the underlying Municipal
Obligations and generally is at a level comparable to that of a Municipal
Obligation of similar quality and having a maturity equal to the period
between interest rate adjustments. The second class bears interest at a
rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this
case inversely to changes in the rate of interest of the first class. In
no event will the aggregate interest paid with respect to
Page 32
the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should
be expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by the Fund should
increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. The Fund
also may purchase directly from issuers, and not in a private placement,
Municipal Obligations having characteristics similar to custodial
receipts. These securities may be issued as part of a multi-class
offering and the interest rate on certain classes may be subject to a cap
or floor.
STAND-BY COMMITMENTS -- The Fund may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under a
stand-by commitment, the Fund obligates a broker, dealer or bank to
repurchase, at the Fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment, therefore, is subject to
the ability of the seller to make payment on demand. The Fund will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
The Fund may pay for stand-by commitments if such action is deemed
necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. Gains realized in connection with stand-by commitments will be
taxable. The Fund also may acquire call options on specific Municipal
Obligations. The Fund generally would purchase these call options to
protect the Fund from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the
Municipal Obligation before maturity. The sale by the Fund of a call
option that it owns on a specific Municipal Obligation could result in
the receipt of taxable income by the Fund.
ZERO COUPON SECURITIES -- The Fund may invest in zero coupon
securities which are debt securities issued or sold at a discount from
their face value which do not entitle the holder to any periodic payment
of interest prior to maturity or a specified redemption date (or cash
payment date). The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer.
Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a
greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, and repurchase agreements providing
for settlement in more than seven days after notice. As to these
securities, the Fund is subject to a risk that should the Fund desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could
be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other
than for temporary defensive purposes (but not to exceed 20% of the value
of the Fund's net assets) or for temporary defensive purposes, the Fund
may invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of purchase, a
quality rating within the two highest grades of Moody's, S&P or Fitch;
obligations of the U.S. Government,
Page 33
its agencies or instrumentalities; commercial paper rated not lower than
P-1 by Moody's, A-1 by S&P or F-1 by Fitch; certificates of deposit of
U.S. domestic banks, including foreign branches of domestic banks, with
assets of one billion dollars or more; time deposits; bankers' acceptances
and other short-term bank obligations; and repurchase agreements in
respect of any of the foregoing. Dividends paid by the Fund that are
attributable to income earned by the Fund from Taxable Investments will
be taxable to investors. See "Dividends, Distributions and Taxes." Except
for temporary defensive purposes, at no time will more than 20% of the
value of the Fund's net assets be invested in Taxable Investments. Under
normal market conditions, the Fund anticipates that not more than 5% of
the value of its total assets will be invested in any one category of
Taxable Investments. Taxable Investments are more fully described in the
Statement of Additional Information, to which reference hereby is made.
RATINGS -- Obligations which are rated Baa are considered medium
grade obligations; they are neither highly protected nor poorly secured,
and are considered by Moody's to have speculative characteristics. Bonds
rated BBB by S&P are regarded as having adequate capacity to pay interest
and repay principal, and while such bonds normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories. Bonds rated BBB by Fitch are considered to be
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 for a general description of Moody's, S&P and Fitch ratings
of Municipal Obligations
The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these bonds. Therefore, although these ratings may
be an initial criterion for selection of portfolio investments, The
Dreyfus Corporation also will evaluate these securities and the ability
of the issuers of such securities to pay interest and principal. The
Fund's ability to achieve its investment objective may be more dependent
on The Dreyfus Corporation's credit analysis than might be the case for a
fund that invested in higher rated securities.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 34
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Page 35
Copy Rights 1997 Dreyfus Service Corporation PIMB/p033097
Page 36
_____________________________________________________________________________
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
CLASS A, CLASS B AND CLASS C SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 30, 1997
_____________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Premier Insured Municipal Bond Fund (the "Fund"), dated March 30,
1997, 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.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies B-2
Management of the Fund B-11
Management Agreement B-16
Purchase of Shares B-18
Distribution Plan and Shareholder Services Plan B-19
Redemption of Shares B-21
Shareholder Services B-22
Determination of Net Asset Value B-25
Dividends, Distributions and Taxes B-26
Portfolio Transactions B-27
Performance Information B-28
Information About the Fund B-30
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-30
Appendix A B-32
Financial Statements B-38
Report of Independent Auditors B-48
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the Fund"
and "Appendix."
Portfolio Securities
Municipal Obligations. The average distribution of investments (at
value) in Municipal Obligations by ratings for the fiscal year ended July 31,
1996, computed on a monthly basis, was as follows:
Fitch Investors Moody's Investors Standard & Poor's
Service, L.P. Service, Inc. Ratings Group Percentage of
("Fitch") or ("Moody's") or ("S&P") Value
- --------------- ----------------- ---------------- -------------
AAA Aaa AAA 99.1%
F-1/F-1+ VMIG1/MIG1, P-1 SP-1+/SP-1, A-1 .9%
------
100.0%
======
The term "Municipal Obligations" generally includes debt obligations
issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, schools, streets and water
and sewer works. Other public purposes for which Municipal Obligations may
be issued include refunding outstanding obligations, obtaining funds for
general operating expenses and lending such funds to other public
institutions and facilities. In addition, certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds to provide for the construction, equipment, repair or improvement of
privately operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, industrial, port or parking
facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity or sewage or solid waste
disposal; the interest paid on such obligations may be exempt from Federal
income tax, although current tax laws place substantial limitations on the
size of such issues. Such obligations are considered to be Municipal
Obligations if the interest paid thereon qualifies as exempt from Federal
income tax in the opinion of bond counsel to the issuer. There are, of
course, variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand obligations are tax exempt obligations
ordinarily having stated maturities in excess of one year, but which permit
the holder to demand payment of principal at any time or at specified
intervals. The issuer of such obligations ordinarily has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders thereof. The interest rate on a
floating rate demand obligation is based on a known lending rate, such as a
bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation, and rating of the issue. The
imposition of the Fund's management fee, as well as other operating expenses,
including fees paid under the Fund's Shareholder Services Plan and, with
respect to Class B and Class C shares only, Distribution Plan, will have the
effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily
associated with Municipal Obligations. Although lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation ordinarily is
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property, dis
position of the property in the event of foreclosure might prove difficult.
The staff of the Securities and Exchange Commission currently considers
certain lease obligations to be illiquid. Determination as to the liquidity
of such securities is made in accordance with guidelines established by the
Fund's Board. Pursuant to such guidelines, the Board has directed the
Manager to monitor carefully the Fund's investment in such securities with
particular regard to (1) the frequency of trades and quotes for the lease
obligation; (2) the number of dealers willing to purchase or sell the lease
obligation and the number of other potential buyers; (3) the willingness of
dealers to undertake to make a market in the lease obligation; (4) the nature
of the marketplace trades including the time needed to dispose of the lease
obligation, the method of soliciting offers and the mechanics of transfer;
and (5) such other factors concerning the trading market for the lease
obligation as the Manager may deem relevant. In addition, in evaluating the
liquidity and credit quality of a lease obligation that is unrated, the
Fund's Board has directed the Manager to consider (a) whether the lease can
be cancelled; (b) what assurance there is that the assets represented by the
lease can be sold; (c) the strength of the lessee's general credit (e.g., its
debt, administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to the
operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. The Fund will not invest more than 15% of the
value of its net assets in lease obligations that are illiquid and in other
illiquid securities. See "Investment Restriction No. 11" below.
The Fund will purchase tender option bonds only when it is satisfied
that the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for the Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Insurance Feature. The Mutual Fund Insurance policies provide for a
policy period of one year which the insurer typically renews for successive
annual periods at the request of the Fund for so long as the Fund is in
compliance with the terms of the relevant policy. The insurance premiums are
payable monthly by the Fund and are 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.
The Fund, at its option, may purchase secondary market insurance
("Secondary Market Insurance") on any Municipal Obligation purchased by the
Fund. By purchasing Secondary Market Insurance, the Fund would obtain, upon
payment of a single premium, insurance against nonpayment of scheduled
principal and interest for the remaining term of the Municipal Obligation,
regardless of whether the Fund then owned such security. Such insurance
coverage would be non-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 the Fund
to sell a Municipal Obligation to a third party as a high rated insured
Municipal Obligation at a market price greater than what otherwise might be
obtainable if the security were sold without the insurance coverage.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for its
investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The ratings
of Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute
standards of quality. Although these ratings may be an initial criterion for
selection of portfolio investments, the Manager also will evaluate these
securities.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased by
the Fund pursuant to Rule 144A under the Securities Act of 1933, as amended,
the Fund intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Fund's Board has directed the Manager to monitor
carefully 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 Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's investments during such
period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the U.S. Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support to such U.S. Government sponsored agencies or instrumentalities, no
assurance can be given that it will always do so, since it is not so
obligated by law.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally are
limited to London branches of domestic banks that have total assets in excess
of one billion dollars. Time deposits which may be held by the Fund will not
benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of
a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
In a repurchase agreement, the Fund buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian or sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of the
Securities and Exchange Commission to be loans by the Fund. In an attempt to
reduce the risk of incurring a loss on a repurchase agreement, the Fund will
enter into repurchase agreements only with domestic banks with total assets
in excess of $1 billion, or primary government securities dealers reporting
to the Federal Reserve Bank of New York, with respect to securities of the
type in which the Fund may invest, and will require that additional
securities be deposited with it if the value of the securities purchased
should decrease below resale price. Repurchase agreements could involve
risks in the event of a default or insolvency of the other party to the
agreement, including possible delays or restrictions upon the Fund's ability
to dispose of the underlying securities.
Management Policies
Short Selling. Until the Fund closes its short position or replaces the
borrowed security, it will: (a) maintain a segregated account, containing
permissible liquid assets, at such a level that the amount deposited in the
account plus the amount deposited with the broker as collateral always equals
the current value of the security sold short; or (b) otherwise cover its
short position.
Lending Portfolio Securities. In connection with its securities lending
transactions, the Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a part
of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must be
able to terminate the loan at any time; (4) the Fund must receive reasonable
interest on the loan, as well as any interest or other distributions payable
on the loaned securities, and any increase in market value; and (5) the Fund
may pay only reasonable custodian fees in connection with the loan.
Derivatives. The Fund may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Fund to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease
the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of counterparties
to over-the-counter Derivatives in the same manner as it would review the
credit quality of a security to be purchased by the Fund. Over-the-counter
Derivatives are less liquid than exchange-traded Derivatives since the other
party to the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for it.
Futures Transactions--In General. The Fund may enter into futures contracts
in U.S. domestic markets, such as the Chicago Board of Trade. Engaging in
these transactions involves risk of loss to the Fund which could adversely
affect the value of the Fund's net assets. 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 that
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 Fund to substantial
losses.
Successful use of futures by the Fund also is subject to the ability of
the Manager to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if the Fund uses futures to hedge against the possibility of a decline in the
market value of securities held in its portfolio and the prices of such
securities instead increase, the Fund will lose part or all of the benefit of
the increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, the Fund may be required to segregate permissible liquid
assets in connection with its commodities transactions in an amount generally
equal to the value of the underlying commodity. The segregation of such
assets will have the effect of limiting the Fund's ability otherwise to
invest those assets.
Specific Futures Transactions. The Fund may purchase and sell interest rate
futures contracts. An interest rate future obligates the Fund to purchase or
sell an amount of a specific debt security at a future date at a specific
price.
Options--In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security or securities at the exercise price at any time
during the option period, or at a specific date. Conversely, a put option
gives the purchaser of the option the right to sell, and obligates the writer
to buy, the underlying security or securities at the exercise price at any
time during the option period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written by
the Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and put
options is to realize, through the receipt of premiums, a greater return than
would be realized on the underlying securities alone. The Fund receives a
premium from writing covered call or put options which it retains whether or
not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may cease
to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other unforeseen events, at
times have rendered certain of the clearing facilities inadequate and
resulted in the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in
one or more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of customers'
orders, will not recur. In such event, it might not be possible to effect
closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent such
predictions are incorrect, the Fund may incur losses.
Future Developments. The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by the
Fund or which are not currently available but which may be developed, to the
extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund will provide appropriate
disclosure in its Prospectus or Statement of Additional Information.
Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to changes
in value (generally changing in the same way, i.e., appreciating when
interest rates decline and depreciating when interest rates rise) based upon
the public's perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities purchased on
a forward commitment or when-issued basis may expose the Fund to risks
because they may experience such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued basis can involve the additional risk
that the yield available in the market when the delivery takes place actually
may be higher than that obtained in the transaction itself. Purchasing
securities on a forward commitment or when-issued basis when the Fund is
fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 7 as
fundamental policies, which cannot be changed without approval by the holders
of a majority (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund's outstanding voting shares. Investment
restrictions numbered 8 through 12 are not fundamental policies and may be
changed by vote of a majority of the Fund's Board members at any time. The
Fund may not:
1. Invest more than 25% of 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 to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of the
Fund's total assets). For purposes of this Investment Restriction, the entry
into options, forward contracts, futures contracts, including those relating
to indices, and options on futures contracts or indices shall not constitute
borrowing.
3. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from investing
in Municipal Obligations secured by real estate or interests therein, or
prevent the Fund from purchasing and selling options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available, and except to the extent the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value
of the Fund's total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange Commission
and the Fund's Board.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities permitted in
Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise to a
senior security.
7. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or
as otherwise provided in the Fund's Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid (which
securities could include, 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
Fund's 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 its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies and
restrictions as the Fund. 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 its shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Board members of the Fund, together with information as to their
principal business occupations during at least the last five years, are shown
below. Each Board member who is deemed to be an "interested person" of the
Fund (as defined in the 1940 Act) is indicated by an asterisk.
Board Members of the Fund
CLIFFORD L. ALEXANDER, JR., Board Member. 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,
Cognizant Corporation, a service provider of marketing information and
information technology, The Dun & Bradstreet Corporation, MCI
Communications Corporation, Mutual of America Life Insurance Company and
TLC Beatrice International Holdings, Inc. He is 63 years old and his
address is 400 C Street, N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Board Member. Shad 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. She is 53 years old and her address is c/o New York
University School of Law, 249 Sullivan Street, New York, New York 10012.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads and buttons, Curtis
Industries, Inc., a national distributor of security products,
chemicals, and automotive and other hardware, and Staffing Resources,
Inc. For more than five years prior to January 1995, he was President,
a director and, until August 1994, Chief Operating Officer of the
Manager and Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until August
24, 1994, the Fund's distributor. From August 1994 to December 31,
1994, he was a director of Mellon Bank Corporation. He is 53 years old
and his address is 200 Park Avenue, New York, New York 10166.
