File
No. 33-42162
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. 5
[ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[ X ]
Amendment No. 5
[ X ]
(Check appropriate box or boxes.)
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
(d/b/a Dreyfus Basic Municipal Fund)
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip
Code)
Registrant's Telephone Number, including Area Code: (212)
922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b) of
Rule 485
----
on (date) pursuant to paragraph (b) of Rule
485
----
60 days after filing pursuant to paragraph (a) of Rule
485
----
X on November 30, 1994 pursuant to paragraph (a) of Rule
485
----
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 will be filed on or about
October 20, 1994.
DREYFUS BASIC MUNICIPAL MONEY MARKET 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 7
5 Management of the Fund 26
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 37
7 Purchase of Securities Being Offered 27
8 Redemption or Repurchase 31
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund
B-14
15 Control Persons and Principal
B-17
Holders of Securities
16 Investment Advisory and Other
B-17
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS BASIC MUNICIPAL MONEY MARKET 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-30
18 Capital Stock and Other Securities
B-31
19 Purchase, Redemption and Pricing
B-20,21,
of Securities Being Offered
B-26
20 Tax Status
B-27
21 Underwriters
B-20
22 Calculations of Performance Data
B-28
23 Financial Statements
B-43
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-10
30 Location of Accounts and Records
C-12
31 Management Services
C-12
32 Undertakings
C-12
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
- -----------------------------------------------------------------
- -----------
PROSPECTUS
NOVEMBER 30, 1994
DREYFUS BASIC MUNICIPAL FUND
- -----------------------------------------------------------------
- ------------
DREYFUS BASIC MUNICIPAL FUND (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 "SERIES"): DREYFUS
BASIC
MUNICIPAL MONEY MARKET FUND (THE "MONEY MARKET SERIES"); DREYFUS
BASIC
INTERMEDIATE MUNICIPAL BOND FUND (THE "INTERMEDIATE BOND
SERIES"); AND DREYFUS
BASIC MUNICIPAL BOND FUND (THE "BOND SERIES"). THE GOAL OF EACH
SERIES 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 SERIES ONLY, THE MAINTENANCE OF LIQUIDITY.
THE FUND IS DESIGNED TO BENEFIT INVESTORS WHO DO NOT ENGAGE
IN FREQUENT
TRANSACTIONS IN SERIES' SHARES.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES EACH SERIES.
AN INVESTMENT IN THE MONEY MARKET SERIES IS NEITHER INSURED
NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
THE MONEY
MARKET SERIES 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.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL
INFORMATION), DATED
NOVEMBER 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 BOND MUTUAL FUNDS WILL FLUCTUATE FROM TIME TO
TIME.
- -----------------------------------------------------------------
- -----------
TABLE OF CONTENTS
PAGE
FEE TABLE................................... 3
CONDENSED FINANCIAL INFORMATION............. 4
PERFORMANCE INFORMATION..................... 5
DESCRIPTION OF THE FUND..................... 6
MANAGEMENT OF THE FUND...................... 19
HOW TO BUY FUND SHARES...................... 20
EXCHANGE PRIVILEGE.......................... 22
HOW TO REDEEM FUND SHARES................... 22
SHAREHOLDER SERVICES PLAN................... 25
DIVIDENDS, DISTRIBUTIONS AND TAXES.......... 25
GENERAL INFORMATION......................... 27
- -----------------------------------------------------------------
- -----------
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>
<CAPTION>
FEE TABLE
MONEY INTERMEDIATE
MARKET BOND BOND
SERIES SERIES SERIES
- --------- ----------- -------
<S>
<C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
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)....
.29% .30% .30%
Other Expenses...................................
.16% .15% .15%
Total Fund Operating Expenses
(after expense reimbursement)..................
.45% .45% .45%
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:
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 SERIES' ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
- -----------------------------------------------------------------
- -----------
The purpose of the foregoing table is to assist you in
understanding the
various costs and expenses that investors will bear, directly or
indirectly,
the payment of which will reduce investors' return on an annual
basis. The
expenses noted above, without reimbursement, would be: Management
Fees-.50%
with respect to the Money Market Series and .60% with respect to
the
Intermediate Bond Series and Bond Series, and Total Fund
Operating
Expenses-.66% with respect to the Money Market Series and .75%
with respect
to the Intermediate Bond Series and Bond Series; and the amount
of expenses
that an investor would pay, assuming redemption after one, three,
five and
ten years, would be $12, $26, $42 and $87 with respect to the
Money Market
Series and $13, $29, $47 and $97 with respect to the Intermediate
Bond Series
and Bond Series, respectively. With respect to the Intermediate
Bond Series
and the Bond Series, Other Expenses and Total Fund Operating
Expenses are
based on estimated amounts for the current fiscal year. 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
undertaken until June 30, 1996, in the case of the Money Market
Series, and
until June 30, 1998, in the case of the Intermediate Bond Series
and Bond
Series, that if in any fiscal year certain expenses of a Series,
including
the management fee, exceed .45% of the value of such Series'
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 table has been audited 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 SERIES -- 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 SERIES'
financial
statements.
<TABLE>
<CAPTION>
MONEY MARKET SERIES
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
-------
------- -------
INVESTMENT OPERATIONS:
Investment income - net.................... .0240
.0270
Net realized (loss) on investments......... --
-------
------- -------
TOTAL FROM INVESTMENT OPERATIONS....... .0240
.0270
-------
------- -------
DISTRIBUTIONS:
Dividends from investment income - net.....
(.0240) (.0270)
-------
------- -------
Net asset value, end of year............... $1.0000
$1.0000
=======
======= =======
TOTAL INVESTMENT RETURN....................
3.41%(2) 2.73%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets..... --
.02%
Ratio of net investment income to average net assets...
3.22%(2) 2.64%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation .................
.77%(2) .64%
Net Assets, end of year (000's omitted).....
$228,708 $685,540
- -------------
(1) From December 16, 1991 (commencement of operations) to August
31, 1992.
(2) Annualized.
</TABLE>
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND SERIES -- 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 indicated. This information has been derived from the
INTERMEDIATE
BOND SERIES financial statements.
<TABLE>
<CAPTION>
INTERMEDIATE BOND SERIES
PERIOD ENDED AUGUST 31,
1994(1)
--------
<S>
<C>
PER SHARE DATA:
Net asset value, beginning of period......................
--------
INVESTMENT OPERATIONS:
Investment income - net...................................
Net realized (loss) on investments........................
--------
TOTAL FROM INVESTMENT OPERATIONS........................
--------
DISTRIBUTIONS:
Dividends from investment income - net....................
--------
Net asset value, end of period............................
========
TOTAL INVESTMENT RETURN...................................
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...................
Ratio of net investment income to average net assets......
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation..........
Net Assets, end of period (000's omitted).................
- ----------------------
(1) From May 3, 1994 (commencement of operations) to August 31,
1994.
(2) Annualized.
</TABLE>
Page 4
FINANCIAL HIGHLIGHTS
BOND SERIES -- 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
indicated.
This information has been derived from the BOND SERIES financial
statements.
<TABLE>
<CAPTION>
BOND SERIES
PERIOD ENDED AUGUST 31,
1994(1)
--------
<S>
<C>
PER SHARE DATA:
Net asset value, beginning of period................
--------
INVESTMENT OPERATIONS:
Investment income - net.............................
Net realized (loss) on investments..................
TOTAL FROM INVESTMENT OPERATIONS..................
DISTRIBUTIONS:
Dividends from investment income - net...............
Net asset value, end of period.......................
TOTAL INVESTMENT RETURN..............................
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...............
Ratio of net investment income to average net assets..
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus Corporation.......
Net Assets, end of period (000's omitted).............
- --------------------
(1) From May 3, 1994 (commencement of operations) to August 31,
1994.
(2) Annualized.
</TABLE>
PERFORMANCE INFORMATION
MONEY MARKET SERIES - From time to time, the Money Market Series
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 Series refers to the income generated by an
investment in the
Series 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 Series 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
Series'
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
Series'
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 Series' shares,
including data from
Lipper Analytical Services, Inc., Bank Rate Monitor trademark, N.
Palm Beach,
Fla. 33408, IBC/Donoghue's Money Fund Report, Morningstar, Inc.
and other
industry publications.
INTERMEDIATE BOND SERIES AND BOND SERIES - For purposes of
advertising,
performance of the Intermediate Bond Series and the Bond Series
(each, a
"Longer Term Series") 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 Series 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
Page 5
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 Series' 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 Series is
calculated
pursuant to a standardized formula which assumes that an
investment in such
Series was purchased with an initial payment of $1,000 and that
the
investment was redeemed at the end of a stated period of time,
after giving
effect to the reinvestment of dividends and distributions during
the period.
The return is expressed as a percentage rate which, if applied on
a
compounded annual basis, would result in the redeemable value of
the
investment at the end of the period. Advertisements of a Longer
Term Series'
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
Series' 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 Series,
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 SERIES - 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 Series is treated as a separate entity
for certain
matters under the Investment Company Act of 1940 and for other
purposes, and
a shareholder of one Series is not deemed to be a shareholder of
any other
Series. As described below, for certain matters Fund shareholders
vote
together as a group; as to others they vote separately by Series.
INVESTMENT OBJECTIVE - Each Series' 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 Market Series
only, the
maintenance of liquidity. To accomplish this goal, each Series
invests
primarily in Municipal Obligations (described below). The Money
Market Series
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 Series' portfolio will range between three and
ten years.
The Bond Series' portfolio will be invested without regard to
maturity. Each
Page 6
Series' investment objective cannot be changed without approval
by the
holders of a majority (as defined in the Investment Company Act
of 1940) of
such Series' outstanding voting shares. There can be no assurance
that a
Series' 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 Series 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 Series 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 Series
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 Series, at least
65% of the
value of each Series' net assets (except when maintaining a
temporary
defensive position) will be invested in bonds and debentures.
MONEY MARKET SERIES - The Money Market Series seeks to maintain a
net asset
value of $1.00 per share for purchases and redemptions. To do so,
the Money
Market Series 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 Series 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
Directors. The nationally recognized statistical rating
organizations
currently rating investments of the type the Money Market Series
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 Series will be able to maintain a stable net asset value
of $1.00 per
share.
