File No. 811-6377
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. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
DREYFUS BASIC MUNICIPAL FUND, INC.
(formerly, Dreyfus BASIC Municipal Money Market Fund, Inc.)
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on December 30, 1994 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 common
stock 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 August 31, 1994 was filed on October 21, 1994.
DREYFUS BASIC MUNICIPAL FUND, INC.
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 6
5 Management of the Fund 18
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 26
7 Purchase of Securities Being Offered 19
8 Redemption or Repurchase 22
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 *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-12
15 Control Persons and Principal B-14
Holders of Securities
16 Investment Advisory and Other B-15
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS BASIC MUNICIPAL FUND, INC.
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-27
19 Purchase, Redemption and Pricing B-17, B-18
of Securities Being Offered
20 Tax Status *
21 Underwriters B-17
22 Calculations of Performance Data B-25
23 Financial Statements B-37
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- -----------------------------------------------------------------------------
PROSPECTUS DECEMBER 30, 1994
DREYFUS BASIC MUNICIPAL FUND, INC.
- -----------------------------------------------------------------------------
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is an open-end,
management investment company, known as a mutual fund. The Fund permits you
to invest in three separate non-diversified series (each, a "Portfolio"):
Dreyfus BASIC Municipal Money Market Portfolio (the "Money Market
Portfolio"); Dreyfus BASIC Intermediate Municipal Bond Portfolio (the
"Intermediate Bond Portfolio"); and Dreyfus BASIC Municipal Bond Portfolio
(the "Bond Portfolio"). The goal of each Portfolio is to provide you with as
high a level of current income exempt from Federal income tax as is
consistent with the preservation of capital and, for the Money Market
Portfolio only, the maintenance of liquidity.
The Fund is designed to benefit investors who do not engage in
frequent transactions in Portfolio shares.
The Dreyfus Corporation professionally manages each Portfolio.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY
MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
---------------
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 December 30, 1994,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free copy, write to
the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or
call 1-800-645-6561. When telephoning, ask for Operator 666.
---------------
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. THE NET ASSET VALUE OF ALL BOND MUTUAL FUNDS WILL FLUCTUATE FROM TIME
TO TIME.
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> Page
Fee Table......................................... 3
Condensed Financial Information................... 4
Performance Information........................... 5
Description of the Fund........................... 6
Management of the Fund............................ 18
How to Buy Fund Shares............................ 19
Fund Exchanges.................................... 21
How to Redeem Fund Shares......................... 22
Shareholder Services Plan......................... 24
Dividends, Distributions and Taxes................ 24
General Information............................... 26
</TABLE>
- -----------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------
[This Page Intentionally Left Blank]
Page 2
<TABLE>
FEE TABLE
MONEY INTERMEDIATE
MARKET BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ----------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
Exchange Fee ............................................. $5.00 $5.00 $5.00
Account Closeout Fee...................................... $5.00 $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (after expense reimbursement)............. .36% .00% .00%
Other Expenses (after expense reimbursement).............. .09% .45% .45%
Total Fund Operating Expenses (after expense reimbursement) .45% .45% .45%
</TABLE>
<TABLE>
EXAMPLE
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period:
<S> <C> <C> <C>
1 YEAR...................................................... $10 $10 $10
3 YEARS..................................................... $19 $19 $19
5 YEARS..................................................... $30 $30 $30
10 YEARS.................................................... $62 $62 $62
</TABLE>
- -----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH PORTFOLIO'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 various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. The expenses noted above, without reimbursement, would be: Management
Fees_.50% with respect to the Money Market Portfolio and .60% with respect to
the Intermediate Bond Portfolio and Bond Portfolio; Other Expenses_.94% with
respect to the Intermediate Bond Portfolio and 1.46% with respect to the Bond
Portfolio; and Total Fund Operating Expenses_.59% with respect to the Money
Market Portfolio, 1.54% with respect to the Intermediate Bond Portfolio and
2.06% with respect to the Bond Portfolio; and the amount of expenses that an
investor would pay, assuming redemption after one, three, five and ten years,
would be $11, $24, $38 and $79 with respect to the Money Market Portfolio,
$21, $54, $89 and $188 with respect to the Intermediate Bond Portfolio and
$26, $70, $116 and $244 with respect to the Bond Portfolio. In addition,
unlike certain other funds in the Dreyfus Family of Funds, the Fund will
charge your account $2.00 for each redemption check you write; you also will
be charged $5.00 for each wire redemption you make and a $5.00 account
closeout fee. These charges will be paid to the Fund's transfer agent and
will reduce the transfer agency charges otherwise payable by the Fund. See
"How to Buy Fund Shares" and "How to Redeem Fund Shares." The Dreyfus
Corporation has agreed until June 30, 1996, in the case of the Money Market
Portfolio, and until June 30, 1998, in the case of the Intermediate Bond
Portfolio and Bond Portfolio, that if in any fiscal year certain expenses of
a Portfolio, including the management fee, exceed .45% of the value of such
Portfolios' average net assets for the fiscal year, the Fund may deduct from
the payment to be made to The Dreyfus Corporation under the Management
Agreement, or The Dreyfus Corporation will bear, such excess expense. The
foregoing table does not reflect any other fee waivers or expense
reimbursement arrangements that may be in effect. See "Management of the
Fund" and "Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited, except
where noted, by Ernst & Young LLP, the Fund's independent auditors, whose
reports thereon appear 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
MONEY MARKET PORTFOLIO -- Contained below is per share operating
performance data for a share of Common Stock outstanding, total investment
return, ratios to average net assets and other supplemental data for each
year indicated. This information has been derived from the MONEY MARKET
PORTFOLIO'S financial statements.
<TABLE>
MONEY MARKET PORTFOLIO
YEAR ENDED AUGUST 31,
PER SHARE DATA: 1992(1) 1993 1994
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of year......................................... $1.0000 $1.0000 $1.0000
-------- -------- --------
INVESTMENT OPERATIONS:
Investment income - net.................................................... .0240 .0270 .0257
Net realized (loss) on investments......................................... --- --_ (.0001)
-------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS........................................... .0240 .0270 .0256
-------- -------- --------
DISTRIBUTIONS:
Dividends from investment income - net..................................... (.0240) (.0270) (.0257)
-------- -------- --------
Net asset value, end of year............................................... $1.0000 $1.0000 $ .9999
======== ======== ========
TOTAL INVESTMENT RETURN.................................................... 3.41%(2) 2.73% 2.60%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................................... --_ .02% .09%
Ratio of net investment income to average net assets....................... 3.22%(2) 2.64% 2.58%
Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .77%(2) .64% .50%
Net Assets, end of year (000's omitted).................................... $228,708 $685,540 $1,027,377
(1) From December 16, 1991 (commencement of operations) to August 31, 1992.
(2) Annualized.
</TABLE>
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND PORTFOLIO -- Contained below is per share operating
performance data for a share of Common Stock outstanding, total investment
return, ratios to average net assets and other supplemental data for the
period from May 5, 1994 (commencement of operations) to August 31, 1994 and
for the one month period ended September 30, 1994. This information has been
derived from the INTERMEDIATE BOND PORTFOLIO'S financial statements.
<TABLE>
INTERMEDIATE BOND PORTFOLIO
ONE MONTH ENDED
PER SHARE DATA: PERIOD ENDED AUGUST 31, SEPTEMBER 30, 1994
1994 (UNAUDITED)
-------- -------------
<S> <C> <C>
Net asset value, beginning of period............................. $12.50 $12.65
------- -------
INVESTMENT OPERATIONS:
Investment income-net............................................ .24 .05
Net realized and unrealized gain (loss) on investments........... . .15 (.17)
------- -------
TOTAL FROM INVESTMENT OPERATIONS................................. .39 (.12)
------- -------
DISTRIBUTIONS:
Dividends from investment income - net........................... (.24) (.05)
------- -------
Net asset value, end of period................................... $12.65 $12.48
======= =======
TOTAL INVESTMENT RETURN.......................................... 3.11%(1) (.91%)(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................... -- --
Ratio of net investment income to average net assets............. 5.53%(2) 5.34%(2)
Decrease reflected in above expense ratios due to undertaking by The Dreyfus
Corporation..................................................... 1.54%(2) 1.05%(2)
Portfolio Turnover Rate.......................................... 41.15%(1) --
Net Assets, end of period (000's omitted)........................ $28,275 $33,035
- -----------------
(1)Not annualized.
(2)Annualized.
</TABLE>
Page 4
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO -- Contained below is per share operating performance
data for a share of Common Stock outstanding, total investment return, ratios
to average net assets and other supplemental data
for the period from May 6, 1994 (commencement of operations) to August 31,
1994 and for the one month period ended September 30, 1994. This information
has been derived from the BOND PORTFOLIO'S financial statements.
<TABLE>
BOND PORTFOLIO
ONE MONTH ENDED
PER SHARE DATA: PERIOD ENDED AUGUST 31, SEPTEMBER 30, 1994
1994 (UNAUDITED)
-------- -----------------
<S> <C> <C>
Net asset value, beginning of period............................. $12.50 $12.76
------- -------
INVESTMENT OPERATIONS:
Investment income-net............................................ .19 .06
Net realized and unrealized gain (loss) on investments........... . .26 (.25)
------- -------
TOTAL FROM INVESTMENT OPERATIONS................................. .45 (.19)
------- -------
DISTRIBUTIONS:
Dividends from investment income - net........................... (.19) (.06)
------- -------
Net asset value, end of period................................... $12.76 $12.51
======= =======
TOTAL INVESTMENT RETURN.......................................... 4.13%(1) (1.50%)(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................... -- --
Ratio of net investment income to average net assets............. 6.03%(2) 5.70%(2)
Decrease reflected in above expense ratios due to undertaking by The Dreyfus
Corporation..................................................... 2.06%(2) 1.05%(2)
Portfolio Turnover Rate.......................................... 8.82%(1) --
Net Assets, end of period (000's omitted)........................ $15,334 $19,646
(1)Not annualized.
(2) Annualized.
(2) Annualized.
</TABLE>
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO -- From time to time, the Money Market Portfolio
advertises its yield and effective yield. Both yield figures are based on
historical earnings and are not intended to indicate future performance. It
can be expected that these yields will fluctuate substantially. The yield of
the Money Market Portfolio refers to the income generated by an investment in
the Portfolio over a seven-day period (which period will be stated in the
advertisement). This income is then annualized. That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly, but, when annualized, the income
earned by an investment in the Portfolio is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The Money Market Portfolio's
yield and effective yield may reflect absorbed expenses pursuant to any
undertakings 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
yield or effective yield calculated as described above.
Yield information is useful in reviewing the Money Market Portfolio's
performance, but because yields will fluctuate, such information under
certain conditions may not provide a basis for comparison with domestic bank
deposits, other investments which pay a fixed yield for a stated period of
time, or other investment companies which may use a different method of
computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Money Market Portfolio's shares, including data
from Lipper Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm
Beach, Fla. 33408, IBC/Donoghue's Money Fund Report, Morningstar, Inc. and
other industry publications.
INTERMEDIATE BOND PORTFOLIO AND BOND PORTFOLIO -- For purposes of
advertising, performance of the
Page 5
Intermediate Bond Portfolio and the Bond
Portfolio (each, a "Longer Term Portfolio") may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield of a Longer Term Portfolio refers to its annualized net
investment income per share over a 30-day period, expressed as a percentage
of the net asset value 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 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 a Longer Term Portfolio's current yield may reflect
absorbed expenses pursuant to any undertakings that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated as described above.
Average annual total return for each Longer Term Portfolio is
calculated pursuant to a standardized formula which assumes that an
investment in such Portfolio 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 a Longer Term
Portfolio's performance will include its average annual total return for one,
five and ten year periods, or for shorter time periods depending upon the
length of time during which it has operated. Computations of average annual
total return for periods for less than one year represent an annualization of
the Portfolio's actual total return for the applicable period.
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 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.
Comparative performance information may be used from time to time in
advertising or marketing shares of each Longer Term Portfolio, including data
from CDA Investment Technologies, Inc., Lipper Analytical Services, Inc.,
Moody's Bond Survey Bond Index, Lehman Brothers Municipal Bond Index,
Morningstar, Inc. and other industry publications.
ALL PORTFOLIOS -- Performance will vary from time to time and past results
are not necessarily representative of future results. You 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.
DESCRIPTION OF THE FUND
GENERAL -- The Fund is a "series fund," which is a mutual fund divided into
separate portfolios. Each Portfolio is treated as a separate entity for
certain matters under the Investment Company Act of 1940 and for other
purposes, and a shareholder of one Portfolio is not deemed to be a
shareholder of any other Portfolio. As described below, for certain matters
Fund shareholders vote together as a group; as to others they vote separately
by Portfolio.
INVESTMENT OBJECTIVE -- Each Portfolio's goal is to provide you with as high
a level of current income exempt from Federal income tax as is consistent
with the preservation of capital and, for the Money
Page 6
Market Portfolio only,
the maintenance of liquidity. To accomplish this goal, each Portfolio invests
primarily in Municipal Obligations (described below). The Money Market
Portfolio invests primarily in high-quality, short-term instruments. These
securities may not earn as high a level of current income as long-term or
lower quality securities which generally have less liquidity, greater market
risk and more fluctuation in market value. The dollar-weighted average
maturity of the Intermediate Bond Portfolio's investments will range between
three and ten years. The Bond Portfolio will invest without regard to
maturity. Each Portfolio's investment objective cannot be changed without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940) of such Portfolio's outstanding voting shares. There can be no
assurance that a Portfolio'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 or 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 generally
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.
Each Longer Term Portfolio may purchase Municipal Obligations with interest
rates that are determined by formulas under which the 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 purchased by a Longer Term Portfolio 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 each Portfolio that it
will invest at least 80% of the value of its respective net assets (except
when maintaining a temporary defensive position) in Municipal Obligations.
Additionally, with respect to each Longer Term Portfolio, at least 65% of the
value of each Portfolio's net assets (except when maintaining a temporary
defensive position) will be invested in bonds, debentures and other debt
instruments.
MONEY MARKET PORTFOLIO -- The Money Market Portfolio seeks to maintain a net
asset value of $1.00 per share for purchases and redemptions. To do so, the
Money Market Portfolio uses the amortized cost method of valuing its
securities pursuant to Rule 2a-7 under the Investment Company Act of 1940,
certain requirements of which are summarized as follows. In accordance with
Rule 2a-7, the Money Market Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 13 months or less and invest only
in U.S. dollar denominated securities determined in accordance with
procedures established by the Fund's Board of Directors to present minimal
credit risks and which are rated in one of the two highest rating categories
for debt obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated only by
one such organization) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Fund's Board of
Page 7
Directors.
The nationally recognized statistical rating organizations currently rating
investments of the type the Money Market Portfolio may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P")
and Fitch Investors Service, Inc. ("Fitch") and their rating criteria are
described in the "Appendix" to the Statement of Additional Information. For
further information regarding the amortized cost method of valuing
securities, see "Determination of Net Asset Value" in the Statement of
Additional Information. There can be no assurance that the Money Market
Portfolio will be able to maintain a stable net asset value of $1.00 per
share.
INTERMEDIATE BOND PORTFOLIO AND BOND PORTFOLIO -- For each Longer
Term Portfolio, at least 65% of the value of its net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than A
by Moody's, S&P or Fitch or, if unrated, deemed to be of comparable quality
by The Dreyfus Corporation. Each Longer Term Portfolio may invest up to 35%
of the value of its net assets in Municipal Obligations which, in the case of
bonds, are rated lower than A by Moody's, S&P and Fitch and as low as the
lowest rating assigned by Moody's, S&P or Fitch. Each Longer Term Portfolio
may invest in short-term Municipal Obligations which are rated in the two
highest rating categories by Moody's, S&P or Fitch. See the "Appendix" in the
Statement of Additional Information. Municipal Obligations rated BBB by S&P
or Fitch or Baa by Moody's are considered investment grade obligations; those
rated BBB by S&P and 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. Investments rated Ba or lower by
Moody's and BB or lower by S&P and Fitch ordinarily provide higher yields but
involve greater risk because of their speculative characteristics. Each
Longer Term Portfolio may invest in Municipal Obligations rated C by Moody's
or D by S&P or Fitch, which is the lowest rating assigned by such rating
organizations and indicates that the Municipal Obligation is in default and
interest and/or repayment of principal is in arrears. See "Risk Factors_Lower
Rated Bonds" below for a further discussion of certain risks. Each Longer
Term Portfolio also may invest in Taxable Investments of the quality
described below.
Each Longer Term Portfolio 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 interest in such stripped debt obligations and coupons. The
market prices of zero coupon securities generally are more volatile than the
market prices of interest-bearing securities and are likely to respond to a
greater degree to changes in interest rates than interest-bearing securities
having similar maturities and credit qualities. Each Longer Term Portfolio
may invest up to 5% of its assets in zero coupon bonds which are rated below
investment grade. See "Risk Factors_Lower Rated Bonds" and "Other Investment
Considerations" below, and "Investment Objective and Management Policies_Risk
Factors_Lower Rated Bonds" and "Dividends, Distributions and Taxes" in the
Statement of Additional Information.
Each Longer Term Portfolio 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
Page 8
generally is expected to be below the coupon rate of
the underlying Municipal Obligations and generally is at a level comparable
to that of a Municipal Obligation of similar quality and having a maturity
equal to the period between interest rate adjustments. The second class bears
interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but
in this case inversely to changes in the rate of interest of the first class.
If the interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate paid
on the second class. In no event will the aggregate interest paid with
respect to the two classes exceed the interest paid by the underlying
Municipal Obligations. The value of the second class and similar securities
should be expected to fluctuate more than the value of a Municipal Obligation
of comparable quality and maturity and their purchase by a Longer Term
Portfolio should increase the volatility of its net asset value and, thus,
its price per share. These custodial receipts are sold in private placements.
Each Longer Term Portfolio 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 a floor.
ALL PORTFOLIOS (EXCEPT AS INDICATED BELOW) -- Each Portfolio 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, each Portfolio may be subject to greater risk as
compared to a fund that does not follow this practice.
From time to time, a Portfolio may invest more than 25% of the value
of its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. Each Portfolio may invest
without limitation in such Municipal Obligations if The Dreyfus Corporation
determines that its purchase is consistent with such Portfolio's investment
objective. See "Risk Factors -- Other Investment Considerations" below.
Each Portfolio may purchase floating or variable rate demand notes,
which are tax exempt obligations ordinarily having stated maturities in
excess of 13 months, but which permit the holder to demand payment of
principal at any time, or at specified intervals, which for the Money Market
Portfolio will not exceed 13 months, and in each case will be upon not more
than 30 days' notice. Variable rate demand notes include master demand notes
which are obligations that permit each Portfolio to invest fluctuating
amounts at varying rates of interest pursuant to direct arrangements between
the Portfolio, as lender, and the borrower. These obligations permit daily
changes in the amounts borrowed. Frequently, such obligations are secured by
letters of credit or other credit support arrangements provided by banks. Use
of letters of credit or other credit support arrangements will not adversely
affect the tax exempt status of these obligations. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value, plus accrued interest. Accordingly, where
these obligations are not secured by letters of credit or other credit
support arrangements, the Portfolio's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Each
obligation purchased by a Portfolio will meet the quality criteria
established for its purchase of Municipal Obligations. The Dreyfus
Corporation, on behalf of each Portfolio, will consider on an ongoing basis
the creditworthiness of the issuers of the floating and variable rate demand
obligations held by the Portfolios.
Page 9
Each Portfolio may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives a
Portfolio an undivided interest in the Municipal Obligation in the proportion
that the Portfolio's participation bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest and, in the case of the Money Market Portfolio, will have
remaining maturities of 13 months or less. If the participation interest is
unrated, it will be backed by an irrevocable letter of credit or guarantee of
a bank that the Fund's Board of Directors has determined meets the prescribed
quality standards for banks set forth below, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For certain
participation interests, a Portfolio will have the right to demand payment,
on not more than seven days' notice, for all or any part of the Portfolio's
participation interest in the Municipal Obligation, plus accrued interest. As
to these instruments, each Portfolio 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.
Each Portfolio 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 each
Portfolio, will consider on an ongoing basis the creditworthiness of the
issuer of the underlying Municipal Obligation, of any custodian and of the
third party provider of the tender option. In certain instances and for
certain tender option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying Municipal
Obligations and for other reasons. No Portfolio will invest more than 15%
(10% in the case of the Money Market Portfolio) of the value of its net
assets in securities that are illiquid, which could include tender option
bonds as to which it cannot exercise the tender feature on not more than
seven days' notice if there is no secondary market available for these
obligations.
Each Portfolio may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, a
Portfolio obligates a broker, dealer or bank to repurchase, at such
Portfolio'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. Each Portfolio will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to exercise any
such rights thereunder for trading purposes. Each Portfolio 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. The Longer Term Portfolios
also may acquire call options on specific Municipal Obligations. A Longer
Term Portfolio generally would purchase these call options to protect it from
the issuer of the related Municipal Obligation redeeming, or other holder of
the call option from calling away, the Municipal Obligation before maturity.
The sale by a Longer Term Portfolio of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income
by the Portfolio.
Page 10
Each Portfolio may invest up to 15% (10% in the case of the Money
Market Portfolio) 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 Portfolio'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, a Longer Term Portfolio investing in
such securities is subject to a risk that should the Portfolio desire to sell
them when a ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net assets could
be adversely affected.
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of its net assets) or
for temporary defensive purposes, a Portfolio may invest in taxable
short-term investments ("Taxable Investments") consisting of: notes of
issuers having, at the time of purchase, a quality rating within the two
highest grades of Moody's, S&P or Fitch; obligations of the U.S. Government,
its agencies or instrumentalities; commercial paper rated not lower than P-2
by Moody's, A-2 by S&P or F-2 by Fitch; certificates of deposit of U.S.
domestic banks, including foreign branches of domestic banks, with assets of
one billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any of
the foregoing. Dividends paid by a Portfolio that are attributable to income
earned by such Portfolio from Taxable Investments will be taxable to
investors. See "Dividends, Distributions and Taxes." Except for temporary
defensive purposes, at no time will more than 20% of the value of a
Portfolio's net assets be invested in Taxable Investments. If the Money
Market Portfolio purchases Taxable Investments, it will value them using the
amortized cost method and comply with Rule 2a-7 relating to purchases of
taxable instruments. Under normal market conditions, each Portfolio
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.
INVESTMENT TECHNIQUES -- Each Longer Term Portfolio may engage in various
investment and hedging techniques such as short-selling, options and futures
transactions and lending portfolio securities, each of which involves risk.
