File No. 811-6377
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 9 [ X ]
(Check appropriate box or boxes.)
DREYFUS BASIC MUNICIPAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
X on December 1, 1995 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended August 31, 1995 was filed on October 25, 1995.
DREYFUS BASIC MUNICIPAL FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in Page in the
Part A of National Portfolios
Form N-1A Caption Prospectus
_________ _______ ___________________
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 3, 15
4 General Description of Registrant 6, 20
5 Management of the Fund 11
5(a) Management's Discussion of Fund's *
Performance
6 Capital Stock and Other Securities 19
7 Purchase of Securities Being Offered 12
8 Redemption or Repurchase 15
9 Pending Legal Proceedings *
Items in Page in the
Portfolio New Jersey Portfolio
Form N-1A Caption Prospectus
_________ _______ ____________________
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information *
4 General Description of Registrant 3, 16
5 Management of the Fund 6
5(a) Management's Discussion of Fund's *
Performance
6 Capital Stock and Other Securities 15
7 Purchase of Securities Being Offered 7
8 Redemption or Repurchase 10
9 Pending Legal Proceedings *
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS BASIC MUNICIPAL FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ ____
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-14
15 Control Persons and Principal B-17
Holders of Securities
16 Investment Advisory and Other B-17
Services
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-31
19 Purchase, Redemption and Pricing B-20, B-21,
of Securities Being Offered B-25
20 Tax Status B-26
21 Underwriters B-20
22 Calculations of Performance Data B-28
23 Financial Statements B-44
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS BASIC MUNICIPAL FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part C of
Form N-1A Caption Page
_________ _______ _____
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
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PROSPECTUS DECEMBER 1, 1995
DREYFUS BASIC MUNICIPAL FUND, INC.
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DREYFUS BASIC MUNICIPAL FUND, INC. (THE "FUND") IS AN OPEN-END,
MANAGEMENT INVESTMENT COMPANY, KNOWN AS A SERIES MUTUAL FUND. BY THIS
PROSPECTUS, THE FUND IS OFFERING THREE SEPARATE NON-DIVERSIFIED SERIES (EACH,
A "PORTFOLIO"): DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO (THE "MONEY
MARKET PORTFOLIO"); DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO (THE
"INTERMEDIATE BOND PORTFOLIO"); AND DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(THE "BOND PORTFOLIO"). EACH PORTFOLIO'S INVESTMENT OBJECTIVE IS TO PROVIDE
YOU WITH AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX AS
IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND, FOR THE MONEY MARKET
PORTFOLIO ONLY, THE MAINTENANCE OF LIQUIDITY.
EACH PORTFOLIO IS DESIGNED TO BENEFIT INVESTORS WHO DO NOT ENGAGE IN
FREQUENT TRANSACTIONS IN PORTFOLIO SHARES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES EACH PORTFOLIO.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE MONEY
MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 1, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO
THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR
CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF ALL BOND MUTUAL FUNDS WILL FLUCTUATE FROM TIME
TO TIME.
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TABLE OF CONTENTS
Page
Fee Table......................................... 3
Condensed Financial Information................... 4
Performance Information........................... 5
Description of the Portfolios..................... 6
Management of the Fund............................ 11
How to Buy Shares................................. 12
Fund Exchanges.................................... 14
How to Redeem Shares.............................. 15
Shareholder Services Plan......................... 17
Dividends, Distributions and Taxes................ 18
General Information............................... 19
Appendix.......................................... 21
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
<TABLE>
<CAPTION>
FEE TABLE
MONEY INTERMEDIATE
MARKET BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ------------
<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)............... .36% .13% .08%
Other Expenses.............................................. .09% .32% .37%
Total Portfolio 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>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
- ---------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by each Portfolio and investors, the payment of
which will reduce investors' annual return. The Dreyfus Corporation has
agreed until June 30, 1996, in the case of the MONEY MARKET PORTFOLIO, and
until June 30, 1998, in the case of the INTERMEDIATE BOND PORTFOLIO and BOND
PORTFOLIO, that if in any fiscal year certain expenses of a Portfolio,
including the management fee, exceed .45% of the value of such Portfolio's
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. The expenses noted above, without reimbursement, would be:
Management Fees_.50% with respect to the MONEY MARKET PORTFOLIO and .60% with
respect to the INTERMEDIATE BOND PORTFOLIO and BOND PORTFOLIO; and Total Fund
Operating Expenses_.59% with respect to the MONEY MARKET PORTFOLIO, .92%
with respect to the INTERMEDIATE BOND PORTFOLIO and .97% with respect to the
BOND PORTFOLIO; and the amount of expenses that an investor would pay,
assuming redemption after one, three, five and ten years, would be $11, $24,
$38 and $79 with respect to the MONEY MARKET PORTFOLIO, $14, $34, $56 and
$118 with respect to the INTERMEDIATE BOND PORTFOLIO and $15, $36, $59 and
$124 with respect to the BOND PORTFOLIO. In addition, unlike certain other
funds in the Dreyfus Family of Funds, the Fund will charge your account $2.00
for each redemption check you write; you also will be charged $5.00 for each
exchange made and for each redemption you make by wire or pursuant to the
Dreyfus TELETRANSFER Privilege, or if you otherwise closeout your account.