Page 7
INTERMEDIATE BOND SERIES AND BOND SERIES - For each Longer
Term Series,
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 Series 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 Series
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
Series 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
Series also
may invest in Taxable Investments of the quality described below.
Each Longer Term Series may invest in zero coupon securities
which are
debt securities issued or sold at a discount from their face
value which do
not entitle the holder to any periodic payment of interest prior
to maturity
or a specified redemption date (or cash payment date). The amount
of the
discount varies depending on the time remaining until maturity or
cash
payment date, prevailing interest rates, liquidity of the
security and
perceived credit quality of the issuer. Zero coupon securities
also may take
the form of debt securities that have been stripped of their
unmatured
interest coupons, the coupons themselves and receipts or
certificates
representing 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
Series 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 Series may purchase custodial receipts
representing the
right to receive certain future principal and interest payments
on Municipal
Obligations which underlie the custodial receipts. A number of
different
arrangements are possible. In a typical custodial receipt
arrangement, an
issuer or a third party owner of Municipal Obligations deposits
such
obligations with a custodian in exchange for two classes of
custodial
receipts. The two classes have different characteristics, but, in
each case,
payments on the two classes are based on payments received on the
underlying
Municipal Obligations. One class has the characteristics of a
typical auction
rate security, where at specified intervals its interest rate is
adjusted,
and ownership changes, based on an auction mechanism. This
class's interest
rate generally is expected to be below the coupon rate of the
underlying
Municipal Obligations and generally is at a level comparable to
that of a
Municipal Obligation of similar quality and having a maturity
equal to the
period between interest rate adjustments. The second class bears
interest at
a rate that exceeds the interest rate typically borne by a
security of
comparable quality and maturity; this rate also is adjusted, but
in this case
inversely to changes in the rate of interest of the first class.
If the
interest rate on the first class exceeds the coupon rate of the
underlying
Municipal Obligations, its interest rate will exceed the rate
paid on the
second class. In no event will the aggregate interest paid with
respect to
the two classes
Page 8
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 Series should increase the
volatility of
its net asset value and, thus, its price per share. These
custodial receipts
are sold in private placements. Each Longer Term Series also may
purchase
directly from issuers, and not in a private placement, Municipal
Obligations
having characteristics similar to custodial receipts. These
securities may be
issued as part of a multi-class offering and the interest rate on
certain
classes may be subject to a cap or a floor.
ALL SERIES (EXCEPT AS INDICATED BELOW) - Each Series may invest
more than 25%
of the value of its total assets in Municipal Obligations which
are related
in such a way that an economic, business or political development
or change
affecting one such security also would affect the other
securities; for
example, securities the interest upon which is paid from revenues
of similar
types of projects, or securities whose issuers are located in the
same state.
As a result, each Series may be subject to greater risk as
compared to a fund
that does not follow this practice.
From time to time, a Series may invest more than 25% of the
value of its
total assets in industrial development bonds which, although
issued by
industrial development authorities, may be backed only by the
assets and
revenues of the non-governmental users. Interest on Municipal
Obligations
(including certain industrial development bonds) which are
specified private
activity bonds, as defined in the Internal Revenue Code of 1986,
as amended
(the "Code"), issued after August 7, 1986, while exempt from
Federal income
tax, is a preference item for the purpose of the alternative
minimum tax.
Where a regulated investment company receives such interest, a
proportionate
share of any exempt-interest dividend paid by the investment
company may be
treated as such a preference item to shareholders. Each Series
may invest
without limitation in such Municipal Obligations if The Dreyfus
Corporation
determines that their purchase is consistent with such Series'
investment
objective. See "Risk Factors -- Other Investment Considerations"
below.
Each Series 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
Series 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 Series to invest fluctuating
amounts, which may
change daily without penalty, pursuant to direct arrangements
between the
Series, as lender, and the borrower. The interest rates on these
obligations
fluctuate from time to time. Frequently, such obligations are
secured by
letters of credit or other credit support arrangements provided
by banks. Use
of letters of credit or other credit support arrangements will
not adversely
affect the tax exempt status of these obligations. Because these
obligations
are direct lending arrangements between the lender and borrower,
it is not
contemplated that such instruments generally will be traded, and
there
generally is no established secondary market for these
obligations, although
they are redeemable at face value. Accordingly, where these
obligations are
not secured by letters of credit or other credit support
arrangements, the
Series' right to redeem is dependent on the ability of the
borrower to pay
principal and interest on demand. Each obligation purchased by a
Series will
meet the quality criteria established for its purchase of
Municipal
Obligations. The Dreyfus Corporation, on behalf of each Series,
will consider
on an ongoing basis the creditworthiness of the issuers of the
floating and
variable rate demand obligations in the Series' portfolio. No
Series will
invest more than 15% (10% in the case of the Money Market Series)
of the
value of its net assets in floating or variable rate demand
obligations as to
which such Series cannot exercise the demand feature on not more
than seven
days' notice if there is no secondary market available for these
obligations,
and in other illiquid securities.
Each Series may purchase from financial institutions
participation
interests in Municipal Obligations (such as industrial
development bonds and
municipal lease/purchase agreements). A participation interest
Page 9
gives a Series an undivided interest in the Municipal Obligation
in the
proportion that the Series' 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
Series, 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 Series will have the right to
demand
payment, on not more than seven days' notice, for all or any part
of the
Series' participation interest in the Municipal Obligation, plus
accrued
interest. As to these instruments, each Series intends to
exercise its right
to demand payment only upon a default under the terms of the
Municipal
Obligation, as needed to provide liquidity to meet redemptions,
or to maintain
or improve the quality of its investment portfolio. No Series
will invest more
than 15% (10% in the case of the Money Market Series) of the
value of its net
assets in participation interests that do not have this demand
feature if
there is no secondary market available for these instruments, and
in other
illiquid securities. Each Series may purchase tender option
bonds. A tender
option bond is a Municipal Obligation (generally held pursuant to
a custodial
arrangement) having a relatively long maturity and bearing
interest at a fixed
rate substantially higher than prevailing short-term tax exempt
rates, that
has been coupled with the agreement of a third party, such as a
bank,
broker-dealer or other financial institution, pursuant to which
such
institution grants the security holders the option, at periodic
intervals, to
tender their securities to the institution and receive the face
value
thereof. As consideration for providing the option, the financial
institution
receives periodic fees equal to the difference between the
Municipal
Obligation's fixed coupon rate and the rate, as determined by a
remarketing
or similar agent at or near the commencement of such period, that
would cause
the securities, coupled with the tender option, to trade at par
on the date
of such determination. Thus, after payment of this fee, the
security holder
effectively holds a demand obligation that bears interest at the
prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of
each
Series, will consider on an ongoing basis the creditworthiness of
the issuer
of the underlying Municipal Obligation, of any custodian and of
the third
party provider of the tender option. In certain instances and for
certain
tender option bonds, the option may be terminable in the event of
a default
in payment of principal or interest on the underlying Municipal
Obligations
and for other reasons. No Series will invest more than 15% (10%
in the case
of the Money Market Series) 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 Series may acquire "stand-by commitments" with respect
to Municipal
Obligations held in its portfolio. Under a stand-by commitment, a
Series
obligates a broker, dealer or bank to repurchase, at such Series'
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 Series will acquire stand-by commitments solely
to facilitate
portfolio liquidity and does not intend to exercise any such
rights thereunder
for trading purposes. Each Series 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 Series also may acquire call
options on specific
Municipal Obligations. A Longer Term Series 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 Series of a
call option
that it owns on a specific Municipal Obligation could result in
the receipt of
taxable income by the Series.
Each Series may invest up to 15% (10% in the case of the
Money Market
Series) of the value of its
Page 10
net assets in securities as to which a liquid trading market does
not exist,
provided such investments are consistent with the Series'
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. However, if a
substantial
market of qualified institutional buyers develops pursuant to
Rule 144A under
the Securities Act of 1933, as amended, for certain of these
securities held
by a Series, the Series intend to treat such securities as liquid
securities
in accordance with procedures approved by the Fund's Board of
Directors.
Because it is not possible to predict with assurance how the
market for
restricted securities pursuant to Rule 144A will develop, the
Fund's Board of
Directors has directed The Dreyfus Corporation to monitor
carefully the
Series' investments in such securities with particular regard
to trading activity, availability of reliable price information
and other
relevant information. To the extent that for a period of time,
qualified
institutional buyers cease purchasing restricted securities
pursuant to Rule
144A, a Series' investing in such securities may have the effect
of
increasing the level of illiquidity in its portfolio during such
period.
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 Series may invest in taxable
short-term
investments ("Taxable Investments") consisting of: notes of
issuers having,
at the time of purchase, a quality rating within the two highest
grades of
Moody's, S&P or Fitch; obligations of the U.S. Government, its
agencies or
instrumentalities; 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 Series that are attributable to
income earned
by such Series from Taxable Investments will be taxable to
investors. See
"Dividends, Distributions and Taxes." Except for temporary
defensive
purposes, at no time will more than 20% of the value of a Series'
net assets
be invested in Taxable Investments. If the Money Market Series
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 Series 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 Series 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 Series is
a commodity
pool. However, as a substitute for a comparable market position
in the
underlying securities and for hedging purposes, each Longer Term
Series may
engage in futures and options on futures transactions as
described below.
Each Longer Term Series' 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 Series may not engage in such transactions if the sum
of the
amount of initial margin deposits and premiums paid for unexpired
commodity
options, other than for bona fide hedging transactions, would
exceed 5% of
the liquidation value of such Series' assets, after taking into
account
unrealized profits and unrealized losses on such contracts it has
entered
into; provided, however, that in the case of an option that is
in-the-money
at the time of purchase, the in-the-money amount may be excluded
in
calculating the 5%. Pursuant to regulations and/or published
positions of the
Securities and Exchange Commission, each Longer Term Series may
be required
to segregate cash or high quality money market instruments in
connection with
its commodities transactions
Page 11
in an amount generally equal to the value of the underlying
commodity. To the
extent a Longer Term Series engages in the use of futures and
options on
futures other than for bona fide hedging purposes, the Series may
be subject
to additional risk.