Options and futures transactions involve so-called "derivative securities."
Use of these techniques may give rise to taxable income.
FUTURES TRANSACTIONS -- IN GENERAL -- Neither Longer Term Portfolio is a
commodity pool. However, as a substitute for a comparable market position in
the underlying securities or for hedging purposes, each Longer Term Portfolio
may engage in futures and options on futures transactions as described below.
Each Longer Term Portfolio's commodities transactions must constitute
bona fide hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission. In addition, each
Longer Term Portfolio may not engage in such transactions if the sum of the
amount of initial margin deposits and premiums paid for unexpired commodity
options, other than for bona fide hedging transactions, would exceed 5% of
the liquidation value of such Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts it has entered
into; provided, however, that in the case of an option that is in-the-money
at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%. Pursuant to regulations and/or published positions of the
Securities and Exchange Commission, each Longer Term Portfolio may be
required to segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount generally equal to
the value of the underlying commodity. To the extent a Longer Term Portfolio
engages in the use of futures and options on futures other than for bona fide
hedging purposes, the Portfolio may be subject to additional risk.
Initially, when purchasing or selling futures contracts each Longer
Term Portfolio will be required to deposit with the Fund's custodian in the
broker's name an amount of cash or cash equivalents up to
Page 11
approximately 10%
of the contract amount. This amount is subject to change by the exchange or
board of trade on which the contract is traded and members of such exchange
or board of trade may impose their own higher requirements. This amount is
known as "initial margin" and is in the nature of a performance bond or good
faith deposit on the contract which is returned to such Portfolio upon
termination of the futures position, assuming all contractual obligations
have been satisfied. Subsequent payments, known as "variation margin," to and
from the broker will be made daily as the price of the index or securities
underlying the futures contract fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." At any time prior to the expiration of a futures
contract, a Longer Term Portfolio may elect to close the position by taking
an opposite position at the then prevailing price, which will operate to
terminate such Portfolio's existing position in the contract.
Although each Longer Term Portfolio intends to purchase or sell
futures contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of trade
limit the amount of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond the limit or
trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation
of futures positions and potentially subjecting a Longer Term Portfolio to a
substantial loss. If it is not possible, or such Portfolio determines not, to
close a futures position in anticipation of adverse price movements, such
Portfolio will be required to make daily cash payments of variation margin.
In such circumstances, an increase in the value of the portion of the
portfolio being hedged, if any, may offset partially or completely losses on
the futures contract. However, no assurance can be given that the price of
the securities being hedged will correlate with the price movements in a
futures contract and thus provide an offset to losses on the futures
contract.
To the extent a Longer Term Portfolio is engaging in a futures
transaction as a hedging device because of the risk of an imperfect
correlation between securities held by the Longer Term Portfolio that are
the subject of a hedging transaction and the futures contract used as a
hedging device, it is possible that the hedge will not be fully effective if,
for example, losses on the portfolio securities exceed gains on the futures
contract or losses on the futures contract exceed gains on the portfolio secur
ities. For futures contracts based on indices, the risk of imperfect
correlation increases as the composition of the Portfolio's securities varies
from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being
hedged and movements in the price of futures contracts, such Portfolio may
buy or sell futures contracts in a greater or lesser dollar amount than the
dollar amount of the securities being hedged if the historical volatility of
the futures contract has been less or greater than that of the securities.
Such "over hedging" or "under hedging" may adversely affect a Longer Term
Portfolio's net investment results if the market does not move as anticipated
when the hedge is established.
Successful use of futures by each Longer Term Portfolio is also
subject to The Dreyfus Corporation's ability to predict correctly movements
in the direction of the market or interest rates. For example, if a Longer
Term Portfolio has hedged against the possibility of a decline in the market
adversely affecting the value of securities held in its portfolio and prices
increase instead, such Portfolio will lose part or all of the benefit of the
increased value of securities it has hedged because it will have offsetting
losses in its futures positions. Furthermore, if in such circumstances the
Portfolio has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. The Longer Term Portfolio may have to sell
such securities at a time when it may be disadvantageous to do so.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
Page 12
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the
market price of the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option
on the futures contract.
Call options sold by each Longer Term Portfolio with respect to
futures contracts will be covered by, among other things, entering into a
long position in the same contract at a price no higher than the strike price
of the call option, or by ownership of the instruments underlying, or
instruments the prices of which are expected to move relatively consistently
with the instruments underlying, the futures contract. Put options sold by
each Longer Term Portfolio with respect to futures contracts will be covered
when, among other things, cash or liquid securities are placed in a
segregated account to fulfill the obligation undertaken.
Each Longer Term Portfolio may utilize municipal bond index futures
to protect against changes in the market value of the Municipal Obligations
in its portfolio or which it intends to acquire. Municipal bond index futures
contracts are based on an index of long-term Municipal Obligations. The index
assigns relative values to the Municipal Obligations included in an index,
and fluctuates with changes in the market value of such Municipal
Obligations. The contract is an agreement pursuant to which two parties agree
to take or make delivery of an amount of cash based upon the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index contract was originally written.
The acquisition or sale of a municipal bond index futures contract enables a
Longer Term Portfolio to protect its assets from fluctuations in rates on tax
exempt securities without actually buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS--Each Longer Term Portfolio may purchase and sell interest rate
futures contracts and options on interest rate futures contracts as a
substitute for a comparable market position or to hedge against adverse
movements in interest rates.
To the extent a Longer Term Portfolio has invested in interest rate
futures contracts or options on interest rate futures contracts as a
substitute for a comparable market position, the Portfolio will be subject to
the investment risks of having purchased the securities underlying the
contract.
Each Longer Term Portfolio may purchase call options on interest rate
futures contracts to hedge against a decline in interest rates and may
purchase put options on interest rate futures contracts to hedge its
portfolio securities against the risk of rising interest rates.
Each Longer Term Portfolio may sell call options on interest rate
futures contracts to partially hedge against declining prices of its
portfolio securities. If the futures price at expiration of the option is
below the exercise price, the Portfolio will retain the full amount of the
option premium which provides a partial hedge against any decline that may
have occurred in such Portfolio's securities holdings. Each Longer Term
Portfolio may sell put options on interest rate futures contracts to hedge aga
inst increasing prices of the securities which are deliverable upon exercise
of the futures contract. If the futures price at expiration of the option is
higher than the exercise price, the Portfolio will retain the full amount of
the option premium which provides a partial hedge against any increase in the
price of securities which the Portfolio intends to purchase. If a put or call
option sold by a Portfolio is exercised, the Portfolio will incur a loss
which will be reduced by the amount of the premium it receives. Depending on
the degree of correlation between changes in the value of its portfolio
securities and changes in the value of its futures positions, a Portfolio's
losses from existing options on futures may to some extent be reduced or incre
ased by changes in the value of its portfolio securities.
Each Longer Term Portfolio also may sell options on interest rate
futures contracts as part of
Page 13
closing purchase transactions to terminate its
options positions. No assurance can be given that such closing transactions
can be effected or that there will be a correlation between price movements
in the options on interest rate futures and price movements in a Portfolio's
securities which are the subject of the hedge. In addition, a Portfolio's
purchase of such options will be based upon predictions as to anticipated
interest rate trends, which could prove to be inaccurate.
SHORT-SELLING -- Each Longer Term Portfolio may make short sales, which are
transactions in which the Portfolio sells a security it does not own in
anticipation of a decline in the market value of that security. To complete
such a transaction, the Portfolio must borrow the security to make delivery
to the buyer. The Portfolio then is obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. The
price at such time may be more or less than the price at which the security
was sold by the Portfolio. A Longer Term Portfolio will incur a loss as a
result of the short sale if the price of the security increases between the
date of the short sale and the date on which the Portfolio replaces the
borrowed security. A Longer Term Portfolio will realize a gain if the
security declines in price between those dates.
No securities will be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of such Portfolio's net assets. Neither Longer Term
Portfolio may sell short the securities of any class of an issuer to the
extent, at the time of the transaction, of more than 5% of the outstanding
securities of that class.
In addition to the short sales discussed above, each Longer Term
Portfolio may make short sales "against the box," a transaction in which the
Portfolio enters into a short sale of a security which the Portfolio owns.
Neither Longer Term Portfolio will at any time have more than 15% of the
value of its net assets in deposits on short sales against the box. It
currently is anticipated that each Longer Term Portfolio will make short
sales against the box for purposes of protecting the value of the Portfolio's
net assets.
FUTURE DEVELOPMENTS -- Each Longer Term Portfolio may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other derivative investments which are not
presently contemplated for use by either Longer Term Portfolio or which are
not currently available but which may be developed, to the extent such
opportunities are both consistent with its investment objective and legally
permissible. Before entering into such transactions or making any such
investment, a Longer Term Portfolio will provide appropriate disclosure in
its prospectus.
LENDING PORTFOLIO SECURITIES -- From time to time, each Longer Term Portfolio
may lend securities from its portfolio to brokers, dealers and other
financial institutions needing to borrow securities to complete certain
transactions. Such loans may not exceed 33-1/3% of the value of such
Portfolio's total assets. In connection with such loans, the Portfolio will
receive collateral consisting of cash, U.S. Government securities or
irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. Each Longer Term Portfolio can increase its income through the
investment of such collateral. The Longer Term Portfolio engaging in the
portfolio loan transaction continues to be entitled to payments in amounts
equal to the interest or other distributions payable on the loaned security
and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. A Longer Term Portfolio might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.
BORROWING MONEY -- As a fundamental policy, each Longer Term Portfolio is
permitted to borrow to the extent permitted under the Investment Company Act
of 1940. However, each Longer Term Portfolio currently intends to borrow
money only for temporary or emergency (not leveraging) purposes, in an amount
up to 15% of the value of such Portfolio'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 borrow
ings exceed 5% of a Longer Term Portfolio's total assets, such
Page 14
Portfolio will
not make any additional investments.
CERTAIN FUNDAMENTAL POLICIES -- Each Portfolio may invest up to 25% of its
total assets in the securities of issuers in any single industry, provided
that there is no such limitation on investments in Municipal Obligations and,
for temporary defensive purposes, obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. In addition, each Longer
Term Portfolio may borrow money to the extent permitted under the Investment
Company Act of 1940 and the Money Market Portfolio may: (i) borrow money from
banks, but only for temporary or emergency (not leveraging) purposes, in an
amount up to 15% of the value of its 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 Money Market Portfolio's total
assets, the Money Market Portfolio will not make any additional investments;
and (ii) pledge, hypothecate, mortgage or otherwise encumber its assets, but
only to secure borrowings for temporary or emergency purposes. This paragraph
describes fundamental policies that cannot be changed, as to a Portfolio,
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940) of such Portfolio's outstanding voting shares. See
"Investment Objective and Management Policies_Investment Restrictions" in the
Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Portfolio may invest up to 15% (10% in the case of the Money Market
Portfolio) of the value of its net assets in repurchase agreements providing
for settlement in more than seven days after notice and in other illiquid
securities (which securities could include participation interests (including
municipal lease/purchase agreements) and floating and variable rate demand
obligations as to which the Portfolio cannot exercise the demand feature
described above and as to which there is no secondary market). In addition,
each Longer Term Portfolio may pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings. See "Investment
Objective and Management Policies_Investment Restrictions" in the Statement
of Additional Information.
RISK FACTORS
LOWER RATED BONDS (APPLICABLE TO EACH LONGER TERM PORTFOLIO ONLY) -- You
should carefully consider the relative risks of investing in the higher
yielding (and, therefore, higher risk) securities in which a Longer Term
Portfolio may invest up to 35% of the value of its net assets. Lower rated
bonds as discussed herein are not eligible investments for the Money Market
Portfolio. These are bonds such as those rated Ba by Moody's or BB by S&P or
Fitch, or as low as the lowest rating assigned by Moody's, S&P or Fitch. They
generally are not meant for short-term investing and may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed-income
securities. Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term vulnerability
to default than other speculative grade debt, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. Bonds rated BB by Fitch are considered speculative
and the payment of principal and interest may be affected at any time by
adverse economic changes. Bonds rated C by Moody's are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Bonds rated D by S&P are in default and the payment of interest and/or
repayment of principal is in arrears. Bonds rated DDD, DD or D by Fitch are
in actual or imminent default, are extremely speculative and should be valued
on the basis of their ultimate recovery value in liquidation or
reorganization of the issues; DDD represents the highest potential for
recovery of such bonds; and D represents the lowest potential for recovery.
Such bonds, though high yielding, are characterized by great risk. See the
"Appendix" in the Statement of
Page 15
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 ability of a Longer Term Portfolio 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. Once the rating of a portfolio security held by a Longer
Term Portfolio has been changed, such Portfolio will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.
The market price and yield of bonds rated Ba or lower by Moody's and
BB or lower by S&P and Fitch are more volatile than those of higher rated
bonds. Factors adversely affecting the market price and yield of these
securities will adversely affect each Longer Term Portfolio's net asset
value. In addition, the retail secondary market for these bonds may be less
liquid than that of higher rated bonds; adverse market conditions could make
it difficult at times for a Longer Term Portfolio to sell certain securities
or could result in lower prices than those used in calculating the net asset
value of each Longer Term Portfolio.
Each Longer Term Portfolio may invest up to 5% of the value of its
total assets in zero coupon securities and pay-in-kind bonds (bonds which pay
interest through the issuance of additional bonds) rated Ba or lower by
Moody's and BB or lower by S&P and Fitch. These securities may be subject to
greater fluctuations in value due to changes in interest rates than
interest-bearing securities and thus may be considered more speculative than
comparably rated interest-bearing securities. See "Other Investment Considerat
ions" below and "Investment Objective and Management Policies_Risk
Factors_Lower Rated Bonds" and "Dividends, Distributions and Taxes" in the
Statement of Additional Information.
OTHER INVESTMENT CONSIDERATIONS -- The Fund is designed to benefit investors
who do not engage in frequent redemptions or exchanges of Portfolio shares.
Because charges may apply to redemptions and exchanges of Portfolio shares,
the Fund may not be an appropriate investment for an investor who intends to
engage frequently in such transactions.
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 a
Longer Term Portfolio, 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. The Money
Market Portfolio seeks to maintain a stable $1.00 share price, while the net
asset value of each Longer Term Portfolio generally will not be stable and
should fluctuate based upon changes in the value of its respective portfolio
securities. Securities in which a Longer Term Portfolio invests may earn a
higher level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and less
fluctuation in market value.
New issues of Municipal Obligations usually are offered on a
when-issued basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate that
will be received on the Municipal Obligations are fixed at the time the
Portfolio enters into the commitment. A Portfolio will make commitments to
purchase such Municipal Obligations only with the intention of actually
acquiring
Page 16
the securities, but a Portfolio may sell these securities before
the settlement date if it is deemed advisable, although any gain realized on
such sale would be taxable. The Portfolio will not accrue income in respect
of a when-issued security prior to its stated delivery date. No additional
when-issued commitments will be made by a Portfolio if more than 20% of the
value of its net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held by a Portfolio are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased
by a Portfolio on a when-issued basis may expose the Portfolio to risk
because they may experience such fluctuations prior to their actual delivery.
Purchasing Municipal Obligations on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. Each Portfolio will establish and maintain at the Fund's custodian
bank a segregated account consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the when-issued commitment. Purchasing
Municipal Obligations on a when-issued basis when a Portfolio is fully or
almost fully invested may result in greater potential fluctuation in the
value of such Portfolio's net assets and its net asset value per share.
Certain municipal lease/purchase obligations in which a Portfolio 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/p
urchase 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.
Federal income tax law requires the holder of a zero coupon security
or of certain pay-in-kind bonds to accrue income with respect to these
securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
Federal income taxes, a Longer Term Portfolio 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 genera
te cash to satisfy these distribution requirements.
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 each
Portfolio and thus reduce the available yield. Shareholders should consult
their tax advisers concerning the effect of these provisions on an investment
in a Portfolio. 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 a Portfolio so as to adversely
affect its shareholders, such Portfolio would reevaluate its investment
objective and policies and submit possible changes in its structure to
shareholders for their consideration. If legislation were enacted that would
treat a type of Municipal Obligation as taxable, each Portfolio would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
Classification of each Portfolio as a "non-diversified" investment
company means that the proportion of the Portfolio's assets that may be
invested in the securities of a single issuer is not limited by the
Investment Company Act of 1940. A "diversified" investment company is
required by the Investment Company Act of 1940 generally to invest, with
respect to 75% of its total assets, not more than 5% of such assets in the
securities of a single issuer. However, each Portfolio intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes
of the Code which
Page 17
requires that, at the end of each quarter of its taxable
year, (i) at least 50% of the market value of the Portfolio's total assets be
invested in cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other
securities of any one issuer limited for the purposes of this calculation to
an amount not greater than 5% of the value of the Portfolio's total assets,
and (ii) not more than 25% of the value of the Portfolio's total assets be
invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies). Since
a relatively high percentage of each Portfolio's assets may be invested in
the obligations of a limited number of issuers, the Portfolio's investments
may be more susceptible to any single economic, political or regulatory
occurrence than the portfolio securities of a diversified investment company.
Investment decisions for each Portfolio are made independently from
those of other investment companies advised by The Dreyfus Corporation.
However, if such other investment companies or one or more of the Portfolios
are prepared to invest in, or desire to dispose of, Municipal Obligations or
Taxable Investments at the same time as such Portfolio, available investments
or opportunities for sales will be allocated equitably to each investment
company or Portfolio, as the case may be. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by a
Portfolio or the price paid or received by it.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
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 November 30, 1994, The Dreyfus Corporation managed or administered
approximately $69 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law. The primary portfolio manager of the each
Longer Term Portfolio is Joseph P. Darcy. He has held that position since
the commencement of operations of each Longer Term Portfolio and has been
employed by The Dreyfus Corporation since May 1994. From October 1989 to May
1994, Mr. Darcy was Vice President and Portfolio Manager for Merrill Lynch
Asset Management. Prior thereto, he worked in sales and marketing at Chemical
Bank.
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., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, Mellon managed more than $201 billion in assets as of
September 30, 1994, including approximately $76 billion in mutual fund
assets. As of September 30, 1994, various subsidiaries of Mellon provided
non-investment services, such as custodial or administration services, for
approximately $659 billion in assets including approximately $108 billion in
mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of: (i) .50 of
1% of the value of the Money Market Portfolio's average daily net assets and
(ii) .60 of 1% of the value of each Longer Term Portfolio's average daily net
assets. From time to time, The Dreyfus Corporation may waive receipt of its
fees and/or voluntarily assume certain expenses of a Portfolio, which would
have the effect of lowering the overall expense ratio of that Portfolio and
increasing yield to investors at the time such amounts are
Page 18
waived or assumed,
as the case may be. The Fund will not pay The Dreyfus Corporation at a later
time for any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume. For the fiscal year ended August
31, 1994, no management fee was paid by the Fund with respect to the Money
Market Portfolio and the Longer Term Portfolios pursuant to separate
undertakings by The Dreyfus Corporation.
The Dreyfus Corporation has undertaken until June 30, 1996, in the
case of the Money Market Portfolio, and until June 30, 1998, in the case of
each Longer Term Portfolio, that if in any fiscal year the aggregate expenses
of a Portfolio, exclusive of taxes, brokerage, interest on borrowings and
(with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee, exceed
.45% of the value of such Portfolio's average daily net assets for the fiscal
year, the Fund may deduct from the payment to be made to The Dreyfus
Corporation under the Management Agreement, or The Dreyfus Corporation will
bear, such excess expense.
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 securities
dealers or others in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of Institutional Administration
Services, Inc., a provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Transfer Agent will receive the $5.00 exchange fee, the $5.00 account
closeout fee, the $5.00 wire redemption fee and the $2.00 checkwriting
charge, described below. A sufficient number of your shares will be redeemed
automatically to pay these amounts. These payments will reduce the transfer
agency fee otherwise payable by the Fund. By purchasing Portfolio shares, you
are deemed to have consented to this procedure. The Bank of New York, 110
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
You can purchase Portfolio shares without a sales charge if you
purchase them directly from the distributor; you may be charged a nominal fee
if you effect transactions in Portfolio shares through a securities dealer,
bank or other financial institution. Share certificates are issued only upon
your written request. No certificates are issued for fractional shares. It is
not recommended that any Portfolio be used as a vehicle for Keogh, IRA or
other qualified plans. The Fund reserves the right to reject any purchase
order.
The minimum initial investment is $25,000 for the Money Market
Portfolio and $10,000 for each Longer Term Portfolio. Subsequent investments
must be at least $1,000. The initial investment must be accompanied by the
Fund's Account Application.
You may purchase Portfolio shares by check or wire. Checks should be
made payable to "The Dreyfus Family of Funds" and should specify the
Portfolio in which you are investing. Payments to open new accounts which are
mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account Application.
For subsequent investments, your Fund account number should appear on the
check and an investment slip should be enclosed and sent to The Dreyfus
Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial
nor subsequent investments should be made by third party check. Purchase
orders may be delivered in person only to a Dreyfus Financial Center. THESE
ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
Page 19
call one of the telephone numbers listed under "General Information."
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, together with the applicable
Portfolio's DDA# as shown below, for purchase of Portfolio shares in your
name: DDA# 8900208767/Dreyfus BASIC Municipal Fund, Inc./Dreyfus BASIC
Municipal Money Market Portfolio; DDA# 8900088451/Dreyfus BASIC Municipal
Fund, Inc./Dreyfus BASIC Intermediate Municipal Bond Portfolio; or DDA#
8900088443/Dreyfus BASIC Municipal Fund, Inc./Dreyfus BASIC Municipal Bond
Portfolio. The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead),
account registration and dealer number, if applicable. If your initial
purchase of Portfolio shares is by wire, please call 1-800-645-6561 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may obtain further
information about remitting funds in this manner from your bank. All payments
should be made in U.S. dollars and, to avoid additional fees and delays,
should be drawn only on U.S. banks. A charge will be imposed if any check
used for investment in your account does not clear. The Fund makes available
to certain large institutions the ability to issue purchase instructions
through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Shares of the Money Market Portfolio are sold on a continuous basis
at the net asset value per share next determined after an order in proper
form and 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. If you do not remit Federal Funds, your payment must be
converted into Federal Funds. This usually occurs within one business day of
receipt of a bank wire or 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. Prior to receipt of Federal Funds, your
money will not be invested.
The Money Market Portfolio's net asset value per share is determined
as of 12:00 Noon, New York time, on each day the New York Stock Exchange is
open for business. Net asset value per share is computed by dividing the
value of the Money Market Portfolio's net assets (i.e., the value of its
assets less liabilities) by the total number of Money Market Portfolio's
shares outstanding. See "Determination of Net Asset Value" in the Statement
of Additional Information.