These charges will be paid to the Fund's transfer agent and will reduce the
transfer agency charges otherwise payable by the Fund. See "Fund Exchanges"
and "How to Redeem Shares." In addition, certain securities dealers, banks or
other financial institutions may charge their clients direct fees for
effecting transactions in Portfolio shares; such fees are not reflected in
the foregoing table. See "Management of the Fund" and "Shareholder Services
Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following tables 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.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO _ Contained below is per share operating
performance data for a share of Common Stock outstanding, total investment
return, ratios to average net assets and other supplemental data for each
year indicated. This information has been derived from the MONEY MARKET
PORTFOLIO'S financial statements.
MONEY MARKET PORTFOLIO
YEAR ENDED AUGUST 31,
---------------------------------------
PER SHARE DATA: 1992(1) 1993 1994 1995
------ ---- ----- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of year................................ $1.0000 $1.0000 $1.0000 $.9999
------ ------- ------ ------
INVESTMENT OPERATIONS:
Investment income - net........................................... .0240 .0270 .0257 .0373
Net realized (loss) on investments................................ -- -- (.0001) --
------ ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS.................................. .0240 .0270 .0256 .0373
------ ------- ------ ------
DISTRIBUTIONS:
Dividends from investment income - net............................ (.0240) (.0270) (.0257) (.0373)
------ ------- ------ ------
Net asset value, end of year...................................... $1.0000 $1.0000 $ .9999 $.9999
======= ======= ======= ======
TOTAL INVESTMENT RETURN........................................... 3.41%(2) 2.73% 2.60% 3.80%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................... -- .02% .09% .14%
Ratio of net investment income to average net assets.............. 3.22%(2) 2.64% 2.58% 3.73%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation............. .77%(2) .64% .50% .45%
Net Assets, end of year (000's omitted)........................... $228,708 $685,540 $1,027,377 $1,099,434
- ---------------
(1) From December 16, 1991 (commencement of operations) to August 31, 1992.
(2) Annualized.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND PORTFOLIO _ Contained below is per share operating
performance data for a share of Common Stock outstanding, total investment
return, ratios to average net assets and other supplemental data for each
year indicated. This information has been derived from the INTERMEDIATE BOND
PORTFOLIO'S financial statements.
INTERMEDIATE BOND PORTFOLIO
YEAR ENDED AUGUST 31,
---------------------------
PER SHARE DATA: 1994(1) 1995
------- ------
<S> <C> <C>
Net asset value, beginning of year............................... $12.50 $12.65
------- ------
INVESTMENT OPERATIONS:
Investment income-net............................................ .24 .68
Net realized and unrealized gain on investments.................. .15 .30
------- ------
TOTAL FROM INVESTMENT OPERATIONS................................. .39 .98
------- ------
DISTRIBUTIONS:
Dividends from investment income - net........................... (.24) (.68)
------- ------
Net asset value, end of year..................................... $12.65 $12.95
====== ======
TOTAL INVESTMENT RETURN.......................................... 3.11%(2) 8.09%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................... -- .11%
Ratio of net investment income to average net assets............. 5.53%(3) 5.45%
Decrease reflected in above expense ratios due to undertakings
by The Dreyfus Corporation.................. 1.54%(3) .81%
Portfolio Turnover Rate.......................................... 41.15%(2) 34.12%
Net Assets, end of year (000's omitted).......................... $28,275 $43,155
- ---------
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
(2) Not annualized.