Initially, when purchasing or selling futures contracts each
Longer Term
Series will be required to deposit with the Fund's custodian in
the broker's
name an amount of cash or cash equivalents up to approximately
10% of the
contract amount. This amount is subject to change by the exchange
or board of
trade on which the contract is traded and members of such
exchange or board
of trade may impose their own higher requirements. This amount is
known as
"initial margin" and is in the nature of a performance bond or
good faith
deposit on the contract which is returned to such Series 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 Series may elect to close the position by taking an opposite
position at
the then prevailing price, which will operate to terminate such
Series'
existing position in the contract.
Although each Longer Term Series 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 Series to a
substantial
loss. If it is not possible, or such Series determines not, to
close a
futures position in anticipation of adverse price movements, such
Series will
be required to make daily cash payments of variation margin. In
such
circumstances, an increase in the value of the portion of the
portfolio being
hedged, if any, may offset partially or completely losses on the
futures
contract. However, no assurance can be given that the price of
the securities
being hedged will correlate with the price movements in a futures
contract
and thus provide an offset to losses on the futures contract.
In addition, to the extent a Longer Term Series is engaging
in a futures
transaction as a hedging device, due to the risk of an imperfect
correlation
between securities in the Longer Term Series' portfolio that are
the subject
of a hedging transaction and the futures contract used as a
hedging device,
it is possible that the hedge will not be fully effective in
that, for
example, losses on the portfolio securities may be in excess of
gains on the
futures contract or losses on the futures contract may be in
excess of gains
on the portfolio securities that were the subject of the hedge.
In futures
contracts based on indexes, the risk of imperfect correlation
increases as
the composition of such Series' portfolio varies from the
composition of the
index. In an effort to compensate for the imperfect correlation
of movements
in the price of the securities being hedged and movements in the
price of
futures contracts, such Series may buy or sell futures contracts
in a greater
or lesser dollar amount than the dollar amount of the securities
being hedged
if the historical volatility of the futures contract has been
less or greater
than that of the securities. Such "over hedging" or "under
hedging" may
adversely affect a Longer Term Series' net investment results if
market
movements are not as anticipated when the hedge is established.
Successful use of futures by each Longer Term Series 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
Series 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 Fund will lose part or all of the
Page 12
benefit of the increased value of securities which it has hedged
because it
will have offsetting losses in its futures positions. In
addition, in such
situations, if a Fund has insufficient cash, it may have to sell
securities to
meet daily variation margin requirements. Such sales of
securities may, but
will not necessarily, be at increased prices which reflect the
rising market.
Each Longer Term Series may have to sell 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 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 Series with respect to
futures
contracts will be covered by, among other things, entering into a
long
position in the same contract at a price no higher than the
strike price of
the call option, or by ownership of the instruments underlying,
or
instruments the prices of which are expected to move relatively
consistently
with the instruments underlying, the futures contract. Put
options sold by
each Longer Term Series with respect to futures contracts will be
covered
when, among other things, cash or liquid securities are placed in
a
segregated account to fulfill the obligation undertaken.
Each Longer Term Series 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 Series 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 Series may purchase and sell interest
rate futures
contracts and options on interest rate futures contracts as a
substitute for
a comparable market position and to hedge against adverse
movements in
interest rates.
To the extent a Longer Term Series has invested in interest
rate futures
contracts or options on interest rate futures contracts as a
substitute for a
comparable market position, the Series will be subject to the
investment
risks of having purchased the securities underlying the contract.
Each Longer Term Series may purchase call options on interest
rate
futures contracts to hedge against a decline in interest rates
and may
purchase put options on interest rate futures contracts to hedge
its
portfolio securities against the risk of rising interest rates.
If a Longer Term Series has hedged against the possibility of
an increase
in interest rates adversely affecting the value of securities
held in such
Series' portfolio and rates decrease instead, such Series will
lose part or
all of the benefit of the increased value of the securities which
it has
hedged because it will have offsetting losses in its futures
positions. In
addition, in such situations, if such Series has insufficient
cash, it may
have to sell securities to meet daily variation margin
requirements at a time
when it may be disadvantageous to do so. These sales of
securities may, but
will not necessarily, be at increased prices which reflect the
decline in
interest rates.
Page 13
Each Longer Term Series may sell call options on interest
rate futures
contracts to partially hedge against declining prices of its
portfolio
securities. If the futures price at expiration of the option is
below the
exercise price, such Series will retain the full amount of the
option premium
which provides a partial hedge against any decline that may have
occurred in
that Series' portfolio holdings. Each Longer Term Series may sell
put options
on interest rate futures contracts to hedge against increasing
prices of the
securities which are deliverable upon exercise of the futures
contract. If
the futures price at expiration of the option is higher than the
exercise
price, such Series will retain the full amount of the option
premium which
provides a partial hedge against any increase in the price of
securities
which that Series intends to purchase. If a put or call option
sold by such
Series is exercised, that Series will incur a loss which will be
reduced by
the amount of the premium it receives. Depending on the degree of
correlation
between changes in the value of its portfolio securities and
changes in the
value of its futures positions, such Series' losses from existing
options on
futures may to some extent be reduced or increased by changes in
the value of
its portfolio securities.
Each Longer Term Series also may sell options on interest
rate futures
contracts as part of 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 such
Series'
portfolio securities which are the subject of the hedge. In
addition, such
Series' purchase of such options will be based upon predictions
as to
anticipated interest rate trends, which could prove to be
inaccurate.
SHORT-SELLING - Each Longer Term Series may make short sales,
which are
transactions in which a Series sells a security it does not own
in
anticipation of a decline in the market value of that security.
To complete
such a transaction, such Series must borrow the security to make
delivery to
the buyer. That Series then is obligated to replace the security
borrowed by
purchasing it at the market price at the time of replacement. The
price at
such time may be more or less than the price at which the
security was sold
by such Series. Until the security is replaced, the Series is
required to pay
to the lender amounts equal to any interest which accrue during
the period of
that loan. To borrow the security, such Series also may be
required to pay a
premium, which would increase the cost of the security sold. The
proceeds of
the short sale will be retained by the broker, to the extent
necessary to
meet margin requirements, until the short position is closed out.
Until either Longer Term Series replaces a borrowed security
in
connection with a short sale, such Series will: (a) maintain
daily a
segregated account, containing cash or U.S. Government
securities, at such a
level that (i) the amount deposited in the account plus the
amount deposited
with the broker as collateral will equal the current value of the
security
sold short and (ii) the amount deposited in the segregated
account plus the
amount deposited with the broker as collateral will not be less
than the
market value of the security at the time it was sold short; or
(b) otherwise
cover its short position.
A Longer Term Series will incur a loss as a result of the
short sale if
the price of the security increases between the date of the short
sale and
the date on which such Series replaces the borrowed security. A
Longer Term
Series will realize a gain if the security declines in price
between those
dates. This result is the opposite of what one would expect from
a cash
purchase of a long position in a security. The amount of any gain
will be
decreased, and the amount of any loss increased, by the amount of
any premium
or amounts in lieu of dividends or interest the Longer Term
Series may be
required to pay in connection with a short sale.
Each Longer Term Series may purchase call options to provide
a hedge
against an increase in the price of a security sold short by such
Series.
When a Series purchases a call option it has to pay a premium to
the person
writing the option and a commission to the broker selling the
option. If the
option is exercised by that Series, the premium and the
commission paid may
be more than the amount of the brokerage commission charged if
the security
were to be purchased directly.
Page 14
Each Longer Term Series anticipates that the frequency of
short sales
will vary substantially in different periods, and it does not
intend that any
specified portion of its assets, as a matter of practice, will be
invested in
short sales. However, no securities will be sold short if, after
effect is
given to any such short sale, the total market value of all
securities sold
short would exceed 25% of the value of such Series' net assets.
Neither
Longer Term Series may sell short the securities of any class of
an issuer to
the extent, at the time of the transaction, of more than 5% of
the
outstanding securities of that class.
In addition to the short sales discussed above, each Longer
Term Series
may make short sales "against the box," a transaction in which
such Series
enters into a short sale of a security which the Series owns. The
proceeds of
the short sale will be held by a broker until the settlement date
at which
time such Series delivers the security to close the short
position. Such
Series receives the net proceeds from the short sale. Neither
Longer Term
Series 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 Series will make short sales against the box for
purposes of
protecting the value of such Series' net assets.
FUTURE DEVELOPMENTS - Each Longer Term Series 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 Series 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 Series will provide appropriate
disclosure in its
prospectus.
LENDING PORTFOLIO SECURITIES - From time to time, each Longer
Term Series 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 Series'
total assets.
In connection with such loans, such Series 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
Series can
increase its income through the investment of such collateral.
Each Longer
Term Series continues to be entitled to payments in amounts equal
to the
interest or other distributions payable on the loaned security
and receives
interest on the amount of the loan. Such loans will be terminable
at any time
upon specified notice. Each Longer Term Series might experience
risk of loss
if the institution with which it has engaged in a portfolio loan
transaction
breaches its agreement with such Series.
BORROWING MONEY - As a fundamental policy, each Longer Term
Series is
permitted to borrow to the extent permitted under the Investment
Company Act
of 1940. However, each Longer Term Series currently intends to
borrow money
only for temporary or emergency (not leveraging) purposes, in an
amount up to
15% of the value of such Series' total assets (including the
amount borrowed)
valued at the lesser of cost or market, less liabilities (not
including the
amount borrowed) at the time the borrowing is made. While
borrowings exceed
5% of a Longer Term Series' total assets, such Series will not
make any
additional investments.
CERTAIN FUNDAMENTAL POLICIES - Each Series 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
Series may borrow money to the extent permitted under the
Investment Company
Act of 1940 and the Money Market Series may: (i) borrow money
from banks, but
only for temporary or emergency (not leveraging) purposes, in an
amount up to
15% of the value of 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 Series' total assets, the Money
Market Series
will not make any additional investments; (ii) pledge,
hypothecate, mortgage
or otherwise
Page 15
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 Series, without approval by the
holders of a
majority (as defined in the Investment Company Act of 1940) of
such Series'
outstanding voting shares. See "Investment Objective and
Management
Policies-Investment Restrictions" in the Statement of Additional
Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
Each Series may invest up to 15% (10% in the case of the Money
Market Series)
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 Fund cannot exercise the demand
feature described
above and as to which there is no secondary market). In addition,
each Longer
Term Series 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 SERIES ONLY) -
You should
carefully consider the relative risks of investing in the higher
yielding
(and, therefore, higher risk) securities in which a Longer Term
Series 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 Series.