If your payments for shares of the Money Market Portfolio are
received in or converted into Federal Funds by 12:00 Noon, New York time, by
the Transfer Agent, you will receive the dividend declared that day. If your
payments are received in or converted into Federal Funds after 12:00 Noon,
New York time, by the Transfer Agent, you will begin to accrue dividends on
the following business day.
Qualified institutions may telephone orders for purchase of the Money
Market Portfolio's shares. These orders will become effective at the price
determined at 12:00 Noon, New York time, and the shares purchased will
receive the dividend on Portfolio shares declared on that day if the
telephone order is placed by 12:00 Noon, New York time, and Federal Funds are
received by 4:00 p.m., New York time, on that day.
Shares of each Longer Term Portfolio are sold on a continuous basis
at the net asset value per share next determined after an order in proper
form is received by the Transfer Agent. Each Longer Term
Page 20
Portfolio's net
asset value per share 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 that the New York Stock Exchange is open for business. For purposes of
determining the net asset value of each Longer Term Portfolio, 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 is computed
by dividing the value of the specific Longer Term Portfolio's net assets
(i.e., the value of its assets less liabilities) by the total number of such
Portfolio's shares outstanding. The investments of each Longer Term Portfolio
are valued by an independent pricing service approved by the Fund's Board of
Directors, 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 of Directors. For further information regarding the
methods employed in valuing each Longer Term Portfolio's investments, see
"Determination of Net Asset Value" in the Statement of Additional
Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
FUND EXCHANGES
You may purchase up to four times a calendar year, in exchange for
shares of a Portfolio, shares in one of the other Portfolios or shares 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.
If you desire to use this service please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. You will
be charged a $5.00 fee for each exchange you make out of a Portfolio. This
fee will be deducted from your account and paid to the Transfer Agent.
To request an exchange you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange into a fund
offered by another prospectus, you must obtain and should review a copy of
the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Except in the case of
Personal Retirement Plans, the shares being exchanged must have a current
value of at least $1,000; 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 relevant "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, or by a separate signed Shareholder Services Form, also available by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if you are calling from overseas, call 1-401-455-3306. See "How to Redeem
Fund Shares_Procedures." 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, Wire Redemption
Privilege, Telephone Redemption Privilege, and the dividend/capital gain
distribution option 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 into funds
sold with a sales load. If you are exchanging 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 of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
Page 21
acquired through reinvestment of dividends or distributions paid with respect
to the foregoing categories of shares. To qualify, at the time of your
exchange you must notify the Transfer Agent. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Exchange Privilege" in the Statement of Additional Information.
The Fund reserves the right to reject any exchange request in whole or in
part and will reject any request to exchange out of one of the Portfolios in
excess of four during any calendar year. The availability of fund exchanges
may be modified or terminated at any time upon notice to shareholders.
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.
HOW TO REDEEM FUND 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.
You will be charged $5.00 when you redeem all shares in your account
or your account is otherwise closed out. The fee will be deducted from your
redemption proceeds and paid to the Transfer Agent. The account closeout fee
does not apply to exchanges out of a Portfolio or to wire redemptions, for
each of which a $5.00 fee applies. Securities dealers, banks and other
financial institutions may charge a nominal fee for effecting redemptions of
Portfolio shares. Any certificates representing Portfolio 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 Portfolio'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 PORTFOLIO SHARES BY CHECK AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, YOUR
REDEMPTION WILL BE EFFECTIVE AND THE REDEMPTION PROCEEDS WILL BE TRANSMITTED
TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, 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 BY WIRE OR TELEPHONE, FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK 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. 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 45 days' written notice if your account's net asset value is
$10,000 or less in the case of the Money Market Portfolio or $5,000 or less
in the case of a Longer Term Portfolio and remains so during the notice
period. The $5.00 account closeout fee would be charged in such case.
PROCEDURES -- You may redeem Portfolio shares by using the regular redemption
procedure through the Transfer Agent, the Check Redemption Privilege, the
Wire Redemption Privilege or the Telephone Redemption Privilege. The Fund
makes available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Portfolio shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person
Page 22
representing himself or herself to be you 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 Portfolio 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, a Longer Term Portfolio's net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." 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 call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $5,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- You may request on the Account Application,
Shareholder Services Form or by later written request, that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $1,000 or more. Potential
fluctuations in the net asset value of the shares of each Longer Term
Portfolio should be considered in determining the amount of the check.
Redemption Checks should not be used to close your account. Your account will
be charged $2.00 for each Redemption Check you write. The Transfer Agent also
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. The Fund may return unpaid a
Redemption Check that would draw your account balance below $5.00 and you may
be subject to extra charges. You should date your Redemption Checks with the
current date when you write them. Please do not post-date your Redemption
Checks. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all post-dated Redemption Checks
which are dated within six months of presentment for payment, if they are
otherwise in good order. Shares for which certificates have been issued may
not be redeemed by Redemption Check. This Privilege may be modified or
terminated at any time by the Fund or the Transfer Agent upon notice to
shareholders.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $5,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You will be charged a $5.00 wire redemption fee for
each wire redemption, which will be deducted from your account and paid to
the Transfer Agent. To establish the Wire Redemption Privilege, you must
check the appropriate box and
Page 23
supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day) made out to the owners of record and mailed to your
address. Redemption proceeds of less than $5,000 will be paid automatically
by check. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of not more than $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. The Fund reserves the right
to refuse any redemption request, including requests made shortly after a
change of address, and may limit the amount involved or the number of such
requests. This Privilege may be modified or terminated at any time by the
Transfer Agent or the Fund. The Fund's Statement of Additional Information
sets forth instructions for transmitting redemption requests by wire. Shares
for which certificates have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE -- You may redeem Portfolio shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. 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 telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares for which certificates have been issued are not eligible for this
Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus Corporation, an amount not to exceed an annual rate of .25 of l%
of the value of each Portfolio's average daily net assets for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Portfolio and providing reports and other information, and
services related to the maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio ordinarily declares dividends from its net investment
income on each day the New York Stock Exchange is open for business.
Dividends usually are paid on the last business day of each month (calendar
day in the case of the Money Market Portfolio) and are automatically
reinvested in additional Portfolio shares at net asset value or, at your
option, paid in cash. The Portfolio's earnings for Saturdays, Sundays and
holidays are declared as dividends on the preceding business day in the case o
f the Money Market Portfolio and on the next business day in the case of the
Longer Term Portfolio. With respect to each Longer Term Portfolio, Portfolio
shares begin earning income dividends on the day following the date of
purchase. 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, after deduction of any fees. Distributions
from net realized securities gains, if any, generally are declared and paid
once a year, but each Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the Investment Company Act of
1940. No Portfolio will make distributions from net realized securities gains
unless capital loss carryovers, if any, have been utilized or have expired.
You may choose whether to receive distributions in cash or to reinvest in
additional Portfolio shares at net asset value. All expenses are accrued
daily and deducted before declaration of dividends to investors.
Except for dividends from Taxable Investments, each Portfolio
anticipates that substantially all dividends paid by such Portfolio will not
be subject to Federal income tax. Dividends derived from Taxable Investments,
Page 24
together with distributions from 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 a Portfolio are subject to Federal
income tax as ordinary income whether or not reinvested. No dividend paid by
a Portfolio will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions from net realized long-term
securities gains of each Portfolio generally are taxable as long-term capital
gains for Federal income tax purposes if you are a citizen or resident of the
United States. 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 Portfolio shares which is deemed to relate to
exempt-interest dividends is not deductible. Dividends and distributions may
be subject to state and local taxes.
Taxable dividends derived from net investment income, together with
distributions from 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 a Portfolio to a foreign investor generally
are subject to U.S. nonresident withholding taxes at the rate of 30%, unless
the foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by a
Portfolio to a foreign investor as well as, in the case of a Longer Term
Portfolio, the proceeds of any redemptions from a foreign investor's account,
regardless of the extent to which gains or loss may be realized, generally
will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Although all or a substantial portion of the dividends paid by a
Portfolio may be excluded by its shareholders from their gross income for
Federal income tax purposes, such Portfolio may purchase specified private
activity bonds, the interest from which may be (i) a preference item for
purposes of the alternative minimum tax, (ii) a component of the "adjusted
current earnings" preference item for purposes of the corporate alternative
minimum tax as well as a component in computing the corporate environmental
tax or (iii) a factor in determining the extent to which a shareholder's
Social Security benefits are taxable. If a Portfolio purchases such
securities, the portion of its 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 a Portfolio. If a Portfolio
pays dividends derived from taxable income, it intends to designate as
taxable the same percentage of the day's dividend as the actual taxable
income earned on that day bears to total income earned on that day. Thus, the
percentage of the dividend designated as taxable, if any, may vary from day
to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains of a Portfolio and, in the
case of a Longer Term Portfolio, the proceeds of redemption, regardless of
the extent to which gain or loss may be realized, paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or 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
Page 25
income tax return.
Management of the Fund believes that each Portfolio has qualified for
the fiscal year ended August 31, 1994 as a "regulated investment company"
under the Code. Each Portfolio intends to continue to so qualify if such
qualification is in the best interests of its shareholders. Qualification as
a "regulated investment company" relieves the Portfolio of any liability for
Federal income taxes to the extent its earnings are distributed in accordance
with applicable provisions of the Code. In addition, each Portfolio is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on August 8, 1991, and
commenced operations on December 16, 1991. On December 24, 1992, the Fund's
name was changed from Dreyfus Investors Municipal Money Market Fund, Inc. to
Dreyfus BASIC Municipal Money Market Fund, Inc., and, on October 21, 1994, to
Dreyfus BASIC Municipal Fund, Inc. The Fund is authorized to issue four
billion shares of Common Stock, (with three billion shares allocated to the
Money Market Portfolio and 500 million shares allocated to each Longer Term
Portfolio) par value $.001 per share. Each share has one vote.
Unless otherwise required by the Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
shareholders. As a result, Fund shareholders may not consider each year the
election of Directors or the appointment of auditors. However, pursuant to
the Fund's By-Laws, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Fund to hold a special meeting of
shareholders for purposes of removing a Director from office and for any
other purpose. Fund shareholders may remove a Director by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Fund's Board of Directors will call a meeting of shareholders for the purpose
of electing Directors if, at any time, less than a majority of the Directors
then holding office have been elected by shareholders.
To date, the Fund's Board of Directors has authorized the creation of
three series of shares. All consideration received by the Fund for shares of
one of the Portfolios and all assets in which such consideration is invested
will belong to that Portfolio (subject only to the rights of creditors of the
Fund) and will be subject to the liabilities related thereto. The income
attributable to, and the expenses of, one Portfolio are treated separately
from those of the other Portfolios. The Fund has the ability to create, from
time to time, new portfolios without shareholder approval.
Rule 18f-2 under the Investment Company Act of 1940 provides that any
matter required to be submitted under the provisions of the Investment
Company Act of 1940 or applicable state law or otherwise to the holders of
the outstanding voting securities of an investment company, such as the Fund,
will not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Portfolio affected by
such matter. Rule 18f-2 further provides that a Portfolio shall be deemed to
be affected by a matter unless it is clear that the interests of each
Portfolio in the matter are identical or that the matter does not affect any
interest of such Portfolio. However, the Rule exempts the selection of
independent accountants and the election of Directors from the separate
voting requirements of the Rule.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561. In New York City, call 1-718-895-1206; on Long Island, call
794-5452.
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
Page 26
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 27
##
Basic Municipal Fund, Inc.
* Dreyfus BASIC Municipal
Money Market Portfolio
* Dreyfus BASIC Intermediate
Municipal Bond Portfolio
* Dreyfus BASIC Municipal
Bond Portfolio
Prospectus
Registration Mark
Copy Rights 1994 Dreyfus Service Corporation
BMFP2123094
DREYFUS BASIC MUNICIPAL FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
DECEMBER 30, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus BASIC Municipal Fund, Inc. (the "Fund"), dated December 30, 1994, as
it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
On Long Island -- Call 794-5452
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-12
Management Agreement. . . . . . . . . . . . . . . . . . . . B-15
Shareholder Services Plan . . . . . . . . . . . . . . . . . B-17
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-17
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-18
Fund Exchanges. . . . . . . . . . . . . . . . . . . . . . . B-20
Determination of Net Asset Value. . . . . . . . . . . . . . B-22
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-23
Performance Information . . . . . . . . . . . . . . . . . . B-25
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-27
Information About the Fund. . . . . . . . . . . . . . . . . B-27
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . B-28
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . B-29
Financial Statements and Reports of Independent Auditors
Money Market Portfolio . . . . . . . . . . . . . . . . B-37
Intermediate Bond Portfolio . . . . . . . . . . . . . B-50, B-72
Bond Portfolio . . . . . . . . . . . . . . . . . . . . B-60, B-82
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Description of the
Fund."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended August 31, 1994 for the
Money Market Portfolio, and for the periods May 5 and 6, 1994 (commencement
of operations of the Intermediate Bond Portfolio and Bond Portfolio,
respectively) through August 31, 1994 for each Longer Term Portfolio, in
each case computed on a monthly basis, was as follows:
<TABLE>
Fitch or Moody's or Standard &
Investors Investors Poor's Percentage of Value
Service, Inc. Service, Inc. Corporation Money Market Intermediate Bond Portfolio
("Fitch") ("Moody's") ("S&P") Portfolio Bond Portfolio
- ------------- ------------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
F1+/F1 MIG 1/VMIG 1, SP-1+/SP-1, 92.5% 12.4% 14.0%
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA 5.3% 31.3% 15.8%
AA Aa AA - 22.0% 29.6%
A A A - 14.4% 20.2%
BBB Baa BBB - 19.1% 17.0%
BB Ba BB - 0.8% 1.2%
B B B - - 2.2%
Not Rated Not Rated Not Rated 2.2% - -
-------- ------- ----------
100.0% 100.0% 100.0%
====== ====== =======
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated housing
facilities, sports facilities, convention or trade show facilities, airport,
mass transit, industrial, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although current tax laws
place substantial limitations on the size of such issues. Such obligations
are considered to be Municipal Obligations if the interest paid thereon
qualifies as exempt from Federal income tax in the opinion of bond counsel
to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal (upon not more than
30 days' notice in the case of the Money Market Portfolio) at any time or at
specified intervals, which, in the case of the Money Market Portfolio, may
not exceed 13 months. 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 management fee, as well as other operating expenses,
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, disposition of the property in the event of foreclosure
might prove difficult. The Money Market Portfolio will seek to minimize
these risks by investing only in those lease obligations that (1) are rated
in one of the two highest rating categories for debt obligations by at least
two nationally recognized statistical rating organizations (or one rating
organization if the lease obligation was rated only by one such
organization); or (2) if unrated, are purchased principally from the issuer
or domestic banks or other responsible third parties, in each case only if
the seller shall have entered into an agreement with the Money Market
Portfolio providing that the seller or other responsible third party will
either remarket or repurchase the lease obligation within a short period
after demand by such Portfolio. 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
the 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 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. Accordingly, not more than 15% (10% in the case
of the Money Market Portfolio) of the value of a Portfolio's net assets will
be invested in lease obligations that are illiquid and in other illiquid
securities.
The Money Market Portfolio will not purchase tender option bonds unless
(a) the demand feature applicable thereto is exercisable by such Portfolio
within 13 months of the date of such purchase upon no more than 30 days'
notice and thereafter is exercisable by the Portfolio no less frequently
than annually upon no more than 30 days' notice and (b) at the time of such
purchase, the Manager reasonably expects (i) based upon its assessment of
current and historical interest rate trends, that prevailing short-term tax
exempt rates will not exceed the stated interest rate on the underlying
Municipal Obligations at the time of the next tender fee adjustment and (ii)
that the circumstances which might entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. At the time of each tender opportunity, the Money
Market Portfolio will exercise the tender option with respect to any tender
option bonds unless the Manager reasonably expects, (x) based upon its
assessment of current and historical interest rate trends, that prevailing
short-term tax exempt rates will not exceed the stated interest rate on the
underlying Municipal Obligations at the time of the next tender fee
adjustment, and (y) that the circumstances which entitle the grantor of a
tender option to terminate the tender option would not occur prior to the
time of the next tender opportunity. The Money Market Portfolio will
exercise the tender feature with respect to tender option bonds, or
otherwise dispose of its tender option bonds, prior to the time the tender
option is scheduled to expire pursuant to the terms of the agreement under
which the tender option is granted. The Money Market Portfolio otherwise
will comply with the provisions of Rule 2a-7 in connection with the purchase
of tender option bonds, including, without limitation, the requisite
determination by the Fund's Board of Directors that the tender option bonds
in question meet the quality standards described in Rule 2a-7, which, in the
case of a tender option bond subject to a conditional demand feature, would
include a determination that the security has received both the required
short-term and long-term quality rating or is determined to be of comparable
quality. In the event of a default of the Municipal Obligation underlying a
tender option bond, or the termination of the tender option agreement, the
Money Market Portfolio would look to the maturity date of the underlying
security for purposes of compliance with Rule 2a-7 and, if its remaining
maturity was greater than 13 months, the Fund would sell the security as
soon as would be practicable.
A Longer Term Portfolio will purchase tender option bonds only when the
Fund is satisfied that the custodial and tender option 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 such Portfolio. 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.
For the purpose of diversification under the Investment Company Act of
1940, as amended (the "Act"), the identification of the issuer of Municipal
Obligations depends on the terms and conditions of the security. When the
assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
subdivision and the security is backed only by the assets and revenues of
the subdivision, such subdivision would be deemed to be the sole issuer.
Similarly, in the case of an industrial development bond, if that bond is
backed only by the assets and revenues of the non-governmental user, then
such non-governmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other entity
guarantees a security, such a guaranty would be considered a separate
security and will be treated as an issue of such government or other entity.
Ratings of Municipal Obligations. If, subsequent to being purchased by
the Money Market Portfolio, (a) an issue of rated Municipal Obligations
ceases to be rated in the highest rating category by at least two rating
organizations (or one rating organization if the instrument was rated by
only one organization), or the Fund's Board of Directors determines that it
is no longer of comparable quality; or (b) the Manager becomes aware that
any portfolio security not so highly rated or any unrated security has been
given a rating by any rating organization below the rating organization's
second highest rating category, the Fund's Board of Directors will reassess
promptly whether such security presents minimal credit risk and will cause
the Money Market Portfolio to take such action as it determines is in the
best interest of the Money Market Portfolio and its shareholders, provided
that the reassessment required by clause (b) is not required if the
portfolio security is disposed of or matures within five business days of
the Manager becoming aware of the new rating and the Fund's Board of
Directors is subsequently notified of the Manager's actions. Subsequent to
being purchased by a Longer Term Portfolio, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the
minimum required for purchase by such Portfolio. Neither event will require
the sale of such Municipal Obligations by a Longer Term Portfolio, but the
Manager will consider such event in determining whether the Portfolio should
continue to hold the Municipal Obligations.
To the extent the ratings 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 Portfolio investments in accordance with the investment policies
contained in the 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 and the creditworthiness of the issuers of
such securities.
Futures Contracts and Options on Futures Contracts (Longer Term
Portfolios only). For each Longer Term Portfolio, upon exercise of an
option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in the
writer's futures margin account, which represents the amount by which the
market price of the futures contract exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of options on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the time of
sale, there are no daily cash payments to reflect changes in the value of
the underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Longer Term
Portfolio.
Lending Portfolio Securities (Longer Term Portfolios only). To a
limited extent, each Longer Term Portfolio may lend its portfolio securities
to brokers, dealers and other financial institutions, provided it receives
cash collateral which at all times is maintained in an amount equal to at
least 100% of the current market value of the securities loaned. By lending
its securities, a Longer Term Portfolio can increase its income through the
investment of the cash collateral. For purposes of this policy, the Fund
considers collateral consisting of U.S. Government securities or irrevocable
letters of credit issued by banks whose securities meet the standards for
investment by the Longer Term Portfolio to be the equivalent of cash. From
time to time, 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 Longer Term Portfolio 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 Longer Term Portfolio must be able to terminate the loan at any
time; (4) the Longer Term Portfolio must receive reasonable interest on the
loan, as well as any dividends, interest or other distributions payable on
the loaned securities, and any increase in market value; and (5) the Longer
Term Portfolio may pay only reasonable custodian fees in connection with the
loan. These conditions may be subject to future modification.
Short Sales (Longer Term Portfolios only). Until the Portfolio
replaces a borrowed security in connection with a short sale, the Portfolio
will: (a) maintain daily a segregated account, containing cash or U.S.
Government securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral will equal
the current value of the security sold short and (ii) the amount deposited
in the segregated account plus the amount deposited with the broker as
collateral will not be less than the market value of the security at the
time it was sold short; or (b) otherwise cover its short position.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as amended, for certain restricted securities held by any
Portfolio, 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 Portfolio's 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, a Portfolio's investing in such securities
may have the effect of increasing the level of illiquidity in the
Portfolio'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. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the U.S. Treasury; others, such as those
issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates of
interest. Interest may fluctuate based on generally recognized reference
rates or the relationship of rates. While the U.S. Government provides
financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so,
since it is not so obligated by law. A Portfolio will invest in such
securities only when the Fund is satisfied that the credit risk with respect
to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by a Portfolio 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.
Repurchase agreements involve the acquisition by a Portfolio of an
underlying debt instrument subject to an obligation of the seller to
repurchase, and such Portfolio to resell, the instrument at a fixed price,
usually not more than one week after its purchase. The Fund's custodian or
sub-custodian will have custody of, and will hold in a segregated account,
securities acquired by the Portfolio under a repurchase agreement.
Repurchase agreements are considered by the Staff of the Securities and
Exchange Commission to be loans by the Portfolio that enters into them. In
an attempt to reduce the risk of incurring a loss on a repurchase agreement,
a Portfolio will enter into repurchase agreements only with domestic banks
with total assets in excess of one billion dollars or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Portfolio may invest, and
will require that additional securities be deposited with it if the value of
the securities purchased should decrease below resale price. The Manager
will monitor on an ongoing basis the value of the collateral to assure that
it always equals or exceeds the repurchase price. Certain costs may be
incurred by a Portfolio in connection with the sale of the securities if the
seller does not repurchase them in accordance with the repurchase agreement.
In addition, if bankruptcy proceedings are commenced with respect to the
seller of the securities, realization on the securities by a Portfolio may
be delayed or limited. Each Portfolio will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into repurchase
agreements.