(3) Annualized.
</TABLE>
Page 4
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO _ Contained below is per share operating performance
data for a share of Common Stock outstanding, total investment return, ratios
to average net assets and other supplemental data for each year indicated.
This information has been derived from the BOND PORTFOLIO'S financial
statements.
BOND PORTFOLIO
YEAR ENDED AUGUST 31,
--------------------------
PER SHARE DATA: 1994(1) 1995
------- ------
<S> <C> <C>
Net asset value, beginning of year............................... $12.50 $12.76
------- ------
INVESTMENT OPERATIONS:
Investment income-net............................................ .19 .76
Net realized and unrealized gain on investments.................. .26 .25
------- ------
TOTAL FROM INVESTMENT OPERATIONS................................. .45 1.01
------- ------
DISTRIBUTIONS:
Dividends from investment income-net............................. (.19) (.76)
------- ------
Dividends from net realized gains on investments................. -- --
TOTAL DISTRIBUTIONS.............................................. (.19) (.76)
Net asset value, end of year..................................... $12.76 $13.01
====== =======
TOTAL INVESTMENT RETURN.......................................... 4.13%(2) 8.30%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................... -- .20%
Ratio of net investment income to average net assets............. 6.03%(3) 5.99%
Decrease reflected in above expense ratios due to undertakings
by The Dreyfus Corporation...................................... 2.06%(3) .77%
Portfolio Turnover Rate.......................................... 8.82%(2) 58.91%
Net Assets, end of year (000's omitted).......................... $15,334 $42,913
- ---------------
(1) From May 6, 1994 (commencement of operations) to August 31, 1994.
(2) Not annualized.
(3) Annualized.
</TABLE>
Further information about the performance of the INTERMEDIATE BOND
PORTFOLIO and BOND PORTFOLIO is contained in each Portfolio's respective
annual report, which may be obtained without charge by writing to the address
or calling the number set forth on the cover of this Prospectus.
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO _ From time to time, the MONEY MARKET PORTFOLIO
advertises its yield and effective yield. Both yield figures are based on
historical earnings and are not intended to indicate future performance. It
can be expected that these yields will fluctuate substantially. The yield of
the MONEY MARKET PORTFOLIO refers to the income generated by an investment in
the Portfolio over a seven-day period (which period will be stated in the
advertisement). This income is then annualized. That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly, but, when annualized, the income
earned by an investment in the Portfolio is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The MONEY MARKET PORTFOLIO'S
yield and effective yield may reflect absorbed expenses pursuant to any
undertakings that may be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
yield or effective yield calculated as described above.
Yield information is useful in reviewing the MONEY MARKET PORTFOLIO'S
performance, but because yields will fluctuate, such information under
certain conditions may not provide a basis for comparison with domestic bank
deposits, other investments which pay a fixed yield for a stated period of
time, or other investment companies which may use a different method of
computing yield.
Page 5
Comparative performance information may be used from time to time in
advertising or marketing the MONEY MARKET PORTFOLIO'S shares, including data
from Lipper Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm
Beach, Fla. 33408, IBC/Donoghue's Money Fund ReportRegistration Mark,
Morningstar, Inc. and other industry publications.
INTERMEDIATE BOND PORTFOLIO AND BOND PORTFOLIO _ For purposes of
advertising, performance of the INTERMEDIATE BOND PORTFOLIO and the BOND
PORTFOLIO (each, a "LONGER TERM PORTFOLIO") may be calculated on several
bases, including current yield, tax equivalent yield, average annual total
return and/or total return.
Current yield of a LONGER TERM PORTFOLIO refers to its annualized net
investment income per share over a 30-day period, expressed as a percentage
of the net asset value per share at the end of the period. For purposes of
calculating current yield, the amount of net investment income per share
during that 30-day period, computed in accordance with regulatory
requirements, is compounded by assuming it is reinvested at a constant rate
over a six-month period. An identical result is then assumed to have occurred
during a second six-month period which, when added to the result for the
first six months, provides an "annualized" yield for an entire one-year
period. Calculations of a LONGER TERM PORTFOLIO'S current yield may reflect
absorbed expenses pursuant to any undertakings that may be in effect. See
"Management of the Fund."
Tax equivalent yield is calculated as described above.