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 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 Series 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
Series has been
changed, such Series will consider all circumstances deemed
relevant in
determining whether to continue to hold the security.
Page 16
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 Series' 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 Series to sell certain securities or
could result in
lower prices than those used in calculating the net asset value
of each
Longer Term Series.
Each Longer Term Series 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
Considerations" 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 Series
shares.
Because charges may apply to redemptions and exchanges of Series
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 Series, such as those with interest rates that
fluctuate directly
or indirectly based on multiples of a stated index, are designed
to be highly
sensitive to changes in interest rates and can subject the
holders thereof to
extreme reductions of yield and possibly loss of principal. The
values of
fixed-income securities also may be affected by changes in the
credit rating
or financial condition of the issuing entities. The Money Market
Series seeks
to maintain a stable $1.00 share price, while the net asset value
of each
Longer Term Series 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 Series 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 Series
enters into the
commitment. A Series will make commitments to purchase such
Municipal
Obligations only with the intention of actually acquiring the
securities, but
a Series may sell these securities before the settlement date if
it is deemed
advisable, although any gain realized on such sale would be
taxable. The
Series 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 Series 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 in a Series' portfolio are subject to changes in value (both
generally
changing in the same way, i.e., appreciating when interest rates
decline and
depreciating when interest rates rise) based upon the public's
perception of
the creditworthiness of the issuer and changes, real or
anticipated, in the
level of interest rates. Municipal Obligations purchased by a
Series on a
when-issued basis may expose the Series to risk because they may
experience
such fluctuations prior to their actual delivery. Purchasing
Municipal
Page 17
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 Series
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 Series is fully or almost fully invested
may result
in greater potential fluctuation in the value of such Series' net
assets and
its net asset value per share.
Certain municipal lease/purchase obligations in which a
Series may invest
may contain "non-appropriation" clauses which provide that the
municipality
has no obligation to make lease payments in future years unless
money is
appropriated for such purpose on a yearly basis. Although
"non-appropriation"
lease/purchase obligations are secured by the leased property,
disposition of
the leased property in the event of foreclosure might prove
difficult. In
evaluating the credit quality of a municipal lease/purchase
obligation that
is unrated, The Dreyfus Corporation will consider, on an ongoing
basis, a
number of factors including the likelihood that the issuing
municipality will
discontinue appropriating funding for the leased property.
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 Series may be required to
distribute such
income accrued with respect to these securities and may have to
dispose of
portfolio securities under disadvantageous circumstances in order
to generate
cash to satisfy these distribution requirements.
Certain 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 Series
and thus reduce the available yield. Shareholders should consult
their tax
advisers concerning the effect of these provisions on an
investment in a
Series. 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 Series so as to adversely affect
its
shareholders, such Series 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 Series would treat such
security as a
permissible Taxable Investment within the applicable limits set
forth herein.
Classification of each Series as a "non-diversified"
investment company
means that the proportion of the Series' assets that may be
invested in the
securities of a single issuer is not limited by the Investment
Company Act of
1940. A "diversified" investment company is required by the
Investment
Company Act of 1940 generally to invest, with respect to 75% of
its total
assets, not more than 5% of such assets in the securities of a
single issuer.
However, each Series intends to conduct its operations so as to
qualify as a
"regulated investment company" for purposes of the Code which
requires that,
at the end of each quarter of its taxable year, (i) at least 50%
of the
market value of the Series' 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 Series' total assets, and (ii) not more than 25% of the value
of the
Series' total assets be invested in the securities of any one
issuer (other
than U.S. Government securities or the securities of other
regulated
investment companies). Since a relatively high percentage of each
Series'
assets may be invested in the obligations of a limited number of
issuers, a
Series' portfolio securities may be more susceptible to any
single economic,
political or regulatory occurrence than the portfolio securities
of a
diversified investment company.
Page 18
Investment decisions for each Series 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 Series are
prepared to
invest in, or desire to dispose of, Municipal Obligations or
Taxable
Investments at the same time as such Series, available
investments or
opportunities for sales will be allocated equitably to each
investment
company or Series, 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
Series 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
July 31, 1994, The Dreyfus Corporation managed or administered
approximately
$70 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 Series
is Joseph P. Darcy. He has held that position since the
commencement of
operations of each Longer Term Series 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 Merill 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 $130 billion in assets
as of July
31, 1994, including approximately $6 billion in mutual fund
assets. As of
June 30, 1994, various subsidiaries of Mellon provided
non-investment
services, such as custodial or administration services, for
approximately
$747 billion in assets including approximately $97 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 Series' average daily net assets
and (ii) .60
of 1% of the value of each Longer Term Series' average daily net
assets. From
time to time, The Dreyfus Corporation may waive receipt of its
fees and/or
voluntarily assume certain expenses of a Series, which would have
the effect
of lowering the overall expense ratio of that Series and
increasing yield to
investors at the time such amounts are waived or assumed, as the
case may be.
The Fund will not pay The Dreyfus Corporation at a later time for
any amounts
it may waive, nor will the Fund reimburse The Dreyfus Corporation
for any
amounts it may assume. For the fiscal year ended August 31, 1994,
no
management fee was paid by the Fund with respect to the Money
Market Series
pursuant to an undertaking by The Dreyfus Corporation.
The Dreyfus Corporation has undertaken until June 30, 1996,
in the case
of the Money Market Series, and until June 30, 1998, in the case
of each
Longer Term Series, that if in any fiscal year the aggregate
expenses of a
Series, 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 Series' average daily net assets for the fiscal
year, the
Page 19
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 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 Series
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
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.
You can purchase Series 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 Series 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 Series 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 Series and
$10,000 for each Longer Term Series. Subsequent investments must
be at least
$1,000. The initial investment must be accompanied by the Fund's
Account
Application.
You may purchase Series shares by check or wire. Checks
should be made
payable to "The Dreyfus Family of Funds" and should specify the
Series 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
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
Series' DDA# as shown below, for purchase of Series shares in
your name: DDA#
8900208767/Dreyfus BASIC Municipal Fund/Dreyfus BASIC Municipal
Money Market
Fund; DDA# 8900088451/Dreyfus BASIC Municipal Fund/Dreyfus BASIC
Intermediate
Municipal Bond Fund;or DDA# 8900088443/Dreyfus BASIC Municipal
Fund/Dreyfus
BASIC Municipal Bond Fund. he 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
Page 20
your initial purchase of Series 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 Series 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 Series' 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 Series' net assets (i.e., the value of its
assets less
liabilities) by the total number of Money Market Series' shares
outstanding.
See "Determination of Net Asset Value" in the Statement of
Additional
Information.
If your payments into the Money Market Series 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 Series' 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 Series 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 Series 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 Series' 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 Series, 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 Series' net assets (i.e., the value
of its assets
less liabilities) by the total number of such Series' shares
outstanding. The
investments of each Longer Term Series 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
Page 21
Longer Term Series' investments, see "Determination of Net Asset
Value" in the
Statement of Additional Information.
Federal regulations require that you provide a certified TIN
upon opening
or reopening an account. See "Dividends, Distributions and Taxes"
and the
Fund's Account Application for further information concerning
this
requirement. Failure to furnish a certified TIN to the Fund could
subject you
to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
EXCHANGE PRIVILEGE
The Exchange Privilege enables you to purchase up to four
times a
calendar year, in exchange for shares of a Series, shares in one
of the other
Series 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 Privilege,
you should
consult the Distributor 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 Series. This fee will be deducted from
your
account and paid to the Transfer Agent.
To use this Privilege, you must give exchange instructions to
the
Transfer Agent in writing, by wire or by telephone. If you
previously have
established the Telephone Exchange Privilege, you may telephone
exchange
instructions by calling 1-800-221-4060 or, if you are calling
from overseas,
call 1-401-455-3306. See "How to Redeem Fund Shares-Procedures."
Before any
exchange 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 from the
Distributor.
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. Telephone exchanges may be made only if
the
appropriate "YES" box has been checked on the Account
Application, or a
separate signed Shareholder Services Form is on file with the
Transfer Agent.
Upon an exchange into a new account, the following shareholder
services and
privileges, as applicable and where available, will be
automatically carried
over to the fund into which the exchange is made: Exchange
Privilege, Check
Redemption Privilege, 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) 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 Series in excess of four
during any
calendar year. The Exchange Privilege 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.
Page 22
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 Series 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 Series
shares. Any certificates representing Series shares being
redeemed must be
submitted with the redemption request. The value of the shares
redeemed may
be more or less than their original cost, depending upon the
Series' then
current net asset value.
The Fund ordinarily will make payment for all shares redeemed
within
seven days after receipt by the Transfer Agent of a redemption
request in
proper form, except as provided by the rules of the Securities
and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED SERIES 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 Series or $5,000
or less in
the case of the Longer Term Series and remains so during the
notice period.
The $5.00 account closeout fee would be charged in such case.
PROCEDURES - You may redeem Series shares by using the regular
redemption
procedure through the Transfer Agent, using the Check Redemption
Privilege,
through the Wire Redemption Privilege or through 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 or exchange Series 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 or exchange privilege, you authorize the Transfer
Agent to act on
telephone instructions from any person 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 Series shares. In such cases, you
should consider
using the other redemption procedures described herein. Use of
these other
redemption procedures
Page 23
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 Series' 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 Series
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 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 only up to $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.
Page 24
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 Series 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 Series' 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
Series and providing reports and other information, and services
related to
the maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Series 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 of each month (calendar day
in the case
of the Money Market Series) and are automatically reinvested in
additional
Series shares at net asset value or, at your option, paid in
cash. The
Series' earnings for Saturdays, Sundays and holidays are declared
as
dividends on the preceding business day in the case of the Money
Market
Series and on the next business day in the case of the Longer
Term Series.
With respect to each Longer Term Series, Series 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 Series
may make
distributions on a more frequent basis to comply with the
distribution
requirements of the Code, in all events in a manner consistent
with the
provisions of the Investment Company Act of 1940. No Series 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 Series
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 Series
anticipates
that substantially all dividends paid by such Series will not be
subject to
Federal income tax. Dividends derived from Taxable Investments,
together with
distributions from any net realized short-term securities gains
and all or a
portion of any gains realized from the sale or other disposition
of certain
market discount bonds, paid by a Series are subject to Federal
income tax as
ordinary income whether or not reinvested. No dividend paid by a
Series will
qualify for the dividends received deduction allowable to certain
U.S.
corporations. Distributions from net realized long-term
securities gains of
each Series generally are taxable as long-term capital gains for
Federal
income tax purposes if you are a citizen or resident of the
United States.