Risk Factors
Lower Rated Bonds. This section applies to each Longer Term Portfolio
only. Lower rated bonds as described herein are not eligible investments
for the Money Market Portfolio. Each Longer Term Portfolio is permitted to
invest in securities rated below Baa by Moody's and below BBB by S&P or
Fitch. Such bonds, though higher yielding, are characterized by risk. See
in the Prospectus "Risk Factors--Lower Rated Bonds" for a discussion of
certain risks and "Appendix" for a general description of Moody's, S&P and
Fitch ratings of Municipal Obligations. 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. Each Longer Term Portfolio
will rely on the Manager's judgment, analysis and experience in evaluating
the creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond held
by a Longer Term Portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether the Portfolio should
continue to hold the bond.
Investors should be aware that the market values of many of these bonds
tend to be more sensitive to economic conditions than are higher rated
securities. These bonds generally are considered by Moody's, S&P and Fitch
to be predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation and generally
will involve more credit risk than securities in the higher rating
categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market price
and yield and a Longer Term Portfolio's ability to dispose of particular
issues when necessary to meet its liquidity needs or in response to a
specific economic event such as a deterioration in the creditworthiness of
the issuer. The lack of a liquid secondary market for certain securities
also may make it more difficult for a Longer Term Portfolio to obtain
accurate market quotations for purposes of valuing its portfolio and
calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play
a greater role in valuation because less reliable, objective data may be
available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could severely disrupt the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn could
adversely affect the ability of the issuers of such securities to repay
principal and pay interest thereon and increase the incidence of default of
such securities.
Each Longer Term Portfolio may acquire these bonds during an initial
offering. Such securities may involve special risks because they are new
issues. Neither Longer Term Portfolio has any arrangements with the
Distributor or any other persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
Lower rated zero coupon securities, in which each Longer Term Portfolio
may invest up to 5% of its total assets, involve special consideration. The
credit risk factors pertaining to lower rated securities also apply to lower
rated zero coupon bonds. Such zero coupon bonds carry an additional risk in
that, unlike bonds which pay interest throughout the period to maturity, the
Portfolio will realize no cash until the cash payment date unless a portion
of such securities are sold and, if the issuer defaults, the Longer Term
Portfolio may obtain no return at all on its investment. See "Dividends,
Distributions and Taxes."
Investment Restrictions
Money Market Portfolio. The Money Market Portfolio has adopted
investment restrictions numbered 1 through 10 as fundamental policies.
Fundamental policies cannot be changed without approval by the holders of a
majority (as defined in the Act) of the Money Market Portfolio's outstanding
voting shares. Investment restriction number 11 is a non-fundamental policy
and may be changed by a vote of a majority of the Fund's Directors at any
time. The Money Market Portfolio may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Portfolio's
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that the
Portfolio 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.
6. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Portfolio from investing in Municipal
Obligations secured by real estate or interests therein.
7. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements referred to above and
in the Fund's Prospectus.
8. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
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.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of its net assets would be so invested.
Intermediate Bond Portfolio and Bond Portfolio. Each Longer Term
Portfolio has adopted investment restrictions numbered 1 through 7 as
fundamental policies. Fundamental policies cannot be changed, as to a
Portfolio, without approval by the holders of a majority (as defined in the
Act) of such Portfolio's outstanding voting shares. Investment restrictions
numbered 8 through 13 are non-fundamental policies and may be changed by
vote of a majority of the Fund's Directors at any time. Neither Longer Term
Portfolio may:
1. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
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 Act. 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 Portfolio from
investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Portfolio 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
Portfolio 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 Portfolio 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 Portfolio
may lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Directors.
6. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent that the activities permitted in
Investment Restrictions numbered 2, 3, 10 and 11 may be deemed to give rise
to a senior security.
7. Purchase securities on margin, but the Portfolio may take 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 Prospectus.
9. Invest in securities of other investment companies, except to the
extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
11. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Fund's Prospectus and Statement of Additional
Information.
12. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests (including municipal
lease/purchase agreements) and floating and variable rate demand obligations
as to which the Portfolio cannot exercise the demand feature as described in
the Prospectus on less than seven days' notice and as to which there is no
secondary market), if, in the aggregate, more than 15% of its net assets
would be so invested.
13. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 8 with respect to the Money
Market Portfolio, and Investment Restriction No. 1 with respect to each
Longer Term Portfolio, 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." If a percentage
restriction is adhered to at the time of investment, a later increase or
decrease 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 Portfolio shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of the Portfolio and its shareholders, the Fund reserves the right
to revoke the commitment by terminating the sale of such Portfolio's shares
in the state involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors of the Fund
*DAVID W. BURKE, Director. Consultant to the Manager. From October 1990 to
August 1994, he was Vice President and Chief Administrative Officer of
the Manager. From 1977 to 1990, Mr. Burke was involved in the
management of national television news, as Vice President and Executive
Vice President of ABC News, and subsequently as President of CBS News.
His address is 200 Park Avenue, New York, New York 10166.
SAMUEL CHASE, Director. Since 1982, President of Samuel Chase & Company,
Ltd., and from 1983 to December 1989, Chairman of Chase, Brown &
Blaxall, Inc., economic consulting firms. His address is 4410
Massachusetts Avenue, N.W., Suite 408, Washington, D.C. 20016.
JONI EVANS, Director. Senior Vice President of the William Morris Agency.
From September 1987 to May 1993, Executive Vice President of Random
House Inc. and, from January 1991 to May 1993, President and Publisher
of Turtle Bay Books; from January 1987 to December 1990, Publisher of
Random House-Adult Trade Division; from September 1985 to September
1987, President of Simon and Schuster-Trade Division. Her address is
1350 Avenue of the Americas, New York, New York 10019.
ARNOLD S. HIATT, Director. Chairman of The Stride Rite Foundation. From
1969 to June 1992, Chairman of the Board, President or Chief Executive
Officer of The Stride Rite Corporation, a multi-divisional footwear
manufacturing and retailing company. Mr. Hiatt is also a director of
The Cabot Corporation. His address is 400 Atlantic Avenue, Boston,
Massachusetts 02110.
DAVID J. MAHONEY, Director. President of David Mahoney Ventures since 1983.
From 1968 to 1983, he was Chairman and Chief Executive Officer of
Norton Simon Inc., a producer of consumer products and services. Mr.
Mahoney is also a director of National Health Laboratories Inc.,
Blonaire, Inc., and Good Samaritan Health Systems, Inc. His address is
745 Fifth Avenue, Suite 700, New York, New York 10151.
BURTON N. WALLACK, Director. President and co-owner of Wallack Management
Company, a real estate management company managing real estate in the
New York City area. His address is 18 East 64th Street, Suite 3D, New
York, New York 10021.
Each of the "non-interested" Directors is also a director of Dreyfus
California Tax Exempt Bond Fund, Inc., Dreyfus Connecticut Municipal Money
Market Fund, Inc., Dreyfus GNMA Fund, Inc., Dreyfus Intermediate Municipal
Bond Fund, Inc., Dreyfus Michigan Municipal Money Market Fund, Inc., Dreyfus
New Jersey Municipal Money Market Fund, Inc., Dreyfus New York Tax Exempt
Bond Fund, Inc. and Dreyfus Ohio Municipal Money Market Fund, Inc., and a
trustee of Dreyfus Massachusetts Municipal Money Market Fund, Dreyfus
Massachusetts Tax Exempt Bond Fund, Dreyfus New York Tax Exempt Intermediate
Bond Fund, Dreyfus New York Tax Exempt Money Market Fund and Dreyfus
Pennsylvania Municipal Money Market Fund.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund who
are not "interested persons" of the Fund, as defined in the Act, will be
selected and nominated by the Directors who are not "interested persons" of
the Fund.
The Fund does not pay any remuneration to its officers and Directors
other than fees and expenses to Directors who are not "interested persons"
of the Fund, which totalled $8,182 for the fiscal year ended August 31, 1994
for all such Directors as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer 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., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc.
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. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray, and prior to August 1990, he was employed as
an Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was manager of the High Performance Fabric Division of Springs
Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate General
Counsel of the Distributor and an officer of other investment companies
advised or administered by the Manager. From September 1992 to August
1994, he was an attorney with the Board of Governors of the Federal
Reserve System.
JOSEPH F. TOWER, III, 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.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From 1984 to July 1994, was Assistant Vice President in the
Mutual Fund Accounting Department of the Manager.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was a
Senior Legal Product Manager and, from January 1990 to January 1992, he
was mutual fund accountant for The Boston Company Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
each Portfolio's common stock outstanding on December 14, 1994.
The following entity is known by the Fund to be the holder of record of
5% or more of the Bond Portfolio's shares of common stock outstanding as of
December 14, 1994: Frank Beckerman, 19500 Turnberry Way, North Miami Beach,
FL 33180, 92,427.640 (6.20%).
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") dated August 24, 1994, with the Fund. As to
each Portfolio, the Agreement is subject to annual approval by (i) the
Fund's Board of Directors or (ii) vote of a majority (as defined in the Act)
of the outstanding voting securities of such Portfolio, provided that in
either event the continuance also is approved by a majority of the Directors
who are not "interested persons" (as defined in the Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Agreement was approved by shareholders of each
Portfolio on August 2, 1994. It was last approved by the Fund's Board of
Directors, including a majority of the Directors who are not "interested
persons" of any party to the Agreement, at a meeting held on February 16,
1994. As to each Portfolio, the Agreement is terminable without penalty, on
60 days' notice, by the Fund's Board of Directors or by vote of the holders
of a majority of such Portfolio's shares, or, on not less than 90 days'
notice, by the Manager. The Agreement will terminate automatically, as to
the relevant Portfolio, in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; Julian M.
Smerling, Vice Chairman of the Board of Directors; Joseph S. DiMartino,
President and a director; W. Keith Smith, Chief Operating Officer and a
director; Paul H. Snyder, Vice President and Chief Financial Officer; Daniel
C. Maclean III, General Counsel and Vice President; Elie M. Genadry, Vice
President-Wholesale; Henry D. Gottmann, Vice President-Retail; Jeffrey N.
Nachman, Vice President-Fund Administration; Philip L. Toia, Vice Chairman-
Operations and Administration; Lawrence S. Kash, Vice Chairman-Distribution;
Jay R. DeMartine, Vice President-Marketing; Barbara E. Casey, Vice
President-Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Katherine C. Wickham, Vice President-Human Resources; Mark
N. Jacobs, Vice President-Fund Legal and Compliance; Maurice Bendrihem,
Controller; and Mandell L. Berman, Alvin E. Friedman, Lawrence M. Greene,
Frank V. Cahouet and David B. Truman, directors.
The Manager manages each Portfolio's investments in accordance with the
stated policies of the Portfolio, subject to the approval of the Fund's
Board of Directors. The Manager is responsible for investment decisions,
and provides the Fund with portfolio managers who are authorized by the
Fund's Board of Directors 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, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as for other funds advised by the Manager. All purchases and sales
are reported for the Directors' review at the meeting subsequent to such
transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of certain Board members,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of shareholders' reports and corporate meetings, costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Expenses attributable to a particular Portfolio are
charged against the assets of that Portfolio; other expenses of the Fund are
allocated among the Portfolio on the basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the
net assets of each Portfolio.
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.
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .50 of 1% of the
value of the Money Market Portfolio's average daily net assets and .60 of 1%
of the value of each of the Longer Term Portfolio's average daily net
assets. All fees and expenses are accrued daily and deducted before the
declaration of dividends to shareholders. For the period December 16, 1991
(commencement of operations of the Money Market Portfolio) through August
31, 1992, and for the fiscal years ended August 31, 1993 and 1994, no
management fee was paid by the Fund with respect to the Money Market
Portfolio pursuant to an undertaking by the Manager. For the periods May 5
and 6, 1994 (commencement of operations of the Intermediate Bond Portfolio
and Bond Portfolio, respectively) through August 31, 1994, no management fee
was paid by the Fund with respect to the Longer Term Portfolios, pursuant to
separate undertakings by the Manager.
As to each Portfolio, the Manager has agreed that if in any fiscal year
the aggregate expenses of such Portfolio, exclusive of taxes, brokerage,
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 a Portfolio's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services
Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager, for certain allocated expenses of providing
personal services and/or maintaining shareholder accounts. The services
provided may include personal services relating to shareholder accounts,
such an answering shareholder inquiries and providing reports and other
information, and services related to the maintenance of shareholder
accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Fund's Board of Directors for their review. In addition, the Plan provides
that material amendments of the Plan must be approved by the Fund's Board of
Directors, and by the Directors who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial interest in
the operation of the Plan, by vote cast in person at a meeting called for
the purpose of considering such amendments. The Plan is subject to annual
approval by such vote of the Directors cast in person at a meeting called
for the purpose of voting on the Plan. The Plan is terminable at any time
with respect to each Portfolio by vote of a majority of the Directors who
are not "interested persons" and have no direct or indirect financial
interest in the operation of the Plan.
For the fiscal year ended August 31, 1994, $265,786 was chargeable to
the Money Market Portfolio under the Plan. No amounts were charged to the
Longer Term Portfolios pursuant to separate undertakings by the Manager.
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Using Federal Funds. The following information is applicable to the
Money Market Portfolio only. The Shareholder Services Group, Inc., the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), or the
Fund may attempt to notify the investor upon receipt of checks drawn on
banks that are not members of the Federal Reserve System as to the possible
delay in conversion into Federal Funds and may attempt to arrange for a
better means of transmitting the money. If the investor is a customer of a
securities dealer, bank or other financial institution and his order to
purchase Money Market Portfolio shares is paid for other than in Federal
Funds, the securities dealer, bank or other financial institution 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 Money Market
Portfolio shares placed by an investor with sufficient Federal Funds or cash
balance in his brokerage account with a securities dealer, bank or other
financial institution will become effective on the day that the order,
including Federal Funds, is received by the Transfer Agent.
Transactions Through Securities Dealers. Portfolio shares may be
purchased and redeemed through securities dealers which may charge a nominal
transaction fee for such services. Some dealers will place Portfolio shares
in an account with their firm. Dealers also may require that the customer
not take physical delivery of stock certificates; the customer not request
redemption checks to be issued in the customer's name; fractional shares not
be purchased; monthly income distributions be taken in cash; or other
conditions.
There is no sales charge by the Fund or the Distributor, although
securities dealers, banks and other institutions may make reasonable charges
to investors for their services. The services provided and the applicable
fees are established by each dealer or other institution acting
independently of the Fund. The Fund has been given to understand that these
fees may be charged for customer services including, but not limited to,
same-day investment of client funds; same-day access to client funds; advice
to customers about the status of their accounts, yield currently being paid
or income earned to date; provision of periodic account statements showing
security and money market positions; other services available from the
dealer, bank or other institution; and assistance with inquiries related to
their investment. Any such fees will be deducted monthly from the
investor's account, which on smaller accounts could constitute a substantial
portion of distributions. Small, inactive, long-term accounts involving
monthly service charges may not be in the best interest of investors.
Investors should be aware that they may purchase Portfolio shares directly
from the Fund without imposition of any maintenance or service charges,
other than those already described herein. In some states, banks or other
institutions effecting transactions in Portfolio shares may be required to
register as dealers pursuant to state law.
Reopening an Account. An investor may reopen an account with a minimum
investment of $10,000 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.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Fund
Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application or later written request must be manually signed by
the registered owner(s). Checks may be made payable to the order of any
person in an amount of $1,000 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 shares in the
investor's account to cover the amount of the Check and the $2.00 charge.
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, plus any applicable charges, is greater
than the value of the shares in an investor's account, the Check will be
returned marked insufficient funds. Checks should not be used to close an
account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine. An
investor will be charged a $5.00 fee for each wire redemption, which will be
deducted from the investor's account and paid to the Transfer Agent.
Ordinarily, the Fund will initiate payment for Money Market Portfolio shares
redeemed pursuant to this Privilege on the same business day if the Transfer
Agent receives the redemption request in proper form prior to Noon on such
day; otherwise, and with respect to all Longer Term Portfolio shares
redeemed pursuant to this Privilege, the Fund will initiate payment on the
next business day. Redemption proceeds will be transferred by Federal
Reserve wire only to the commercial bank account specified by the investor
on the Account Application or Shareholder Services Form. Redemption
proceeds, if wired, must be in the amount of $5,000 or more and will be
wired to the investor's account at the bank of record designated in the
investor's file at the Transfer Agent, if the investor's bank is a member of
the Federal Reserve System, or to a correspondent bank if the investor's
bank is not a member. Fees ordinarily are imposed by such bank and usually
are borne by the investor. Immediate notification by the correspondent bank
to the investor's bank is necessary to avoid a delay in crediting the funds
to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
---------------- ------------------
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Stock 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 holder 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. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Portfolio, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Portfolio'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 of Directors reserves the right to make
payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the
Portfolio to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the portfolio of the
Portfolio is valued. If the recipient sold such securities, brokerage
charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund ordinarily utilities 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.
FUND EXCHANGES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Fund Exchanges."
Shares of other Portfolios of the Fund or other funds purchased by
exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the applicable sales
load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales load and
additional shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein as
"Purchased Shares") may be exchanged for 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.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor 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 relevant "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 from any
person representing himself or herself to be the investor, 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. Investors will be charged a $5.00 fee for each exchange
made out of the Fund, which will be deducted from the investor's account and
paid to the Transfer Agent.
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
required for the fund into which the exchange is being made. For
Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("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
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.
This Privilege is 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 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges Privilege may
be modified or terminated at any time upon notice to shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Fund Shares."
Amortized Cost Pricing. The information contained in this section is
applicable only to the Money Market Portfolio. The valuation of the Money
Market Portfolio's portfolio securities is based upon their amortized cost
which does not take into account unrealized capital gains or losses. This
involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
instrument. While this method provides certainty in valuation, it may
result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Portfolio would receive if it sold the
instrument.
The Fund's Board of Directors has established, as a particular
responsibility within the overall duty of care owed to the Money Market
Portfolio's investors, procedures reasonably designed to stabilize the
Portfolio's price per share as computed for purposes of sales and
redemptions at $1.00. Such procedures include review of the Money Market
Portfolio's portfolio holdings by the Fund's Board of Directors, at such
intervals as it deems appropriate, to determine whether the Money Market
Portfolio's net asset value calculated by using available market quotations
or market equivalents deviates from $1.00 per share based on amortized cost.
Market quotations and market equivalents used in such review are obtained
from an independent pricing service (the "Service") approved by the Fund's
Board of Directors. The Service values the Money Market Portfolio's
investments based on methods which include consideration of: yields or
prices of municipal bonds of comparable quality, coupon, maturity and type;
indications of values from dealers; and general market conditions. The
Service also may employ electronic data processing techniques and/or a
matrix system to determine valuations.
The extent of any deviation between the Money Market Portfolio's net
asset value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Fund's Board
of Directors. If such deviation exceeds 1/2 of 1%, the Fund's Board of
Directors will consider what actions, if any, will be initiated. In the
event the Fund's Board of Directors determines that a deviation exists which
may result in material dilution or other unfair results to investors or
existing shareholders, it has agreed to take such corrective action as it
regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market
quotations or market equivalents.
Valuation of Portfolio Securities. The information contained in this
section is applicable to each Longer Term Portfolio only. The investments
of each Longer Term Portfolio are valued each business day by an independent
pricing service (the "Service") approved by the Fund's Board of Directors.
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 Portfolio's officers under the general supervision of the Fund's Board
of Directors. Expenses and fees, including the management fee (reduced by
the expense limitation, if any), are accrued daily and are taken into
account for the purpose of determining the net asset value of Portfolio
shares.
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."
In the case of Money Market Portfolio's shares redeemed in connection
with any exchange or redemption fees, a shareholder will recognize a capital
loss in the amount of the fee paid. In the case of Longer Term Portfolio's
shares redeemed in connection with any exchange or redemption fees, such
fees will either decrease a capital gain or increase a capital loss realized
in such disposition. In general, such loss will be treated as a short-term
capital loss if the shares were held for one year or less, or, in the case
of shares held for greater than one year, a long-term capital loss.
The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six months
(or such shorter time as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be disallowed
to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gains
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 Longer
Term Portfolio from certain financial futures and options transactions will
be treated as 60% long-term capital gain or loss and 40% short-term capital
gain or loss. Gain or loss will arise upon exercise or lapse of such
futures and options as well as from closing transactions. In addition, such
futures and options remaining unexercised at the end of a Longer Term
Portfolio's taxable year will be treated as sold for their fair market
value, resulting in additional gain or loss to a Longer Term Portfolio
characterized in the manner described above.
Offsetting positions held by a Longer Term Portfolio involving certain
futures and options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section 1256.
As such, all or a portion of any short or long-term capital gain from
certain "straddle" transactions may be recharacterized to ordinary income.
If a Longer Term Portfolio 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 Portfolio may make one or more elections with
respect to "mixed straddles." Depending on which election is made, if any,
the results to the Portfolio may differ. If no election is made, to the
extent the "straddle" rules apply to positions established by the Portfolio,
losses realized by the Portfolio will be deferred to the extent of
unrealized gain in any offsetting positions. Moreover, as a result of the
"straddle" and "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 recharacterized to short-term capital gains
or ordinary income.
Investment by the Longer Term Portfolio in securities issued at a
discount or providing for deferred interest or for payment of interest in
the form of additional obligations could, under special tax rules, affect
the amount, timing and character of distributions to shareholders. For
example, a Longer Term Portfolio 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 qualifications as a regulated investment company. In that case, the
Portfolio may have to dispose of securities which might otherwise have
continued to hold in order to generate cash to satisfy these distribution
requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance
Information."
Money Market Portfolio. For the seven-day period ended August 31,
1994, the Money Market Portfolio's yield was 3.27% and effective yield was
3.32%. These yields reflect the waiver of a portion of the management fee
by the Manager, without which the Money Market Portfolio's seven-day yield
and effective yield for the period ended August 31, 1994 would have been
2.89% and 2.93%, respectively. See "Management of the Fund" in the
Prospectus. Yield is computed in accordance with a standardized method
which involves determining the net change in the value of a hypothetical
pre-existing Fund account having a balance of one share at the beginning of
a seven calendar day period for which yield is to be quoted, dividing the
net change by the value of the account at the beginning of the period to
obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value
of the account reflects the value of additional shares purchased with
dividends declared on the original share and any such additional shares and
fees that may be charged to shareholder accounts, in proportion to the
length of the base period and the Portfolio's average account size, but does
not include realized gains and losses or unrealized appreciation and
depreciation. Effective yield is computed by adding 1 to the base period
return (calculated as described above), raising that sum to a power equal to
365 divided by 7, and subtracting 1 from the result.