ERNEST KAFKA, Board Member. 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. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
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. He is 64 years old and his address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Board Member. 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. He
is 77 years old and his address is 431-B Dedham Street, The Gables,
Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Board Member. 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. Mr. Leventhal
also serves as Chairman of Citizens Union, an organization which strives
to reform and modernize City and State government. He is 53 years old
and his address is 70 Lincoln Center Plaza, New York, New York
10023-6583.
For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the Board
members of the Fund who are not "interested persons" of the Fund, as defined
in the 1940 Act, will be selected and nominated by the Board members who are
not "interested persons" of the Fund.
Ordinarily meetings of shareholders for the purpose of electing Board
members will not be held unless and until such time as less than a majority
of the Board members holding office have been elected by shareholders, at
which time the Board members then in office will call a shareholders' meeting
for the election of Board members. Under the 1940 Act, shareholders of
record of not less than two-thirds of the outstanding shares of the Fund may
remove a Board member through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. The Board is
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Board member when requested in writing to do so by
the shareholders of record of not less than 10% of the Fund's outstanding
shares.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year ended
July 31, 1996, and by all other funds in the Dreyfus Family of Funds for
which such person is a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation) for the year
ended December 31, 1996 were as follows:
Total Compensation
Aggregate from Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Member
Clifford L. Alexander, Jr. $ 2,250 $82,436 (17)
Peggy C. Davis $ 2,250 $73,084 (15)
Joseph S. DiMartino $ 2,813 $517,075 (94)
Ernest Kafka $ 2,250 $69,584 (15)
Saul B. Klaman $ 2,250 $73,584 (15)
Nathan Leventhal $ 2,250 $71,084 (15)
_________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $468 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent company of which
is Boston Institutional Group, Inc. She is 39 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
He is 32 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she was
an Assistant Vice President and Client Manager for The Boston Company,
Inc. She is 32 years old.
MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Director of
Strategic Client Initiatives for Funds Distributor, Inc. and an officer
of other investment companies advised or administered by Dreyfus. From
December 1989 through November 1996, he was employed with GE Investments
where he held various financial, business development and compliance
positions. He also served as Treasurer of the GE Funds and as Director
of the GE Investment Services. He is 35 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc., where he held various management positions in the
Corporate Finance and Treasury areas. He is 33 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston Company,
Inc. He is 27 years old.
RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data Investor
Services Group. From 1989 to 1994, Mr. Ingram was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company, Inc. He is 40 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised or
administered by the Manager. Prior to August 1993, he was employed as
an Associate Examiner at the National Association of Securities Dealers,
Inc. He is 27 years old.
ELIZABETH KEELEY, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 27 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1% of
the Fund's shares outstanding on March 19, 1997.
The following shareholders are known by the Fund to own of record or
beneficially 5% or more of the Fund's voting securities outstanding on March
19, 1997:
Class A: Joseph G. Alden and Mary Catherine Alden, Arlington Heights,
Illinois--owned beneficially 7.3%; Dominic F. Salleroli, Franklin Lakes, New
Jersey--owned beneficially 6%; Stanley Wus & Michael Wus, JT WROS, Sarasota,
Florida--owned beneficially 5.5%.
Class C: Premier Mutual Fund Services, Inc., Boston, Massachusetts--
owned beneficially 100%.
A shareholder who beneficially owns, directly or indirectly, 25% or more
of the Fund's voting securities may be deemed to be a "control person" (as
defined in the 1940 Act) of the Fund.
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 August 24, 1994, which is
subject to annual approval by (i) the Fund's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the
Fund, provided that in either event the continuance also is approved by a
majority of the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager, by vote cast in person at a meeting
called for the purpose of voting on such approval. Shareholders of the Fund
approved the Agreement on August 3, 1994. The Agreement was last approved by
the Fund's Board, including a majority of the Board members who are not
"interested persons" of any party to the Agreement, at a meeting held on
January 8, 1997. The Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of the
Fund's outstanding shares, or, on not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E. Canter,
Vice Chairman, Chief Investment Officer and a director; Lawrence S. Kash,
Vice Chairman-Distribution and a director; William T. Sandalls, Jr., Senior
Vice President and Chief Financial Officer; William F. Glavin, Jr., Vice
President-Corporate Development; Mark N. Jacobs, Vice President, General
Counsel and Secretary; Patrice M. Kozlowski, Vice President-Corporate
Communications; Mary Beth Leibig, Vice President-Human Resources; Jeffrey N.
Nachman, Vice President-Mutual Fund Accounting; Andrew S. Wasser, Vice
President-Information Systems; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Burton C. Borgelt and Frank V. Cahouet, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions, and provides the
Fund with portfolio managers who are authorized by the Fund's Board to
execute purchases and sales of securities. The Fund's portfolio managers are
Joseph P. Darcy, A. Paul Disdier, Karen M. Hand, Stephen C. Kris, Richard J.
Moynihan, Jill C. Shaffro, 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 and for other funds advised by the Manager. All purchases and sales
are reported for the Board's review at the meeting subsequent to such
transactions.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The expenses
borne by the Fund include without limitation, the following: organizational
costs, taxes, interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if any, fees of
Board members who are not officers, directors, employees or holders of 5% or
more of the outstanding voting securities of the Manager, Securities and
Exchange Commission fees 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 and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, costs of
shareholders' reports and meetings and any extraordinary expenses. In
addition, shares of each Class are subject to an annual service fee and Class
B and Class C shares are subject to an annual distribution fee. See
"Distribution Plan and Shareholder Services Plan."
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .55 of 1% of the
value of the Fund's average daily net assets. For the period from May 4,
1994 (commencement of operations) through July 31, 1994 and the fiscal years
ended July 31, 1995 and 1996, the management fees payable by the Fund
amounted to $3,491, $64,630 and $106,758, respectively, which fees were
reduced by $3,491, $64,630 and $25,258, respectively, pursuant to
undertakings then in effect, resulting in net management fees paid to the
Manager of $0 in fiscal 1994 and 1995 and $81,500 in fiscal 1996.
The Manager has agreed that if in any fiscal year the aggregate expenses
of the Fund, 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 the Fund, 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 the Fund's net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually. The
Distributor also acts as distributor for the other funds in the Dreyfus
Premier Family of Funds, for funds in the Dreyfus Family of Funds and for
certain other investment companies. In some states, certain financial
institutions effecting transactions in Fund shares may be required to
register as dealers pursuant to state law.
For the period August 24, 1994 through July 31, 1995 and for the fiscal
year ended July 31, 1996, the Distributor retained $9,561 and $54,515,
respectively, from sales loads on Class A shares, and $0 and $0,
respectively, from contingent deferred sales charges ("CDSC") on Class B
shares. For the period December 4, 1995 (commencement of initial offering)
through July 31, 1995, no amount was retained from the CDSC on Class C
shares. For the period August 1, 1994 through August 23, 1994, and for the
fiscal year ended July 31, 1994, Dreyfus Service Corporation, as the Fund's
distributor during such periods, retained $5,913 and $2,430, respectively,
from sales loads on Class A shares and $0 and $0, respectively, from CDSCs on
Class B shares.
Using Federal Funds. Dreyfus Transfer, 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.
Set forth below is an example of the method of computing the offering
price of the Fund's Class A shares. The example assumes a purchase of Class
A shares of the Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Fund's Prospectus at a price based upon the
net asset value of the Fund's Class A shares on July 31, 1996.
Class A shares:
NET ASSET VALUE per share................................. $13.06
Sales load for individual sales of shares aggregating less
than $50,000 - 4.5% of offering price
(approximately 4.7% of net asset value
per share)............................................... .62
Offering price to public.................................. $13.68
TeleTransfer Privilege. TeleTransfer purchase orders may be made at any
time. Purchase orders received by 4:00 p.m., New York time, on any business
day the Transfer Agent and the New York Stock Exchange are open for business
will be credited to the shareholder's Fund account on the next bank business
day following such purchase order. Purchase orders made after 4:00 p.m., New
York time, on any business day the Transfer Agent and the New York Stock
Exchange are open for business, or orders made on Saturday, Sunday or any
Fund holiday (e.g., when the New York Stock Exchange is not open for
business), will be credited to the shareholder's Fund account on the second
bank business day following such purchase order. To qualify to use the
TeleTransfer Privilege, the initial payment for the purchase of Fund shares
must be drawn on, and redemption proceeds paid to, the same bank and account
as are designated on the Account Application or Shareholder Services Form on
file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "Redemption of Shares--TeleTransfer Privilege."
Reopening an Account. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
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."
Class B and Class C shares only are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the 1940 Act provides, among other things, that
an investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board has
adopted such a plan (the "Distribution Plan") with respect to Class B and
Class C shares, pursuant to which the Fund pays the Distributor for
distributing the relevant Class of shares. The Fund's Board believes that
there is a reasonable likelihood that the Distribution Plan will benefit the
Fund and the holders of Class B and Class C shares.
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 Fund's Board for its review. In addition, the Distribution Plan provides
that it may not be amended to increase materially the costs which holders of
the relevant Class of shares may bear for distribution pursuant to the
Distribution Plan without such shareholders' approval and that other material
amendments of the Distribution Plan must be approved by the Fund's Board and
by the Board members who are not "interested persons" (as defined in the 1940
Act) of the Fund 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 Board members cast in
person at a meeting called for the purpose of voting on the Distribution
Plan. The Distribution Plan was last so approved on January 8, 1997. As to
each Class, the Distribution Plan may be terminated at any time by vote of a
majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Distribution
Plan or in any of the related agreements entered into in connection with the
Distribution Plan, or by vote of the holders of a majority of the outstanding
shares of such Class.
For the fiscal year ended July 31, 1996, the Fund paid the Distributor
$53,526 with respect to Class B shares and $5 with respect to Class C shares
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, Class B and Class C shares. 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 such shareholder accounts. Under the Shareholder Services
Plan, the Distributor may make payments to certain financial institutions
(which may include banks), Selected Dealers and other financial industry
professionals (collectively, "Service Agents") in respect to these services.
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 Fund's Board for its review. In addition, the
Shareholder Services Plan provides that material amendments must be approved
by the Fund's Board, and by the Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund 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 Board members cast in person at a meeting
called for the purpose of voting on the Shareholder Services Plan. The
Shareholder Services Plan was last so approved on January 8, 1997. As to
each Class, the Shareholder Services Plan is terminable at any time by vote
of a majority of the Board members 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 fiscal year ended July 31, 1996, the Fund paid the Distributor
$21,762 with respect to Class A, $26,763 with respect to Class B, and $2 with
respect to Class C, under the Shareholder Services Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege - Class A Shares. An investor may indicate
on the Account Application, Shareholder Services Form or by later written
request that the Fund provide Redemption Checks ("Checks") with respect to
Class A shares, drawn on the investor's Fund account. Checks will be sent
only to the registered owner(s) of the account and only to the address of
record. The Account Application, Shareholder Services Form 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 Class A
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 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, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. Such commitment is irrevocable
without the prior approval of the Securities and Exchange Commission. In the
case of requests for redemption in excess of such amount, the Fund's Board
reserves the right to make payments in whole or in part in securities (which
may include non-marketable securities) or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sold such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect the
Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
Fund Exchanges. Class A, Class B and Class C 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 other 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 or Class C shares of any fund may be exchanged for the same
Class of shares of other funds without a sales load. Class B or Class
C shares of any fund exchanged for the same Class of shares of another
fund will be subject to the higher applicable CDSC of the two
exchanged funds and, for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the date
the Class B or Class C 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 request an exchange, the investor's Service Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer Agent
to act on telephonic instructions (including over The Dreyfus Touchr
automated telephone system) from any person representing himself or herself
to be 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 shares of the same Class of the fund into which the
exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set
up under a Simplified Employee Pension Plans ("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, Class B or Class C shares,
shares of the same Class of another fund in the Dreyfus 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 "Fund Exchanges." Enrollment in or
modification or cancellation of this Privilege is effective three business
days following notification by the investor. An investor will be notified if
his account falls below the amount designated to be exchanged under this
Privilege. In this case, an investor's account will fall to zero unless
additional investments are made in excess of the designated amount prior to
the next Auto-Exchange transaction. Shares held under IRA and other
retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts and from regular accounts to IRA accounts,
but not from IRA accounts to regular accounts. With respect to all other
retirement accounts, exchanges may be made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being acquired
may legally be sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-554-4611. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or the
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. 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 or Class C shares withdrawn pursuant to the Automatic Withdrawal Plan will
be subject to any applicable CDSC.
Dividend Sweep. Dividend Sweep allows investors to invest automatically
their dividends or dividends and capital gain distributions, if any, from the
Fund in shares of the same Class of another fund in the Dreyfus 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 or Class C
shares by a fund may be invested without imposition of any applicable
CDSC in the same Class of shares of other funds and the relevant Class of
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 Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
each business day by an independent pricing service (the "Service") approved
by the Fund's Board. When, in the judgment of the Service, quoted bid prices
for investments are readily available and are representative of the bid side
of the market, these investments are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority
of the portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices
of municipal bonds of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. The
Service may employ electronic data processing techniques and/or a matrix
system to determine valuations. The Service's procedures are reviewed by the
Fund's officers under the general supervision of the Fund's Board. Expenses
and fees, including the management fee (reduced by the expense limitation, if
any) and fees pursuant to the Shareholder Services Plan and, with respect to
Class B and Class C shares only, Distribution Plan, are accrued daily and are
taken into account for the purpose of determining the net asset value of the
relevant Class of the Fund's 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, the Manager
intends to retain in the Fund's portfolio Municipal Obligations which are
insured under the Mutual Fund Insurance policy and which are in default or in
significant risk of default in the payment of principal or interest until the
default has been cured or the principal and interest are paid by the issuer
or the insurer. In establishing fair value for these securities the Board
will give recognition to the value of the insurance feature as well as the
market value of the securities. Absent any unusual or unforeseen
circumstances, the Manager will recommend valuing these securities at the
same price as similar securities of a minimum investment grade (i.e., rated
Baa by Moody's or BBB by S&P or Fitch).
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
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."