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
Page 25
purchase or carry Series 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 Series to a foreign investor
generally are
subject to U.S. nonresident withholding taxes at the rate of 30%,
unless the
foreign investor claims the benefit of a lower rate specified in
a tax
treaty. Distributions from net realized long-term securities
gains paid by a
Series to a foreign investor as well as, in the case of a Longer
Term Series,
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 Series
may be excluded by its shareholders from their gross income for
Federal
income tax purposes, such Series may purchase specified private
activity
bonds, the interest from which may be (i) a preference item for
purposes of
the alternative minimum tax, (ii) a component of the "adjusted
current
earnings" preference item for purposes of the corporate
alternative minimum
tax as well as a component in computing the corporate
environmental tax or
(iii) a factor in determining the extent to which a shareholder's
Social
Security benefits are taxable. If a Series purchases such
securities, the
portion of 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 Series. If a
Series pays
dividends derived from taxable income, it intends to designate as
taxable the
same percentage of the day's dividend as the actual taxable
income earned on
that day bears to total income earned on that day. Thus, the
percentage of
the dividend designated as taxable, if any, may vary from day to
day.
Federal regulations generally require the Fund to withhold
("backup
withholding") and remit to the U.S. Treasury 31% of taxable
dividends,
distributions from net realized securities gains of a Series and,
in the case
of a Longer Term Series, 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 income tax return.
Management of the Fund believes that each Series has
qualified for the
fiscal year ended August 31, 1994 as a "regulated investment
company" under
the Code. Each Series intends to continue to so qualify if such
qualification
is in the best interests of its shareholders. Qualification as a
"regulated
investment company" relieves a Series 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 Series is
subject
Page 26
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. On March 15,
1994, the Fund
began operating under the name Dreyfus BASIC Municipal Fund. The
Fund is
authorized to issue four billion shares of Common Stock, (with
three billion
shares allocated to the Money Market Series and 500 million
shares allocated
to each Longer Term Series) 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 Series and all assets in which such consideration is
invested will
belong to that Series (subject only to the rights of creditors of
the Fund)
and will be subject to the liabilities related thereto. The
income
attributable to, and the expenses of, one Series are treated
separately from
those of the other Series. The Fund has the ability to create,
from time to
time, new series 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 Series
affected by
such matter. Rule 18f-2 further provides that a Series shall be
deemed to be
affected by a matter unless it is clear that the interests of
each Series in
the matter are identical or that the matter does not affect any
interest of
such Series. However, the Rule exempts the selection of
independent
accountants and the election of 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 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
* Dreyfus BASIC Municipal
Money Market Fund
* Dreyfus BASIC Intermediate
Municipal Bond Fund
* Dreyfus BASIC Municipal
Bond Fund
Prospectus
(Lion Logo)
Copy Rights Premier Mutual Fund Services, Inc., 1994
Distributor BMFP1031594
DREYFUS BASIC MUNICIPAL
FUND
PART B
(STATEMENT OF ADDITIONAL
INFORMATION)
NOVEMBER 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 (the "Fund"), dated November 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-19
Exchange Privilege. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . B-21
Determination of Net Asset Value. . . . . . . . . . . . . . . . .
. . . . . B-22
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . .
. . . . . B-24
Performance Information . . . . . . . . . . . . . . . . . . . . .
. . . . . B-25
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . .
. . . . . B-27
Information About the Fund. . . . . . . . . . . . . . . . . . . .
. . . . . B-28
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . .
. . . . . B-28
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . B-29
Financial Statements and Reports of Independent Auditors
Money Market Series . . . . . . . . . . . . . . . . . . . .
. . . . . B-38
Intermediate Bond Series . . . . . . . . . . . . . . . . . .
. . . . . B-
Bond Series . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . B-
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,
in each
case computed on a monthly basis, for the Money Market Series and
for the
period May 3, 1994 (commencement of operations) through August
31, 1994
for each, Longer Term Series was as follows:
<TABLE>
<CAPTION>
Fitch or Moody's or Standard &
Investors Investors Poor's
Percentage of Value
Service, Inc. Service, Inc. Corporation
Money Market Intermediate Bond
("Fitch") ("Moody's") ("S&P")
Series Bond Series Series
- ------------- ------------- -----------
------------ ----------- ------
<S> <C> <S>
<C> <S> <C>
F1+/F1 MIG 1/VMIG 1, SP-1+/SP-1,
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA
Not Rated Not Rated Not Rated
------------ ------------ -----
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 Series) at
any time
or at specified intervals, which, in the case of the Money Market
Series,
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 in that
Series.
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 Series 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 Series 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
Series.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one
year, but
which permit the holder to demand payment of principal at any
time, or at
specified intervals. The issuer of such obligations ordinarily
has a
corresponding right, after a given period, to prepay in its
discretion the
outstanding principal amount of the obligations plus accrued
interest upon
a specified number of days' notice to the holders thereof. The
interest
rate on a floating rate demand obligation is based on a known
lending
rate, such as a bank's prime rate, and is adjusted automatically
each time
such rate is adjusted. The interest rate on a variable rate
demand
obligation is adjusted automatically at specified intervals.
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.
The yields on Municipal Obligations are dependent on a
variety of
factors, including general economic and monetary conditions,
money market
factors, conditions in the Municipal Obligations market, size of
a
particular offering, maturity of the obligation and rating of the
issue.
The imposition of the Fund's management fee, as well as other
operating
expenses, will have the effect of reducing the yield to
investors. 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 Series) of the value of a
Series' net
assets will be invested in lease obligations that are illiquid
and in
other illiquid securities.
The Money Market Series will not purchase tender option
bonds unless
(a) the demand feature applicable thereto is exercisable by such
Series
within 13 months of the date of such purchase upon no more than
30 days'
notice and thereafter is exercisable by the Series 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 Series 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 Series 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 Series 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
Series
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 Series 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 Series. Based on the tender
option
bond agreement, the Fund expects to be able to value the tender
option
bond at par; however, the value of the instrument will be
monitored to
assure that it is valued at fair value.
Ratings of Municipal Obligations. If, subsequent to being
purchased
by the Money Market Series, (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 Series to take such
action as
it determines is in the best interest of the Money Market Series
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 Series,
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 Series.
Neither
event will require the sale of such Municipal Obligations by a
Longer Term
Series, but the Manager will consider such event in determining
whether
the Series 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 Series will attempt to use comparable
ratings as
standards for its 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. For
each Longer
Term Series, 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 Series.
Lending Portfolio Securities. To a limited extent, each
Longer Term
Series may lend its portfolio securities to brokers, dealers and
other
financial institutions, provided it receives cash collateral
which at all
times is maintained in an amount equal to at least 100% of the
current
market value of the securities loaned. By lending its
securities, a
Longer Term Series can increase its income through the investment
of the
cash collateral. For purposes of this policy, the Fund considers
collateral consisting of U.S. Government securities or
irrevocable letters
of credit issued by banks whose securities meet the standards for
investment by the Longer Term Series 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 Series must receive at least 100% cash
collateral from
the borrower; (2) the borrower must increase such collateral
whenever the
market value of the securities rises above the level of such
collateral;
(3) the Longer Term Series must be able to terminate the loan at
any time;
(4) the Longer Term Series 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 Series may pay only reasonable custodian fees in connection
with the
loan. These conditions may be subject to future modification.
Taxable Investments. Securities issued or guaranteed by
the U.S.
Government or its agencies or instrumentalities include U.S.
Treasury
securities, which differ in their interest rates, maturities and
times of
issuance. Treasury Bills have initial maturities of one year or
less;
Treasury Notes have initial maturities of one to ten years; and
Treasury
Bonds generally have initial maturities of greater than ten
years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage
Association
pass-through certificates, are supported by the full faith and
credit of
the U.S. Treasury; others, such as those of the Federal Home Loan
Banks,
by the right of the issuer to borrow from the U.S. Treasury;
others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase
certain
obligations of the agency or instrumentality; and others, such as
those
issued by the Student Loan Marketing Association, only by the
credit of
the agency or instrumentality. These securities bear fixed,
floating or
variable rates of interest. 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 Series 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 Series 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 Series
of an
underlying debt instrument subject to an obligation of the seller
to
repurchase, and such Series to resell, the instrument at a fixed
price,
usually not more than one week after its purchase. The Fund's
custodian
or sub-custodian will have custody of, and will hold in a
segregated
account, securities acquired by the Series under a repurchase
agreement.
Repurchase agreements are considered by the Staff of the
Securities and
Exchange Commission to be loans by the Series that enters into
them. In
an attempt to reduce the risk of incurring a loss on a repurchase
agreement, a Series will enter into repurchase agreements only
with
domestic banks with total assets in excess of one billion dollars
or
primary government securities dealers reporting to the Federal
Reserve
Bank of New York, with respect to securities of the type in which
that
Series may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should
decrease
below resale price. The Manager will monitor on an ongoing basis
the
value of the collateral to assure that it always equals or
exceeds the
repurchase price. Certain costs may be incurred by a Series in
connection
with the sale of the securities if the seller does not repurchase
them in
accordance with the repurchase agreement. In addition, if
bankruptcy
proceedings are commenced with respect to the seller of the
securities,
realization on the securities by a Series may be delayed or
limited. Each
Series 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 Series
only. Lower rated bonds as described herein are not eligible
investments
for the Money Market Series. Each Longer Term Series 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
Series 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 in a Longer Term Series' portfolio has been
changed, the
Manager will consider all circumstances deemed relevant in
determining
whether such Series 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 Series' 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 Series 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 Series may acquire these bonds during an
initial
offering. Such securities may involve special risks because they
are new
issues. Neither Longer Term Series 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 Series
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, a Series 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 Series may obtain no return at all on its investment.
See
"Dividends, Distributions and Taxes."