Average annual total return for each LONGER TERM PORTFOLIO is
calculated pursuant to a standardized formula which assumes that an
investment in such Portfolio was purchased with an initial payment of $1,000
and that the investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and distributions during
the period. The return is expressed as a percentage rate which, if applied on
a compounded annual basis, would result in the redeemable value of the
investment at the end of the period. Advertisements of a LONGER TERM
PORTFOLIO'S performance will include its average annual total return for one,
five and ten year periods, or for shorter time periods depending upon the
length of time during which it has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Comparative performance information may be used from time to time in
advertising or marketing shares of each LONGER TERM PORTFOLIO, including data
from CDA Investment Technologies, Inc., Lipper Analytical Services, Inc.,
Moody's Bond Survey Bond Index, Lehman Brothers Municipal Bond Index,
Morningstar, Inc. and other industry publications.
ALL PORTFOLIOS _ Performance will vary from time to time and past results
are not necessarily representative of future results. You should remember
that performance is a function of portfolio management in selecting the type
and quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described above, may not provide a
basis for comparison with other investments or other investment companies
using a different method of calculating performance.
DESCRIPTION OF THE PORTFOLIOS
INVESTMENT OBJECTIVE
Each Portfolio's investment objective 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
Page 6
PORTFOLIO only, the maintenance of liquidity. To accomplish its investment
objective, each Portfolio invests primarily in Municipal Obligations
(described below). The MONEY MARKET PORTFOLIO invests primarily in
high-quality, short-term instruments, which may not earn as high a level of
current income as long-term or lower quality securities which generally have
less liquidity, greater market risk and more fluctuation in market value.
The dollar-weighted average maturity of the INTERMEDIATE BOND PORTFOLIO'S
investments ranges between three and ten years. The BOND PORTFOLIO is
invested without regard to maturity. Each Portfolio's investment objective
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of such
Portfolio's outstanding voting shares. There can be no assurance that a
Portfolio's investment objective will be achieved.
MUNICIPAL OBLIGATIONS
Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities, the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal income tax.
Municipal Obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds or notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that generally
do not carry the pledge of the credit of the issuing municipality, but
generally are guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities.
Municipal Obligations bear fixed, floating or variable rates of interest.
Each LONGER TERM PORTFOLIO may purchase Municipal Obligations with interest
rates that are determined by formulas under which the rate will change
directly or inversely to changes in interest rates or an index, or multiples
thereof, in many cases subject to a maximum and minimum. Certain Municipal
Obligations purchased by a LONGER TERM PORTFOLIO are subject to redemption at
a date earlier than their stated maturity pursuant to call options, which may
be separated from the related Municipal Obligation and purchased and sold
separately.
MANAGEMENT POLICIES
It is a fundamental policy of each Portfolio that it will invest at
least 80% of the value of its respective net assets (except when maintaining
a temporary defensive position) in Municipal Obligations. Additionally, at
least 65% of the value of each LONGER TERM PORTFOLIO'S net assets (except
when maintaining a temporary defensive position) will be invested in bonds,
debentures and other debt instruments. Each PORTFOLIO also may invest in
Taxable Investments of the quality described under "Appendix _ Certain
Portfolio Securities _ Taxable Investments."
MONEY MARKET PORTFOLIO _ The MONEY MARKET PORTFOLIO seeks to
maintain a net asset value of $1.00 per share for purchases and redemptions.
To do so, the MONEY MARKET PORTFOLIO uses the amortized cost method of
valuing its securities pursuant to Rule 2a-7 under the 1940 Act, certain
requirements of which are summarized as follows. In accordance with Rule
2a-7, the MONEY MARKET PORTFOLIO is required to maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase only instruments
having remaining maturities of 13 months or less and invest only in U.S.
dollar denominated securities determined in accordance with procedures
established by the Fund's Board to present minimal credit risks and which are
rated in one of the two highest rating categories
Page 7
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.
The nationally recognized statistical rating organizations currently rating
investments of the type the MONEY MARKET PORTFOLIO may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, a
division of the McGraw Hill Companies, Inc. ("S&P") and Fitch Investors
Service, L.P. ("Fitch") and their rating criteria are described in Appendix
B to the Statement of Additional Information. For further information
regarding the amortized cost method of valuing securities, see "Determination
of Net Asset Value" in the Statement of Additional Information. There can be
no assurance that the MONEY MARKET PORTFOLIO will be able to maintain a
stable net asset value of $1.00 per share.