Management believes that the Fund has qualified as a "regulated
investment company" under the Code for the fiscal year ended July 31, 1996,
and the Fund intends to continue to so qualify, so long as such qualification
is in the best interests of its shareholders. As a regulated investment
company, the Fund 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, the Fund must distribute
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. The term "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
The Code provides that if a shareholder has not held his Fund shares for
more than six months (or such shorter period as the Internal Revenue Service
may prescribe by regulation) and has received an exempt-interest dividend
with respect to such shares, any loss incurred on the sale of such shares
will be disallowed to the extent of the exempt-interest dividend received.
In addition, any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the net asset value of his shares
below the cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated under "Dividends,
Distributions and Taxes" in the Prospectus.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds
will be treated as ordinary income under Section 1276 of the Code. In
addition, all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258 of the
Code. "Conversion transactions" are defined to include certain forward,
futures, option and "straddle" transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to
be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund 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, any such futures or options
remaining unexercised at the end of the Fund's taxable year will be treated
as sold for their then fair market value, resulting in additional gain or
loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain futures or
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 of the
Code. As such, all or a portion of any short- or long-term capital gain from
certain "straddle" and/or conversion transactions may be recharacterized to
ordinary income.
If the Fund 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. The Fund may make one or more elections with respect to "mixed
straddles." Depending on which election is made, if any, the results to the
Fund may differ. If no election is made to the extent the "straddle" rules
apply to positions established by the Fund, losses realized by the Fund will
be deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and the conversion transaction 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 Fund 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, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion
in order to maintain its qualification as a regulated investment company. In
such case, the Fund may have to dispose of securities which it might
otherwise have continued to hold in order to generate cash to satisfy these
distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases
and sales usually are placed with those dealers from which it appears that
the best price or execution will be obtained. Usually no brokerage
commissions, as such, are paid by the Fund for such purchases and sales,
although the price paid usually includes an undisclosed compensation to the
dealer acting as agent. The prices paid to underwriters of newly-issued
securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers ordinarily
are executed at a price between the bid and asked price. No brokerage
commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by the
Manager in advising the Fund. Although it is not possible to place a dollar
value on these services, it is the opinion of the Manager that the receipt
and study of such services should not reduce the overall expenses of its
research department.
The Fund anticipates that its annual portfolio turnover rate generally
will not exceed 100% but the turnover rate will not be a limiting factor when
the Fund deems it desirable to sell or purchase securities. Therefore,
depending upon market conditions, the Fund's annual portfolio turnover rate
may exceed 100% in certain years.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance Information."
Current yield for the 30-day period ended July 31, 1996 was 4.43% for
Class A, 4.12% for Class B and 3.90% for Class C. The yield per Class
reflects fee waivers in effect, without which the yield would have been
4.40%, 4.08% and 3.90% for Class A, Class B and Class C, respectively.
Current yield is computed pursuant to a formula which operates as follows:
The amount of the Fund's expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by the Fund
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were
entitled to receive dividends, and (b) the net asset value (or maximum
offering price in the case of Class A) per share on the last day of the
period less any undistributed earned income per share reasonably expected to
be declared as a dividend shortly thereafter. The quotient is then added to
1, and that sum is raised to the 6th power, after which 1 is subtracted. The
current yield is then arrived at by multiplying the result by 2.
Based upon the 1996 Federal tax rate of 39.60%, the tax equivalent yield
for the 30-day period ended July 31, 1996 for Class A was 7.33%, for Class B
was 6.82% and for Class C was 6.64%. Absent the fee waiver then in effect,
tax equivalent yield for Class A, Class B and Class C would have been 7.28%,
6.75% and 6.64%, respectively. Tax equivalent yield is computed by dividing
that portion of the current yield (calculated as described above) which is
tax exempt by 1 minus a stated tax rate and adding the quotient to that
portion, if any, of the yield of the Fund that is not tax exempt.
The tax equivalent yield quoted above represents the application of the
highest marginal personal income tax rates currently in effect. The tax
equivalent yield figure, however, does not include the potential effect of
any state or 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 Fund's average annual total return for the 1 and 2.247 year periods
ended July 31, 1996 for Class A was 0.83% and 5.62% and for Class B was 2.09%
and 6.48%, respectively. The average annual total return for the period from
December 4, 1995 (initial offering of Class C shares) to July 31, 1996 for
Class C was -2.41%. Average annual total return is calculated by determining
the ending redeemable value of an investment purchased at net asset value
(maximum offering price in the case of Class A) per share 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 has been deducted from the
hypothetical initial investment at the time of purchase or in the case of
Class B or Class C the maximum applicable CDSC has been paid upon redemption
at the end of the period.
The total return for Class A for the period May 3, 1994 (commencement of
operations) through July 31, 1996 was 13.09%. Based on net asset value per
share, the total return for Class A was 18.42% for this period. The total
return for Class B for the period May 3, 1994 (commencement of operations)
through July 31, 1996 was 15.18%. Without giving effect to the applicable
CDSC, the total return for Class B was 17.18% for this period. The total
return for Class C for the period December 4, 1995 (initial offering of Class
C shares) to July 31, 1996 was -1.59%. Without giving effect to the
applicable CDSC, the total return for Class C was -0.62%. Total return is
calculated by subtracting the amount of the Fund's net asset value (maximum
offering price in the case of Class A) per share at the beginning of a stated
period from the net asset value per share at the end of the period (after
giving effect to the reinvestment of dividends and distributions during the
period and any applicable CDSC), and dividing the result by the net asset
value (maximum offering price in the case of Class A) per share at the
beginning of the period. Total return also may be calculated based on the
net asset value 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 or Class C shares. In such cases, the calculation would not reflect
the deduction of the sales charge 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 not as representative of the Fund's
past or future performance.
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 actual or proposed tax legislation. Advertising
materials for the Fund may also refer to statistical or other information
concerning trends relating to investment companies, as compiled by industry
associations such as the Investment Company Institute. From time to time,
advertising materials for the Fund, also may refer to Morningstar ratings and
related analyses supporting such ratings.
The Fund may compare its performance, directly as well as against
inflation, with that of other instruments, such as short-term Treasury bills
(which are direct obligations of the U.S. Government), FDIC-insured bank
money market accounts and FDIC-insured fixed-rate certificates of deposit.
In addition, advertising for the Fund may indicate that investors may
consider diversifying their investment portfolios in order to seek protection
of the value of their assets against inflation.
From time to time, advertising materials for the Fund may include
biographical information relating to its portfolio managers and may refer to,
or include commentary by a portfolio manager relating to an investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Fund
shares 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
$25 billion in tax exempt assets.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-of-
pocket expenses. For the period December 1, 1995 (effective date of transfer
agency agreement) through July 31, 1996, the Fund paid the Transfer Agent
$6,146.
The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's custodian.
Neither the Transfer Agent nor The Bank of New York has any part in
determining the investment policies of the Fund or which securities are to be
purchased or sold by the Fund.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038-
4982, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of shares being
sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
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.
Generally, Moody's applies either a generic rating or a rating with a
numerical modifiers of 1 for bonds in each of the generic rating categories
Aa, A, Baa, Ba and B. Moody's also applies numerical modifiers of 2 and 3 in
each of these categories for bond issue in the health care, higher education
and other not-for-profit sectors; the modifier 1 indicates that the issue
ranks in the higher end of its generic rating category; the modifier 2
indicates that the issue is in the mid-range of the generic category; and the
modifier 3 indicates that the issue is in the low end of the generic
category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR.
Short-term ratings on issues with demand features are differentiated by
the use of the VMIG symbol to reflect such characteristics as payment upon
periodic demand rather than fixed maturity dates and payment relying on
external liquidity. Additionally, investors should be alert to the fact that
the source of payment may be limited to the external liquidity with no or
limited legal recourse to the issuer in the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for repayment
of short-term promissory obligations, and ordinarily will be evidenced by
leading market positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with moderate
reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well established access to a range of financial markets and assured sources
of alternate liquidity.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of a specific debt issue or class of debt. The ratings take
into consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the AAA category covering 12-36 months.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
______ ______
<S> <C> <C>
Burbank Wastewater Treatment, Revenue 5.50%, 6/1/2025 (Insured; FGIC)....... $ 500,000 $ 481,435
California 6.60%, 2/1/2010 (Insured; AMBAC)................................. 400,000 449,076
California Health Facilities Financing Authority, Revenue
(Children's Hospital of San Diego) 6.50%, 7/1/2020 (Insured; MBIA)...... 200,000 218,816
California Maritime Infrastructure Authority, Airport Revenue
(San Diego Unified Port District Airport) 5%, 11/1/2020 (Insured; AMBAC) 250,000 224,263
California State University, Fresno Association Inc., Revenue
Auxiliary Residence (Student Project) 6.25%, 2/1/2017 (Insured; MBIA)... 300,000 310,308
Campbell Unified School District 6.25%, 8/1/2019 (Insured; MBIA)........... 500,000 515,935
Central Coast Water Authority, Revenue (Water Project Regional Facilities)
6.60%, 10/1/2022 (Insured; AMBAC)....................................... 200,000 215,580
East Bay Municipal Utility District, Wastewater Treatment System Revenue,
Refunding 5.55%, 6/1/2020 (Insured; AMBAC).................................. 200,000 188,892
Fairfield, Water Revenue, Refunding 5.375%, 4/1/2017 (Insured; AMBAC)....... 250,000 239,455
Fresno, Sewer Revenue (Fowler Avenue Project) 6.25%, 8/1/2011 (Insured; AMBAC) 500,000 523,465
Port Oakland, Port Revenue 6.50%, 11/1/2016 (Insured; MBIA)................. 200,000 209,522
Riverside County Transportation Commission, Sales Tax Revenue
5.75%, 6/1/2008 (Insured; AMBAC)........................................ 300,000 313,746
San Diego County, COP, Regional Communications System
5.50%, 8/15/2013 (Insured; AMBAC)....................................... 400,000 392,408
San Francisco, City and County Airports Commission, International Airport
Revenue:
6.25%, 5/1/2012 (Insured; FGIC)......................................... 150,000 156,432
5.70%, 5/1/2026 (Insured; MBIA) ........................................ 500,000 489,090
San Mateo County Joint Powers Financing Authority, LR (Capital Projects)
5.75%, 7/15/2017 (Insured; FSA)......................................... 200,000 200,074
University of California, Revenues, Hospital-UC Davis Medical Center
5.75%, 7/1/2012 (Insured; AMBAC)........................................ 500,000 508,825
Victor, Elementary School District, Zero Coupon, 6/1/2015 (Insured; MBIA)... 1,000,000 329,050
_____
TOTAL INVESTMENTS (cost $5,848,930)......................................... $5,966,372
=====
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
(b) At July 31, 1996, 41.9% of the Series' net assets are insured by
AMBAC and 28.4% are insured by MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $5,848,930)-see statement....................................... $5,966,372
Cash.................................................................... 747,178
Receivable for investment securities sold............................... 460,286
Interest receivable..................................................... 104,083
Receivable for shares of Beneficial Interest subscribed................. 20,000
Prepaid expenses........................................................ 27,779
Due from The Dreyfus Corporation........................................ 573
_____
7,326,271
LIABILITIES:
Due to Distributor...................................................... $ 3,251
Accrued expenses and other liabilities.................................. 30,663 33,914
____ _____
NET ASSETS.................................................................. $7,292,357
=====
REPRESENTED BY:
Paid-in capital......................................................... $7,269,619
Accumulated net realized (loss) on investments.......................... (94,704)
Accumulated net unrealized appreciation on investments-Note 3........... 117,442
_____
NET ASSETS at value......................................................... $7,292,357
=====
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 264,003
=====
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 345,382
=====
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 84
=====
NET ASSET VALUE per share:
Class A Shares
($3,156,089 / 264,003 shares)......................................... $11.95
=====
Class B Shares
($4,135,263 / 345,382 shares)......................................... $11.97
=====
Class C Shares
($1,005.40 / 84 shares)............................................... $11.97
=====
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $388,923
EXPENSES:
Management fee-Note 2(a).............................................. $ 39,781
Shareholder servicing costs-Note 2(c)................................. 33,012
Distribution fees-Note 2(b)........................................... 19,357
Organization expenses................................................. 11,040
Prospectus and shareholders' reports.................................. 6,167
Registration fees..................................................... 5,049
Custodian fees........................................................ 1,127
Professional fees..................................................... 979
Trustees' fees and expenses-Note 2(d)................................. 877
Miscellaneous......................................................... 7,367
_____
TOTAL EXPENSES.................................................. 124,756
Less-reduction in management fee due to undertakings-Note 2(a)........ 19,320
_____
NET EXPENSES.................................................... 105,436
_____
INVESTMENT INCOME-NET........................................... 283,487
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments...................................... $ (83,146)
Net unrealized appreciation on investments.............................. 334,442
_____
NET REALIZED AND UNREALIZED GAIN ON INVESMENTS.................. 251,296
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $534,783
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
______________________________
1995 1996
______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 317,088 $ 283,487
Net realized (loss) on investments...................................... (11,558) (83,146)
Net unrealized appreciation on investments for the year................. 67,281 334,442
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 372,811 534,783
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (157,005) (141,525)
Class B shares........................................................ (160,083) (141,941)
Class C shares........................................................ - (21)
______ ______
TOTAL DIVIDENDS................................................... (317,088) (283,487)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 2,395,751 239,140
Class B shares........................................................ 1,798,008 748,137
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 52,720 42,498
Class B shares........................................................ 99,361 106,237
Class C shares........................................................ - 21
Cost of shares redeemed:
Class A shares........................................................ (441,885) (780,827)
Class B shares........................................................ (771,920) (633,353)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 3,132,035 (277,147)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,187,758 (25,851)
NET ASSETS:
Beginning of year....................................................... 4,130,450 7,318,208
______ ______
End of year............................................................. $7,318,208 $7,292,357
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ ____________________________ ____________
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
____________________________ ____________________________ JULY 31,
CAPITAL SHARE TRANSACTIONS: 1995 1996 1995 1996 1996*
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Shares sold............. 211,279 19,872 158,840 62,126 82
Shares issued for dividends
reinvested............ 4,664 3,545 8,762 8,868 2
Shares redeemed......... (38,340) (64,393) (69,492) (53,525) -
______ ______ ______ ______ ______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING..... 177,603 (40,976) 98,110 17,469 84
====== ====== ====== ====== ======
*From December 4, 1995 (commencement of initial offering) to July 31,
1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated
March 30, 1997.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series including the California Series (the "Series"). The
Fund's investment objective 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 Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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 on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) 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 are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $17,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to July 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through July 31, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, the carryover expires in
fiscal 2004.