Based upon the highest 1994 Federal income tax rate of 39.6%, the Money
Market Portfolio's tax equivalent yield for the seven-day period ended
August 31, 1994 was 5.41%. Without the waiver of a portion of the
management fee discussed above then in effect, the Money Market Portfolio's
tax equivalent yield for the seven-day period ended August 31, 1994 would
have been 4.78%.
Longer Term Portfolios. The Intermediate Bond Portfolio's yield for
the 30-day period ended September 30, 1994 was 5.50%. The Bond Fund's yield
for the 30-day period ended September 30, 1994 was 5.88%. These yields
reflect the waiver of the management fee and absorbtion of the Fund's
expenses by the Manager, without which the Intermediate Bond Portfolio's
yield for the 30-day period ended September 30, 1994 would have been 5.05%
and the Bond Portfolio's yield for the 30-day period ended September 30,
1994 would have been 5.43%. See "Management of the Fund" in the Prospectus.
Current yield for a Longer Term Portfolio is computed pursuant to a formula
which operates as follows: the amount of the Portfolio's expenses accrued
for a 30-day period (net of reimbursements) is subtracted from the amount of
the dividends and interest earned (computed in accordance with regulatory
requirements) by it 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
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 a 1994 Federal income tax rate of 39.6%, the Intermediate
Bond Portfolio's tax equivalent yield for the 30-day period ended September
30, 1994 was 9.11% and the Bond Portfolio's tax equivalent yield for the 30-
day period ended September 30, 1994 was 9.74%. Without the waiver discussed
above then in effect, the Intermediate Bond Portfolio's tax equivalent yield
for the 30-day period ended September 30, 1994 would have been 8.36% and the
Bond Portfolio's tax equivalent yield for the 30-day period ended September
30, 1994 would have been 8.99%.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
The Intermediate Bond Portfolio's total return for the period May 5,
1994 (commencement of operations) to September 30, 1994 was 2.18%. The Bond
Portfolio's total return for the period May 6, 1994 (commencement of
operations) to September 30, 1994 was 2.57%. Total return is calculated by
subtracting the amount of the Portfolio's net asset value 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 dividing the result by the net asset
value per share at the beginning of the period.
All Portfolios. Tax equivalent yield is computed by dividing that
portion of the yield or effective 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 Portfolio that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The
tax equivalent 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 rate or yields. 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.
Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in a Portfolio is not
guaranteed. See "Determination of Net Asset Value" for a discussion of the
manner in which a Portfolio's price per share is determined.
From time to time, a Portfolio may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not indicative of the
Portfolio's past or future performance.
Advertising materials for a Portfolio also may refer to or discuss then
current or past economic conditions, developments, and/or events, including
those relating to actual or proposed legislation. From time to time,
advertising materials for a Portfolio also may 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 a Portfolio may refer to
Morningstar, Inc. ratings and related analysis supporting the ratings.
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 a Portfolio 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 any Portfolio to date.
Transactions are allocated to various dealers by a Portfolio'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 a Portfolio
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 a Portfolio. 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.
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 Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Portfolio shares are of one class and have equal rights as to dividends and
in liquidation. Shares have no preemptive, subscription or conversion
rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a subsidiary
of First Data Corporation, P.O. Box 9671, Providence, Rhode Island
02940-9671, is the Fund's transfer and dividend disbursing agent. Neither
The Bank of New York nor The Shareholder Services Group, Inc. has any part
in determining the investment policies of the Fund or which portfolio
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of Common Stock 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 certain 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.
BB, B, CCC, CC
Debt rated BB, B, CCC or CC is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to
pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or minus
sign designation, which is used to show relative standing within the major
rating categories, except in the AAA (Prime Grade) category.
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
The rating A is the highest rating and is assigned by S&P to issues
that 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. Paper rated A-1 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.
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 sometime 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.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize
the difference 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 description 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 Rating
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.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
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.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of interest
and/or principal payments. Such bonds are extremely speculative and should
be valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. DDD represents the highest potential for
recovery on these bonds and D represents lowest potential for recovery.
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
or the DDD, DD or D categories.
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 payment, but the margin of safety is not as
great as the F-1+ and
F-1 categories.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS--100.0% AMOUNT VALUE
---------------- ----------------
<S> <C> <C>
ALABAMA--3.6%
Alabama Industrial Development Authority, SWDR, VRDN (Pine City Fiber Co. Project)
3.30% (LOC; Barclays Bank) (a,b)........................................ $ 20,000,000 $ 20,000,000
Birmingham Medical Clinic Board, Revenue, VRDN (University of Alabama Health
Service Facilities) 3.15% (LOC; Morgan Guaranty Trust Co.) (a,b)........ 10,000,000 10,000,000
City of Phenix Industrial Development Board, EIR, VRDN (Mead Coated Board Project)
3.40%, Series A (LOC; Sumitomo Bank) (a,b).............................. 6,400,000 6,400,000
ARIZONA--.7%
Maricopa County Pollution Control Corp., PCR, Refunding, VRDN
(Arizona Public Service Co) 3.05%, Series E (LOC; Bank of America) (a,b) 7,000,000 7,000,000
CALIFORNIA--7.4%
State of California, RAN 3.75%, Series A, 12/21/94.......................... 15,000,000 15,024,352
California Higher Education Loan Authority Inc., Student Loan Revenue:
3.60%, Series A, 5/1/95 (LOC; Student Loan Marketing Association) (b)... 10,600,000 10,600,000
4%, Series C, 7/1/95 (LOC; Student Loan Marketing Association) (b)...... 10,000,000 10,000,000
California School Cash Reserve Program Authority,
4.50%, Series A, 7/5/95................................................. 10,000,000 10,060,727
Los Angeles County, TRAN 4.50%, 6/30/95..................................... 8,800,000 8,845,559
Los Angeles County Unified School District 4.50%, 7/10/95................... 11,175,000 11,257,925
Vista Community Development Commission, BAN, Refunding
3.375%, 11/1/94 (LOC; Sumitomo Bank) (b)................................ 10,000,000 10,000,000
COLORADO--.5%
Denver Urban Renewal Authority, Tax Increment Revenue (Downtown Denver Renewal)
3.15%, Series A, 9/8/94 (Collateralized; U.S. Treasury Bills)........... 4,940,000 4,940,000
DELAWARE--.4%
Delaware Health Facilities Authority, Revenue, Pooled Loan Program, VRDN
3.10% (BPA; Morgan Guaranty Trust Co. and Insured; MBIA) (a)............ 4,600,000 4,600,000
DISTRICT OF COLUMBIA--6.0%
District of Columbia, VRDN:
(General Fund Recovery):
3.35%, Series B (LOC; Sanwa Bank) (a,b)............................... 25,000,000 25,000,000
3.35%, Series B-2 (LOC; Sumitomo Bank) (a,b).......................... 19,100,000 19,100,000
3.35%, Series B-3 (LOC; Industrial Bank of Japan) (a,b)............... 11,000,000 11,000,000
Refunding 3.10%, Series A-5 (LOC; Mitsubishi Bank) (a,b)................ 5,800,000 5,800,000
FLORIDA--1.3%
Putnam County Development Authority, PCR (Seminole Electric Cooperative)
3.15%, Series D, 12/15/94
(Corp. Guaranty; National Rural Utilities Cooperative Finance Corp.).... 12,820,000 12,820,000
GEORGIA--2.1%
Georgia Hospital Financing Authority, Revenue, VRDN (Georgia Pooled Hospital
Loan Program) 3.25% (LOC; First Union National Bank) (a,b).............. 7,200,000 7,200,000
Municipal Electric Authority, General Resolution
3.05%, Series C, 3/1/95 (SBPA; Morgan Guaranty Trust Co.)............... 14,520,000 14,520,000
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
ILLINOIS--5.5%
City of Chicago, GO Tender Notes 3.15%, Series B, 10/31/94
(LOC: Dai-Ichi Kangyo Bank, Industrial Bank of Japan, Mitsubishi Bank,
Sanwa Bank and Sumitomo Bank) (b)....................................... $ 10,000,000 $ 10,000,000
State of Illinois, GO Notes 4.75%, 5/15/95.................................. 10,000,000 10,053,236
Illinois Development Finance Authority, Revenue, Refunding, VRDN (Olin Corp. Project)
3.20%, Series A (LOC; Credit Suisse) (a,b).............................. 6,400,000 6,400,000
Illinois Health Facilities Authority, Revenue, VRDN (Resurrection Health Care Systems)
3.35% (LOC: Comerica Bank, First National Bank of Chicago,
La Salle National Bank and National Bank of Detroit) (a,b).............. 26,000,000 26,000,000
Southwestern Development Authority, SWDR, VRDN
(Shell Oil Co. Wood River Project) 3.25% (Corp. Guaranty; Shell Oil Co.) (a) 3,800,000 3,800,000
INDIANA--2.2%
Indiana Bond Bank Advance Funding Program, Tax Exempt Notes
3.03%, Series A-2, 1/17/95.............................................. 15,000,000 15,015,411
Indiana Secondary Market Educational Loans Inc., Education Loan Revenue, VRDN
3.10%, Series F (Insured; AMBAC and LOC; Student Loan Marketing
Association) (a,b).......................................................... 7,000,000 7,000,000
IOWA--1.4%
Iowa Finance Authority, SWDR, VRDN (Cedar River Paper Co. Project)
3.35%, Series A (LOC; Swiss Bank Corp.) (a,b)........................... 13,900,000 13,900,000
KENTUCKY--6.1%
City of Danville, Multi-City Lease Revenue, CP
(Kentucky Municipal League Pooled Program) 3.25%, 9/19/94
(LOC: HongKong Shanghai Banking Corp. and Marine Midland Bank) (b)...... 3,205,000 3,205,000
Daviss County, Solid Waste Disposal Facilities Revenue, VRDN (Scott Paper Co. Project):
3.25%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 37,000,000 37,000,000
3.30%, Series B (LOC; ABN-Amro Bank) (b)................................ 12,800,000 12,800,000
Morgantown, IDR (Sumitomo Electric Wire System)
3.20%, 10/1/94 (LOC; Sumitomo Bank) (b)................................. 9,200,000 9,200,000
LOUISIANA--6.7%
Louisiana Offshore Terminal Authority, Deepwater Port Revenue, Refunding, VRDN
(Aces Loop Inc.) 3.30% (LOC; Union Bank of Switzerland) (a,b)........... 13,000,000 13,000,000
Plaquemines Port, Harbor and Terminal District, Port Facilities Revenue
(International Marine Terminal Project) 3.40%, Series A, 3/15/95
(LOC; Morgan Guaranty Trust Co.) (b).................................... 7,000,000 7,000,000
Saint Charles Parish, PCR, VRDN:
(Shell Oil Co. Project) 3.25%. Series A (a)............................. 6,000,000 6,000,000
(Shell Oil Co. Norco Project) 3.25% (Corp. Guaranty; Shell Oil Co.) (a). 42,800,000 42,800,000
MAINE--1.0%
Maine Housing Authority, Mortgage Purchase 3.70%, Series B-2, 4/13/95....... 10,000,000 10,000,000
MARYLAND--2.2%
Frederick, Improvement Bonds, VRDN 3.40% (LOC; Fuji Bank) (a,b)............. 2,200,000 2,200,000
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
MARYLAND (CONTINUED)
Maryland Energy Financing Administration, LOR, VRDN (Baltimore First Project)
3.40% (LOC; Credit Suisse) (a,b)........................................ $ 12,400,000 $ 12,400,000
Montgomery County Housing Opportunities Commission, MFMR,
2.65%, Series C, 12/1/94................................................ 8,310,000 8,310,000
MASSACHUSETTS--1.0%
Massachusetts Bay Transportation Authority, Tax Exempt Notes 3.75%, Series A, 3/1/95 10,000,000 10,028,811
MICHIGAN--5.7%
Grand Rapids Economic Development Corp., Revenue, VRDN
(Amway/Grand Plaza Hotel Facility #1) 3.10% (LOC; Old Kent Bank and Trust) (a,b) 4,000,000 4,000,000
Michigan Higher Education Student Loan Authority, Revenue, VRDN
3.20%, Series XII-F (Insured; AMBAC and Liquidity Agreement; Sumitomo Bank) (a) 5,000,000 5,000,000
Michigan Housing Development Authority, LOR, Refunding, VRDN
(Harbortown Limited Divide) 2.925% (LOC; Bankers Trust) (a,b)........... 5,000,000 5,000,000
Michigan Municipal Bond Authority, RAN 4.25%, 5/5/95........................ 15,600,000 15,676,121
Michigan Strategic Fund, PCR, Refunding, VRDN (Consumer Power Project)
3%, Series A (LOC; Union Bank of Switzerland) (a,b)..................... 16,900,000 16,900,000
Midland County Economic Development Corp., Economic Development Limited
Obligation Revenue, VRDN (Dow Chemical Co. Project) 3.50%, Series A (a). 11,900,000 11,900,000
MINNESOTA--1.3%
Becker, Tax Increment Revenue 3%, 10/1/94................................... 10,000,000 10,000,000
Minnesota Housing Financing Agency, SFMR
2.60%, Series E, 1/12/95 (GIC; Societe Generale)........................ 3,255,000 3,255,000
MONTANA--2.5%
Forsyth, PCR, VRDN (Portland General Electric Co.)
3.40% (LOC; Banque Nationale De Paris) (a,b)............................ 20,300,000 20,300,000
Montana Board of Investment, RRR, VRDN (Colstrip Project)
3.65% (LOC; Fuji Bank) (a,b)............................................ 5,600,000 5,600,000
NEW MEXICO--1.0%
New Mexico Educational Assistance Foundation, Student Loan Revenue, VRDN
3.25%, Series B (Insured; AMBAC and SBPA; International Bank of Nederland) (a) 10,000,000 10,000,000
NEW YORK--1.6%
New York City:
TAN 4.25%, Series A, 2/15/95............................................ 10,000,000 10,024,500
VRDN, 3.20%, Series E5 (LOC; Sumitomo Bank) (a,b)....................... 6,600,000 6,600,000
NORTH CAROLINA--1.7%
Halifax County Industrial Facilities and Pollution Control Financing Authority,
Exempt Facilities Revenue, VRDN (Westmoreland Hadson Project)
3.30% (LOC; Credit Suisse) (a,b)........................................ 9,900,000 9,900,000
North Carolina Eastern Municipal Power Agency, Power Systems Revenue, CP
3.15%, Series 88B, 11/23/94
(LOC: Morgan Guaranty Trust Co. and Union Bank of Switzerland) (b)...... 7,000,000 7,000,000
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
OHIO--1.0%
Ohio Water Development Authority, PCR (Edison Project)
4.25%, 9/1/95 (LOC; Barclays Bank) (b).................................. $ 7,500,000 $ 7,500,000
Student Loan Funding Corp., Student Loan Revenue, VRDN
3.25%, Series A-3 (LOC; National Westminster Bank) (a,b)................ 3,400,000 3,400,000
OREGON--2.2%
Klamoth Falls, Hydroelectric Revenue
3.75%, Series E, 5/2/95 (Escrowed in U.S. Treasury Bills)............... 20,000,000 20,000,000
State of Oregon, EDR, VRDN (Toyo Tanso USA)
3.525%, Series CXLVII (LOC; Bank of Tokyo) (a,b)........................ 2,000,000 2,000,000
PENNSYLVANIA--4.9%
Cambria County Hospital Development Authority, HR (Mercy Hospital Johnstown
Project)
3.15%, 3/1/95 (LOC; Bank of Tokyo) (b).................................. 8,620,000 8,620,000
Carbon County Industrial Development Authority, RRR, CP
(Panther Creek Partner) 3.35%, Series A, 12/15/94 (LOC; National
Westminster Bank) (b)....................................................... 6,825,000 6,825,000
Emmaus General Authority, Local Government Revenue, VRDN
3.15% (LOC; HongKong Shanghai Banking Corp.) (a,b)...................... 13,000,000 13,000,000
Geisinger Authority, Health System Revenue, VRDN
3.15%, Series B (Liquidity Facility; Morgan Bank) (a)................... 6,500,000 6,500,000
Schuykill County Industrial Development Authority, RRR, VRDN
(Northeastern Power Co. Project) 3.25%, Series B (LOC; Sumitomo Bank) (a,b) 14,800,000 14,800,000
SOUTH CAROLINA--.5%
South Carolina Job Economic Development Authority, EDR, VRDN
(Wellman Inc. Project) 3.30% (LOC; Wachovia Bank and Trust Co.) (a,b)... 5,000,000 5,000,000
TENNESSEE--2.1%
City of Memphis, VRDN 3.40%, Series B (LOC; Sanwa Bank) (a,b)............... 1,000,000 1,000,000
Metropolitan Government Nashville and Davidson County Health and Education
Facilities Board, Revenue (Vanderbilt University) 2.60%, Series A, 1/15/95 20,250,000 20,250,000
TEXAS--13.4%
Brazos River Authority, CP 3.30%, Series A, 12/16/94
(LOC; Canadian Imperial Bank of Commerce) (a,b)......................... 13,000,000 13,000,000
Brazos River Harbor Navigation District, Harbor Revenue, VRDN
(Dow Chemical Co. Project):
3.35% (Corp. Guaranty; Dow Chemical Co.) (a).......................... 7,500,000 7,500,000
3.35%, Series A (Corp. Guaranty; Dow Chemical Co.) (a)................ 2,700,000 2,700,000
El Paso Industrial Development Authority Inc., IDR, VRDN
(El Paso School District Limited Project) 3.35% (LOC; Chemical Bank) (a,b) 4,400,000 4,400,000
Grapevine Industrial Development Corporation, Airport Revenue (Singer Co. Project)
3.50%, 4/1/95 (LOC; Bank of Montreal) (b)............................... 5,100,000 5,100,000
Greater East Texas Higher Education Authority Inc., Student Loan Revenue, VRDN
(Senior Lien) 3.25%, Series A (LOC; Student Loan Marketing Association) (a,b) 4,200,000 4,200,000
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
TEXAS--13.4%
Gulf Coast Industrial Development Authority, VRDN:
Marine Terminal Revenue (Amoco Oil Co. Project)
3.25% (Corp. Guaranty; Amoco Credit Corp.) (a)........................ $ 19,400,000 $ 19,400,000
SWDR (Citgo Petroleum Corp. Project) 3.30% (LOC; Wachovia Bank of Georgia) (a,b) 9,100,000 9,100,000
Gulf Coast Waste Disposal Authority, PCR, VRDN (Amoco Oil Co. Project)
3.25% (Corp. Guaranty; Amoco Credit Corp.) (a).......................... 32,900,000 32,900,000
Harris County Health Facilities Development Corp., HR, VRDN (TIRR Project)
3.25% (LOC; Texas Commerce Bank) (a,b).................................. 10,200,000 10,200,000
North Texas Higher Education Authority Inc., Student Loan Revenue, Refunding, VRDN
3.10%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 10,500,000 10,500,000
Panhandle Plains Higher Education Authority Inc., Student Loan Revenue
3.35%, Series A, 3/31/95 (LOC; Student Loan Marketing Association) (b).. 15,000,000 15,000,000
Port Development Corp., IDR, VRDN (Pasadena Terminals Project)
3.05% (LOC; ABN-Amro Bank) (a,b)........................................ 2,420,000 2,420,000
UTAH--.5%
Utah Board of Regents, Student Loan Revenue, Refunding, VRDN
3.10%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 5,000,000 5,000,000
VIRGINIA--8.3%
Campbell County Industrial Development Authority, Exempt Facility Revenue, VRDN
(Hadson Power Project) 3.30%, Series 12-A (LOC; Barclays Bank) (a,b).... 5,100,000 5,100,000
Henrico County Industrial Development Authority, Health Facility Revenue, VRDN
(Hermitage Project) 3.40% (LOC; National Bank of Virginia) (a,b)........ 38,200,000 38,200,000
Hopewell Industrial Development Authority, Exempt Facility Revenue, VRDN
(Hadson Power Project) 3.30%, Series 13-A (LOC; Credit Suisse) (a,b).... 5,700,000 5,700,000
Peninsula Ports Authority, Terminal Revenue, Refunding, VRDN
(Dominion Terminal Project) 3.05%, Series D (LOC; Barclays Bank) (a,b).. 1,590,000 1,590,000
Richmond Industrial Development Authority, VRDN:
Exempt Facility Revenue (Cogentrix) 3.35%, Series A (LOC; Banque Paribas) (a,b) 3,400,000 3,400,000
Revenue (Cogentrix of Richmond Project):
3.35%, Series A (LOC; Banque Paribas) (a,b)........................... 8,300,000 8,300,000
3.35%, Series B (LOC; Banque Paribas) (a,b)........................... 6,000,000 6,000,000
Virginia Housing Development Authority, Commonwealth Mortgage:
2.90%, Series B, 11/4/94 (GIC; AMBAC)................................... 6,000,000 6,000,000
3.10%, Series A, 12/15/94............................................... 10,000,000 10,000,000
WASHINGTON--2.5%
Washington Housing Finance Commission, SFMR:
3.85%, Series F, 6/15/95 (GIC; Transamerica Corp.)...................... 9,400,000 9,400,000
Refunding 3.90%, Series D, 6/1/95 (GIC; FGIC Capital Markets Services).. 15,990,000 15,990,000
WEST VIRGINIA--2.7%
West Virginia Public Energy Authority, Energy Revenue, CP
(Morgantown Association Project) 3.25%, 11/10/94 (LOC; Swiss Bank Corp.) (b) 28,000,000 28,000,000
----------------
TOTAL INVESTMENTS (cost $1,019,431,642)..................................... $1,019,431,642
==============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOR Limited Obligation Revenue
BAN Bond Anticipation Notes MBIA Municipal Bond Insurance Association
BPA Bond Purchase Agreement MFMR Multi-Family Mortgage Revenue
CP Commercial Paper PCR Pollution Control Revenue
EDR Economic Development Revenue RAN Revenue Anticipation Notes
EIR Environment Improvement Revenue RRR Resources Recovery Revenue
FGIC Financial Guaranty Insurance Corporation SBPA Standby Bond Purchase Agreement
GIC Guaranteed Investment Contract SFMR Single Family Mortgage Revenue
GO General Obligation SWDR Solid Waste Disposal Revenue
HR Hospital Revenue TAN Tax Anticipation Notes
IDR Industrial Development Revenue TRAN Tax and Revenue Anticipation Notes
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 92.4%
F2 VMIG2/MIG2,P2 SP2, A2 1.0
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 5.7
Not Rated (f) Not Rated (f) Not Rated (f) .9
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At August 31, 1994, 59.9% of the
Series' net assets are backed by letters of credit issued by domestic
banks, foreign banks and government agencies.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) P1 and A1 are the highest ratings assigned tax-exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Series may
invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value--Note 1(a).......................... $1,019,431,642
Cash.................................................................... 9,182,619
Interest receivable..................................................... 5,496,006
Prepaid expenses........................................................ 95,662
Due from The Dreyfus Corporation........................................ 865,757
----------------
1,035,071,686
LIABILITIES:
Payable for investment securities purchased............................. $7,500,000
Accrued expenses and other liabilities.................................. 194,999 7,694,999
------------ --------------
NET ASSETS ................................................................ $1,027,376,687
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,027,430,826
Accumulated net realized (loss) on investments.......................... (54,139)
----------------
NET ASSETS at value applicable to 1,027,430,826 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $1,027,376,687
==============
NET ASSET VALUE, offering and redemption price per share
($1,027,376,687 / 1,027,430,826 shares)................................. $1.00
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $22,715,841
EXPENSES:
Management fee--Note 2(a)............................................. $4,251,481
Shareholder servicing costs--Note 2(b)................................. 353,892
Registration fees..................................................... 209,714
Custodian fees........................................................ 71,921
Professional fees..................................................... 46,658
Prospectus and shareholders' reports.................................. 16,294
Directors' fees and expenses--Note 2(c)................................ 8,118
Miscellaneous......................................................... 30,913
------------
4,988,991
Less--management fee waived due to
undertaking--Note 2(a)............................................. 4,251,481
------------
TOTAL EXPENSES.................................................. 737,510
-------------
INVESTMENT INCOME--NET...................................................... 21,978,331
NET REALIZED (LOSS) ON INVESTMENTS--Note 1(b)............................... (51,388)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $21,926,943
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
------------------------------------
1993 1994
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 12,062,881 $ 21,978,331
Net realized (loss) on investments................................... (1,046) (51,388)
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 12,061,835 21,926,943
---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net............................................... (12,062,881) (21,978,331)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................ 1,291,906,333 1,656,500,822
Dividends reinvested................................................. 11,317,181 20,702,803
Cost of shares redeemed.............................................. (846,390,497) (1,335,315,577)
---------------- ----------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 456,833,017 341,888,048
---------------- ----------------
TOTAL INCREASE IN NET ASSETS................................... 456,831,971 341,836,660
NET ASSETS:
Beginning of year.................................................... 228,708,056 685,540,027
---------------- ----------------
End of year.......................................................... $ 685,540,027 $1,027,376,687
=============== ================
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's current Prospectus dated
December 30, 1994.