Investment Restrictions
Money Market Series. The Money Market Series has adopted
investment
restrictions numbered 1 through 5 and 7 through 11 as fundamental
policies
which cannot be changed without approval by the holders of a
majority (as
defined in the Investment Company Act of 1940, as amended (the
"Act")) of
the Money Market Series' outstanding voting shares. Investment
restriction number 6 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
Series 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
Series'
total assets (including the amount borrowed) based on the lesser
of cost
or market, less liabilities (not including the amount borrowed)
at the
time the borrowing is made. While borrowings exceed 5% of the
value of
the Series' total assets, the Series will not make any additional
investments.
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
Series may bid separately or as part of a group for the purchase
of
Municipal Obligations directly from an issuer for its own
portfolio to
take advantage of the lower purchase price available.
6. 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) that are not
subject to
the demand feature described in the Fund's Prospectus and
floating and
variable rate demand notes and bonds as to which the Series
cannot
exercise the demand feature described in the Fund's Prospectus on
less
than seven days' notice and as to which there is no secondary
market), if,
in the aggregate, more than 10% of its net assets would be so
invested.
7. 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 Series from investing in Municipal
Obligations secured by real estate or interests therein.
8. 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.
9. 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.
10. Invest in companies for the purpose of exercising
control.
11. Invest in securities of other investment companies,
except as
they may be acquired as part of a merger, consolidation or
acquisition of
assets.
Intermediate Bond Series and Bond Series. Each Longer
Term Series
has adopted investment restrictions numbered 1 through 7 as
fundamental
policies which cannot be changed, as to a Series, without
approval by the
holders of a majority (as defined in the Act) of such Series'
outstanding
voting shares. Investment restrictions numbered 8 through 13 are
non-fundamental policies and may be changed, as to a Longer Term
Series,
by vote of a majority of the Fund's Directors at any time.
Neither Longer
Term Series 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
indexes, and
options on futures contracts or indexes shall not constitute
borrowing.
3. Purchase or sell real estate, commodities or
commodity
contracts, or oil and gas interests, but this shall not prevent
the Series
from investing in Municipal Obligations secured by real estate or
interests therein, or prevent the Series from purchasing and
selling
options, forward contracts, futures contracts, including those
relating to
indexes, and options on futures contracts or indexes.
4. Underwrite the securities of other issuers, except
that the
Series may bid separately or as part of a group for the purchase
of
Municipal Obligations directly from an issuer for its own
portfolio to
take advantage of the lower purchase price available, and except
to the
extent the Series may be deemed an underwriter under the
Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase
of debt
obligations and the entry into repurchase agreements; however,
the Series
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 Series may
take margin
deposits in connection with transactions in options, forward
contracts,
futures contracts, including those relating to indexes, and
options on
futures contracts or indexes.
8. Purchase securities other than Municipal
Obligations and Taxable
Investments and those arising out of transactions in futures and
options
or as otherwise provided in the Prospectus.
9. Invest in securities of other investment companies,
except to
the extent permitted under the Act.
10. Pledge, hypothecate, mortgage or otherwise encumber
its assets,
except to the extent necessary to secure permitted borrowings and
to the
extent related to the deposit of assets in escrow in connection
with the
purchase of securities on a when-issued or delayed-delivery basis
and
collateral and initial or variation margin arrangements with
respect to
options, forward contracts, futures contracts, including those
related to
indexes, and options on futures contracts or indexes.
11. 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 Series 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. 9 with respect
to the
Money Market Series, and Investment Restriction No. 1 with
respect to each
Longer Term Series, 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.
Each Series may make commitments more restrictive than the
respective
restrictions listed above so as to permit the sale of such
Series' shares
in certain states. Should any Series determine that a commitment
is no
longer in the best interest of such Series and its shareholders,
it
reserves the right to revoke the commitment by terminating the
sale of its
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 and Officers of the Fund
*DAVID W. BURKE, Director. Since August 1994, a consultant to
the
Manager. From October 1990 to August 1994, he was Vice
President and
Chief Administrative Officer of the Manager and an
officer, director
or trustee of other investment companies advised or
administered by
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 officers,
directors,
employees or holders of 5% or more of the outstanding voting
securities of
the Manager, which totalled $ for the fiscal year ended
August 31,
1994 for all such Directors as a group.
Officers of the Fund Not Listed Above
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating
Officer and a Director of the Distributor and an officer
of other
investment companies advised or administered by the
Manager. From
December 1991 to July 1994, she was President and Chief
Compliance
Officer of Funds Distributor, Inc., 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, 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.
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.
FREDERICK C. DEY, 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, 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.
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, registered
investment
companies. 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
the Fund's Common Stock outstanding on September 1, 1994.
The following entities are known by the Fund to be the
holders of
record of 5% or more of the Bond Series' shares of common stock
outstanding as of September 1, 1994: Troudy M.L. Nelson, 5462 N.
Antler
Run, Littleton, CO 80125-9261, 94,646.344 (7.0%); Frank
Beckerman, 19500
Turnberry Way, North Miami Beach, FL 33180, 91,025.842 (6.8%);
and Ted A.
Mirski and Roberta J. Mirski, 21701 N. Sylvander Drive,
Barrington, IL
60010-2484, 68,669.920 (5.1%).
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 2, 1994, with the Fund.
As to
each Series, 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 Series, 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 Series and 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 Series, 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 Series' shares, or, on not
less than
90 days' notice, by the Manager. The Agreement will terminate
automatically, as to the relevant Series, in the event of its
assignment
(as defined in the Act).
The following persons are also 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, Chief Operating Officer and a director;
Paul H.
Synder, Vice President and Chief Financial Officer; Robert F.
Dubuss, Vice
President; Daniel C. Maclean, Vice President and General Counsel;
Jeffrey
N. Nachman, Vice President--Mutual Fund Accounting; Mark N.
Jacobs, Vice
President--Legal; Elie M. Genadry, Vice President--Institutional
Sales;
Lawrence Kash, Vice President--Distribution; Peter A.
Santoriello, Vice
President; Philip L. Toia, Vice Chairman-Operations and
Administration;
Kirk V. Stumpp, Vice President--New Product Development; John J.
Pyburn,
Assistant Vice President; Katherine C. Wickham, Vice
President--Human
Resources; Diane M. Coffey, Vice President--Corporate
Communications,
Maurice Bendrihem, Controller; and Mandell L. Berman, Frank V.
Cahouet,
Alvin E. Friedman, Abigail Q. McCarthy, W. Keith Smith and David
B.
Truman, directors.
The Manager manages each Series' portfolio of investments
in
accordance with the stated policies of such Series, subject to
the
approval of the Fund's Board of 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 Directors who are
not
officers, directors, employees or holders of 5% or more of the
outstanding
voting securities of the Manager, Securities and Exchange
Commission fees,
state Blue Sky qualification fees, advisory fees, charges of
custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums,
industry association fees, outside auditing and legal expenses,
costs of
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 Series are charged against
the
assets of that Series; other expenses of the Fund are allocated
among the
Series on the basis determined by the Board of Directors,
including, but
not limited to, proportionately in relation to the net assets of
each
Series.
The Manager maintains office facilities, and furnishes the
Fund
statistical and research data, clerical help, accounting, data
processing,
bookkeeping and internal auditing and certain other required
services.
The Manager also may make such advertising and promotional
expenditures,
using its own resources, as it from time to time deems
appropriate.
As compensation for the Manager's services, 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 Series' average daily net assets
and .60
of 1% of the value of each of the Longer Term Series' 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) 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 Series pursuant to an
undertaking by the Manager. For the period May 3, 1994
(commencement of
operations) through August 31, 1994, no management fee was paid
by the
Fund with respect to the Intermediate Bond Series and Bond Series
pursuant
to an undertaking by the Manager.
As to each Series, the Manager has agreed that if in any
fiscal year
the aggregate expenses of such Series, 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 Series' 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 the Distributor 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 Series 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, $_____________ was
changeable
to the Fund under the Plan.
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 Series only. The Shareholder Services Group, Inc.,
the
Fund's transfer and dividend disbursing agent (the "Transfer
Agent"), or
the Money Market Series 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 Series 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 Series 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. Series shares
may be
purchased and redeemed through securities dealers which may
charge a
nominal transaction fee for such services. Some dealers will
place Series
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 Series 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
Series 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
Series 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
Series
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 Series,
limited
in amount during any 90-day period to the lesser of $250,000 or
1% of the
value of such Series' net assets at the beginning of such period.
Such
commitment is irrevocable without the prior approval of the
Securities and
Exchange Commission. In the case of requests for redemption in
excess of
such amount, the 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 Series to the detriment of the existing shareholders. In
this event,
the securities would be valued in the same manner as the
portfolio of the
Series 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.
EXCHANGE PRIVILEGE
The following information supplements and should be read
in
conjunction with the section in the Fund's Prospectus entitled
"Exchange
Privilege."
Shares of other Series 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 use this Privilege, an investor must give exchange
instructions to
the Transfer Agent in writing, by wire or by telephone.
Telephone
exchanges may be made only if the appropriate "YES" box has been
checked
on the Account Application or a separate signed Shareholder
Services Form
is on file with the Transfer Agent. By using this Privilege, the
investor
authorizes the Transfer Agent to act on telephonic, telegraphic
or written
exchange instructions from any person representing himself or
herself to
be the investor, 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 from the Distributor, 144 Glenn Curtiss Boulevard,
Uniondale, New
York 11556-0144. The Fund reserves the right to reject any
exchange
request in whole or in part. The Exchange Privilege 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 Series. The valuation of the
Money
Market Series' 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 Series 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
Series' investors, procedures reasonably designed to stabilize
the Series'
price per share as computed for purposes of sales and redemptions
at
$1.00. Such procedures include review of the Money Market
Series'
portfolio holdings by the Fund's Board of Directors, at such
intervals as
it deems appropriate, to determine whether the Money Market
Series' 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 Series'
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
Series' 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 Series only. The
investments of
each Longer Term Series 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 Series' 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 Series 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 Series' 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
Series' 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 the
gain realized from the 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 Series 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 Series' taxable year will be treated as sold for
their fair
market value, resulting in additional gain or loss to a Longer
Term Series
characterized in the manner described above.