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 value
of the Series' average daily 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
(excluding 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 value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 29, 1995 through September 30, 1996, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (excluding 12b-1 distribution plan fees
and certain expenses as described above) exceed an annual rate of 1.25% of
the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $19,320 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $258 during the year ended July 31, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$19,352 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$8,404, $9,676 and $2 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $2,214 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $3,725,154 and $4,391,372 , respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $117,442, consisting of $139,052 gross unrealized appreciation and
$21,610 gross unrealized depreciation.
At July 31, 1996, 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, CALIFORNIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, California Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Insured Municipal Bond Fund, California Series at July
31, 1996, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
September 4, 1996
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ ______
<S> <C> <C>
Cheshire:
5.80%, 8/15/2010 (Insured; FGIC)........................................ $ 500,000 $ 515,215
5.85%, 8/15/2011 (Insured; FGIC)........................................ 675,000 696,121
Columbia:
5.75%, 4/1/2014 (Insured; MBIA)......................................... 320,000 325,459
5.75%, 4/1/2015 (Insured; MBIA)......................................... 320,000 324,173
Connecticut:
Airport Revenue, Refunding 7.20%, 10/1/1997 (Insured; FGIC)............. 220,000 227,918
COP (Middletown Courthouse Facilities Project)
5.90%, 12/15/2001 (Insured; MBIA)..................................... 250,000 265,237
Special Tax Obligation Revenue (Transportation Infrastructure)
5.65%, 4/1/2013 (Insured; FGIC)....................................... 1,500,000 1,501,965
Connecticut Development Authority:
Governmental LR 6.60%, 6/15/2014 (Insured; MBIA)........................ 350,000 379,925
Health Care Revenue (Masonic) 6.50%, 8/1/2020 (Insured; AMBAC).......... 250,000 261,932
Water Facility Revenue, Refunding:
(Bridgeport Hydraulic) 5.60%, 6/1/2028 (Insured; MBIA)................ 700,000 671,384
(Connecticut Water Co. Project) 5.875%, 9/1/2022 (Insured; AMBAC)..... 250,000 247,027
Connecticut Health and Educational Facilities Authority, Revenue:
(Bridgeport Hospital) 6.625%, 7/1/2018 (Insured; MBIA).................. 700,000 746,025
(Connecticut College) 6.625%, 7/1/2011 (Insured; MBIA).................. 200,000 217,184
(Danbury Hospital):
6.50%, 7/1/2014 (Insured; MBIA)....................................... 250,000 265,737
5.375%, 7/1/2023 (Insured; AMBAC)..................................... 2,000,000 1,875,760
(Day Kimball Hospital) 5.375%, 7/1/2026 (Insured; FSA).................. 1,000,000 935,220
(Lawrence and Memorial Hospital) 6.25%, 7/1/2022 (Insured; MBIA)........ 285,000 310,590
(Loomis Chaffee School Project):
6%, 7/1/2015 (Insured; MBIA).......................................... 715,000 731,338
6%, 7/1/2025 (Insured; MBIA).......................................... 1,000,000 1,013,130
(Manchester Memorial Hospital) 5.75%, 7/1/2022 (Insured; MBIA).......... 100,000 97,562
(Mansfield Nursing) 5.875%, 11/1/2012 (Insured; AMBAC).................. 500,000 510,860
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA).................... 1,000,000 1,020,870
(New Britain General Hospital):
6.125%, 7/1/2014 (Insured; AMBAC)..................................... 1,000,000 1,035,250
6%, 7/1/2024 (Insured; AMBAC)......................................... 200,000 200,804
(Newington Children's Hospital):
6.05%, 7/1/2010 (Insured; MBIA)....................................... 235,000 244,311
6.10%, 7/1/2011 (Insured; MBIA)....................................... 250,000 259,880
6.25%, 7/1/2015 (Insured; MBIA)....................................... 500,000 517,710
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)...................... 260,000 268,076
(Nursing-Noble Horizon) 6%, 11/1/2022 (Insured; AMBAC).................. 500,000 501,880
(Refunding-Hospital of Saint Raphael) 6.625%, 7/1/2014 (Insured; AMBAC). 250,000 267,295
(Refunding-Sharon Health Care Project) 6.25%, 11/1/2021 (Insured; AMBAC) 500,000 516,175
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Saint Francis Hospital and Medical Center) 5%, 7/1/2023 (Insured; FGIC) $ 2,760,000 $ 2,425,184
Connecticut Housing Finance Authority
(Housing Mortgage Finance Program):
6.20%, 5/15/2012 (Insured; MBIA)...................................... 1,000,000 1,022,990
6.40%, 5/15/2015 (Insured; MBIA)...................................... 1,000,000 1,035,160
6.125%, 5/15/2018 (Insured; MBIA)..................................... 1,655,000 1,675,009
6.30%, 5/15/2024 (Insured; MBIA)...................................... 1,000,000 1,016,050
Derby 5.90%, 5/15/2010 (Insured; AMBAC)..................................... 615,000 643,856
East Hampton:
5.80%, 7/15/2010 (Insured; FGIC)........................................ 295,000 304,697
5.90%, 7/15/2011 (Insured; FGIC)........................................ 320,000 332,013
Meriden 5.50%, 11/15/2001 (Insured; MBIA)................................... 250,000 264,100
New Haven:
5.75%, 2/15/2012 (Insured; FGIC)........................................ 500,000 510,485
Air Rights Parking Facility Revenue 6.50%, 12/1/2015 (Insured; MBIA).... 500,000 535,925
Plainfield 5.80%, 8/1/2001 (Insured; MBIA).................................. 250,000 266,770
Regional School District Number 5:
5.90%, 1/15/2010 (Insured; MBIA)........................................ 280,000 290,223
5.90%, 1/15/2011 (Insured; MBIA)........................................ 320,000 330,582
Waterbury, Refunding 4.90%, 4/15/2002 (Insured; FGIC)....................... 280,000 281,711
Woodstock:
5.85%, 2/15/2009 (Insured; FGIC)........................................ 345,000 360,822
6%, 2/15/2013 (Insured; FGIC)........................................... 340,000 354,521
______
TOTAL INVESTMENTS (cost $27,911,704)........................................ $28,602,111
======
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
(b) At July 31, 1996, 26.2% of the Series' net assets are insured by
FGIC and 49.2% are insured by MBIA.
(c) At July 31, 1996, the Series' had $11,999,189 (41.9% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $27,911,704)-see statement...................................... $28,602,111
Interest receivable..................................................... 311,319
Prepaid expenses........................................................ 8,032
______
28,921,462
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 13,869
Due to Distributor...................................................... 13,656
Due to Custodian........................................................ 218,471
Payable for shares of Beneficial Interest redeemed...................... 2,265
Accrued expenses and other liabilities.................................. 50,054 298,315
_____ ______
NET ASSETS ................................................................ $28,623,147
======
REPRESENTED BY:
Paid-in capital......................................................... $27,869,122
Accumulated undistributed net realized gain on investments.............. 63,618
Accumulated net unrealized appreciation on investments-Note 3........... 690,407
______
NET ASSETS at value......................................................... $28,623,147
======
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 856,775
======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,334,918
======
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 13,319
======
NET ASSET VALUE per share:
Class A Shares
($11,117,393 / 856,775 shares)........................................ $12.98
======
Class B Shares
($17,332,932 / 1,334,918 shares)...................................... $12.98
======
Class C Shares
($172,822 / 13,319 shares)............................................ $12.98
======
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,720,866
EXPENSES:
Management fee-Note 2(a).............................................. $165,914
Shareholder servicing costs-Note 2(c)................................. 101,772
Distribution fees-Note 2(b)........................................... 89,382
Auditing fees......................................................... 43,025
Legal fees............................................................ 12,607
Trustees' fees and expenses-Note 2(d)................................. 3,918
Registration fees..................................................... 3,812
Custodian fees........................................................ 3,370
Prospectus and shareholders' reports.................................. 2,596
Miscellaneous......................................................... 12,895
_____
TOTAL EXPENSES.................................................. 439,291
Less-reduction in management fee due to undertakings-Note 2(a)........ 36,681
_____
NET EXPENSES.................................................... 402,610
_____
INVESTMENT INCOME-NET........................................... 1,318,256
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $ 83,650
Net unrealized appreciation on investments.............................. 7,914
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 91,564
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,409,820
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
________________________________
1995 1996
_______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,170,030 $ 1,318,256
Net realized gain (loss) on investments................................. (20,032) 83,650
Net unrealized appreciation on investments for the year................. 543,616 7,914
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,693,614 1,409,820
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (586,262) (575,778)
Class B shares........................................................ (583,768) (740,873)
Class C shares........................................................ - (1,605)
______ ______
TOTAL DIVIDENDS................................................... (1,170,030) (1,318,256)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 6,196,536 1,488,845
Class B shares........................................................ 11,068,365 2,773,704
Class C shares........................................................ - 171,568
Dividends reinvested:
Class A shares........................................................ 320,037 266,864
Class B shares........................................................ 359,096 483,988
Class C shares........................................................ - 1,605
Cost of shares redeemed:
Class A shares........................................................ (2,682,798) (3,172,879)
Class B shares........................................................ (2,076,477) (2,544,794)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 13,184,759 (531,099)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,708,343 (439,535)
NET ASSETS:
Beginning of year....................................................... 15,354,339 29,062,682
______ ______
End of year............................................................. $29,062,682 $28,623,147
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
____________________________________________________________________________
CLASS A CLASS B CLASS C
________________________________ ________________________________ ______________
YEAR ENDED
YEAR ENDED JULY 31, YEAR ENDED JULY 31, JULY 31,
________________________________ ________________________________ ______________
1995 1996 1995 1996 1996*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 490,513 114,141 875,988 212,187 13,193
Shares issued for dividends
reinvested........... 25,429 20,292 28,348 36,852 126
Shares redeemed........ (216,046) (239,044) (164,414) (195,936) -
_______ _______ _______ _______ _______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING.... 299,896 (104,611) 739,922 53,103 13,319
======= ======= ======= ======= =======
______________________________
*From December 4, 1995 (commencement of initial offering) to July 31, 1996.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 7 of the Fund's Prospectus dated
December 2, 1996.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series including the Connecticut Series (the "Series"). The
Fund's investment objective 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 Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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 on a pro rata basis.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(A) 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 are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
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 value
of the Series' average daily 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
(excluding 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 value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the value of the Series' average daily net assets. The Manager has currently
undertaken from September 29, 1995 through September 30, 1996, to reduce the
management fee and reimburse such excess expenses paid by the Series, to the
extent that the Series' aggregate annual expenses (excluding 12b-1
distribution plan fees and certain expenses as described above) exceed an
annual rate of 1.25% of the value of the Series' average daily net assets.
The reduction in management fee, pursuant to the undertakings, amounted to
$36,681 during the year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$89,077 was charged to the Series for the Class B shares and $305 was charged
to the Series for the Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$30,775, $44,538 and $102 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $9,453 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $9,341,682 and $8,972,919, respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $690,407, consisting of $808,051 gross unrealized appreciation and
$117,644 gross unrealized depreciation.
At July 31, 1996, 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, CONNECTICUT SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, Connecticut Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1996 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Insured Municipal Bond Fund, Connecticut Series at July
31, 1996, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
September 4, 1996
DREYFUS 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 Fund for the
period from May 4, 1994 (commencement of operations) to July
31, 1994 and for each of the two years ended July 31, 1996.
Included in Part B of the Registration Statement:
Statement of Investments-- July 31, 1996
Statement of Assets and Liabilities-- July
31, 1996
Statement of Operations--year ended July
31, 1996
Statement of Changes in Net Assets--for
each of the two years ended July 31, 1995 and 1996.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent
Auditors, dated September 4, 1996
All Schedules 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) Registrant's Amended and Restated Agreement and
Declaration of Trust is incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 5 to the Registration Statement on
Form N-1A, filed on November 24, 1996.
(1)(b) Amendment to Agreement and Declaration of Trust.
(2) Registrant's By-Laws, as amended, are incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A, filed on February 10, 1994.
(5) Management Agreement.
(6)(a) Distribution Agreement.
(6)(b) Forms of Distribution Plan Agreement are incorporated by
reference to Exhibit (6)(b) of Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A, filed on November 24,
1995.
(6)(c) Forms of Shareholder Services Plan Agreement are
incorporated by reference to Exhibit (6)(c) of Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A, filed
on November 24, 1995.
(8)(a) Custody Agreement.
(8)(b) Sub-Custodian Agreement is incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on February 10, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A, filed on November 24, 1995.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(16) Schedules of Computation of Performance Data are incorporated
by reference to Exhibit (16) of Post-Effective Amendment No. 2 to
the Registration Statement on Form N-1A, filed on February 10,
1994.
(17) Financial Data Schedules.
(18) Rule 18f-3 Plan is incorporated by reference to Exhibit (18)
of Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A, filed on November 27, 1996.
Other Exhibits
______________
(a) Powers of Attorney of the Board members
are incorporated by reference to Other Exhibits (a) of
Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A, filed on November 27, 1996.
(b) Certificate of Secretary are incorporated
by reference to Other Exhibits (b) of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-
1A, filed on November 27, 1996.
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 March 19, 1997
______________ _______________________________
Beneficial Interest
(Par value $.001)
Class A 181
Class B 303
Class C 1
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 4 of Part II of
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A, filed on July 16, 1993.
Reference is also made to the Distribution Agreement attached
hereto as Exhibit (6)(a).
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 a registered broker-dealer 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;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.****;
President:
Boston Safe Deposit and Trust Company****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.**;
Director:
Dreyfus America Fund
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****;
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
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 Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus S&P 500 Index Fund
63) Dreyfus Short-Intermediate Government Fund
64) Dreyfus Short-Intermediate Municipal Bond Fund
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Stock Index Fund, Inc.
67) Dreyfus Tax Exempt Cash Management
68) The Dreyfus Third Century Fund, Inc.
69) Dreyfus Treasury Cash Management
70) Dreyfus Treasury Prime Cash Management
71) Dreyfus Variable Investment Fund
72) Dreyfus Worldwide Dollar Money Market Fund, Inc.