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
On March 15, 1994, Dreyfus BASIC Municipal Money Market Fund, Inc. began
operating under the name Dreyfus BASIC Municipal Fund (the "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 three series, including the Dreyfus BASIC
Municipal Money Market Fund (the "Series"). Dreyfus Service Corporation,
until August 24, 1994, acted as the exclusive distributor of the Fund's
shares, which are sold to the public without a sales charge. Dreyfus Service
Corporation is a wholly owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
It is the Series' policy to maintain a continuous net asset value per
share of $1.00; the Series has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so.
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.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Series' investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date 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. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
(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, 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 Series has an unused capital loss carryover of $3,770 available for
Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to August 31, 1994. The carryover does
not include net realized securities losses from November 1, 1993 through
August 31, 1994, which are treated, for Federal income tax purposes, as
arising in fiscal 1995. If not applied, $1,705 of the carryover expires in
fiscal 2001 and $2,065 expires in fiscal 2002.
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At August 31, 1994, 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).
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 .50 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1993 through October 5, 1994 to waive receipt of the management
fee payable to it by the Series, and thereafter had undertaken through
October 11, 1994 to reduce the management fee paid by the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The Manager has currently undertaken from October 12, 1994
through December 31, 1994 or until such time as the net assets of the Series
exceed $1.25 billion, regardless of whether they remain at that level, to
waive receipt of the management fee payable to it by the Series in excess of
an annual rate of .05 of 1% of the Series' average daily net assets. The
management fee waived, pursuant to the undertaking, amounted to $4,251,481
for the year ended August 31, 1994.
In addition, the Manager has undertaken through June 30, 1996, to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager, from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation an amount not to exceed an annual rate
of .25 of 1% of the value of the Series' average daily net assets for
servicing shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Series and providing reports and other information,
and services related to the maintenance of shareholder accounts. During the
year ended August 31, 1994, the Series was charged an aggregate of $265,786
pursuant to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the
Series were "affiliated persons," as defined in the Act, of the Manager
and/or Dreyfus Service Corporation. Each director who is not an "affiliated
person" receives an annual fee of $1,000.
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Money
Market Fund (one of the Series constituting Dreyfus BASIC Municipal Fund) as
of August 31, 1994, 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 August 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Money Market Fund at August 31, 1994, 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 & Young Signature Logo)
New York, New York
October 4, 1994
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--94.5% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ARIZONA--4.7%
Central Water Conservation District, Contract Revenue (Central Arizona Project)
6.50%, 5/1/2001......................................................... $ 250,000 $ 273,717
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 999,760
CALIFORNIA--6.2%
Foothill Transit Zone 5.35%, 5/1/2003....................................... 200,000 192,908
Hemet, COP 6.50%, 2/1/2003.................................................. 200,000 199,770
Los Angeles City, COP, Refunding (Real Property Acquisition Program) 5.75%, 8/1/2004 1,000,000 1,000,690
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998 ........................................................ 185,000 185,277
7.50%, 6/1/1999 ........................................................ 110,000 110,165
COLORADO--3.5%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 756,780
7.25%, 11/15/2007....................................................... 200,000 195,706
CONNECTICUT--2.0%
Connecticut 6.50%, 3/15/2002................................................ 500,000 547,640
GEORGIA--4.1%
Georgia 6.80%, 8/1/2004..................................................... 1,000,000 1,112,850
ILLINOIS--4.5%
Chicago, Wastewater Transmission Revenue
6.75%, 11/15/2000 (Insured; FGIC)....................................... 250,000 277,175
Du Page County, Revenue (Stormwater Project) 6.50%, 1/1/2002................ 500,000 547,315
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Development Project)
6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.)...................... 200,000 203,318
Illinois Educational Facilities Authority, Revenues, Refunding
(Illinois Institute of Technology) 6%, 12/1/2004........................ 200,000 197,672
INDIANA--.7%
Franklin, EDR, Refunding (Hoover Universal, Inc. Project)
6.10%, 12/1/2004 (Guaranteed; Johnson Controls, Inc.)................... 200,000 200,884
MARYLAND--4.1%
Prince George County, HR (Dimensions Health Corp.) 7%, 7/1/2002............. 1,000,000 1,129,960
MASSACHUSETTS--8.3%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 249,578
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MASSACHUSETTS (CONTINUED)
Massachusetts Municipal Wheelhouse Electric Co., Power Supply Systems Revenue
6.75%, 7/1/2002......................................................... $ 250,000 $ 278,678
Massachusetts Water Resource Authority 5.50%, 8/1/2006 (Insured; MBIA)...... 1,750,000 1,736,332
MICHIGAN--3.8%
Detroit 7.25%, 4/1/2009..................................................... 1,000,000 1,041,190
MINNESOTA--2.8%
Washington County Housing and Redevelopment Authority, Jail Facility Revenue
Unlimited Tax Lease Obligation 7%, 2/1/2002 (Insured; MBIA)............. 685,000 762,261
NEW JERSEY--13.6%
Morris County 5.125%, 5/13/2005............................................. 1,000,000 985,760
New Jersey 5.90%, 8/1/2002.................................................. 1,000,000 1,051,520
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,111,870
Ocean County 7.50%, 10/15/2001.............................................. 500,000 570,070
NEW YORK--5.0%
New York City 6.25%, 8/1/2003............................................... 100,000 103,301
New York State Dormitory Authority, Court Facilities LR 6%, 5/15/2003....... 100,000 102,238
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 658,832
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 6%, 4/1/2002................................. 500,000 513,630
NORTH CAROLINA--7.6%
North Carolina Eastern Municipal Power Agency, Power Systems Revenue, Refunding:
6%, 1/1/2005............................................................ 1,000,000 1,008,320
7%, 1/1/2008............................................................ 1,000,000 1,068,930
PENNSYLVANIA--6.2%
Pennsylvania, Refunding 6.75%, 1/1/2001..................................... 500,000 549,760
Pennsylvania Convention Center Authority, Revenue, Refunding 6.25%, 9/1/2004 200,000 201,476
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Research, Inc.) 6.50%, 1/1/2010...................... 1,000,000 948,530
TEXAS--5.5%
Brazos Higher Education Authority, Student Loan Revenue, Refunding:
6.20%, 12/1/2002........................................................ 200,000 208,490
5.875%, 6/1/2004........................................................ 1,100,000 1,083,467
Houston, Water and Sewer Systems Revenue 5.60%, 12/1/2001................... 200,000 204,640
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
VIRGINIA--3.7%
Virginia Housing Development Authority, Commonwealth Mortgage 5.75%, 1/1/2001 $ 1,000,000 $ 1,011,000
WASHINGTON--3.1%
Lewis County, Public Utility District Number 1, Revenue
(Cowlitz Falls Hydroelectric Project) 7%, 10/1/2001 .................... 500,000 563,810
Washington 6.70%, 6/1/2001.................................................. 250,000 273,173
WISCONSIN--3.0%
Wisconsin, Clean Water Revenue 6.75%, 6/1/2001.............................. 750,000 828,922
WYOMING--2.1%
Wyoming Farm Loan Board, Capital Facilities Revenue Zero Coupon, 10/1/2004.. 1,000,000 564,060
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $25,557,193).................... $25,811,425
-------------
-------------
SHORT-TERM MUNICIPAL INVESTMENTS--5.5%
WASHINGTON;
Washington Public Power Supply Systems, Revenue, VRDN:
Nuclear Project Number 2, 3.65% (a)..................................... $ 500,000 $ 500,000
Nuclear Project Number 3, 3.65% (a)..................................... 1,000,000 1,000,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,500,000).................... $ 1,500,000
=============
TOTAL INVESTMENTS--100.0%
(cost $27,057,193)...................................................... $27,311,425
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
COP Certificate of Participation LR Lease Revenues
EDR Economic Development Revenue MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation RRR Resources Recovery Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 34.9%
AA Aa AA 19.6
A A A 17.8
BBB Baa BBB 23.3
BB Ba BB .7
F1 & F1+ VMIG1, MIG1 & P1 SP1 & A1 3.7
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1994
ASSETS:
<S> <C>
Investments in securities, at value
(cost $27,057,193)-see statement........................................................ $27,311,425
Cash...................................................................................... 583,822
Interest receivable....................................................................... 323,811
Prepaid expenses.......................................................................... 41,082
Due from The Dreyfus Corporation.......................................................... 44,052
-------------
28,304,192
LIABILITIES;
Accrued expenses and other liabilities.................................................... 28,962
-------------
NET ASSETS .................................................................................. $28,275,230
============
REPRESENTED BY:
Paid-in capital........................................................................... $28,022,354
Accumulated net realized (loss) on investments............................................ (1,356)
Accumulated net unrealized appreciation on investments-Note 3............................. 254,232
-------------
NET ASSETS at value applicable to 2,235,320 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)........................... $28,275,230
============
NET ASSET VALUE, offering and redemption price per share
($28,275,230 / 2,235,320 shares).......................................................... $12.65
=======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
FROM MAY 5, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $234,613
EXPENSES:
Management fee-Note 2(a).............................................. $ 25,442
Registration fees..................................................... 10,717
Auditing fees......................................................... 8,333
Shareholders' reports................................................. 5,250
Legal fees............................................................ 4,667
Organization expenses-Note 1(e)....................................... 4,150
Shareholder servicing costs-Note 2(b)................................. 2,317
Custodian fees........................................................ 1,823
Directors' fees-Note 2(c)............................................. 32
Miscellaneous......................................................... 2,601
----------
65,332
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 65,332
----------
TOTAL EXPENSES.................................................. ---
----------
INVESTMENT INCOME--NET.......................................... 234,613
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $ (1,356)
Net unrealized appreciation on investments.............................. 254,232
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 252,876
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $487,489
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 5, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
OPERATIONS:
<S> <C>
Investment income-net................................................................... $ 234,613
Net realized (loss) on investments...................................................... (1,356)
Net unrealized appreciation on investments for the period............................... 254,232
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. 487,489
-------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................................... (234,613)
-------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................................... 32,982,409
Dividends reinvested.................................................................... 166,946
Cost of shares redeemed................................................................. (5,127,001)
-------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................................ 28,022,354
-------------
TOTAL INCREASE IN NET ASSETS...................................................... 28,275,230
NET ASSETS:
Beginning of period..................................................................... ---
-------------
End of period........................................................................... $28,275,230
============
SHARES
-------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................. 2,629,336
Shares issued for dividends reinvested.................................................. 13,222
Shares redeemed......................................................................... (407,238)
-------------
NET INCREASE IN SHARES OUTSTANDING.................................................... 2,235,320
============
See notes to financial statements.
</TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the fund's Prospectus dated December
30, 1994.
See notes to financial statements.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund (the "Fund") began operating under such name
on March 15, 1994 and is currently offering three series, including the
Dreyfus BASIC Intermediate Municipal Bond Fund ("the Series"), which was
authorized by the Board of Directors on February 16, 1994. The Series had no
operations until May 5, 1994 (commencement of operations) other than matters
relating to its organization and registration as a non-diversified open-end
management investment company under the Investment Company Act of 1940
("Act") and the Securities Act of 1933. Dreyfus Service Corporation, until
August 24, 1994, acted as the exclusive distributor of the Fund's shares,
which are sold to the public without a sales charge. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
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.
(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 Directors. 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.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to qualify as a
regulated investment company, which can distribute tax exempt dividends, by
complying with the 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.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series has an unused capital loss carryover of approximately $1,356
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to August 31, 1994. If not
applied, the carryover expires in fiscal 2002.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 5, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized not to exceed five years. At August 31, 1994, the
unamortized balance of such expenses amounted to $30,850.
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 .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken from
May 5, 1994 through December 31, 1994 or until such time as the net assets of
the series exceed $50 million, regardless of whether they remain at that
level, to reimburse all fees and expenses of the Series. The expense
reimbursement, pursuant to the undertaking, amounted to $65,332 for the
period ended August 31, 1994.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the period ended August 31,
1994, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
(C) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
amounted to $47,603,809 and $20,532,069, respectively, for the period ended
August 31, 1994, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1994, accumulated net unrealized appreciation on
investments was $254,232, consisting of $262,338 gross unrealized
appreciation and $8,106 gross unrealized depreciation.
At August 31, 1994, 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).
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Intermediate
Municipal Bond Fund (one of the Series constituting Dreyfus BASIC Municipal
Fund) as of August 31, 1994, and the related statements of operations and
changes in net assets and financial highlights for the period from May 5,
1994 (commencement of operations) to August 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's manag
ement. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether 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 August 31, 1994 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Intermediate Municipal Bond Fund at August 31,
1994, and the results of its operations, the changes in its net assets and
the financial highlights for the period from May 5, 1994 to August 31, 1994,
in conformity with generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
October 4, 1994
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-79.8% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA--6.5%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 752,482
Birmingham, Refunding 6.25%, 4/1/2016....................................... 250,000 251,772
CALIFORNIA--3.1%
California Higher Education Loan Authority,
Student Loan Revenue, Refunding 6.50%, 6/1/2005......................... 250,000 252,372
Sacramento Municipal Utility District, Electric Revenue 5.75%, 5/15/2022.... 250,000 231,140
COLORADO--1.2%
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 200,000 185,304
CONNECTICUT--1.2%
Connecticut Health and Educational Facilities Authority, Revenue
(The Griffin Hospital) 6%, 7/1/2013..................................... 200,000 181,666
FLORIDA--1.3%
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 200,438
GEORGIA--4.8%
Burke County Development Authority, PCR
(Georgia Power Co. Plant Vogtle) 6.375%, 8/1/2024....................... 500,000 496,985
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Health Care) 6.25%, 9/1/2013........................... 250,000 238,113
ILLINOIS--4.4%
Chicago State University, Revenue, Auxiliary Facilities System
6.10%, 12/1/2017 (Insured; MBIA)........................................ 250,000 244,207
Illinois Development Finance Authority, PCR, Refunding
(Commonwealth Edison Co. Project) 7.25%, 6/1/2011....................... 175,000 181,762
Illinois Health Facilities Authority, Revenue, Refunding
(Northwestern Memorial Hospital) 6.10%, 8/15/2014....................... 250,000 244,355
INDIANA--1.6%
Indiana Municipal Power Agency, Power Supply System Revenue
6.125%, 1/1/2019 (Insured; MBIA)........................................ 250,000 243,350
KENTUCKY--1.3%
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ 200,000 200,914
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MARYLAND--1.6%
Maryland Community Development Administration, Department of Housing and
Community Development Revenue (Single Family Program) 6.75%, 4/1/2026... $ 250,000 $ 251,175
MASSACHUSETTS--5.2%
Massachusetts Construction Loan 6%, 6/1/2013................................ 300,000 294,996
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 509,230
MINNESOTA--3.0%
Minnesota Housing Finance Agency, SFHR:
6.90%, 7/1/2022......................................................... 250,000 257,498
6.30%, 7/1/2025......................................................... 200,000 196,772
NEBRASKA--2.9%
Nebraska Public Power District Revenue, Refunding, Power Supply System
6.125%, 1/1/2015........................................................ 450,000 447,624
NEVADA--1.7%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 258,617
NEW HAMPSHIRE--1.7%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 254,020
NEW JERSEY--1.6%
New Jersey Health Care Facilities Financing Authority, Revenue, Refunding
(Hackensack Medical Center) 6.25%, 7/1/2021 (Insured; FGIC)............. 250,000 250,522
NEW YORK--15.6%
Metropolitan Transportation Authority, Commuter Facilities Revenue
6.125%, 7/1/2014 (Insured; MBIA)........................................ 200,000 200,730
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 501,700
New York State Dormitory Authority, Revenue:
City University System 6.20%, 7/1/2013 (Insured; AMBAC)................. 250,000 252,478
Refunding, State University Educational Facilities:
5.875%, 5/15/2017..................................................... 250,000 236,383
6%, 5/15/2017......................................................... 500,000 480,220
New York State Energy Research and Development Authority,
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 302,679
New York State Environmental Facilities Corp., PCR (State Water Revolving
Fund)
New York City Municipal Water 5.875%, 6/15/2014......................... 180,000 175,160
United Nations Development Corp., Revenue, Refunding 6.20%, 7/1/2011........ 250,000 251,737
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NORTH CAROLINA--3.4%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. $ 250,000 $ 267,232
North Carolina Municipal Power Agency, Catawba Electric Revenue,
Refunding 6.25%, 1/1/2017............................................... 250,000 247,893
PENNSYLVANIA--1.7%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 254,613
RHODE ISLAND--2.9%
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity) 6.50%, 4/1/2027............................. 200,000 198,912
Rhode Island Port Authority and Economic Development Corp.,
Airport Revenue 6.625%, 7/1/2024........................................ 250,000 253,553
TENNESSEE--1.7%
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 254,828
TEXAS--4.8%
Harris County, Toll Road, Senior Lien 6.50%, 8/15/2017 (Insured; AMBAC)..... 250,000 255,685
Tarrant County, Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... 500,000 477,950
WASHINGTON--5.3%
Washington Health Care Facilities Authority, Revenue
(Childrens Hospital and Medical Center) 6.25%, 10/1/2018 (Insured; FGIC) 200,000 196,086
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 635,000 624,884
WYOMING--1.3%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 203,226
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $12,182,706).................... $12,261,263
============
SHORT-TERM MUNICIPAL INVESTMENTS--20.2%
MARYLAND--5.2%
Frederick Improvement, VRDN 3.40% (LOC; Fuji Bank and Trust Co.)(a,b)....... $ 800,000 $ 800,000
MICHIGAN--4.6%
Michigan Strategic Fund Ltd., Obligation Revenue, VRDN
(Coil Center Corp. Project) 4.15% (LOC; The Tokai Bank) (a,b)........... 700,000 700,000
WASHINGTON--10.4%
Washington Public Power Supply System, Nuclear Project #2,
Revenue, VRDN 3.65% (a)................................................. 1,600,000 1,600,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,100,000).................... $ 3,100,000
============
TOTAL INVESTMENTS--100.0%
(cost $15,282,706)...................................................... $15,361,263
============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Corporation SFHR Single Family Housing Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
MBIA Municipal Bond Insurance Association
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 17.2%
AA Aa AA 32.8
A A A 20.6
BBB Baa BBB 15.3
BB Ba BB 1.3
F1 VMIG1 A1 9.8
Not Rated Not Rated Not Rated 3.0
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $15,282,706)-see statement...................................... $15,361,263
Cash.................................................................... 486,647
Interest receivable..................................................... 201,611
Prepaid expenses........................................................ 34,952
Due from The Dreyfus Corporation........................................ 30,954
------------
16,115,427
LIABILITIES:
Payable for investment securities purchased............................. $750,339
Accrued expenses and other liabilities.................................. 30,989 781,328
---------- ------------
NET ASSETS ................................................................ $15,334,099
============
REPRESENTED BY:
Paid-in capital......................................................... $15,253,667
Accumulated undistributed net realized gain on investments.............. 1,875
Accumulated net unrealized appreciation on investments-Note 3........... 78,557
------------
NET ASSETS at value, applicable to 1,201,289 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $15,334,099
============
NET ASSET VALUE, offering and redemption price per share
($15,334,099 / 1,201,289 shares)........................................ $12.76
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $128,111
EXPENSES:
Management fee-Note 2(a).............................................. $12,745
Auditing fees......................................................... 8,337
Shareholders' reports................................................. 5,250
Registration fees..................................................... 5,232
Legal fees............................................................ 4,667
Organization expenses-Note 1(e)....................................... 2,496
Shareholder servicing costs-Note 2(b)................................. 1,716
Custodian fees........................................................ 1,092
Directors' fees-Note 2(c)............................................. 32
Miscellaneous......................................................... 2,132
--------
43,699
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 43,699
--------
TOTAL EXPENSES.................................................. ---
---------
INVESTMENT INCOME-NET........................................... 128,111
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 1,875
Net unrealized appreciation on investments.............................. 78,557
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 80,432
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $208,543
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
OPERATIONS:
<S> <C>
Investment income--net................................................................. $ 128,111
Net realized gain on investments....................................................... 1,875
Net unrealized appreciation on investments for the period.............................. 78,557
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 208,543
------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net................................................................. (128,111)
------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................................... 19,178,689
Dividends reinvested................................................................... 81,312
Cost of shares redeemed................................................................ (4,006,334)
------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............................... 15,253,667
------------
TOTAL INCREASE IN NET ASSETS..................................................... 15,334,099
NET ASSETS:
Beginning of period.................................................................... ---
------------
End of period.......................................................................... $15,334,099
============
SHARES
------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................ 1,509,942
Shares issued for dividends reinvested................................................. 6,385
Shares redeemed........................................................................ (315,038)
------------
NET INCREASE IN SHARES OUTSTANDING................................................... 1,201,289
============
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated December 30,
1994.