INTERMEDIATE BOND PORTFOLIO AND BOND PORTFOLIO _ For each LONGER
TERM PORTFOLIO, at least 65% of the value of its net assets must consist of
Municipal Obligations which, in the case of bonds, are rated no lower than A
by Moody's, S&P or Fitch or, if unrated, deemed to be of comparable quality
by The Dreyfus Corporation. Each LONGER TERM PORTFOLIO may invest up to 35%
of the value of its net assets in Municipal Obligations which, in the case of
bonds, are rated lower than A by Moody's, S&P and Fitch and as low as the
lowest rating assigned by Moody's, S&P or Fitch. Each LONGER TERM PORTFOLIO
may invest in short-term Municipal Obligations which are rated in the two
highest rating categories by Moody's, S&P or Fitch. See Appendix B in the
Statement of Additional Information. Municipal Obligations rated BBB by S&P
or Fitch or Baa by Moody's are considered investment grade obligations; those
rated BBB by S&P and Fitch are regarded as having an adequate capacity to pay
principal and interest, while those rated Baa by Moody's are considered
medium grade obligations which lack outstanding investment characteristics
and have speculative characteristics. Investments rated Ba or lower by
Moody's and BB or lower by S&P and Fitch ordinarily provide higher yields but
involve greater risk because of their speculative characteristics. Each LONGER
TERM PORTFOLIO may invest in Municipal Obligations rated C by Moody's or D
by S&P or Fitch, which is the lowest rating assigned by such rating
organizations and indicates that the Municipal Obligation is in default and
interest and/or repayment of principal is in arrears. See "Investment
Considerations and Risks_Lower Rated Bonds" below for a further discussion of
certain risks.
Each Longer Term Portfolio's annual portfolio turnover rate is not
expected to exceed 100%. Each Longer Term Portfolio may engage in various
investment techniques, such as lending portfolio securities, options and
futures transactions and short-selling. Use of certain of these techniques
may give rise to taxable income. See also "Investment Considerations and
Risks" and "Appendix_Investment Techniques" below and "Investment Objective
and Management Policies_Management Policies" in the Statement of Additional
Information.
ALL PORTFOLIOS _ From time to time, a Portfolio may invest more than
25% of the value of its total assets in industrial development bonds which,
although issued by industrial development authorities, may be backed only by
the assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code of
1986, as amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company may be treated as such a preference item to shareholders. Each
Portfolio may invest without limitation in such Municipal Obligations if The
Dreyfus Corporation determines that its purchase is consistent with such
Portfolio's investment objective. See "Investment Considerations and Risks"
below.
Page 8
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL_The Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of Portfolio shares. Because charges may
apply to redemptions and exchanges of Portfolio shares, the Fund may not be
an appropriate investment for an investor who intends to engage frequently in
such transactions.
Even though interest-bearing securities are investments which promise
a stable stream of income, the prices of such securities are inversely
affected by changes in interest rates and, therefore, are subject to the risk
of market price fluctuations. Certain securities that may be purchased by a
LONGER TERM PORTFOLIO, such as those with interest rates that fluctuate
directly or indirectly based on multiples of a stated index, are designed to
be highly sensitive to changes in interest rates and can subject the holders
thereof to extreme reductions of yield and possibly loss of principal. The
values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. The MONEY
MARKET PORTFOLIO seeks to maintain a stable $1.00 share price, while the net
asset value of each LONGER TERM PORTFOLIO generally will not be stable and
should fluctuate based upon changes in the value of its respective portfolio
securities. Securities in which a LONGER TERM PORTFOLIO invests may earn a
higher level of current income than certain shorter-term or higher quality
securities which generally have greater liquidity, less market risk and less
fluctuation in market value.
INVESTING IN MUNICIPAL OBLIGATIONS_Each Portfolio may invest more than 25%
of the value of its total assets in Municipal Obligations which are related
in such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for
example, securities the interest upon which is paid from revenues of similar
types of projects, or securities whose issuers are located in the same state.
As a result, each Portfolio may be subject to greater risk as compared to a
fund that does not follow this practice.