73) General California Municipal Bond Fund, Inc.
74) General California Municipal Money Market Fund
75) General Government Securities Money Market Fund, Inc.
76) General Money Market Fund, Inc.
77) General Municipal Bond Fund, Inc.
78) General Municipal Money Market Fund, Inc.
79) General New York Municipal Bond Fund, Inc.
80) General New York Municipal Money Market Fund
81) Premier Insured Municipal Bond Fund
82) Premier California Municipal Bond Fund
83) Premier Equity Funds, Inc.
84) Premier Global Investing, Inc.
85) Premier GNMA Fund
86) Premier Growth Fund, Inc.
87) Premier Municipal Bond Fund
88) Premier New York Municipal Bond Fund
89) Premier State Municipal Bond Fund
90) Premier Strategic Growth Fund
91) Premier Value Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth A. Keeley++ Assistant Vice President Vice President
and Assistant
Secretary
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 27th day of March, 1997.
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
MARIE E. CONNOLLY, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
/s/Marie E. Connolly* President (Principal Executive 03/27/97
Marie E. Connolly Officer) and Treasurer
/s/Joseph F. Tower, III* Vice President and Assistant 03/27/97
Joseph F. Tower, III Treasurer (Principal Accounting
and Financial Officer)
/s/Clifford L. Alexander, Jr.* Board member 03/27/97
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Board member 03/27/97
Peggy C. Davis
/s/Joseph S. DiMartino* Chairman of the Board 03/27/97
Joseph S. DiMartino
/s/Ernest Kafka* Board member 03/27/97
Ernest Kafka
/s/Saul B. Klaman* Board member 03/27/97
Saul B. Klaman
/s/Nathan Leventhal* Board member 03/27/97
Nathan Leventhal
BY: __________________________*
Elizabeth A. Keeley,
Attorney-in-Fact
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
INDEX OF EXHIBITS
(1)(b) Amendment to Agreement and Declaration of Trust
(5) Management Agreement
(6)(a) Distribution Agreement
(8)(a) Custody Agreement
(9) Shareholder Services Plan
(11) Consent of Independent Auditors
(15) Distribution Plan
(17) Financial Data Schedule
Other Exhibits
(a) Powers of Attorney
(b) Certificate of Secretary
PREMIER INSURED MUNICIPAL BOND FUND
ARTICLES OF AMENDMENT
Premier 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
'Dreyfus Premier Insured Municipal Bond Fund.'"
SECOND: The amendment to the Agreement and Declaration of Trust
herein made was duly approved at a meeting of the Trustees of the Trust on
January 8, 1997 pursuant to Article IX, Section 8 of the Agreement and
Declaration of Trust.
IN WITNESS WHEREOF, Premier Insured Municipal Bond Fund has caused
these Articles to be filed in its name and on its behalf by its Trustees.
PREMIER INSURED MUNICIPAL BOND FUND
By: /s/JOSEPH S. DIMARTINO
Joseph S. DiMartino, Trustee
By: /s/CLIFFORD L. ALEXANDER, JR.
Clifford L. Alexander, Jr., Trustee
By: /s/PEGGY C. DAVIS
Peggy C. Davis, Trustee
By: /s/ERNEST KAFKA
Ernest Kafka, Trustee
By: /s/SAUL B. KLAMAN
Saul B. Klaman, Trustee
By: /s/NATHAN LEVENTHAL
Nathan Leventhal, Trustee
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 8th day of January, 1997, before me personally appeared the
above-named Trustees of the Trust, 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
494337
MANAGEMENT AGREEMENT
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
200 Park Avenue
New York, New York 10166
August 24, 1994
As Revised, March 31, 1997
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund") 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 charter documents 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 the Fund's portfolio in accordance with
the Fund's investment objectives and policies as stated in its 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 the Fund's investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Fund's assets. You will furnish to the Fund such statistical information,
with respect to the investments which the Fund may hold or contemplate
purchasing, as the Fund may reasonably request. The Fund wishes to be
informed of important developments materially affecting its 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 the Fund's stockholders, tax returns, reports to and
filings with the Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of the Fund's shares; and
generally assist in all aspects of the Fund's operations. You shall have the
right, at your expense, to engage other entities to assist you in performing
some or all of the obligations set forth in this paragraph, provided each
such entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for the acts or
omissions of each such entity to the same extent as if you had acted or
failed to act under the circumstances.
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 the Fund,
provided that nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund 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
annual rate of .55 of 1% of the value of the Fund's average daily net assets.
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. 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
the Fund's net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of the Fund's 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,
loan commitment fees, interest and distributions 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 and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing stockholders, costs of stockholders' reports
and meetings, and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the Fund (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 Fund, 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 the 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 the Fund or the size of the position obtainable for or disposed
of by the Fund.
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.
This Agreement shall continue until January 31, 1998, and
thereafter shall continue automatically for successive annual periods ending
on January 31st of each year, 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 the Fund's 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. This Agreement is terminable without penalty, on 60 days' notice,
by the Fund's Board or by vote of holders of a majority of the Fund's shares
or, upon not less than 90 days' notice, by you. This Agreement also will
terminate automatically in the event of its assignment (as defined in said
Act).
The Fund recognizes that from time to time your directors, officers
and employees may serve as directors, trustees, partners, officers and
employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities
may include the name "Dreyfus" as part of their name, and that your
corporation or its affiliates may enter into investment advisory or other
agreements with such other entities. If you cease to act as the Fund's
investment adviser, the Fund agrees that, at your request, the Fund will take
all necessary action to change the name of the Fund to a name not including
"Dreyfus" in any form or combination of words.
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 Board member, 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,
DREYFUS PREMIER INSURED MUNICIPAL
BOND FUND
By:________________________________
Accepted:
THE DREYFUS CORPORATION
By:____________________________
494337
DISTRIBUTION AGREEMENT
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
200 Park Avenue
New York, New York 10166
August 24, 1994
As Revised, March 31, 1997
Premier Mutual Fund Services, Inc.
60 State Street
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund") has
agreed that you shall be, for the period of this agreement, the distributor
of (a) shares 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") or (b) if no
Series are set forth on such Exhibit, shares of the Fund. For purposes of
this agreement the term "Shares" shall mean the authorized shares of the
relevant Series, if any, and otherwise shall mean the Fund's authorized
shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares 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 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. 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 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 Exchange Commission or any
securities association registered under the Securities 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 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 Shares under the Securities Act of 1933, as amended,
and all expenses in connection with maintaining facilities for the issue and
transfer of 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
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
connection with the qualification of 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 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 Shares, such information with respect to the Fund
or any relevant Series and the 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 the
Fund's or, if applicable, 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 statements
and prospectuses filed by the Fund with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, with respect to the Shares have
been carefully prepared in conformity with the requirements of said Acts and
rules and regulations of the Securities and Exchange Commission thereunder.
As used in this agreement the terms "registration 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 Acts 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 registration 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 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 therewith) 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 registration 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 address set forth above 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 agreement 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 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 controlling 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 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 therewith)
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
controlling 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 address set forth above 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. This agreement of indemnity will inure exclusively to
the Fund's benefit, to the benefit of the Fund's officers and Board members,
and their respective estates, and to the benefit of any controlling persons
and their successors.
You agree promptly to notify the Fund of the commencement of any litigation
or proceedings against you or any of your officers or directors in connection
with the issue and sale of Shares.
1.11 No Shares 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 Shares
from any shareholder in accordance with the provisions of the Fund's
prospectus or charter documents.
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. Offering Price
Shares of any class 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 charter documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, 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. In addition, Shares of any
class of the Fund offered for sale by you may be subject to a contingent
deferred sales charge as set forth in the Fund's then-current prospectus. You
shall be entitled to receive any sales charge or contingent deferred sales
charge in respect of the Shares. Any payments to dealers shall be governed
by a separate agreement between you and such dealer and the Fund's then-
current prospectus.
3. Term
This agreement shall continue until the date (the "Reapproval
Date") set forth on Exhibit A hereto (and, if the Fund has Series, a separate
Reapproval Date shall be specified on Exhibit A for each Series), and
thereafter shall continue automatically for successive annual periods ending
on the day (the "Reapproval Day") of each year set forth on Exhibit A hereto,
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 the Shares of the Fund or the relevant Series, as the
case may be, 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 or, as to any relevant Series, such
Series' outstanding voting securities or by the Fund's Board as to the Fund
or the relevant Series, as the case may be. This agreement is terminable by
you, upon 270 days' notice, effective on or after the fifth anniversary of
the date hereof. This agreement also will terminate automatically, as to the
Fund or relevant Series, as the case may be, in the event of its assignment
(as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you shall not
perform any services for any entity other than investment companies advised
or administered by The Dreyfus Corporation. The Fund acknowledges that the
persons employed by you to assist in the performance of your duties under
this agreement may not devote their full time to such service and nothing
contained in this agreement shall be deemed to limit or restrict your or any
of your affiliates right to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
5. 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 Board member, 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,
DREYFUS PREMIER INSURED MUNICIPAL
BOND FUND
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:_______________________________
EXHIBIT A
Reapproval Date Reapproval Day
January 31, 1998 January 31st
CUSTODY AGREEMENT
Custody Agreement made as of April 23, 1993, as revised March 31,
1997, between DREYFUS 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 200 Park Avenue, New
York, New York 10166 (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 90 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 hereinafter set forth
the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Treasurer,
the Controller or any other person, whether or not any such person is an
Officer or employee of the Fund, duly authorized by the Fund's Board to give
Oral Instructions and Written Instructions on behalf of the Fund and listed
in the Certificate annexed hereto as Appendix A or such other Certificate as
may be received by the Custodian from time to time.
2. "Available Balance" shall mean for any given day during a
calendar year the aggregate amount of Federal Funds held in the Fund's
custody account(s) at The Bank of New York, or its successors, as of the
close of such day or, if such day is not a business day, the close of the
preceding business day.
3. "Bankruptcy" shall mean with respect to a party such party's
making a general assignment, arrangement or composition with or for the
benefit of its creditors, or instituting or having instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or the entry of an
order for relief under the Federal bankruptcy law or any other relief under
any bankruptcy or insolvency law or other similar law affecting creditors'
rights, or if a petition is presented for the winding up or liquidation of
the party or a resolution is passed for its winding up or liquidation, or it
seeks, or becomes subject to, the appointment of an administrator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all of its assets or its taking any action in furtherance of,
or indicating its consent to approval of, or acquiescence in, any of the
foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/ Treasury
book-entry system for United States and Federal agency securities, its
successor or successors and its nominee or nominees.
5. "Call Option" shall mean an exchange traded option with respect
to Securities other than Stock Index Options, Futures Contracts and Futures
Contract Options entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the writer thereof
the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given
to the Custodian, which is actually received by the Custodian and signed on
behalf of the Fund by any two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-dealer which
is a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be such
a clearing member.
8. "Collateral Account" shall mean a segregated account so
denominated and pledged to the Custodian as security for, and in
consideration of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article V herein, or
(b) any receipt described in Article V or VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer Price
Index, all items and all urban consumers, U.S. city average 1982-84 equals
100, as first published without seasonal adjustment by the Bureau of Labor
Statistics, the Department of Labor, without regard to subsequent revisions
or corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange traded option
entitling the holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the specified
Securities (excluding Futures Contracts) which are owned by the writer
thereof and subject to appropriate restrictions.
11. "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian
has received a certified copy of a resolution of the Fund's Board
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, as amended, its successor or successors and
its nominee or nominees, specifically identified in a certified copy of a
resolution of the Fund's Board specifically approving deposits therein by the
Custodian.
12. "Earnings Credit" shall mean for any given day during a
calendar year the product of (a) the Federal Funds Rate for such date minus
.25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately available same day
funds.
14. "Federal Funds Rate" shall mean, for any day, the Federal
Funds (Effective) interest rate so denominated as published in Federal
Reserve Statistical Release H.15 (519) and applicable to such day and each
succeeding day which is not a business day.
15. "Financial Futures Contract" shall mean the firm commitment to
buy or sell fixed income securities, including, without limitation, U.S.
Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank
certificates of deposit, and Eurodollar certificates of deposit, during a
specified month at an agreed upon price.
16. "Futures Contract" shall mean a Financial Futures Contract
and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with respect to
a Futures Contract.
18. "Margin Account" shall mean a segregated account in the name
of a broker, dealer, futures commission merchant or Clearing Member, or in
the name of the Fund for the benefit of a broker, dealer, futures commission
merchant or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money
of the Fund shall be deposited and withdrawn from time to time in connection
with such transactions as the Fund may from time to time determine.
Securities held in the Book-Entry System or the Depository shall be deemed to
have been deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry on its books and records.
19. "Merger" shall mean with respect to a party, the consolidation
or amalgamation with, merger into, or transfer of all or substantially all of
such party's assets to, another entity, 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 the United States or agencies or
instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase and reverse repurchase agreements with
respect to the same and bank time deposits, where the purchase and sale of
such securities 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 Securities Exchange Act of 1934,
its successor or successors, and its nominee or nominees.
22. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Fund's Board to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
23. "Option" shall mean a Call Option, Covered Call Option, Stock
Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person.
25. "Put Option" shall mean an exchange traded option with respect
to Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
26. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
27. "Security" shall be deemed to include, without limitation,
Money Market Securities, Call Options, Put Options, Stock Index Options,
Stock Index Futures Contracts, Stock Index Futures Contract Options,
Financial Futures Contracts, Financial Futures Contract Options, Reverse
Repurchase Agreements, common stock and other instruments or rights having
characteristics similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public authorities
(including, without limitation, general obligation bonds, revenue bonds and
industrial bonds and industrial development bonds), bonds, debentures, notes,
mortgages or other obligations, and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights or interest
therein, or any property or assets.
28. "Segregated Security Account" shall mean an account maintained
under the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or
other assets of the Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in connection with
such transactions as the Fund may from time to time determine.
29. "Series" shall mean (i) the Series of the Fund specified on
Appendix D hereto, or, where the context requires each such Series, or
(ii) if no Series are set forth on such Appendix, the Fund.
30. "Shares" shall mean the shares beneficial interest of the
Fund, each of which, in the case of a Fund having Series, is allocated to a
particular Series.
31. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference
between the value of a particular stock index at the close of the last
business day of the contract and the price at which the futures contract is
originally struck.