Offsetting positions held by a Longer Term Series
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 Series were treated as entering into
"straddles" by
reason of its engaging in certain futures or options
transactions, such
"straddles" would be characterized as "mixed straddles" if the
futures or
options transactions comprising a part of such "straddles" were
governed
by Section 1256 of the Code. The Series may make one or more
elections
with respect to "mixed straddles." Depending on which election
is made,
if any, the results to the Series may differ. If no election is
made, to
the extent the "straddle" rules apply to positions established by
the
Series, losses realized by the Series 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 Series in securities issued
at a
discount or providing for deferred interest or for payment of
interest in
the form of additional obligations could, under special tax
rules, affect
the amount, timing and character of distributions to
shareholders. For
example, a Longer Term Series could be required to take into
account
annually a portion of the discount (or deemed discount) at which
such
securities were issued and to distribute such portion in order to
maintain
its qualifications as a regulated investment company. In that
case, the
Series 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 Series. For the seven-day period ended
August 31, 1994,
the Money Market Series' yield was % and effective yield was
___%.
These yields reflect the then waiver of a portion of the
management fee,
without which the Money Market Series' seven-day yield and
effective yield
for the period ended August 31, 1994 would have been
% and %, 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 Series' 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 a 1994 Federal income tax rate of 39.6%, the
Money Market
Series' tax equivalent yield for the seven-day period ended
August 31,
1994 was %. Without the waiver of a portion of the
management fee
discussed above then in effect, the Money Market Series' tax
equivalent
yield for the seven-day period ended August 31, 1994 would have
been
%.
Longer Term Series. Current yield for a Longer Term
Series is
computed pursuant to a formula which operates as follows: the
amount of a
Series' 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.
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.
Total return is calculated by subtracting the amount of
the Series'
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 Series. 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 Fund 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
Series is
not guaranteed. See "Determination of Net Asset Value" for a
discussion
of the manner in which a Series' price per share is determined.
From time to time, a Series may use hypothetical tax
equivalent
yields or charts in its advertising. These hypothetical yields
or charts
will be used for illustrative purposes only and are not
indicative of the
Fund's past or future performance.
Advertising materials for a Series 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 Series 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 Series
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 Series 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 Series to
date.
Transactions are allocated to various dealers by a Series'
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
Series 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 Series. 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 Series share has one vote and, when issued and paid
for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series shares 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
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of
the
creditworthiness of an obligor with respect to a specific
obligation.
The ratings are based on current information furnished by
the issuer
or obtained by S&P from other sources it considers reliable, and
will
include: (1) likelihood of default-capacity and willingness of
the
obligor as to the timely payment of interest and repayment of
principal in
accordance with the terms of the obligation; (2) nature and
provisions of
the obligation; and (3) protection afforded by, and relative
position of,
the obligation in the event of bankruptcy, reorganization or
other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P.
Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest
and repay
principal and differs from the highest rated issues only in a
small
degree.
A
Principal and interest payments on bonds in this category
are
regarded as safe. This rating describes the third strongest
capacity for
payment of debt service. It differs from the two higher ratings
because:
General Obligation Bonds--There is some weakness in the
local
economic base, in debt burden, in the balance between revenues
and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of
the
issuer to meet debt obligations at some future date.
Revenue Bonds--Debt service coverage is good, but not
exceptional.
Stability of the pledged revenues could show some variations
because of
increased competition or economic influences on revenues. Basic
security
provisions, while satisfactory, are less stringent. Management
performance appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds--Under certain adverse
conditions, several
of the above factors could contribute to a lesser capacity for
payment of
debt service. The difference between "A" and "BBB" rating is
that the
latter shows more than one fundamental weakness, or one very
substantial
fundamental weakness, whereas the former shows only one
deficiency among
the factors considered.
Revenue Bonds--Debt coverage is only fair. Stability of
the pledged
revenues could show substantial variations, with the revenue flow
possibly
being subject to erosion over time. Basic security provisions
are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC and C is regarded as having
predominantly
speculative characteristics with respect to capacity to pay
interest and
repay principal. BB indicates the least degree of speculation
and C 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 is typically 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.
Plus (+) or minus (-): The ratings from AA to CCC may be
modified by
the addition of a plus or minus sign to show relative standing
within the
major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong
or strong
capacity to pay principal and interest. Those issues determined
to
possess overwhelming safety characteristics are given a plus sign
(+)
designation.
SP-2
The issuers of these municipal notes exhibit satisfactory
capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of
the
likelihood of timely payment of debt having an original maturity
of no
more than 365 days.
A
Issues assigned this rating are regarded as having the
greatest
capacity for timely payment. Issues in this category are
delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety
regarding timely
payment is either overwhelming or very strong. Those issues
determined to
possess overwhelming safety characteristics are denoted with a
plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this
designation is
strong. However, the relative degree of safety is not as high as
for
issues designated A-1.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best
quality. They
carry the smallest degree of investment risk and are generally
referred to
as "gilt edge." Interest payments are protected by a large or by
an
exceptionally stable margin and principal is secure. While the
various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality
by all
standards. Together with the Aaa group they comprise what
generally are
known as high-grade bonds. They are rated lower than the best
bonds
because margins of protection may not be as large as in Aaa
securities or
fluctuation of protective elements may be of greater amplitude or
there
may be other elements present which make the long-term risks
appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment
attributes
and are to be considered as upper-medium grade obligations.
Factors
giving security to principal and interest are considered
adequate, but
elements may be present which suggest a susceptibility to
impairment some
time in the future.
Baa
Bonds which are rated Baa are considered as medium grade
obligations,
i.e., they are neither highly protected nor poorly secured.
Interest
payments and principal security appear adequate for the present
but
certain protective elements may be lacking or may be
characteristically
unreliable over any great length of time. Such bonds lack
outstanding
investment characteristics and in fact have speculative
characteristics as
well.
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 present 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 rating categories, except in the Aaa
category
and in 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 differences between short-term credit risk and
long-term
risk. Factors affecting the liquidity of the borrower and
short-term
cyclical elements are critical in short-term ratings, while other
factors
of major importance in bond risk, long-term secular trends for
example,
may be less important over the short run.
A short-term rating may also be assigned on an issue
having a demand
feature. Such ratings will be designated as VMIG or, if the
demand
feature is not rated, as NR. Short-term ratings on issues with
demand
features are differentiated by the use of the VMIG symbol to
reflect such
characteristics as payment upon periodic demand rather than fixed
maturity
dates and payment relying on external liquidity. Additionally,
investors
should be alert to the fact that the source of payment may be
limited to
the external liquidity with no or limited legal recourse to the
issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's
Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies,
when
Moody's assigns a MIG or VMIG rating, all categories define an
investment
grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present
strong
protection by established cash flows, superior liquidity support
or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of
protection are
ample although not so large as in the preceding group.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper
rating
assigned by Moody's. Issuers of P-1 paper must have a superior
capacity
for repayment of short-term promissory obligations, and
ordinarily will be
evidenced by leading market positions in well established
industries, high
rates of return on funds employed, conservative capitalization
structures
with moderate reliance on debt and ample asset protection, broad
margins
in earnings coverage of fixed financial charges and high internal
cash
generation, and well established access to a range of financial
markets
and assured sources of alternate liquidity.
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 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 the 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 payments, but the margin of safety
is not
as great as the F-1+ and F-1 categories.
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Condensed Financial Information--for the period
December 16,
1991 (commencement of operations) to August 31,
1992 and for
each of the two fiscal years ended August 31,
1994.
Included in Part B of the Registration Statement:
Statement of Investments--as of August 31,
1994.
Statement of Assets and Liabilities--as of
August 31,
1994.
Statement of Operations--for the year ended
August 31,
1994.
Statement of Changes in Net Assets--for the
years ended August 31, 1993 and August 31,
1994.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent
Auditors, dated
.
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.
(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
(6) Distribution Agreement
(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) Shareholder Services Plan is incorporated by reference
to Exhibit
9 of Post-Effective Amendment No. 4 to the
Registration Statement,
filed on February 16, 1994.
(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.
(16) Schedule of Computation of Performance Data is
incorporated by
reference to Exhibit (16) of Post-Effective Amendment
No. 3 to the
Registration Statement, filed on December 15, 1993.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney are incorporated by
reference to the
Signature Page of Pre-Effective Amendment
No. 1 to the
Registration Statement on Form N-1A, filed
on December
10, 1991, and Other Exhibit (a) of
Post-Effective
Amendment No. 1 to the Registration
Statement on Form
N-1A, filed on May 26, 1992.
(b) Registrant's Certificate of Secretary is
incorporated by
reference to Other Exhibit of Pre-Effective
Amendment
No. 1 to the Registration Statement on Form
N-1A, filed
on December 10, 1991.
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 September
1, 1994
______________
_______________________________
Money Market Intermediate
Bond
Series Bond Series
Series
____________ ____________
______
Common Stock
(Par value $.001) 5,749 395
216
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
indemnified
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 hereto.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary
companies
comprise a financial service organization whose
business
consists primarily of providing investment management
services
as the investment adviser, manager and distributor
for sponsored
investment companies registered under the Investment
Company Act
of 1940 and as an investment adviser to institutional
and
individual accounts. Dreyfus also serves as
sub-investment
adviser to and/or administrator of other investment
companies.
Premier Mutual Fund Services, Inc., serves 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. 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.
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.**
ABIGAIL Q. McCARTHY Author, lecturer, columnist and
educational
Director consultant
2126 Connecticut Avenue
Washington, D.C. 20008
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage
Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke
College
South Hadley, Massachusetts
01075;
Former Director:
Student Loan Marketing
Association
1055 Thomas Jefferson Street,
N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities
Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
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 Partnership
Management,
Inc.*;
Dreyfus Personal Management,
Inc.*;
HOWARD STEIN Dreyfus Precious Metals,
Inc.*;
(cont'd) Dreyfus Realty Advisors,
Inc.+++;
Dreyfus Service Organization,
Inc.*;
Dreyfus Strategic Governments
Income,
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, Chief Operating The Dreyfus Trust Company++;
Officer and 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.*;
Director:
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*
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*;
LAWRENCE M. GREENE Director and Vice President:
(cont'd) 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
Institutional Sales 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.*;
PETER A. SANTORIELLO Director and President
Vice President Dreyfus Management, Inc.*;
Vice President:
Dreyfus Personal Management,
Inc.*
KIRK V. STUMPP Senior Vice President and
Vice President - Director of Marketing:
New Product Development Dreyfus Service Corporation*
PHILIP L. TOIA Chairman of the Board and Vice
President:
Vice Chairman-- Dreyfus Thrift & Commerce****;
Operations and Director:
Administration 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*;
MAURICE BENDRIHEM Controller:
(cont'd) 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 Assistant Secretary:
Vice President Dreyfus Service Organization,
Inc.*;
Legal Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary 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 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.