See notes to financial statements.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund (the "Fund") began operating under such name
on March 15, 1994 and is currently offering three series, including the
Dreyfus BASIC Municipal Bond Fund ("the Series"), which was authorized by the
Board of Directors on February 16, 1994. The Series had no operations until
May 6, 1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
Securities Act of 1933. Dreyfus Service Corporation, until August 24, 1994,
acted as the distributor of the Fund's shares, which are sold to the public
without a sales charge. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
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.
(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 Directors. 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.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 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.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 6, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At August 31, 1994, the
unamortized balance of such expenses amounted to $34,952.
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 .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken from
May 6, 1994 through December 31, 1994 or until such time as the net assets of
the Series exceed $50 million, regardless of whether they remain at that
level, to reimburse all fees and expenses of the Series. The expense
reimbursement, pursuant to the undertaking, amounted to $43,699 for the
period ended August 31, 1994.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Fund's
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the period ended August 31,
1994, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $23,777,621 and $8,496,875, respectively, for the period ended
August 31, 1994, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1994, accumulated net unrealized appreciation on
investments was $78,557, consisting of $85,684 gross unrealized appreciation
and $7,127 gross unrealized depreciation.
At August 31, 1994, 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).
DREYFUS BASIC MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Bond Fund
(one of the Series constituting Dreyfus BASIC Municipal Fund) as of August
31, 1994, and the related statements of operations and changes in net assets
and financial highlights for the period from May 6, 1994 (commencement of
operations) to August 31, 1994. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether 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 August 31, 1994 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 audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Bond Fund at August 31, 1994, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from May 6, 1994 to August 31, 1994, in conformity
with generally accepted accounting principles.
(ERNST & YOUNG LLP, Signature Logo)
New York, New York
October 4, 1994
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--86.3% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ARIZONA--3.9%
Central Water Conservation District, Contract Revenue (Central Arizona Project)
6.50%, 5/1/2001......................................................... $ 250,000 $ 270,460
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 988,370
CALIFORNIA--5.2%
Foothill Transit Zone, 5.35%, 5/1/2003...................................... 200,000 189,428
Hemet, COP 6.50%, 2/1/2003.................................................. 200,000 196,778
Los Angeles City, COP, Refunding (Real Property Acquisition Program) 5.75%, 8/1/2004 1,000,000 977,180
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998 ........................................................ 185,000 185,414
7.50%, 6/1/1999 ........................................................ 110,000 110,247
COLORADO--3.0%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 753,450
7.25%, 11/15/2007....................................................... 200,000 195,032
CONNECTICUT--1.7%
Connecticut 6.50%, 3/15/2002................................................ 500,000 539,945
GEORGIA--3.5%
Georgia 6.80%, 8/1/2004..................................................... 1,000,000 1,101,640
ILLINOIS--3.8%
Chicago, Wastewater Transmission Revenue
6.75%, 11/15/2000 (Insured; FGIC)....................................... 250,000 273,735
Du Page County, Revenue (Stormwater Project) 6.50%, 1/1/2002................ 500,000 539,385
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Development Project)
6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.)...................... 200,000 199,652
Illinois Educational Facilities Authority, Revenues, Refunding
(Illinois Institute of Technology) 6%, 12/1/2004........................ 200,000 194,420
INDIANA--3.8%
Franklin, EDR, Refunding (Hoover Universal, Inc. Project)
6.10%, 12/1/2004 (Guaranteed; Johnson Controls, Inc.)................... 200,000 197,744
Indiana Transit Authority, LR 6.25%, 11/1/2003.............................. 1,000,000 1,019,350
MARYLAND--3.5%
Prince George County, HR (Dimensions Health Corp.) 7%, 7/1/2002............. 1,000,000 1,112,700
MASSACHUSETTS--7.0%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 245,153
Massachusetts Municipal Wheelhouse Electric Co., Power Supply Systems Revenue
6.75%, 7/1/2002 ........................................................ 250,000 274,430
Massachusetts Water Resource Authority 5.50%, 8/1/2006 (Insured; MBIA)...... 1,750,000 1,692,250
MICHIGAN--3.2%
Detroit 7.25%, 4/1/2009..................................................... 1,000,000 1,028,070
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MINNESOTA--2.4%
Washington County Housing and Redevelopment Authority, Jail Facility Revenue
Unlimited Tax Lease Obligation 7%, 2/1/2002 (Insured; MBIA)............. $ 685,000 $ 751,027
NEW JERSEY--11.5%
Morris County 5.125%, 5/13/2005............................................. 1,000,000 963,070
New Jersey 5.90%, 8/1/2002.................................................. 1,000,000 1,037,980
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,100,060
Ocean County 7.50%, 10/15/2001.............................................. 500,000 561,590
NEW YORK--4.3%
New York City 6.25%, 8/1/2003............................................... 100,000 100,776
New York State Dormitory Authority, Court Facilities LR 6%, 5/15/2003....... 100,000 100,373
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 647,323
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 6%, 4/1/2002................................. 500,000 504,840
NORTH CAROLINA--6.4%
North Carolina Eastern Municipal Power Agency, Power Systems Revenue,
Refunding:
6%, 1/1/2005............................................................ 1,000,000 991,590
7%, 1/1/2008............................................................ 1,000,000 1,049,270
PENNSYLVANIA--5.3%
Pennsylvania, Refunding 6.75%, 1/1/2001..................................... 500,000 542,970
Pennsylvania Convention Center Authority, Revenue, Refunding 6.25%, 9/1/2004 200,000 199,110
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Research, Inc.) 6.50%, 1/1/2010...................... 1,000,000 930,940
TEXAS--4.7%
Brazos Higher Education Authority, Student Loan Revenue, Refunding:
6.20%, 12/1/2002........................................................ 200,000 205,650
5.875%, 6/1/2004........................................................ 1,100,000 1,074,172
Houston, Water and Sewer Systems Revenue 5.60%, 12/1/2001................... 200,000 200,450
VIRGINIA--3.2%
Virginia Housing Development Authority, Commonwealth Mortgage 5.75%, 1/1/2001 1,000,000 998,860
WASHINGTON--2.6%
Lewis County, Public Utility District Number 1, Revenue
(Cowlitz Falls Hydroelectric Project) 7%, 10/1/2001 .................... 500,000 555,810
Washington 6.70%, 6/1/2001.................................................. 250,000 269,570
WISCONSIN--5.6%
Wisconsin, Clean Water Revenue 6.75%, 6/1/2001.............................. 750,000 818,190
Wisconsin Transit Authority 5.40%, 7/1/2004................................. 1,000,000 973,320
WYOMING--1.7%
Wyoming Farm Loan Board, Capital Facilities Revenue Zero Coupon, 10/1/2004.. 1,000,000 549,300
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $27,554,334).................... $27,411,074
=============
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS--13.7% AMOUNT VALUE
------------- -------------
MICHIGAN--3.9%
Michigan Strategic Fund, Limited Obligation Revenue, VRDN
(Kurdziel Iron Rothbury Project) 4.55% (a).............................. $ 1,250,000 $ 1,250,000
MINNESOTA--1.6%
Golden Valley, IDR, Refunding, VRDN (Graco, Inc. Project) 3.80% (a)......... 500,000 500,000
PENNSYLVANIA--1.6%
Bucks County Industrial Development Authority, Revenue, VRDN 4.20% (a)...... 500,000 500,000
WASHINGTON--5.7%
Washington Public Power Supply Systems, Revenue, VRDN:
Nuclear Project Number 2, 3.65% (a)..................................... 800,000 800,000
Nuclear Project Number 3, 3.65% (a)..................................... 1,000,000 1,000,000
U. S. RELATED--.9%
Puerto Rico Electric Power Authority, Revenue 3.10% (Insured; FSA) (b)...... 300,000 300,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,350,000).................... $ 4,350,000
=============
TOTAL INVESTMENTS--100.0%
(cost $31,904,334)...................................................... $31,761,074
=============
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
COP Certificate of Participation IDR Industrial Development Revenue
EDR Economic Development Revenue LR Lease Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FSA Financial Security Assurance RRR Resources Recovery Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 29.6%
AA Aa AA 20.6
A A A 18.3
BBB Baa BBB 19.7
BB Ba BB .6
F1 & F1+ VMIG1, MIG1 & P1 SP1 & A1 11.2
--------
100.0%
--------
--------
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Inverse Floater Security - the interest rate is subject to change at
next auction date.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $31,904,334)--see statement..................................... $31,761,074
Cash.................................................................... 1,740,814
Interest receivable..................................................... 491,863
Prepaid expenses........................................................ 38,586
Due from The Dreyfus Corporation........................................ 55,191
-------------
34,087,528
LIABILITIES:
Payable for investment securities purchased............................. $1,043,802
Accrued expenses and other liabilities.................................. 8,417 1,052,219
------------ -------------
NET ASSETS ................................................................ $33,035,309
============
REPRESENTED BY:
Paid-in capital......................................................... $33,179,925
Accumulated net realized (loss) on investments.......................... (1,356)
Accumulated net unrealized (depreciation) on investments--Note 3......... (143,260)
-------------
NET ASSETS at value applicable to 2,646,704 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $33,035,309
============
NET ASSET VALUE, offering and redemption price per share
($33,035,309 / 2,646,704 shares)........................................ $12.48
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS ONE MONTH ENDED SEPTEMBER 30, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 131,373
EXPENSES:
Management fee--Note 2(a)............................................. $14,772
Registration fees..................................................... 2,882
Auditing fees......................................................... 2,083
Shareholder servicing costs--Note 2(b)................................. 1,912
Organization expenses--Note 1(e)....................................... 1,383
Legal fees............................................................ 1,167
Shareholders' reports................................................. 875
Custodian fees........................................................ 560
Directors' fees--Note 2(c)............................................. 15
Miscellaneous......................................................... 262
--------
25,911
Less--expense reimbursement from Manager due to
undertaking--Note 2(a)............................................. 25,911
--------
TOTAL EXPENSES........................................................ --
----------
INVESTMENT INCOME--NET...................................................... 131,373
NET UNREALIZED (DEPRECIATION) ON INVESTMENTS................................ (397,492)
----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(266,119)
==========
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED ONE MONTH ENDED
AUGUST 31, SEPTEMBER 30, 1994
1994(1) (UNAUDITED)
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................ $ 234,613 $ 131,373
Net realized (loss) on investments.................................... (1,356) ------
Net unrealized appreciation (depreciation) on investments for the period 254,232 (397,492)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... 487,489 (266,119)
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net................................................ (234,613) (131,373)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold......................................... 32,982,409 6,818,350
Dividends reinvested.................................................. 166,946 92,252
Cost of shares redeemed............................................... (5,127,001) (1,753,031)
------------ ------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.............. 28,022,354 5,157,571
------------ ------------
TOTAL INCREASE IN NET ASSETS.................................... 28,275,230 4,760,079
NET ASSETS:
Beginning of period................................................... ------ 28,275,230
------------ ------------
End of period......................................................... $28,275,230 $33,035,309
============ ============
SHARES SHARES
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................... 2,629,336 543,853
Shares issued for dividends reinvested................................ 13,222 7,392
Shares redeemed....................................................... (407,238) (139,861)
------------ ------------
NET INCREASE IN SHARES OUTSTANDING.................................. 2,235,320 411,384
============ ============
- ---------------------
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
See notes to financial statements.
</TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's current Prospectus dated December
30, 1994.
See notes to financial statements.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund (the "Fund") began operating under such name
on March 15, 1994 and is currently offering three series, including the
Dreyfus BASIC Intermediate Municipal Bond Fund ("the Series"), which was
authorized by the Board of Directors on February 16, 1994. The Series had no
operations until May 5, 1994 (commencement of operations) other than matters
relating to its organization and registration as a non-diversified open-end
management investment company under the Investment Company Act of 1940
("Act") and the Securities Act of 1933. Dreyfus Service Corporation, until
August 24, 1994, acted as the exclusive distributor of the Fund's shares,
which are sold to the public without a sales charge. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
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.
(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 Directors. 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.
(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, it is the policy of the Series not to distribute such gain.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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 Series has an unused capital loss carryover of approximately $1,356
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to August 31, 1994. If not
applied, the carryover expires in fiscal 2002.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 5, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At September 30, 1994,
the unamortized balance of such expenses amounted to $29,467.
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 .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken from
September 1, 1994 through December 31, 1994 or until such time as the net
assets of the Series exceed $50 million, regardless of whether they remain at
that level, to reimburse all fees and expenses of the Series. The expense
reimbursement, pursuant to the undertaking, amounted to $25,911 for the one
month ended September 30, 1994.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the one month ended September
30, 1994, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
(C) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $8,552,240 and $3,700,000, respectively, for the one month ended S
eptember 30, 1994, and consisted entirely of long-term and short-term
municipal investments.
At September 30, 1994, accumulated net unrealized depreciation on
investments was $143,260, consisting of $27,052 gross unrealized appreciation
and $170,312 gross unrealized depreciation.
At September 30, 1994, 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).
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--82.1% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA--4.6%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 736,545
Birmingham, Refunding 6.25%, 4/1/2016....................................... 250,000 245,650
CALIFORNIA--2.2%
California Higher Education Loan Authority,
Student Loan Revenue, Refunding 6.50%, 6/1/2005......................... 250,000 249,210
Sacramento Municipal Utility District, Electric Revenue 5.75%, 5/15/2022.... 250,000 222,845
COLORADO--.9%
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 200,000 180,714
CONNECTICUT--.8%
Connecticut Health and Educational Facilities Authority, Revenue
(The Griffin Hospital) 6%, 7/1/2013..................................... 200,000 174,560
FLORIDA--.9%
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 195,826
GEORGIA--12.6%
Atlanta, GO 6.10%, 12/1/2019................................................ 1,000,000 959,000
Burke County Development Authority, PCR
(Georgia Power Co. Plant Vogtle) 6.375%, 8/1/2024....................... 500,000 479,080
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Health Care) 6.25%, 9/1/2013........................... 250,000 224,697
Georgia Municipal Electric Authority (Project One Sub-Series A)
6.50%, 1/1/2026 (Insured; AMBAC)........................................ 1,000,000 998,540
ILLINOIS--7.6%
Chicago State University, Revenue, Auxiliary Facilities System
6.10%, 12/1/2017 (Insured; MBIA)........................................ 250,000 237,510
Illinois Development Finance Authority, PCR, Refunding
(Commonwealth Edison Co. Project) 7.25%, 6/1/2011....................... 175,000 178,124
Illinois Health Facilities Authority, Revenue, Refunding
(Northwestern Memorial Hospital) 6.10%, 8/15/2014....................... 250,000 236,775
Illinois Regional Transportation Authority, Revenue 6.25%, 6/1/2026......... 1,000,000 960,850
INDIANA--5.6%
Indiana, Gas Utility Revenue 6.20%, 6/1/2023 (Insured; FGIC)................ 1,000,000 951,160
Indiana Municipal Power Agency, Power Supply System Revenue
6.125%, 1/1/2019 (Insured; MBIA)........................................ 250,000 236,565
KENTUCKY--.9%
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ 200,000 197,114
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MARYLAND--1.2%
Maryland Community Development Administration, Department of
Housing and Community Development Revenue (Single Family Program)
6.75%, 4/1/2026......................................................... $ 250,000 $ 245,205
MASSACHUSETTS--3.8%
Massachusetts Construction Loan 6%, 6/1/2013................................ 300,000 288,261
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 506,720
MINNESOTA--6.5%
Bass Brook, PCR, Refunding (Minnesota Power and Light Co. Project) 6%, 7/1/2022 1,000,000 920,990
Minnesota Housing Finance Agency, SFHR:
6.90%, 7/1/2022......................................................... 250,000 253,280
6.30%, 7/1/2025......................................................... 200,000 191,358
NEBRASKA--2.0%
Nebraska Public Power District Revenue, Refunding, Power Supply System
6.125%, 1/1/2015........................................................ 450,000 431,577
NEVADA--1.2%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 256,260
NEW HAMPSHIRE--1.2%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 250,362
NEW JERSEY--1.2%
New Jersey Health Care Facilities Financing Authority, Revenue, Refunding
(Hackensack Medical Center) 6.25%, 7/1/2021 (Insured; FGIC)............. 250,000 246,455
NEW YORK--14.0%
Metropolitan Transportation Authority, Commuter Facilities Revenue
6.125%, 7/1/2014 (Insured; MBIA)........................................ 200,000 196,052
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 496,805
New York State Dormitory Authority, Revenue:
City University System 6.20%, 7/1/2013 (Insured; AMBAC)................. 250,000 247,240
Court Facilities Lease 5.50%, 5/15/2023................................. 750,000 625,245
Refunding, State University Educational Facilities:
5.875%, 5/15/2017..................................................... 250,000 225,855
6%, 5/15/2017......................................................... 500,000 461,655
New York State Energy Research and Development Authority,
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 291,750
New York State Environmental Facilities Corp., PCR (State Water Revolving Fund)
New York City Municipal Water 5.875%, 6/15/2014......................... 180,000 168,334
United Nations Development Corp., Revenue, Refunding 6.20%, 7/1/2011........ 250,000 247,660
NORTH CAROLINA--2.4%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. 250,000 262,318
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NORTH CAROLINA (CONTINUED)
North Carolina Municipal Power Agency, Catawba Electric Revenue,
Refunding 6.25%, 1/1/2017............................................... $ 250,000 $ 240,115
PENNSYLVANIA--1.2%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 249,448
RHODE ISLAND--2.1%
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity) 6.50%, 4/1/2027............................. 200,000 193,448
Rhode Island Port Authority and Economic Development Corp.,
Airport Revenue 6.625%, 7/1/2024........................................ 250,000 248,198
TENNESSEE--1.2%
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 250,960
TEXAS--3.3%
Harris County, Toll Road, Senior Lien 6.50%, 8/15/2017 (Insured; AMBAC)..... 250,000 249,385
Tarrant County, Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... 500,000 457,995
WASHINGTON--3.8%
Washington Health Care Facilities Authority, Revenue
(Childrens Hospital and Medical Center) 6.25%, 10/1/2018 (Insured; FGIC) 200,000 190,700
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 635,000 614,451
WYOMING--.9%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 197,510
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $17,678,535).................... $17,370,357
============
SHORT-TERM MUNICIPAL INVESTMENTS--17.9%
CALIFORNIA--2.3%
California Statewide Communities Development Authority, Revenue, VRDN
3.30% (Insured; AMBAC) (a).............................................. $ 500,000 $ 500,000
MARYLAND--3.8%
Frederick Improvement, VRDN 3.40% (LOC; Fuji Bank and Trust Co.)(a,b)....... 800,000 800,000
MICHIGAN--5.7%
Michigan Strategic Fund, LOR, VRDN (Coil Center Corp. Project)
4.15% (LOC; The Tokai Bank) (a,b)....................................... 1,200,000 1,200,000
WASHINGTON--6.1%
Washington Public Power Supply System, Nuclear Project #2,
Revenue, VRDN 3.65% (a)................................................. 1,300,000 1,300,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,800,000).................... $ 3,800,000
============
TOTAL INVESTMENTS--100.0% (cost $21,478,535)................................ $21,170,357
============
</TABLE>
<TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
GO General Obligation SFHR Single Family Housing Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
LOR Limited Obligation Revenue
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 28.3%
AA Aa AA 26.6
A A A 18.9
BBB Baa BBB 13.7
BB Ba BB .9
F1 VMIG1 A1 9.5
Not Rated Not Rated Not Rated 2.1
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $21,478,535)-see statement...................................... $21,170,357
Interest receivable..................................................... 371,678
Prepaid expenses........................................................ 46,244
Due from The Dreyfus Corporation........................................ 39,536
-------------
21,627,815
LIABILITIES:
Due to Custodian........................................................ $1,009,013
Payable for investment securities purchased............................. 933,717
Accrued expenses........................................................ 38,800 1,981,530
------------ -------------
NET ASSETS ................................................................ $19,646,285
=============
REPRESENTED BY:
Paid-in capital......................................................... $19,952,588
Accumulated undistributed net realized gain on investments.............. 1,875
Accumulated net unrealized (depreciation) on investments-Note 3......... (308,178)
-------------
NET ASSETS at value, applicable to 1,570,395 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $19,646,285
=============
NET ASSET VALUE, offering and redemption price per share
($19,646,285 / 1,570,395 shares)........................................ $12.51
=======
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS ONE MONTH ENDED SEPTEMBER 30, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 88,590
EXPENSES:
Management fee-Note 2(a).............................................. $ 9,324
Auditing fees......................................................... 2,083
Registration fees..................................................... 1,598
Legal fees............................................................ 1,167
Shareholders' reports................................................. 875
Shareholder servicing costs-Note 2(b)................................. 841
Organization expenses-Note 1(e)....................................... 624
Custodian fees........................................................ 408
Directors' fees and expenses-Note 2(c)................................ 10
Miscellaneous......................................................... 976
--------
17,906
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 17,906
--------
TOTAL EXPENSES.................................................. ----
----------
INVESTMENT INCOME--NET...................................................... 88,590
NET UNREALIZED (DEPRECIATION) ON INVESTMENTS................................ (386,735)
----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(298,145)
==========
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED ONE MONTH ENDED
AUGUST 31, SEPTEMBER 30, 1994
1994* (UNAUDITED)
------------- ------------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................ $ 128,111 $ 88,590
Net realized gain on investments..................................... 1,875 ---
Net unrealized appreciation (depreciation) on investments for the period 78,557 (386,735)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.... 208,543 (298,145)
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................ (128,111) (88,590)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 19,178,689 5,388,341
Dividends reinvested................................................. 81,312 66,202
Cost of shares redeemed.............................................. (4,006,334) (755,622)
------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 15,253,667 4,698,921
------------- -------------
TOTAL INCREASE IN NET ASSETS................................... 15,334,099 4,312,186
NET ASSETS:
Beginning of period.................................................. --- 15,334,099
------------- -------------
End of period........................................................ $15,334,099 $19,646,285
============= =============
SHARES SHARES
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 1,509,942 423,986
Shares issued for dividends reinvested............................... 6,385 5,292
Shares redeemed...................................................... (315,038) (60,172)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING................................. 1,201,289 369,106
============= =============
* From May 6, 1994 (commencement of operations) to August 31, 1994.