32. "Stock Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount of cash
determined by reference to the difference between the exercise price and the
value of the index on the date of exercise.
33. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person by telex or
any other such system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and moneys at any time owned by the Fund
during the period of this Agreement, except that (a) if the Custodian fails
to provide for the custody of any of the Fund's Securities and moneys located
or to be located outside the United States in a manner satisfactory to the
Fund, the Fund shall be permitted to arrange for the custody of such
Securities and moneys located or to be located outside the United States
other than through the Custodian at rates to be negotiated and borne by the
Fund and (b) if the Custodian fails to continue any existing sub-custodial or
similar arrangements on substantially the same terms as exist on the date of
this Agreement, the Fund shall be permitted to arrange for such or similar
services other than through the Custodian at rates to be negotiated and borne
by the Fund. The Custodian shall not charge the Fund for any such terminated
services after the date of such termination.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by any Series, including cash
received for the issuance of such Series' shares, at any time during the
period of this Agreement and shall specify the Series, if any, 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 Fund's Board 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 deliver to the Custodian a certified resolution of
the Fund's Board 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 deposit in the Depository
all Securities eligible for deposit therein and to utilize the Depository 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. Securities and moneys 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 approving,
authorizing and instructing the Custodian on a continuous and on-going basis,
until instructed to the contrary by a Certificate actually received by the
Custodian, to accept, utilize and act in accordance with such confirmations
as provided in this Agreement.
2. The Custodian shall credit to a separate account in the name of
the Fund for each Series all moneys received by it for 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, as provided in
Article XI hereof;
(c) In payment of original issue or other taxes, as provided in
Article XII hereof;
(d) In payment for Shares redeemed by it, as provided in Article
XII hereof;
(e) Pursuant to Certificates setting forth the name and address of
the person to whom the payment is to be made, the Series 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 the expenses
and liabilities of the Custodian, as provided in Article XV hereof.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary of all transfers to
or from the account of each Series during 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 the Depository. At least monthly and from time
to time, the Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held for each Series under this Agreement.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held for a Series, which are issued or
issuable only in bearer form, except such Securities as are held in the Book-
Entry System, shall be held by the Custodian in that form; all other
Securities held for 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
or nominees. The Fund agrees to furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository, any Securities which it may hold
for the account of a Series and which may from time to time be registered in
the name of such Series. The Custodian shall hold all such Securities which
are not held in the Book-Entry System or in the Depository in a separate
account in the name of such Series physically segregated at all times from
those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or the Depository with
respect to Securities therein deposited, shall with respect to all Securities
held for each Series in accordance with this Agreement:
(a) Collect all income due or payable and, in any event, if the
Custodian receives a written notice from the Fund specifying that an amount
of income should have been received by the Custodian within the last 90 days,
the Custodian will provide a conditional payment of income within 60 days
from the date the Custodian received such notice, unless the Custodian
reasonably concludes that such income was not due or payable to the Fund,
provided that the Custodian may reverse any such conditional payment upon its
reasonably concluding that all or any portion of such income was not due or
payable, and provided further that the Custodian shall not be liable for
failing to collect on a timely basis the full amount of income due or payable
in respect of a "floating rate instrument" or "variable rate instrument" (as
such terms are defined under Rule 2a-7 under the Investment Company Act of
l940, as amended) if it has acted in good faith, without negligence or
willful misconduct.
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or
more of the publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian upon five business days' prior
notification to the Fund;
(c) Present for payment and collect the amount payable upon all
Securities which may mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(e) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of
each Series all rights and similar securities issued with respect to any
Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be
exercised;
(b) Deliver any Securities held for the Series in exchange for
other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Series to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale
of assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the 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 payable upon
Securities not described in preceding paragraph 5(b) of this Article which
may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, Option or Futures Contract
Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a Certificate no
later than the business day preceding the availability of any such instrument
or certificate. Prior to such availability, the Custodian shall comply with
Section 17(f) of the Investment Company Act of 1940, as amended, in
connection with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options or Futures Contract Options by making payments or
deliveries specified in Certificates received by the Custodian in connection
with any such purchase, sale, writing, settlement or closing out upon its
receipt from a broker, dealer or futures commission merchant of a statement
or confirmation reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or futures commission merchants with
respect to such Futures Contracts, Options or Futures Contract Options, as
the case may be, confirming that such Security is held by such broker, dealer
or futures commission merchant, in book-entry form or otherwise, in the name
of the Custodian (or any nominee of the Custodian) as custodian for the Fund,
provided, however, that payments to or deliveries from the Margin Account
shall be made in accordance with the terms and conditions of the Margin
Account Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision in this
Agreement to the contrary, make payment for any Futures Contract, Option or
Futures Contract Option for which such instruments or such certificates are
available only against the delivery to the Custodian of such instrument or
such certificate, and deliver any Futures Contract, Option or Futures
Contract Option for which such instruments or such certificates are available
only against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the provisions of
this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the Fund, other
than a purchase of any Option, Futures Contract, Futures Contract Option or
Reverse Repurchase Agreement, the Fund shall deliver to the Custodian (i)
with respect to each purchase of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the 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 shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price 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 clearing
broker, 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, the
purchase was made, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or Written
Instructions.
2. Promptly after each sale of Securities by the Fund, other than
a sale of any Option, Futures Contract, Futures Contract Option or Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with
respect to each sale of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying with
respect to each such sale: (a) the 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, and accrued
interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the
total amount payable to such Series upon such 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 the Securities
upon receipt of the total amount payable to the Fund 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 the Fund, the Fund
shall deliver to the Custodian a Certificate specifying 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 such Series in
connection with such purchase; (h) the name of the Clearing 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 duly appointed 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 Option
sold by the Clearing Member which previously supplied the confirmation
described in preceding paragraph 1 of this Article with respect to such
Option against payment to the Custodian of the total amount payable to the
Fund 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 Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to such Call Option:
(a) the 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 Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to such Put Option:
(a) the 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 date of 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 the exercise of the Put
Option, deliver or direct the Depository to deliver the Securities, provided
the same conforms to the amount payable to the Fund for the account of such
Series as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Stock
Index Option: (a) the 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, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to
such Covered Call Option: (a) the Series to which the Covered Call Option
written is to be specifically allocated; (b) the name of the issuer and the
title and number of shares for which the Covered Call Option was written and
which underlie the same; (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 Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call Options and shall
impose, or direct the Depository to impose, upon the underlying Securities
specified in the Certificate such restrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the right, upon
prior written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not deposited
with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the Custodian a Certificate instructing the
Custodian to deliver, or to direct the Depository to deliver, the Securities
subject to such Covered Call Option and specifying: (a) the Series to which
the Covered 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 Fund shall 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 of the 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 of Securities, if any, to
be deposited in the Segregated Security Account; 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 Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which the Put Option
exercised was specifically allocated; (b) the name of the issuer and title
and 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, 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
written is to be specifically allocated; (b) whether such Stock Index Option
is a 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 by the 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 to
issue, which are in accordance with the customs prevailing among Clearing
Members in Stock Index Options and make the deposits into the Collateral
Account specified in the Certificate, or (2) make the deposits into the
Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to such Stock Index Option: (a) 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 is being 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
index to 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 Segregated Security Account. Upon the
Custodian's payment of the premium and the return and/or cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect
to the Option being liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration or exercise of, or consummation of a
Closing Purchase Transaction with respect to, any Option purchased or written
by the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund 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 Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract (or with respect to any number of identical Futures
Contract(s)): (a) the 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 Futures Contract(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 was entered 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 Account
in accordance with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment of the fee or commission, if any, specified
in the Certificate and deposit in the Segregated Security Account the amount
of cash and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar payment required
to be made by the Fund 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 Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying:
(a) the 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 cash to be delivered or received; (d) the broker, dealer or futures
commission merchant to or from which payment or delivery is to be made or
received; and (e) the amount of cash and/or Securities to be withdrawn from
the Segregated Security Account. The Custodian shall make the payment or
delivery specified in the Certificate and delete such Futures Contract from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver to
the Custodian a Certificate specifying: (a) the 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 with the
terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by
the Fund, the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the 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 Contract Option 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 pay the total amount to be paid upon such purchase to the
broker or futures commission merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
sale: (a) the 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 Contract underlying 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 of the 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 the Fund
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 Futures Contract 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 is exercised; (f) the net total
amount, if any, payable by the Fund; (g) the amount, if any, to be received
by the Fund for the account of such Series; and (h) the amount of cash and/or
the amount and kind of Securities to be deposited in the Segregated Security
Account. The Custodian shall make the payments, if any, and the deposits, if
any, into the Segregated Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to such Futures Contract Option: (a) the Series to which the Futures
Contract Option written 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 Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium 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 the Fund 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 of cash and/or
the amount and kind of Securities to be deposited in the Segregated Security
Account. The Custodian shall, upon its receipt of the net total amount
payable to the Fund 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 written by the Fund
and which is a Put Option is exercised, the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the 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 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 the deposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option
identical to a previously written Futures Contract Option described in this
Article in order to liquidate its position as a writer of such Futures
Contract Option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) 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 be withdrawn from the Segregated Security Account. The Custodian shall
effect the withdrawals from the Segregated Security Account specified in the
Certificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
8. Upon the expiration or exercise of, or consummation of a
closing transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall (a)
delete such Futures Contract Option from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and (b) make such withdrawals
from, and/or, in the case of an exercise, such deposits into, the Segregated
Security Account as may be specified in a Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series 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, and accrued
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 such sale and that the
total amount credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a receipt or make
the deposits into the Margin Account and the Segregated Security Account
specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to each such closing-out: (a) the Series to which the short sale being
closed-out was specifically allocated; (b) the name of the issuer and the
title of the Security; (c) the number of shares or the principal amount, and
accrued interest or dividends, if any, required to effect such closing-out to
be delivered to the broker; (d) the dates of the closing-out and settlement;
(e) the purchase 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/or cancellation of the receipts, if any, issued by the custodian with
respect to the short sale being closed-out, pay out of the moneys held for
the account of the 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 cash and/or the amount and kind of Securities, if any, to be
deposited in a Segregated Security Account in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the total amount
payable to the Fund specified in the Certificate, Oral Instructions or
Written Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement
described in paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions or Written Instructions to
the Custodian specifying: (a) the Series to which the Reverse Repurchase
Agreement terminated was specifically allocated; (b) the Reverse Repurchase
Agreement being terminated; (c) the total amount 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 the payment to the broker or dealer, and the
withdrawals, if any, from the Segregated Security Account, specified in such
Certificate, Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to,
or withdrawals from, a Segregated Security Account as specified in a
Certificate received by the Custodian. Such Certificate shall specify the
amount of cash and/or the amount and kind of Securities to be deposited in,
or withdrawn from, the Segregated Security Account. In the event that the
Fund fails to specify in a Certificate the 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 Segregated Securities 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 commission merchant or Clearing Member
in whose name, or for whose benefit, the account was established as specified
in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian in any
Collateral Account described herein. In accordance with applicable law, the
Custodian may enforce its lien and realize on any such property whenever the
Custodian has made payment or delivery pursuant to any Put Option guarantee
letter or similar document or any receipt issued hereunder by the Custodian.
In the event the Custodian should realize on any such property net proceeds
which are less than the Custodian's obligations under any Put Option
guarantee letter or similar document or any receipt, such deficiency shall be
a debt owed the Custodian by the Fund within the scope of Article XIII
herein.
5. On each business day, the Custodian shall furnish the Fund with
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 each business day in
which cash and/or Securities are maintained in a Collateral Account, the
Custodian shall furnish the Fund with a Statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind
of Securities held therein. No later than the close of business next
succeeding the delivery to the Fund of such statement, the Fund shall furnish
to the Custodian a Certificate or Written Instructions specifying the then
market value of the securities described in such statement. In the event
such then market value is indicated to be less than the Custodian's
obligation with respect to any outstanding Put Option, guarantee letter or
similar document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such Collateral Account
to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to the Custodian a copy
of the resolution of the Fund's Board, certified by the Secretary or any
Assistant Secretary, either (i) setting forth the date of the declaration of
a dividend or distribution, the date of payment thereof, the record date as
of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date and the total
amount payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distributions on a daily basis
and authorizing the Custodian to rely on Oral Instructions, Written
Instructions or a Certificate setting forth the date of the declaration of
such dividend or distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, as the case may be, the
Custodian shall pay out of the moneys held for the account of the Series the
total amount payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
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 accordance with 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 Fund shall
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 advice setting forth
the number of a Series' Shares received by the Transfer Agent for redemption
and that such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent out of the moneys held for the
account of such Series of the total amount specified in the Certificate
issued pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption
of any of 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 discretion advance 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 any overdraft resulting from
an error by the Custodian shall bear no interest. Any such overdraft or
indebtedness shall be reduced by an amount equal to the total of all amounts
due 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 of any third party acting
in the Custodian's behalf. The Fund authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to 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 Custodian a 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 other loan agreement; (d) the time and date, if known, on which
the 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 collateral for such loan, including the name of the issuer, the
title and the number of shares or the principal amount of any particular
Securities; and (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 the Investment Company Act of 1940, as amended, and
the Fund's prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall deliver
such Securities as additional collateral as may be specified in a Certificate
to collateralize further any transaction described in this paragraph. The
Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive from time
to time such return of collateral as may be tendered to it. In the event
that the Fund fails to specify in a Certificate the Series, the name of the
issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its organization
documents and as disclosed in its most recent and currently 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 respect to each such
loan: (a) the Series to which the Securities to be loaned are specifically
allocated; (b) the name of the issuer and the title of the Securities;
(c) the number of shares or the principal amount loaned; (d) the date of loan
and delivery; (e) the total amount to be delivered to the Custodian against
the loan of the Securities, including the amount of cash collateral and the
premium, if any, separately identified; and (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 of the total
amount designated as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a certified
or bank cashier's check payable to the order of the Fund or the Custodian
drawn on New York Clearing House funds and may deliver Securities in
accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return
of Securities: (a) the Series to which the Securities to be returned are
specifically allocated; (b) the name of the issuer and the title of 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 shall receive all Securities returned from
the broker, dealer, or financial institution to which such Securities were
loaned and upon receipt thereof shall pay, out of the moneys held for the
account of the Series specified in the Certificate, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either hereunder
or under any Margin Account Agreement, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Custodian may,
with respect to questions of law arising hereunder or under any Margin
Account Agreement, apply for and obtain the advice and opinion of counsel to
the Fund or of its own counsel, at the expense of the Fund, and shall be
fully protected with respect to anything done or omitted by it in good faith
in conformity with such advice or opinion. The Custodian shall be liable to
the Fund for any loss or damage resulting from the use of the Book-Entry
System or any Depository arising by reason of any negligence, misfeasance or
willful misconduct on the part of the Custodian or any of its employees or
agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the issue or sale of any of the Fund's Shares,
or the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's Shares, or
the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by
the Fund;
(e) The legality of any borrowing by the Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to
Article XIV of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such
cash collateral held by it for the Fund is sufficient collateral for the
Fund, but such duty or obligation shall be the sole responsibility of the
Fund. In addition, the Custodian shall be under no duty or obligation to see
that any broker, dealer or financial institution to which portfolio
Securities of the Fund are lent pursuant to Article XIV of this Agreement
makes payment to it of any dividends or interest which are payable to or for
the account of the applicable Series of the Fund during the period of such
loan or at the termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that such dividends or
interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Segregated Security Account or
Collateral Account in connection with transactions by the Fund. In addition,
the Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to the
Fund of any variation margin payment or similar payment which the Fund may be
entitled to receive from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, futures commission merchant or Clearing Member is the amount
the Fund is entitled to receive, or to notify the Fund of the Custodian's
receipt or non-receipt of any such payment; provided however that the
Custodian, upon the Fund's written request, shall, as Custodian, demand from
any broker, dealer, futures commission merchant or Clearing Member identified
by the Fund the payment of any variation margin payment or similar payment
that the Fund asserts it is entitled to receive pursuant to the terms of a
Margin Account Agreement or otherwise from such broker, dealer, futures
commission merchant or Clearing Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or
other instrument for the payment of money, received by it on behalf of the
Fund until the Custodian actually receives and collects such money directly
or by the final crediting of the account representing the Fund's interest at
the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be
liable for ascertaining or acting upon any calls, conversions, exchange,
offers, tenders, interest rate changes or similar matters relating to
Securities held in the Depository, unless the Custodian shall have actually
received timely notice from the Depository. In no event shall the Custodian
have any responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the Depository of
any amount payable upon Securities deposited in the Depository which may
mature or be redeemed, retired, called or otherwise become payable. However,
upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in the Depository, the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian shall not be
under any obligation to appear in, prosecute or defend any action, suit or
proceeding in respect to any Securities held by the Depository which in its
opinion may involve it in expense or liability, unless indemnity satisfactory
to it against all expense and liability be furnished as often as may be
required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand
or presentation, unless and until (i) it shall be directed to take such
action by a Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including,
but not limited to, banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon terms and
conditions approved in the Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the Fund's Board
adopted in accordance with 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 or obligation to
ascertain whether any Securities at any time delivered to or held by it for
the account of the Fund are such as properly may be held by the Fund under
the provisions of its organization documents.