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) The Dreyfus Third Century Fund, Inc.
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Money Market Fund
80) First Prairie Tax Exempt Bond Fund, Inc.
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash
Management
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund,
Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
91) Pacific American Fund
92) Peoples Index Fund, Inc.
93) Peoples S&P MidCap Index Fund, Inc.
94) Premier Insured Municipal Bond Fund
95) Premier California Municipal Bond Fund
96) Premier GNMA Fund
97) Premier Growth Fund, Inc.
98) Premier Municipal Bond Fund
99) Premier New York Municipal Bond Fund
100) Premier State Municipal Bond Fund
(b)
Positions and offices with
Positions and
Name and principal Premier Mutual Fund
offices with
business address Services, Inc.
Registrant
__________________ ___________________________
_____________
Marie E. Connolly* President and Chief Operating
President and
Officer
Treasurer
Joseph F. Tower III* Treasurer and Chief Financial
Assistant
Officer
Treasurer
John E. Pelletier* Senior Vice President-General
Secretary
Counsel/Secretary and Clerk
Jean M. O'Leary* Assistant Secretary and Clerk None
_____________________________________________________
* The address of the offices so indicated is 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 its latest annual report to shareholders,
upon request
and without change.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933
and the
Investment Company Act of 1940, the Registrant 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 day of September 1994.
DREYFUS BASIC MUNICIPAL MONEY MARKET 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
9/ /94
____________________________ Officer) and Treasurer
Marie E. Connolly
/s/Paul T. Molloy* Controller (Principal Accounting
9/ /94
____________________________ Officer)
Paul T. Molloy
/s/David W. Burke* Director
9/ /94
____________________________
David W. Burke
/s/Samuel Chase* Director
9/ /94
____________________________
Samuel Chase
/s/Joni Evans* Director
9/ /94
____________________________
Joni Evans
/s/Arnold S. Hiatt* Director
9/ /94
____________________________
Arnold S. Hiatt
/s/David J. Mahoney* Director
9/ /94
____________________________
David J. Mahoney
/s/Burton N. Wallack* Director
9/ /94
____________________________
Burton N. Wallack
*BY: __________________________
Ruth D. Leibert,
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Item 24(b)(5) Management Agreement
Item 24(b)(6) Distribution Agreement
<PAGE>
MANAGEMENT AGREEMENT
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
(d/b/a Dreyfus BASIC Municipal Fund)
August 24, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting any Series' portfolio and shall expect you, on your
own initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series'
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series'
shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to
engage other entities to assist you in performing some or all of
the obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or
purport to protect you against any liability to the Fund or a
Series or to its security holders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series'
name on Schedule 1 hereto. Net asset value shall be computed on
such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information.
Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you,
the value of each Series' net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting
securities, Securities and Exchange Commission fees and state
Blue Sky qualification fees, advisory fees, charges of
custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of independent pricing
services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess expense to the extent required by state law. Your
obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one
or more Series or the size of the position obtainable for or
disposed of by one or more Series.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director,
partner, employee or agent or one under your control or
direction even though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940) of such Series' outstanding voting securities,
provided that in either event its continuance also is approved
by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this
Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board or by vote of holders of a majority of such
Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Dreyfus" as part of their name,
and that your corporation or its affiliates may enter into
investment advisory or other agreements with such other
entities. If you cease to act as the Fund's investment adviser,
the Fund agrees that, at your request, the Fund will take all
necessary action to change the name of the Fund to a name not
including "Dreyfus" in any form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS BASIC MUNICIPAL MONEY
MARKET FUND, INC.
By:_______________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
<PAGE>
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date
Reapproval Day
Money Market Series .50 of 1% August 28, 1995
August 28th
Bond Series .60 of 1% August 28, 1995
August 28th
Intermediate Bond Series .60 of 1% August 28, 1995
August 28th
<PAGE>
DISTRIBUTION AGREEMENT
DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.
(d/b/a Dreyfus BASIC Municipal Fund)
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
August 24, 1994
Premier Mutual Fund Services, Inc.
One Exchange Place
Tenth Floor
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agree-
ments hereinafter contained, the above-named investment company
(the "Fund") has agreed that you shall be, for the period of
this agreement, the distributor of (a) shares of each Series of
the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series
are set forth on such Exhibit, shares of the Fund. For purposes
of this agreement the term "Shares" shall mean the authorized
shares of the relevant Series, if any, and otherwise shall mean
the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of
Shares covered by, and in accordance with, the registration
statement and prospectus then in effect under the Securities Act
of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the
Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit
orders for the sale of Shares. It is contemplated that you will
enter into sales or servicing agreements with securities
dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and
estate planning firms, and in so doing you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in
compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as
amended, by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934, as amended.
1.4 Whenever in their judgment such action is
warranted by market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may
decline to accept any orders for, or make any sales of, any
Shares until such time as they deem it advisable to accept such
orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and
for supplying information, prices and other data to be furnished
by the Fund hereunder, and all expenses in connection with the
preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and
for distribution to shareholders; provided however, that nothing
contained herein shall be deemed to require the Fund to pay any
of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all documents
and to furnish any and all information and otherwise to take all
actions which may be reasonably necessary in the discretion of
the Fund's officers in connection with the qualification of
Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all
expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your
own qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this agreement, all
other expenses incurred by you in connection with the sale of
Shares as contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for
use in connection with the sale of Shares, such information with
respect to the Fund or any relevant Series and the Shares as you
may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and
correct. The Fund also shall furnish you upon request with:
(a) semi-annual reports and annual audited reports of the Fund's
books and accounts made by independent public accountants
regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of
the securities in the Fund's or, if applicable, each Series'
portfolio, (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition
as you may reasonably request.
1.8 The Fund represents to you that all registration
statements and prospectuses filed by the Fund with the Securi-
ties and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as
amended, with respect to the Shares have been carefully prepared
in conformity with the requirements of said Acts and rules and
regulations of the Securities and Exchange Commission there-
under. As used in this agreement the terms "registration state-
ment" and "prospectus" shall mean any registration statement and
prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and
Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission.
The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be
stated therein in conformity with said Acts and the rules and
regulations of said Commission; that all statements of fact
contained in any such registration statement and prospectus will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Fund may but
shall not be obligated to propose from time to time such amend-
ment or amendments to any registration statement and such
supplement or supplements to any prospectus as, in the light of
future developments, may, in the opinion of the Fund's counsel,
be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Fund of a written request from
you to do so, you may, at your option, terminate this agreement
or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to
any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance;
provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to
any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with
the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person
who controls you within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such con-
trolling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of
a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or
necessary to make the statements in either thereof not
misleading; provided, however, that the Fund's agreement to
indemnify you, your officers or directors, and any such control-
ling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Fund by you
specifically for use in the preparation thereof. The Fund's
agreement to indemnify you, your officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned
upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its address set forth above within ten days after
the summons or other first legal process shall have been served.
The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any
such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel
of good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any such suit, or in case you do
not approve of counsel chosen by the Fund, the Fund will
reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or
them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in
this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their
successors. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against the Fund
or any of its officers or Board members in connection with the
issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund,
its several officers and Board members, and any person who con-
trols the Fund within the meaning of Section 15 of the Securi-
ties Act of 1933, as amended, free and harmless from and against
any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933,
as amended, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting
from such claims or demands, shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Fund
specifically for use in the Fund's registration statement and
used in the answers to any of the items of the registration
statement or in the corresponding statements made in the pro-
spectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Fund and
required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the
Fund, its officers and Board members, and any such controlling
person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your
address set forth above within ten days after the summons or
other first legal process shall have been served. You shall
have the right to control the defense of such action, with
counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on your part, and in any other event the Fund, its
officers or Board members, or such controlling person shall each
have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which
you may have to the Fund, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise
than on account of your indemnity agreement contained in this
paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members, and their respective estates, and to
the benefit of any controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the
Fund under any of the provisions of this agreement and no orders
for the purchase or sale of such Shares hereunder shall be
accepted by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amend-
ments thereto shall be suspended under any of the provisions of
the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10 of said Act, as
amended, is not on file with the Securities and Exchange
Commission; provided, however, that nothing contained in this
paragraph 1.11 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of
the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange
Commission for amendments to the registration statement
or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or pro-
spectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or
which requires the making of a change in such registra-
tion statement or prospectus in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to
any registration statement or prospectus which may from
time to time be filed with the Securities and Exchange
Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be
the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus. The offering price, if
not an exact multiple of one cent, shall be adjusted to the
nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred
sales charge as set forth in the Fund's then-current prospectus.
You shall be entitled to receive any sales charge or contingent
deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you
and such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified
on Exhibit A for each Series), and thereafter shall continue
automatically for successive annual periods ending on the day
(the "Reapproval Day") of each year set forth on Exhibit A
hereto, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a
majority (as defined in the Investment Company Act of 1940) of
the Shares of the Fund or the relevant Series, as the case may
be, provided that in either event its continuance also is
approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to any relevant
Series, such Series' outstanding voting securities or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be. This agreement is terminable by you, upon 270 days'
notice, effective on or after the fifth anniversary of the date
hereof. This agreement also will terminate automatically, as to
the Fund or relevant Series, as the case may be, in the event of
its assignment (as defined in said Act).
4. Exclusivity
So long as you act as the distributor of Shares, you
shall not perform any services for any entity other than
investment companies advised or administered by The Dreyfus
Corporation. The Fund acknowledges that the persons employed by
you to assist in the performance of your duties under this
agreement may not devote their full time to such service and
nothing contained in this agreement shall be deemed to limit or
restrict your or any of your affiliates right to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by
signing below, whereupon it shall become a binding agreement
between us.
Very truly yours,
DREYFUS BASIC MUNICIPAL MONEY MARKET
FUND, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
<PAGE>
EXHIBIT A
Name of Series Reapproval Date Reapproval
Day
Dreyfus BASIC August 28, 1995 August
28th
Municipal Money
Market Fund
Dreyfus BASIC August 28, 1995 August
28th
Intermediate Municipal
Bond Fund
Dreyfus BASIC August 28, 1995 August
28th
Municipal Bond
Fund
