LETTER TO SHAREHOLDERS
Dear Shareholder:
The initial four-month period of your Fund's operations witnessed a
continuation of the volatility which has dominated the trading of all
fixed-income vehicles for most of the past year. Early on, as investors
sensed that economic activity was abating based on preliminary data released
for the period covering May and early June, the markets were buoyed by the
prospects for declining inflationary pressures. By July, however, as
statistics covering such areas as job creation, capacity utilization and indus
trial production were released, the markets were ill-positioned to accept the
heightened activity levels indicated. Anxiety levels rose nearly as quickly
as long-term interest rates as market participants quickly perceived the need
for another round of monetary tightening on the part of the Federal Reserve
Board. In August, when the Fed did move to a more restrictive stance by
raising both the Fed Funds rate and the discount rate, market participants
viewed the moves as decisive and adequate enough to stem the rising tide of
inflationary pressures present in the economy. Interest rates were able to
end the period a mere 10 basis points (.10%) higher than where they were at
the inception of the Fund's activities.
Municipal securities were supported throughout this period by a
formidable technical dynamic which they have enjoyed much of the past year as
well. While the rise in individual income tax rates has generated a
significant amount of demand for tax-free income via direct purchase and
mutual fund participation, issuance of municipal bonds has fallen
dramatically. Through August of this year, new issue volume has declined a
striking 55% when compared to the same period in 1993. As a result, tax
exempt yields did fluctuate in tandem with their taxable counterpart, but
their movements tended to be much more muted. A comparison of the relative
movements of 30-year U.S. Treasury yields and municipal yields as represented
by the Bond Buyer Revenue Bond Index illustrates this point. As your Fund
commenced activity in May, 30-year Government bond yields stood at 7.35% and
the Revenue Index at 6.42%. While interest rates proceeded to fluctuate
widely over the period, by the close of the Fund's abbreviated first fiscal
year on August 31, 1994, the benchmark yield of long-term Treasuries had
increased by 10 basis points (0.10%) to 7.45% while comparable term yields on
municipal securities increased only 4 basis points (0.04%) to 6.46%.
Since the commencement of the Fund's activities in May, we have sought to
capitalize on the opportunities inherent in such an environment by
constructing a portfolio that emphasizes the generation of current tax-free
income while minimizing principal volatility. To accomplish this, our
decisions were guided by two primary themes: timing and liquidity. As assets
were deposited in the Fund and we perceived the initial positive sentiment
emerging in the marketplace, we aggressively sought those issues offering
generous levels of income and strong qualities of protection from redemption
before maturity. Our choices tended toward higher quality issues with broad
acceptance in the marketplace and maturity structures generally pegged to the
20-year range. As it became apparent that the market was vulnerable to the
price deterioration witnessed in July, we began to invest the accumulating
assets in short-term tax exempt securities to build a significant reserve
position. As there emerged a sense of stability toward August, these funds
were then redirected toward higher-yielding, longer-term municipal bonds. As
a result of this strategy, the Fund was able to post an increase in net asset
value over this initial period of 2.08%.
We appreciate your investment in the Dreyfus BASIC Municipal Bond Fund,
and we want to assure you that we are, at all times, working in the Fund's
best interest.