9. (a) The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian all reasonable out-of-pocket expenses and such
compensation and fees as are specified on Schedule A hereto. The Custodian
shall not deem amounts payable in respect of foreign custodial services to be
out-of-pocket expenses, it being the parties' intention that all fees for
such services shall be as set forth on Schedule B hereto and shall be
provided for the term of this Agreement without any automatic or unilateral
increase. The Custodian shall have the right to unilaterally increase the
figures on Schedule A on or after March 1, 1998 and on or after each
succeeding March 1 thereafter by an amount equal to 50% of the increase in
the Consumer Price Index for the calendar year ending on the December 31
immediately preceding the calendar year in which such March 1 occurs,
provided, however, that during each such annual period commencing on a
March 1, the aggregate increase during such period shall not be in excess of
10%. Any increase by the Custodian shall be specified in a written notice
delivered to the Fund at least thirty days prior to the effective date of the
increase. The Custodian may charge such compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to such
agreement against any money held by it for the account of the Fund. The
Custodian shall also be entitled to 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 of Securities of the Fund.
(b) The Fund shall receive a credit for each calendar month
against such compensation and fees of the Custodian as may be payable by the
Fund with respect to such calendar month in an amount equal to the aggregate
of its Earnings Credit for such calendar month. In no event may any Earnings
Credits be carried forward to any fiscal year other than the fiscal year in
which it was earned, or, unless permitted by applicable law, transferred to,
or utilized by, any other person or entity, provided that any such
transferred Earnings Credit can be used only to offset compensation and fees
of the Custodian for services rendered to such transferee and cannot be used
to pay the Custodian's out-of-pocket expenses. For purposes of this sub-
section (b), the Fund is permitted to transfer Earnings Credits only to The
Dreyfus Corporation, its affiliates and/or any investment company now or in
the future for which The Dreyfus Corporation or any of its affiliates acts as
the sole investment adviser. For purposes of this sub-section (b), a fiscal
year shall mean the twelve-month period commencing on the effective date of
this Agreement and on each anniversary thereof.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and
reasonably believed by the Custodian to be a Certificate. The Custodian
shall be entitled to rely upon any Oral Instructions and any Written
Instructions actually received by the Custodian pursuant to Article IV or XI
hereof. The Fund agrees to forward to the Custodian a Certificate or
facsimile thereof, confirming such Oral Instructions or Written Instructions
in such manner so that such Certificate or facsimile thereof is received by
the Custodian, whether by hand delivery, telex or otherwise, by the close of
business of the same day that such Oral Instructions or Written Instructions
are given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of the transactions
hereby authorized by the Fund. The Fund agrees that the Custodian shall
incur no liability to the Fund in acting upon Oral Instructions given to the
Custodian hereunder concerning such transactions, provided such instructions
reasonably appear to have been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by
the Custodian to be given in accordance with the terms and conditions of any
Margin Account Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification
of any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books
and records shall be prepared and maintained as required by the Investment
Company Act of 1940, as amended, and other applicable securities laws and
rules and regulations. The Fund, or the Fund's authorized representatives,
shall have access to such books and records during the Custodian's normal
business hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by the Custodian to the Fund or the
Fund's authorized representative at the Fund's expense.
13. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-
Entry System or the Depository, or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request
from time to time.
14. The Fund agrees to indemnify the Custodian against and save
the Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising or incurred because
of or in connection with the Custodian's payment or non-payment of checks
pursuant to paragraph 6 of Article XII as part of any check redemption
privilege program of the Fund, except for any such liability, claim, loss and
demand arising out of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the
Custodian may deliver and receive Securities, and receipts with respect to
such Securities, and arrange for payments to be made and received by the
Custodian in accordance with the customs prevailing from time to time among
brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. (a) Any termination may be effected only by the terminating
party giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than two hundred seventy (270) days
after the date of giving of such notice.
(b) The Fund may at any time terminate this Agreement if the
Custodian has materially breached its obligations under this Agreement and
such breach has remained uncured for a period of thirty days after the
Custodian's receipt from the Fund of written notice specifying such breach.
(c) Either party, immediately upon written notice to the
other party, may terminate this Agreement upon the Merger or Bankruptcy of
the other party.
(d) The Fund may at any time terminate this Agreement if the
Custodian has materially breached its obligations under the "Amendment to
Transfer Agency Agreements" dated August 18, 1989 and has not cured such
breach as promptly as practicable and in any event within seven days of its
receipt of written notice of such breach, provided that the Custodian shall
not be permitted to cure any such material breach arising from the willful
misconduct of the Custodian.
In the event notice of termination is given by the Fund, it shall
be accompanied by a copy of a resolution of the Fund's Board, certified by
the Secretary or any Assistant Secretary, electing to terminate this
Agreement and designating a successor custodian or custodians, each of which
shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event notice of termination
is given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of its Board, certified by
the Secretary or any Assistant Secretary, designating a successor custodian
or custodians. In the absence of such designation by the Fund, the Custodian
may designate a successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and undivided
profits. Upon the date set forth in such notice, this Agreement shall
terminate and the Custodian shall, upon receipt of a notice of acceptance by
the successor custodian, on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall, upon
the date specified in the notice of termination of this Agreement and upon
the delivery by the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the Fund) and moneys
then owned by the Fund, be deemed to be its own custodian, and the Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-
Entry System, in any Depository or by a Clearing Member which cannot be
delivered to the Fund, to hold such Securities hereunder in accordance with
this Agreement.
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate setting 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 or appointed. Until
such new Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized Persons as set forth in
the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund 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 in the event any such present Officer ceases to
be an Officer of the Fund, or in the event that other or additional Officers
are elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signatures of the Officers as set forth in the last
delivered Certificate.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to
it at its offices at 90 Washington Street, 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 Fund's Board.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
written consent of the Custodian, or by the Custodian without the written
consent of the Fund, authorized or approved by a resolution of its Board.
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 the Fund by the
undersigned officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and shall not be
binding upon any trustee, officer or shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers, thereunto duly authorized, as of
the day and year first above written.
DREYFUS PREMIER INSURED MUNICIPAL
BOND FUND
By: __________________________
Attest:
THE BANK OF NEW YORK
By: __________________________
Attest:
Appendix A
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN ACCOUNT
FOR PORTFOLIO SECURITIES TRANSACTIONS
Group I Group II
Phyllis Meiner, Paul Paul R. Casti, Thomas J. Durante
R. Casti, Jr., Thomas Jr. Jeffrey N. Gregory S. Gruber
J. Durante, Jean Nachman James M. Windels
Farley, Gregory S. Christopher Paul T. Molloy
Gruber, Paul T. Condron Joseph I. Jean Farley
Molloy, Jeffrey N. Connolly William T. Sandalls,
Nachman, James M. Jr.
Windels, Michael
Condon, Richard
Cassaro, Lori McNab,
Stephen Powanda and
Laura Sanderson
Cash Account
1. Fees payable to The Bank of New York pursuant to written agreement with
the Fund for services rendered in its capacity as Custodian or agent of
the Fund, or to Dreyfus Transfer, Inc. in its capacity as Transfer Agent
or agent of the Fund:
Two (2) signatures required, one of which must be from Group
II, except that no individual shall be authorized to sign more than
once.
2. Other expenses of the Fund, $5,000 and under:
Any combination of two (2) signatures from either Group I or
Group II, or both such Groups, except that no individual shall be
authorized to sign more than once.
3. Other expenses of the Fund, over $5,000 but not over $25,000:
Two (2) signatures required, one of which must be from Group
II, except that no individual shall be authorized to sign more than
once.
4. Other expenses of the Fund, over $25,000:
Two (2) signatures required, one from Group I or Group II,
including any one of the following: Paul R. Casti, Jr.,
Christopher Condron, James M. Windels, Jeffrey N. Nachman, Joseph
I. Connolly or William T. Sandalls, Jr., 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:
Joseph I. Connolly, Paul R. Casti, Jr., Thomas J.
Durante, Jean Farley, Gregory S. Gruber, Paul T. Molloy,
Jeffrey N. Nachman, James M. Windels, Michael Condron, Richard
Cassaro, Alan Brown, Linda Lionetti, Michelle Pressa, Richard
Wiener, Douglas Christensen, Lori McNab, Joseph Bruno, Vincent
Grolli, Elizabeth McDonough, Stephen Powanda and all current
Portfolio Managers.
Appendix B
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
The undersigned Officers of the Fund do hereby certify that the
following individuals, whose specimen signatures are on file with The Bank of
New York, have been duly elected or appointed by the Fund's Board to the
position set forth opposite their names and have qualified therefor:
Name Position
Marie E. Connolly President and Treasurer
John E. Pelletier Vice President and Secretary
Elizabeth A. Keeley Vice President and Assistant
Secretary
Douglas C. Conroy Vice President and Assistant
Secretary
Richard W. Ingram Vice President and Assistant
Secretary
Mark A. Karpe Vice President and Assistant
Secretary
Joseph S. Tower, III Vice President and Assistant
Treasurer
Mary A. Nelson Vice President and Assistant
Treasurer
Michael S. Petrucelli Vice President and Assistant
Treasurer
______________________________ ______________________________
Elizabeth A. Keeley, Douglas C. Conroy,
Vice President and Assistant Vice President and Assistant
Secretary Secretary
Appendix C
The following are designated publications for purposes of
paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
The New York Times
Standard & Poor's Called Bond Record
The Wall Street Journal
Appendix D
Name of Series
Schedule A
The fees payable to the Custodian with respect to securities held
in domestic custody are annexed hereto.
DOMESTIC CUSTODY FEES
CUSTODY
HOLDING FEES TRANSACTION FEES
1 BP FIRST 500MM BOOK
1/2 BP ON NEXT 1.5B $7 PER
1/4 ON EXCESS
GLOBAL PHYSICAL
REVISED FEES BASED ON COUNTRY $13 PER
PAYDOWNS
$6 PER
NOTE: NO CHANGE TO HOLDING
FEE FOR THE FOLLOWING
TWO (2 FUNDS)
THE FOLLOWING TRANSACTIONS
DREYFUS LIQUID ASSETS, INC. REMAIN THE SAME
DREYFUS AMERICA EURO CD $40.00
PHYSICAL PUTS $20.00
SUB CUST. BOOK $20.00
TIME DEPOSITS $20.00
PRINCIPAL PAYM'TS $15.00
PTC SETTLEMENT $15.00
GNMA $10.00
MARGIN $5.00
FUTURES $5.00
OPTIONS $5.00
GLOBAL
REVISED FEES BASED ON COUNTRY
EARNINGS CREDIT BASED ON 100% OF CUSTODY BALANCES,
LESS DEPOSIT RESERVE REQUIREMENTS AND F.D.I.C. INSURANCE
Schedule B
The fees payable to the Custodian with respect to securities held
in foreign custody are annexed hereto.