Certain municipal lease/purchase obligations in which a Portfolio may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal lease/p
urchase obligation that is unrated, The Dreyfus Corporation will consider, on
an ongoing basis, a number of factors including the likelihood that the
issuing municipality will discontinue appropriating funding for the leased
property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by each
Portfolio and thus reduce the available yield. Shareholders should consult
their tax advisers concerning the effect of these provisions on an investment
in a Portfolio. Proposals that may restrict or eliminate the income tax
exemption for interest on Municipal Obligations may be introduced in the
future. If any such proposal were enacted that would reduce the availability
of Municipal Obligations for investment by a Portfolio so as to adversely
affect its shareholders, such Portfolio would reevaluate its investment
objective and policies and submit possible changes in its structure to
shareholders for their consideration. If legislation were enacted that would
treat a type of Municipal Obligation as taxable, each Portfolio would treat
such security as a permissible Taxable Investment within the applicable
limits set forth herein.
LOWER RATED BONDS (APPLICABLE TO EACH LONGER TERM PORTFOLIO ONLY) _ Each
LONGER TERM PORTFOLIO may invest up to 35% of the value of its net assets in
higher yielding (and, therefore, higher risk) debt securities. Lower rated
bonds as discussed herein are not eligible investments for the MONEY MARKET
PORTFOLIO. These are bonds such as those rated Ba by Moody's or BB by S&P or
Fitch, or as low as the lowest rating assigned by Moody's, S&P or Fitch
(commonly known as junk bonds). They
Page 9
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. The market price and yield of bonds rated Ba
or lower by Moody's and BB or lower by S&P and Fitch are more volatile than
those of higher rated bonds. Factors adversely affecting the market price and
yield of these securities will adversely affect each LONGER TERM PORTFOLIO'S
net asset value. In addition, the retail secondary market for these bonds may
be less liquid than that of higher rated bonds; adverse market conditions
could make it difficult at times for a LONGER TERM PORTFOLIO to sell certain
securities or could result in lower prices than those used in calculating the
net asset value of each LONGER TERM PORTFOLIO.
Each LONGER TERM PORTFOLIO may invest up to 5% of the value of its
total assets in zero coupon securities and pay-in-kind bonds (bonds which pay
interest through the issuance of additional bonds) rated Ba or lower by
Moody's and BB or lower by S&P and Fitch. These securities may be subject to
greater fluctuations in value due to changes in interest rates than
interest-bearing securities and thus may be considered more speculative than
comparably rated interest-bearing securities. See "Appendix _ Certain
Portfolio Securities _ Ratings" below and "Investment Objective and
Management Policies_Investment Considerations and Risks_Lower Rated Bonds"
and "Dividends, Distributions and Taxes" in the Statement of Additional
Information.
ZERO COUPON SECURITIES _ Federal income tax law requires the holder of a
zero coupon security or of certain pay-in-kind bonds to accrue income with
respect to these securities prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and avoid
liability for Federal income taxes, a LONGER TERM PORTFOLIO may be required
to distribute such income accrued with respect to these securities and may
have to dispose of portfolio securities under disadvantageous circumstances
in order to generate cash to satisfy these distribution requirements.
Use of Derivatives_Each LONGER TERM PORTFOLIO may invest, to a limited
extent, in derivatives ("Derivatives"). These are financial instruments which
derive their performance, at least in part, from the performance of an
underlying asset, index or interest rate. The Derivatives the LONGER TERM
PORTFOLIOS may use include options and futures. While Derivatives can be used
effectively in furtherance of the LONGER TERM PORTFOLIO'S investment
objective, under certain market conditions, they can increase the volatility
of the LONGER TERM PORTFOLIOS' net asset value, can decrease the liquidity of
the Longer Term Portfolios' investments and make more difficult the accurate
pricing of the LONGER TERM PORTFOLIOS' portfolio. See "Appendix_Investment
Techniques_Use of Derivatives" below, and "Investment Objective and
Management Policies_Management Policies_Derivatives" in the Statement of
Additional Information.
NON-DIVERSIFIED STATUS _ Each Portfolio's classification as a
"non-diversified" investment company means that the proportion of the
Portfolio's assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act 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. Since a relatively high percentage of each Portfolio's assets may be
invested in the obligations of a limited number of issuers, the Portfolio's
investments may be more sensitive to changes in the market value of a single
issuer. However, to meet Federal tax requirements, at the close of each
quarter no Portfolio may have more than 25% of its total assets invested in
any one issuer and, with respect to 50% of its total assets, more than 5% of
its total assets invested in any one issuer. These limitations do not apply
to U.S. Government securities.