Very truly yours,
Richard J. Moynihan
(Richard J. Moynihan Signauter Logo)
Director, Municipal Portfolio Management
The Dreyfus Corporation
September 15, 1994
New York, N.Y.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-79.8% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA--6.5%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 752,482
Birmingham, Refunding 6.25%, 4/1/2016....................................... 250,000 251,772
CALIFORNIA--3.1%
California Higher Education Loan Authority,
Student Loan Revenue, Refunding 6.50%, 6/1/2005......................... 250,000 252,372
Sacramento Municipal Utility District, Electric Revenue 5.75%, 5/15/2022.... 250,000 231,140
COLORADO--1.2%
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 200,000 185,304
CONNECTICUT--1.2%
Connecticut Health and Educational Facilities Authority, Revenue
(The Griffin Hospital) 6%, 7/1/2013..................................... 200,000 181,666
FLORIDA--1.3%
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 200,438
GEORGIA--4.8%
Burke County Development Authority, PCR
(Georgia Power Co. Plant Vogtle) 6.375%, 8/1/2024....................... 500,000 496,985
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Health Care) 6.25%, 9/1/2013........................... 250,000 238,113
ILLINOIS--4.4%
Chicago State University, Revenue, Auxiliary Facilities System
6.10%, 12/1/2017 (Insured; MBIA)........................................ 250,000 244,207
Illinois Development Finance Authority, PCR, Refunding
(Commonwealth Edison Co. Project) 7.25%, 6/1/2011....................... 175,000 181,762
Illinois Health Facilities Authority, Revenue, Refunding
(Northwestern Memorial Hospital) 6.10%, 8/15/2014....................... 250,000 244,355
INDIANA--1.6%
Indiana Municipal Power Agency, Power Supply System Revenue
6.125%, 1/1/2019 (Insured; MBIA)........................................ 250,000 243,350
KENTUCKY--1.3%
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ 200,000 200,914
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MARYLAND--1.6%
Maryland Community Development Administration, Department of Housing and
Community Development Revenue (Single Family Program) 6.75%, 4/1/2026... $ 250,000 $ 251,175
MASSACHUSETTS--5.2%
Massachusetts Construction Loan 6%, 6/1/2013................................ 300,000 294,996
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 509,230
MINNESOTA--3.0%
Minnesota Housing Finance Agency, SFHR:
6.90%, 7/1/2022......................................................... 250,000 257,498
6.30%, 7/1/2025......................................................... 200,000 196,772
NEBRASKA--2.9%
Nebraska Public Power District Revenue, Refunding, Power Supply System
6.125%, 1/1/2015........................................................ 450,000 447,624
NEVADA--1.7%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 258,617
NEW HAMPSHIRE--1.7%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 254,020
NEW JERSEY--1.6%
New Jersey Health Care Facilities Financing Authority, Revenue, Refunding
(Hackensack Medical Center) 6.25%, 7/1/2021 (Insured; FGIC)............. 250,000 250,522
NEW YORK--15.6%
Metropolitan Transportation Authority, Commuter Facilities Revenue
6.125%, 7/1/2014 (Insured; MBIA)........................................ 200,000 200,730
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 501,700
New York State Dormitory Authority, Revenue:
City University System 6.20%, 7/1/2013 (Insured; AMBAC)................. 250,000 252,478
Refunding, State University Educational Facilities:
5.875%, 5/15/2017..................................................... 250,000 236,383
6%, 5/15/2017......................................................... 500,000 480,220
New York State Energy Research and Development Authority,
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 302,679
New York State Environmental Facilities Corp., PCR (State Water Revolving
Fund)
New York City Municipal Water 5.875%, 6/15/2014......................... 180,000 175,160
United Nations Development Corp., Revenue, Refunding 6.20%, 7/1/2011........ 250,000 251,737
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1994
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NORTH CAROLINA--3.4%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. $ 250,000 $ 267,232
North Carolina Municipal Power Agency, Catawba Electric Revenue,
Refunding 6.25%, 1/1/2017............................................... 250,000 247,893
PENNSYLVANIA--1.7%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 254,613
RHODE ISLAND--2.9%
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity) 6.50%, 4/1/2027............................. 200,000 198,912
Rhode Island Port Authority and Economic Development Corp.,
Airport Revenue 6.625%, 7/1/2024........................................ 250,000 253,553
TENNESSEE--1.7%
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 254,828
TEXAS--4.8%
Harris County, Toll Road, Senior Lien 6.50%, 8/15/2017 (Insured; AMBAC)..... 250,000 255,685
Tarrant County, Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... 500,000 477,950
WASHINGTON--5.3%
Washington Health Care Facilities Authority, Revenue
(Childrens Hospital and Medical Center) 6.25%, 10/1/2018 (Insured; FGIC) 200,000 196,086
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 635,000 624,884
WYOMING--1.3%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 203,226
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $12,182,706).................... $12,261,263
============
SHORT-TERM MUNICIPAL INVESTMENTS--20.2%
MARYLAND--5.2%