GLOBAL CUSTODY FEE PROPOSAL
THE DREYFUS FAMILY OF FUNDS
SAFEKEEPING TRANSACTIONS
ARGENTINA 20 b.p. $ 70
AUSTRALIA 7 b.p. 50
AUSTRIA 7 b.p. 60
BANGLADESH 40 b.p. 170
BELGIUM 7 b.p. 75
BRAZIL 45 b.p. 35
CANADA 7 b.p. 15
CHILE 35 b.p. 65
CHINA 25 b.p. 50
COLOMBIA 50 b.p. 160
CZECH REPUBLIC 25 b.p. 55
DENMARK 7 b.p. 65
EUROMARKET/CEDEL 5 b.p. 15
FINLAND 10 b.p. 70
FRANCE 7 b.p. 70
GERMANY 7 b.p. 35
GREECE 30 b.p. 145
HONG KONG 12 b.p. 80
HUNGARY 65 b.p. 200
INDIA 50 b.p. 175
INDONESIA 12 b.p. 75
IRELAND 7 b.p. 50
ISRAEL 75 b.p. 55
ITALY 7 b.p. 75
JAPAN 7 b.p. 15
LUXEMBOURG 6.5 b.p. 75
MALAYSIA 13 b.p. 100
MEXICO 12 b.p. 60
NETHERLANDS 7 b.p. 15
NEW ZEALAND 7 b.p. 50
NORWAY 7 b.p. 85
PAKISTAN 40 b.p. 150
PERU 65 b.p. 175
PHILIPPINES 12.5 b.p. 150
POLAND 50 b.p. 150
PORTUGAL 25 b.p. 220
SINGAPORE 10 b.p. 100
SOUTH AFRICA 7 b.p. 50
SOUTH KOREA 13 b.p. 25
SPAIN 7 b.p. 40
SRI LANKA 20 b.p. 60
SWEDEN 7 b.p. 50
SWITZERLAND 7 b.p. 75
TAIWAN 15 b.p. 140
THAILAND 7 b.p. 50
TURKEY 25 b.p. 60
UNITED KINGDOM 7 b.p. 35
URUGUAY * 55 b.p. 75
VENEZUELA 45 b.p. 75
* $4,000 Per Year, Per Account.
OUT-OF-POCKET EXPENSES
TELEX, TELEPHONE, SECURITIES REGISTRATION, ETC., ARE IN ADDITION TO THE
ABOVE.
DREYFUS 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 under which
the Fund would pay the Fund's distributor (the "Distributor") for providing
services to (a) shareholders of each series of the Fund or class of Fund
shares set forth on Exhibit A hereto, as such Exhibit may be revised from
time to time, or (b) if no series or classes are set forth on such Exhibit,
shareholders of the Fund. 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 under the NASD Conduct Rules.
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 Fund assets 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 the Fund 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 the annual rate
set forth on Exhibit A 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 of the Fund or the net assets attributable
to each series or class of Fund shares identified on Exhibit A, as
applicable, shall be computed in the manner specified in the Fund's charter
documents for the computation of net asset value.
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 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, unless earlier terminated in accordance with its terms, and
thereafter shall continue automatically for successive annual periods,
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 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 or the
affected series or class, as the case may be, and shall not be binding upon
any Board member, officer or shareholder of the Fund individually.
Dated: August 24, 1994
As Revised: March 31, 1997
EXHIBIT A
Name of Class Fee as a Percentage of
Average Daily Net Assets
Class A .25%
Class B .25%
Class C .25%
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors" and to the use of our report dated
September 4, 1996 on Premier Insured Municipal Bond Fund, National Series
in this Registration Statement (Form N-1A 33-61738) of Dreyfus Premier Insured
Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
March 27, 1997
DREYFUS 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") in
accordance with Rule 12b-1, promulgated under the Investment Company Act of
1940, as amended (the "Act"). The Plan would pertain to each class set forth
on Exhibit A hereto, as such Exhibit may be revised from time to time (each,
a "Class"). Under the Plan, the Fund would pay the Fund's distributor (the
"Distributor") for distributing shares of each Class. If this proposal is to
be implemented, the Act and said Rule 12b-1 require that a written plan
describing all material aspects of the proposed financing be adopted by the
Fund.
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 each Class for
such purposes.
In voting to approve the implementation of such a plan, the Board
members have concluded, in the exercise of their reasonable business judgment
and in light of their respective fiduciary duties, that there is a reasonable
likelihood that the plan set forth below will benefit the Fund and
shareholders of each Class.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor for distribution a fee in
respect of each Class at the annual rate set forth on Exhibit A.
2. For the purposes of determining the fees payable under this
Plan, the value of the Fund's net assets attributable to each Class shall be
computed in the manner specified in the Fund's charter documents as then in
effect for the computation of the value of the Fund's net assets attributable
to such Class.
3. The Fund's 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. As to each Class, this Plan will become effective upon approval
by (a) holders of a majority of the outstanding shares of such Class, 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, unless earlier terminated in accordance with its terms, and
thereafter shall continue automatically for successive annual periods,
provided such continuance is approved at least annually in the manner
provided in paragraph 4(b) hereof.
6. As to each Class, this Plan may be amended at any time by the
Fund's Board, provided that (a) any amendment to increase materially the
costs which such Class may bear pursuant to this Plan shall be effective only
upon approval by a vote of the holders of a majority of the outstanding
shares of such Class, and (b) any material amendments of the terms of this
Plan shall become effective only upon approval as provided in paragraph 4(b)
hereof.
7. As to each Class, this Plan is terminable without penalty 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 the
holders of a majority of the outstanding shares of such Class.
8. The obligations hereunder and under any related Plan agreement
shall only be binding upon the assets and property of the Fund or the
affected series or Class, as the case may be, and shall not be binding upon
any Board member, officer or shareholder of the Fund individually.
Dated: August 24, 1994
As Revised: March 31, 1997
EXHIBIT A
Fee as a Percentage of
Name of Class Average Daily Net Assets
Class B .50%
Class C .75%
J34-030-128-004-2 (MW)
DREYFUS PREMIER INSURED MUNICIPAL BOND FUND
Certificate of Assistant Secretary
The undersigned, Elizabeth A. Keeley, Vice President and Assistant
Secretary of Dreyfus 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 authorizing the signing by Elizabeth A. Keeley, Marie E.
Connolly, Richard W. Ingram, Mark A. Karpe and John Pelletier on behalf of
the proper officers 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 Elizabeth A. Keeley, Marie E. Connolly,
Richard W. Ingram, Mark A. Karpe and John Pelletier 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 or she
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 March 27, 1997.
-----------------------
Elizabeth A. Keeley
Vice President and
Assistant Secretary
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Keeley,
Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier and
each of them, with full power to act without the other, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all
amendments to the Registration Statement of Dreyfus Premier Insured Municipal
Bond Fund (including post-effective amendments and amendments thereto), and
to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/s/Clifford L. Alexander, Jr. March 27, 1997
- --------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis March 27, 1997
- --------------------------------
Peggy C. Davis
/s/Joseph S. DiMartino March 27, 1997
- --------------------------------
Joseph S. DiMartino
/s/Ernst Kafka March 27, 1997
- --------------------------------
Ernst Kafka
/s/Saul B. Klaman March 27, 1997
- --------------------------------
Saul B. Klaman
/s/Nathan Leventhal March 27, 1997
- --------------------------------
Nathan Leventhal
THE DREYFUS FAMILY OF FUNDS
(Dreyfus Premier Family of Fixed-Income Funds)
Rule 18f-3 Plan
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that the Board of an investment company desiring
to offer multiple classes pursuant to said Rule adopt a plan setting forth
the separate arrangement and expense allocation of each class, and any
related conversion features or exchange privileges.
The Board, including a majority of the non-interested Board
members, of each of the investment companies, or series thereof, listed on
Schedule A attached hereto (each, a "Fund") which desires to offer multiple
classes has determined that the following plan is in the best interests of
each class individually and the Fund as a whole:
1. Class Designation: Fund shares shall be divided into Class A,
Class B and Class C.
2. Differences in Services: The services offered to shareholders
of each Class shall be substantially the same, except that Right of
Accumulation, Letter of Intent, and Checkwriting services shall be available
only to holders of Class A shares.
3. Differences in Distribution Arrangements: Class A shares
shall be offered with a front-end sales charge, as such term is defined under
the Conduct Rules of the National Association of Securities Dealers, Inc.,
and a deferred sales charge (a "CDSC"), as such term is defined under said
Conduct Rules, may be assessed on certain redemptions of Class A shares
purchased without an initial sales charge as part of an investment of $1
million or more. The amount of the sales charge and the amount of and
provisions relating to the CDSC pertaining to the Class A shares are set
forth on Schedule B hereto.
Class B shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC and shall be charged an annual distribution
fee under a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of and provisions relating to the CDSC, and the amount of
the fees under the Distribution Plan pertaining to the Class B shares, are
set forth on Schedule C hereto.
Class C shares shall not be subject to a front-end sales charge,
but shall be subject to a CDSC and shall be charged an annual distribution
fee under a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of and provisions relating to the CDSC, and the amount of
the fees under the Distribution Plan pertaining to the Class C shares, are
set forth on Schedule D hereto.
Each Class of shares shall be subject to an annual service fee at
the rate of .25% of the value of the average daily net assets of such Class
pursuant to a Shareholder Services Plan.
4. Expense Allocation. The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a) fees
under the Distribution Plan and Shareholder Services Plan; (b) printing and
postage expenses related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current shareholders of a
specific Class; (c) Securities and Exchange Commission and Blue Sky
registration fees incurred by a specific Class; (d) the expense of
administrative personnel and services as required to support the shareholders
of a specific Class; (e) litigation or other legal expenses relating solely
to a specific Class; (f) transfer agent fees identified by the Fund's
transfer agent as being attributable to a specific Class; and (g) Board
members' fees incurred as a result of issues relating to a specific Class.
5. Conversion Features. Class B shares shall automatically
convert to Class A shares after a specified period of time after the date of
purchase, based on the relative net asset value of each such Class without
the imposition of any sales charge, fee or other charge, as set forth on
Schedule E hereto. No other Class shall be subject to any automatic
conversion feature.
6. Exchange Privileges. Shares of a Class shall be exchangeable
only for (a) shares of the same Class of other investment companies managed
or administered by The Dreyfus Corporation and (b) shares of certain other
investment companies specified from time to time.
Dated: April 12, 1995
Revised as of: March 31, 1997
SCHEDULE A
Dreyfus Premier California Municipal Bond Fund
Dreyfus Premier GNMA Fund
Dreyfus Premier Insured Municipal Bond Fund
Dreyfus Premier Municipal Bond Fund
Dreyfus Premier New York Municipal Bond Fund
Dreyfus Premier State Municipal Bond Fund
SCHEDULE B
Front-End Sales Charge--Class A Shares--The public offering price for Class A
shares shall be the net asset value per share of that Class plus a sales load
as shown below:
Total
Sales
Load
Amount of Transaction As a % of As a % of
offering net asset
price per value per
share share
Less than $50,000 4.50 4.70
$50,000 to less than $100,000 4.00 4.20
$100,000 to less than $250,000 3.00 3.10
$250,000 to less than $500,000 2.50 2.60
$500,000 to less than $1,000,000 2.00 2.00
$1,000,000 or more -0- -0-
Contingent Deferred Sales Charge--Class A Shares--A CDSC of 1.00% shall be
assessed at the time of redemption of Class A shares purchased without an
initial sales charge as part of an investment of at least $1,000,000 and
redeemed within one year of purchase. The terms contained in Schedule C
pertaining to the CDSC assessed on redemptions of Class B shares (other than
the amount of the CDSC and its time periods), including the provisions for
waiving the CDSC, shall be applicable to the Class A shares subject to a
CDSC. Letter of Intent and Right of Accumulation shall apply to such
purchases of Class A shares.
SCHEDULE C
Contingent Deferred Sales Charge--Class B Shares--A CDSC payable to the
Fund's Distributor shall be imposed on any redemption of Class B shares which
reduces the current net asset value of such Class B shares to an amount which
is lower than the dollar amount of all payments by the redeeming shareholder
for the purchase of Class B shares of the Fund held by such shareholder at
the time of redemption. No CDSC shall 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
the shareholder's Class B shares above the dollar amount of all payments for
the purchase of Class B shares of the Fund held by such shareholder at the
time of redemption.
If the aggregate value of the Class B shares redeemed has declined
below their original cost as a result of the Fund's 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 shall depend on the number of years from the time the shareholder
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 shall
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 for Class B
shares, except for Class B shares purchased by shareholders who beneficially
owned Class B shares on November 30, 1996:
CDSC as a % of
Year Since Amount Invested
Purchase Payment or Redemption
Was Made Proceeds
First
4.00
Second
4.00
Third
3.00
Fourth
3.00
Fifth
2.00
Sixth
1.00
The following table sets forth the rates of the CDSC for Class B
shares purchased by shareholders who beneficially owned Class B shares on
November 30, 1996:
CDSC as a % of
Year Since Amount Invested
Purchase Payment 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 shall be made in a manner that results in the lowest possible
rate. Therefore, it shall 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 six years (five years
for shareholders beneficially owning Class B shares on November 30, 1996);
then of amounts representing the cost of shares purchased six years (five
years for shareholders beneficially owning Class B shares on November 30,
1996) prior to the redemption; and finally, of amounts representing the cost
of shares held for the longest period of time within the applicable six-year
period (five-year period for shareholders beneficially owning Class B shares
on November 30, 1996).
Waiver of CDSC--The CDSC shall 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 Internal Revenue Code of 1986, as amended (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 investment in the
Dreyfus Family of Funds or certain other products made available by the
Fund's Distributor 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 pursuant to any systematic withdrawal plan as
described in the Fund's prospectus. Any Fund shares subject to a CDSC which
were purchased prior to the termination of such waiver shall have the CDSC
waived as provided in the Fund's prospectus at the time of the purchase of
such shares.
Amount of Distribution Plan Fees--Class B Shares--.50 of 1% of the value of
the average daily net assets of Class B.
SCHEDULE D
Contingent Deferred Sales Charge--Class C Shares--A CDSC of 1.00% payable to
the Fund's Distributor shall be imposed on any redemption of Class C shares
within one year of the date of purchase. The basis for calculating the
payment of any such CDSC shall be the method used in calculating the CDSC for
Class B shares. In addition, the provisions for waiving the CDSC shall be
those set forth for Class B shares.
Amount of Distribution Plan Fees--Class C Shares--.75 of 1% of the value of
the average daily net assets of Class C.
SCHEDULE E
Conversion of Class B Shares--Approximately six years after the date of
purchase, Class B shares automatically shall convert to Class A shares, based
on the relative net asset values for shares of each such Class, and shall no
longer be subject to the distribution fee. At that time, Class B shares that
have been acquired through the reinvestment of dividends and distributions
("Dividend Shares") shall be converted in the proportion that a shareholder's
Class B shares (other than Dividend Shares) converting to Class A shares
bears to the total Class B shares then held by the shareholder which were not
acquired through the reinvestment of dividends and distributions.
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