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's current Prospectus dated December
30, 1994.
See notes to financial statements.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund (the "Fund") began operating under such name
on March 15, 1994 and is currently offering three series, including the
Dreyfus BASIC Municipal Bond Fund ("the Series"), which was authorized by the
Board of Directors on February 16, 1994. The Series had no operations until
May 6, 1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
DREYFUS BASIC MUNICIPAL FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights--for the period December 16, 1991
(commencement of operations) to August 31, 1992 and for the fiscal years
ended August 31, 1994 and 1993 for the Money Market Portfolio, and for the
periods May 5 and 6, 1994 (commencement of operations) to August 31, 1994
for the Intermediate Bond Portfolio and Bond Portfolio, respectively, and
for the one-month period ended September 30, 1994 (unaudited) for the
Intermediate Bond Portfolio and Bond Portfolio.
Included in Part B of the Registration Statement:
All Portfolios.
Statement of Investments--as of August 31, 1994.
Statement of Assets and Liabilities--as of August 31,
1994.
Statement of Operations--for the period ended August 31,
1994.
Statement of Changes in Net Assets--for the years ended
August 31, 1993 (for the Money Market Portfolio only)
and August 31, 1994.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
October 4, 1994.
Longer Term Portfolios Only.
Statement of Investments (unaudited)--each as of
September 30, 1994.
Statement of Assets and Liabilities (unaudited)--each as
of September 30, 1994.
Statement of Operations (unaudited)--each for the one-
month period ended September 30, 1994.
Statement of Changes in Net Assets--From May 5 and 6,
1994 (commencement of operations), to August 31, 1994,
for the Intermediate Bond Portfolio and Bond Portfolio,
respectively, and for the one-month
period ended September 30, 1994 (unaudited), for the
Intermediate Bond Portfolio and Bond Portfolio.
Notes to Financial Statements
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes which
are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Articles of Incorporation dated August 8, 1991 and Articles of
Amendment thereto are incorporated by reference to Exhibit (1) of Post-
Effective Amendment No. 3 to the Registration Statement, filed on December
15, 1993.
Articles of Amendment dated October 28, 1994.
(2) By-Laws are incorporated by reference to Exhibit (2) of Post-
Effective Amendment No. 3 to the Registration Statement, filed on
December 15, 1993.
(5) Management Agreement is incorporated by reference to Exhibit 5 of
Post-Effective Amendment No. 6 to the Registration Statement, filed on
October 27, 1994.
(6) Distribution Agreement is incorporated by reference to Exhibit 6
of Post-Effective Amendment No. 6 to the Registration Statement, filed on
October 27, 1994.
(8)(a) Form of revised Custody Agreement is incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 4 to
the Registration Statement, filed on February 16, 1994.
(8)(b) Forms of Sub-Custodian Agreements are incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 3 to the Registration
Statement, filed on December 15, 1993.
(9) Revised Shareholder Services Plan is incorporated by reference to
Exhibit 9 of Post-Effective Amendment No. 6 to the Registration Statement,
filed on October 27, 1994
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(10) Opinion and Consent of Stroock & Stroock & Lavan is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 3 to the
Registration Statement, filed on December 15, 1993.
(11) Consent of Ernst & Young LLP.
(16) Schedule of Computation of Performance Data as to the Money Market
Portfolio is incorporated by reference to Exhibit (16) of Post-Effective
Amendment No. 3 to the Registration Statement, filed on December 15, 1993.
Schedules of Computation of Performance Data as to the Longer Term
Portfolios.
Other Exhibits
______________
(a) Powers of Attorney for David W. Burke, Samuel Chase,
Joni Evans, Arnold S. Hiatt, David J. Mahoney and Burton N. Wallack,
Directors; also for Marie E. Connolly, President and Treasurer of the Fund.
(b) Certificate of Assistant Secretary.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of December 7, 1994
______________ _______________________________
Money Market Intermediate Bond
Portfolio Bond Portfolio Portfolio
____________ ____________ ______
Common Stock
(Par value $.001) 6190 275 469
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
27 of Pre-Effective Amendment No.1, filed on December 1991.
Reference is also made to the Distribution Agreement filed as
Exhibit 6 to Post-Effective Amendment No. 6 filed on October 27, 1994.
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 and
manager 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, served primarily as
distributor of shares of investment companies sponsored by Dreyfus and of
investment companies for which Dreyfus acts as sub-investment adviser and
administrator prior to August 24, 1994. 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 of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
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
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Land Development Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++
The Dreyfus Fund International
Limited+++++
World Balanced Fund+++
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
The Dreyfus Trust Company++;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President and The Dreyfus Trust Company++;
Director Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
Vice President and former Treasurer and
Director:
National Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
W. KEITH SMITH Chairman and Chief Executive Officer:
Chief Operating Officer The Boston Company
and a Director One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
PAUL H. SNYDER Director:
Vice President and Chief Pennsylvania Economy League
Financial Officer Philadelphia, Pennsylvania;
Children's Crisis Treatment Center
Philadelphia, Pennsylvania;
Director and Vice President:
Financial Executives Institute,
Philadelphia Chapter
Philadelphia, Pennsylvania;
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman, Distribution Executive Officer:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
LAWRENCE S. KASH Executive Vice President
(cont'd) Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
JAY R. DEMARTINE Chairman of the Board and President:
Vice President, Marketing The Woodbury Society
16 Woodbury Lane
Ogunquit, ME 03907;
Former Managing Director:
Bankers Trust Company
280 Park Avenue
New York, NY 10017;
BARBARA E. CASEY President:
Vice President, Dreyfus Retirement Services;
Retirement Services Executive Vice President:
Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President,
Corporate Communications
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ELIE M. GENADRY President:
Vice President, Institutional Services Division of Dreyfus
Wholesale Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
Secretary:
Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President, Fund
Administration
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice Chairman, Operations Dreyfus Thrift & Commerce****;
and Administration Director:
The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President, Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Secretary:
Vice President, Fund The Dreyfus Consumer Credit Corporation*;
Legal and Compliance Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
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 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Capital Value Fund, Inc.
12) Dreyfus Cash Management
13) Dreyfus Cash Management Plus, Inc.
14) Dreyfus Connecticut Intermediate Municipal Bond Fund
15) Dreyfus Connecticut Municipal Money Market Fund, Inc.
16) The Dreyfus Convertible Securities Fund, Inc.
17) Dreyfus Edison Electric Index Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) Dreyfus Focus Funds, Inc.
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus Global Investing, Inc.
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus Leverage Fund, Inc.
36) Dreyfus Life and Annuity Index Fund, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus Michigan Municipal Money Market Fund, Inc.
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus Ohio Municipal Money Market Fund, Inc.
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 Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) Dreyfus Treasury Cash Management
71) Dreyfus Treasury Prime Cash Management
72) Dreyfus Variable Investment Fund
73) Dreyfus-Wilshire Target Funds, Inc.
74) Dreyfus Worldwide Dollar Money Market Fund, Inc.
75) First Prairie Cash Management
76) First Prairie Diversified Asset Fund
77) First Prairie Money Market Fund
78) First Prairie Municipal Money Market Fund
79) First Prairie Tax Exempt Bond Fund, Inc.
80) First Prairie U.S. Government Income Fund
81) First Prairie U.S. Treasury Securities Cash Management
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Fund, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Fund, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
90) Pacific American Fund
91) Peoples Index Fund, Inc.
92) Peoples S&P MidCap Index Fund, Inc.
93) Premier Insured Municipal Bond Fund
94) Premier California Municipal Bond Fund
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal Bond Fund
99) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly++ Director, President and Chief President and
Operating Officer Treasurer
Joseph F. Tower, III++ Senior Vice President and Chief Assistant
Financial Officer Treasurer
John E. Pelletier++ Senior Vice President and General Vice President
Counsel and Secretary
Frederick C. Dey+ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman+ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
John J. Pyburn+ Vice President Assistant
Treasurer
Jean M. O'Leary++ Assistant Secretary None
Ruth D. Leibert+ Assistant Vice President Assistant
Secretary
Paul D. Furcinito+ Assistant Vice President Assistant
Secretary
John W. Gomez++ Director None
William J. Nutt++ Director None
___________________
+ Located at 200 Park Avenue, New York, New York 10166
++ Located at One Exchange Place, Boston, Massachusetts 02109
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing
to do so by the holders of at least 10% of the Registrant's outstanding
shares of common stock 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 for a Longer Term
Portfolio, 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 15th day of December 1994.
DREYFUS BASIC MUNICIPAL FUND, INC.
BY: /s/Marie E. Connolly*
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title Date
__________________________ ______________________________ __________
/s/Marie E. Connolly* President (Principal Executive 12/15/94
- --------------------- Officer) and Treasurer
Marie E. Connolly (Principal Financial Officer and
Principal Accounting Officer)
/s/David W. Burke* Director 12/15/94
- ------------------
David W. Burke
/s/Samuel Chase* Director 12/15/94
- ----------------
Samuel Chase
/s/Joni Evans* Director 12/15/94
- --------------
Joni Evans
/s/Arnold S. Hiatt* Director 12/15/94
- -------------------
Arnold S. Hiatt
/s/David J. Mahoney* Director 12/15/94
- --------------------
David J. Mahoney
/s/Burton N. Wallack* Director 12/15/94
- ---------------------
Burton N. Wallack
*BY: /s/Ruth D. Leibert
------------------
Ruth D. Leibert,
Attorney-in-Fact
DREYFUS BASIC MUNICIPAL FUND, INC.
EXHIBIT INDEX
Exhibit No.
(1) Articles of Amendment to the Articles of
Incorporation
(11) Consent of Independent Auditors
(16) Schedules of Computation of Performance Data
as to the Longer Term Portfolios
Other Exhibits
Powers of Attorney
Certificate of Assistant Secretary
ARTICLES OF AMENDMENT
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC., a
Maryland corporation having its principal place of business in
Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby
amended by striking Article SECOND of the Articles of
Incorporation and inserting in lieu thereof the following:
"SECOND: The name of the corporation
(hereinafter called the 'corporation') is
Dreyfus BASIC Municipal Fund, Inc."
SECOND: The Charter of the Corporation is hereby
amended further to provide that (i) the designation of generic
shares of Common Stock of the Corporation (marketed as shares of
"Dreyfus BASIC Municipal Money Market Fund") be changed to
Dreyfus BASIC Municipal Money Market Portfolio, (ii) the
designation of Dreyfus BASIC Municipal Bond Fund shares of
Common Stock of the Corporation be changed to Dreyfus BASIC
Municipal Bond Portfolio and (iii) the designation of Dreyfus
BASIC Intermediate Municipal Bond Fund shares of Common Stock of
the Corporation be changed to Dreyfus BASIC Intermediate
Municipal Bond Portfolio.
THIRD: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
FOURTH: These Articles of Amendment were approved by at
least a majority of the entire Board of Directors of the
Corporation and are limited to changes expressly permitted by
Section 2-605 of subtitle 6 of Title 2 of the Maryland General
Corporation Law to be made without the affirmative vote of the
stockholders of the Corporation.
The President acknowledges these Articles of Amendment
to be the corporate act of the Corporation and states that to
the best of her knowledge, information and belief the matters
and facts set forth in these Articles with respect to the
authorization and approval of the amendment of the Corporation's
charter are true in all material respects, and that this
statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus BASIC Municipal Money
Market Fund, Inc. has caused this instrument to be filed in its
name and on its behalf by its Vice President, Eric B. Fischman,
and witnessed by its Assistant Secretary, Ruth D. Leibert, on
the 19th day of October, 1994.
DREYFUS BASIC MUNICIPAL MONEY MARKET
FUND, INC.
By:
Eric B. Fischman, Vice President
WITNESS:
Ruth D. Leibert,
Assistant Secretary
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our reports
dated October 4, 1994 on Dreyfus BASIC Municipal Bond Fund, Dreyfus BASIC
Municipal Money Market Fund, and Dreyfus BASIC Intermediate Municipal
Bond Fund, in this Registration Statement (Form N-1A 33-42162)of
Dreyfus BASIC Municipal Fund.
ERNST & YOUNG LLP
New York, New York
December 14, 1994
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from inception through 8/31/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 8/31/94 of a $1,000
hypothetical investment made on 5/4/94 (inception)
0.329
1000( 1 + T ) = 1,031.14
T = 9.76%
==========
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
TOTAL RETURN COMPUTATION
Total return computation from inception through 8/31/94
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.65 + ( 12.65 x 0.0189 ) ] - 12.50
--------------------------------------------
12.50
T = 3.11%
========
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
SEC 30 DAY YIELD CALCULATION
INCOME 8/2/94 - 8/31/94 $121,620.82
EXPENSES 8/2/94 - 8/31/94 $0.00
Average Shares Entitled to Dividend
8/2/94 - 8/31/94 2,151,576.880
NAV per share 8/31/94 $12.65
x = 121,620.82 - 0.00
------------------------------------------
2,151,576.880 x 12.65
x = 0.004468
6
30 Day yield = 2 [( 1 + x) -1]
6
30 Day yield = 2 [ ( 1 + 0.004468 ) -1]
30 Day yield = 5.42%
=================
TAX EQUIVALENT YIELD
Taxable portion of yield = 0.00%
Tax exempt portion of yield = 5.42%
----------------
Yield = 5.42%
================
Federal Tax Bracket = 39.60%
================
5.42
Tax Equivalent Yield = -------------------- = 8.97%
( 1 - 0.3960 ) ================
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC MUNICIPAL BOND FUND
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
Average annual total return computation from inception through 8/31/94
based upon the following formula:
n
P( 1 + T ) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value as of 8/31/94 of a $1,000
hypothetical investment made on 5/6/94 (inception)
0.323
1000( 1 + T ) = 1,041.34
T = 13.35%
==========
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC MUNICIPAL BOND FUND
TOTAL RETURN COMPUTATION
Total return computation from inception through 8/31/94
based upon the following formula:
[ C + ( C x B ) ] - A
---------------------
T = A
where: A = NAV at beginning of period
B = Additional shares purchased through dividend reinvestment
C = NAV at end of period
T = Total return
T = [ 12.76 + ( 12.76 x 0.0201 ) ] - 12.50
--------------------------------------------
12.50
T = 4.13%
========
DREYFUS BASIC MUNICIPAL FUND
DREYFUS BASIC MUNICIPAL BOND FUND
SEC 30 DAY YIELD CALCULATION
INCOME 8/2/94 - 8/31/94 $67,002.96
EXPENSES 8/2/94 - 8/31/94 $0.00
Average Shares Entitled to Dividend
8/2/94 - 8/31/94 1,051,446.944
NAV per share 8/31/94 $12.76
x = 67,002.96 - 0.00
------------------------------------------
1,051,446.944 x 12.76
x = 0.004994
6
30 Day yield = 2 [( 1 + x) -1]
6
30 Day yield = 2 [ ( 1 + 0.004994 ) -1]
30 Day yield = 6.07%
=================
TAX EQUIVALENT YIELD
Taxable portion of yield = 0.00%
Tax exempt portion of yield = 6.07%
----------------
Yield = 6.07%
================
Federal Tax Bracket = 39.60%
================
6.07
Tax Equivalent Yield = -------------------- = 10.05%
( 1 - 0.3960 ) ================
POWER OF ATTORNEY
_____________________________________
The undersigned hereby constitutes and appoints Frederick C. Dey,
Eric B. Fischman, Ruth D. Leibert 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 for each Fund listed on Exhibit A
attached hereto (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/ David W. Burke /s/ Arnold S. Hiatt
- ----------------- --------------------
David W. Burke Arnold S. Hiatt
/s/ Samuel Chase /s/ David J. Mahoney
- ---------------- ----------------
Samuel Chase David J. Mahoney
/s/ Joni Evans /s/ Burton N. Wallack
- -------------- ----------------
Joni Evans Burton N. Wallack
Dated: August 29, 1994
EXHIBIT A
Dreyfus BASIC Municipal Fund
Dreyfus California Tax Exempt Bond Fund, Inc.
Dreyfus Connecticut Municipal Money Market Fund, Inc.
Dreyfus GNMA Fund, Inc.
Dreyfus Intermediate Municipal Bond Fund, Inc.
Dreyfus Massachusetts Municipal Money Market Fund
Dreyfus Massachusetts Tax Exempt Bond Fund
Dreyfus Michigan Municipal Money Market Fund, Inc.
Dreyfus New Jersey Municipal Money Market Fund, Inc.
Dreyfus New York Tax Exempt Bond Fund, Inc.
Dreyfus New York Tax Exempt Intermediate Bond Fund
Dreyfus New York Tax Exempt Money Market Fund
Dreyfus Ohio Municipal Money Market Fund, Inc.
Dreyfus Pennsylvania Municipal Money Market Fund
POWER OF ATTORNEY
_____________________________________
The undersigned, hereby constitutes and appoints Frederick C. Dey, Eric
B. Fischman, Ruth D. Leibert and John Pelletier and each of them, with full
power to act without the other, her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution; for her
and in her name, place and stead, in any and all capacities (until revoked
in writing) to sign any and all amendmentsto the Registration Statement
for Dreyfus BASIC Municipal Fund, Inc. (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 each of them,
full power and authority to do and perform each and every act 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.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
September 20, 1994.
/s/ Marie E. Connolly
Marie E. Connolly
OTHER EXHIBIT
OTHER EXHIBIT
DREYFUS BASIC MUNICIPAL FUND, INC.
Certificate of Assistant Secretary
The undersigned, Ruth D. Leibert, Assistant Secretary of Dreyfus BASIC
Municipal Fund, Inc. (the "Fund"), hereby certifies that set forth below is
a copy of the resolution adopted by the Fund's Board of Directors
authorizing the signing by Frederick C. Dey, Eric B. Fischman, Ruth
D.Leibert 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 Frederick C.
Dey, Eric B. Fischman, Ruth D. Leibert 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 November 7, 1994.
/s/ Ruth D. Leibert
Ruth D. Leibert
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000878092
<NAME> DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> DREYFUS BASIC MUNICIPAL MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 1019432
<INVESTMENTS-AT-VALUE> 1019432
<RECEIVABLES> 5496
<ASSETS-OTHER> 10144
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1035072
<PAYABLE-FOR-SECURITIES> 7500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 195
<TOTAL-LIABILITIES> 7695
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1027431
<SHARES-COMMON-STOCK> 1027431
<SHARES-COMMON-PRIOR> 849278
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (54)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1027377
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22716
<OTHER-INCOME> 0
<EXPENSES-NET> 738
<NET-INVESTMENT-INCOME> 21978
<REALIZED-GAINS-CURRENT> (51)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 21927
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21978
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1656501
<NUMBER-OF-SHARES-REDEEMED> 1335316
<SHARES-REINVESTED> 20703
<NET-CHANGE-IN-ASSETS> 341837
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (6)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4251
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4989
<AVERAGE-NET-ASSETS> 850296
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .026
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .026
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .001
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000878092
<NAME> DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> DREYFUS BASIC MUNICIPAL BOND FUND
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> AUG-31-1994 AUG-31-1994
<PERIOD-END> AUG-31-1994 SEP-30-1994
<INVESTMENTS-AT-COST> 15283 21479
<INVESTMENTS-AT-VALUE> 15361 21170
<RECEIVABLES> 202 372
<ASSETS-OTHER> 552 86
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 16115 21628
<PAYABLE-FOR-SECURITIES> 750 934
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 31 1048
<TOTAL-LIABILITIES> 781 1982
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 15254 19952
<SHARES-COMMON-STOCK> 1201 1570
<SHARES-COMMON-PRIOR> 0 1201
<ACCUMULATED-NII-CURRENT> 0 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 2 2
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 78 (308)
<NET-ASSETS> 15334 19646
<DIVIDEND-INCOME> 0 0
<INTEREST-INCOME> 128 89
<OTHER-INCOME> 0 0
<EXPENSES-NET> 0 0
<NET-INVESTMENT-INCOME> 128 89
<REALIZED-GAINS-CURRENT> 2 0
<APPREC-INCREASE-CURRENT> 78 (387)
<NET-CHANGE-FROM-OPS> 208 (298)
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 128 89
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 1510 424
<NUMBER-OF-SHARES-REDEEMED> 315 60
<SHARES-REINVESTED> 6 5
<NET-CHANGE-IN-ASSETS> 15334 4312
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 2
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 3 9
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 44 18
<AVERAGE-NET-ASSETS> 6570 18896
<PER-SHARE-NAV-BEGIN> 12.50 12.76
<PER-SHARE-NII> .195 .06
<PER-SHARE-GAIN-APPREC> .260 (.25)
<PER-SHARE-DIVIDEND> .195 .06
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 12.76 12.51
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000878092
<NAME> DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> AUG-31-1994 AUG-31-1994
<PERIOD-END> AUG-31-1994 SEP-30-1994
<INVESTMENTS-AT-COST> 27057 31904
<INVESTMENTS-AT-VALUE> 27311 31761
<RECEIVABLES> 324 492
<ASSETS-OTHER> 0 1834
<OTHER-ITEMS-ASSETS> 665 0
<TOTAL-ASSETS> 28300 34087
<PAYABLE-FOR-SECURITIES> 0 1044
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 25 8
<TOTAL-LIABILITIES> 25 1052
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 28022 33180
<SHARES-COMMON-STOCK> 2235 2647
<SHARES-COMMON-PRIOR> 0 2235
<ACCUMULATED-NII-CURRENT> 0 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> (1) (2)
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 254 (143)
<NET-ASSETS> 28275 33035
<DIVIDEND-INCOME> 0 0
<INTEREST-INCOME> 235 131
<OTHER-INCOME> 0 0
<EXPENSES-NET> 0 0
<NET-INVESTMENT-INCOME> 235 131
<REALIZED-GAINS-CURRENT> (1) 0
<APPREC-INCREASE-CURRENT> 253 (397)
<NET-CHANGE-FROM-OPS> 487 (266)
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 235 131
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 2629 544
<NUMBER-OF-SHARES-REDEEMED> 407 140
<SHARES-REINVESTED> 13 7
<NET-CHANGE-IN-ASSETS> 28275 4761
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 (1)
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 25 15
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 65 26
<AVERAGE-NET-ASSETS> 13006 29953
<PER-SHARE-NAV-BEGIN> 12.50 12.65
<PER-SHARE-NII> .24 .05
<PER-SHARE-GAIN-APPREC> .15 (.17)
<PER-SHARE-DIVIDEND> .24 .05
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 12.65 12.48
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