Frederick Improvement, VRDN 3.40% (LOC; Fuji Bank and Trust Co.)(a,b)....... $ 800,000 $ 800,000
MICHIGAN--4.6%
Michigan Strategic Fund Ltd., Obligation Revenue, VRDN
(Coil Center Corp. Project) 4.15% (LOC; The Tokai Bank) (a,b)........... 700,000 700,000
WASHINGTON--10.4%
Washington Public Power Supply System, Nuclear Project #2,
Revenue, VRDN 3.65% (a)................................................. 1,600,000 1,600,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,100,000).................... $ 3,100,000
============
TOTAL INVESTMENTS--100.0%
(cost $15,282,706)...................................................... $15,361,263
============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Corporation SFHR Single Family Housing Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
MBIA Municipal Bond Insurance Association
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 17.2%
AA Aa AA 32.8
A A A 20.6
BBB Baa BBB 15.3
BB Ba BB 1.3
F1 VMIG1 A1 9.8
Not Rated Not Rated Not Rated 3.0
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $15,282,706)-see statement...................................... $15,361,263
Cash.................................................................... 486,647
Interest receivable..................................................... 201,611
Prepaid expenses........................................................ 34,952
Due from The Dreyfus Corporation........................................ 30,954
------------
16,115,427
LIABILITIES:
Payable for investment securities purchased............................. $750,339
Accrued expenses and other liabilities.................................. 30,989 781,328
---------- ------------
NET ASSETS ................................................................ $15,334,099
============
REPRESENTED BY:
Paid-in capital......................................................... $15,253,667
Accumulated undistributed net realized gain on investments.............. 1,875
Accumulated net unrealized appreciation on investments-Note 3........... 78,557
------------
NET ASSETS at value, applicable to 1,201,289 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $15,334,099
============
NET ASSET VALUE, offering and redemption price per share
($15,334,099 / 1,201,289 shares)........................................ $12.76
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $128,111
EXPENSES:
Management fee-Note 2(a).............................................. $12,745
Auditing fees......................................................... 8,337
Shareholders' reports................................................. 5,250
Registration fees..................................................... 5,232
Legal fees............................................................ 4,667
Organization expenses-Note 1(e)....................................... 2,496
Shareholder servicing costs-Note 2(b)................................. 1,716
Custodian fees........................................................ 1,092
Directors' fees-Note 2(c)............................................. 32
Miscellaneous......................................................... 2,132
--------
43,699
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 43,699
--------
TOTAL EXPENSES.................................................. ---
---------
INVESTMENT INCOME-NET........................................... 128,111
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 1,875
Net unrealized appreciation on investments.............................. 78,557
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 80,432
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $208,543
=========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM MAY 6, 1994 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1994
OPERATIONS:
<S> <C>
Investment income--net................................................................. $ 128,111
Net realized gain on investments....................................................... 1,875
Net unrealized appreciation on investments for the period.............................. 78,557
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 208,543
------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net................................................................. (128,111)
------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.......................................................... 19,178,689
Dividends reinvested................................................................... 81,312
Cost of shares redeemed................................................................ (4,006,334)
------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............................... 15,253,667
------------
TOTAL INCREASE IN NET ASSETS..................................................... 15,334,099
NET ASSETS:
Beginning of period.................................................................... ---
------------
End of period.......................................................................... $15,334,099
============
SHARES
------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................ 1,509,942
Shares issued for dividends reinvested................................................. 6,385
Shares redeemed........................................................................ (315,038)
------------
NET INCREASE IN SHARES OUTSTANDING................................................... 1,201,289
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the period from
May 6, 1994 (commencement of operations) to August 31, 1994. This information
has been derived from the Series' financial statements.
PER SHARE DATA:
<S> <C>
Net asset value, beginning of period........................................................... $12.50
-------
INVESTMENT OPERATIONS:
Investment income--net......................................................................... .19
Net realized and unrealized gain on investments................................................ .26
-------
TOTAL FROM INVESTMENT OPERATIONS............................................................. .45
-------
DISTRIBUTIONS;
Dividends from investment income--net.......................................................... (.19)
-------
Net asset value, end of period................................................................. $12.76
=======
TOTAL INVESTMENT RETURN............................................................................ 4.13%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................................................ ---
Ratio of net investment income to average net assets........................................... 6.03%(2)
Decrease reflected in above expense ratio due to undertaking
by the Manager............................................................................... 2.06%(2)
Portfolio Turnover Rate........................................................................ 8.82%(1)
Net Assets, end of period (000's Omitted)...................................................... $15,334
(1) Not annualized.
(2) Annualized.
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund (the "Fund") began operating under such name
on March 15, 1994 and is currently offering three series, including the
Dreyfus BASIC Municipal Bond Fund ("the Series"), which was authorized by the
Board of Directors on February 16, 1994. The Series had no operations until
May 6, 1994 (commencement of operations) other than matters relating to its
organization and registration as a non-diversified open-end management
investment company under the Investment Company Act of 1940 ("Act") and the
Securities Act of 1933. Dreyfus Service Corporation, until August 24, 1994,
acted as the distributor of the Fund's shares, which are sold to the public
without a sales charge. Dreyfus Service Corporation is a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994,
the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, is a wholly-owned subsidiary of Institutional
Administration Services, Inc., a provider of mutual fund administration
services, the parent company of which is Boston Institutional Group, Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to qualify as a
regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Internal Revenue Code, and to
make distributions of income and net realized capital gain sufficient to
relieve it from substantially all Federal income and excise taxes.
(E) OTHER: Organization expenses paid by the Series are included in
prepaid expenses and are being amortized to operations from May 6, 1994, the
date operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At August 31, 1994, the
unamortized balance of such expenses amounted to $34,952.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken from
May 6, 1994 through December 31, 1994 or until such time as the net assets of
the Series exceed $50 million, regardless of whether they remain at that
level, to reimburse all fees and expenses of the Series. The expense
reimbursement, pursuant to the undertaking, amounted to $43,699 for the
period ended August 31, 1994.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Fund's
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the period ended August 31,
1994, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
DREYFUS BASIC MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Prior to August 24, 1994 certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $23,777,621 and $8,496,875, respectively, for the period ended
August 31, 1994, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1994, accumulated net unrealized appreciation on
investments was $78,557, consisting of $85,684 gross unrealized appreciation
and $7,127 gross unrealized depreciation.
At August 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS BASIC MUNICIPAL BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL BOND FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Bond Fund
(one of the Series constituting Dreyfus BASIC Municipal Fund) as of August
31, 1994, and the related statements of operations and changes in net assets
and financial highlights for the period from May 6, 1994 (commencement of
operations) to August 31, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Bond Fund at August 31, 1994, and the
results of its operations, the changes in its net assets and the financial
highlights for the period from May 6, 1994 to August 31, 1994, in conformity
with generally accepted accounting principles.
(ERNST & YOUNG LLP, Signature Logo)
New York, New York
October 4, 1994
DREYFUS BASIC MUNICIPAL BOND FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby designates all the
dividends paid from investment income-net during the period May 6, 1994
(commencement of operations) to August 31, 1994 as "exempt-interest
dividends" (not generally subject to regular Federal income tax).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
(Dreyfus Logo)
BASIC
Municipal
Bond Fund
Annual Report
August 31, 1994
(Dreyfus Lion "D" Logo)
DREYFUS BASIC MUNICIPAL
BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 125AR948