SIMULTANEOUS INVESTMENTS _ Investment decisions for each Portfolio are made
independently from those of other investment companies advised by The Dreyfus
Corporation. However, if such other investment companies or one or more of
the Portfolios are prepared to invest in, or desire to dispose of, Municipal
Obligations or Taxable Investments at the same time as a Portfolio, available
investments or
Page 10
opportunities for sales will be allocated equitably to each
investment company or Portfolio, as the case may be. In some cases, this
procedure may adversely affect the size of the position obtained for or
disposed of by a Portfolio or the price paid or received by it.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166, was formed in 1947 and serves as the Fund's investment
adviser. The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank,
N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of October 31, 1995, The Dreyfus Corporation managed or
administered approximately $81 billion in assets for more than 1.8 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 in accordance with
Maryland law. The primary portfolio manager of the each LONGER TERM
PORTFOLIO is Joseph P. Darcy. He has held that position since the
commencement of operations of each LONGER TERM PORTFOLIO and has been
employed by The Dreyfus Corporation since May 1994. From October 1989 to May
1994, Mr. Darcy was Vice President and a Portfolio Manager for Merrill Lynch
Asset Management. The Fund's other portfolio managers are identified in the
Statement of Additional Information. The Dreyfus Corporation also provides
research services for the Fund as well as for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$209 billion in assets as of September 30, 1995, including approximately $80
billion in proprietary mutual fund assets. As of September 30, 1995, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $717 billion in assets
including approximately $55 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of: (i) .50 of
1% of the value of the MONEY MARKET PORTFOLIO'S average daily net assets and
(ii) .60 of 1% of the value of each LONGER TERM PORTFOLIO's average daily net
assets. From time to time, The Dreyfus Corporation may waive receipt of its
fees and/or voluntarily assume certain expenses of a Portfolio, which would
have the effect of lowering the overall expense ratio of that Portfolio and
increasing yield to investors at the time such amounts are 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, 1995, the Fund, with respect to the MONEY MARKET PORTFOLIO, paid The
Dreyfus Corporation a monthly management fee at the effective annual rate of
.05 of 1% of the Portfolio's average daily net assets pursuant to
undertakings by The Dreyfus Corporation. For the fiscal year ended August 31,
1995, no management fee was paid by the Fund as to the INTERMEDIATE BOND
PORTFOLIO and BOND PORTFOLIO, respectively, pursuant to separate undertakings
by The Dreyfus Corporation.
The Dreyfus Corporation has agreed until June 30, 1996, in the case
of the MONEY MARKET PORTFOLIO, and until June 30, 1998, in the case of each
LONGER TERM PORTFOLIO, that if in any fiscal
Page 11
year the aggregate expenses of a Portfolio, exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses, but including the
management fee, exceed .45% of the value of such Portfolio's average daily
net assets for the fiscal year, the Fund may deduct from the payment to be
made to The Dreyfus Corporation under the Management Agreement, or The
Dreyfus Corporation will bear, such excess expense.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent company is Boston Institutional
Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN - Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of The Dreyfus Corporation, One American Express
Plaza, Providence, Rhode Island 02903, is the Fund's (the "Transfer Agent").
The Transfer Agent will receive the $5.00 exchange fee, the $5.00 account
closeout fee, the $5.00 wire and Dreyfus TELETRANSFER 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 shares of a Portfolio, you are deemed to have consented to this
procedure. The Bank of New York, 90 Washington Street, New York, New York
10286, is the Fund's Custodian.
HOW TO BUY SHARES
Portfolio Shares are sold without a sales charge. You may be charged
a nominal fee if you effect transactions in Portfolio shares through a
securities dealer, bank or other financial institution. Share certificates
are issued only upon your written request. No certificates are issued for
fractional shares. It is not recommended that any Portfolio be used as a
vehicle for Keogh, IRA or other qualified plans. The Fund reserves the right
to reject any purchase order.
The minimum initial investment is $25,000 for the MONEY MARKET
PORTFOLIO and $10,000 for each LONGER TERM PORTFOLIO. Subsequent investments
in each Portfolio must be at least $1,000. The initial investment must be
accompanied by the Fund's Account Application.
You may purchase Portfolio shares by check or wire or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds" and should specify the Portfolio in which
you are investing. Payments to open new accounts which are mailed should be
sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence, Rhode Island
02940-9387, together with your Account Application. For subsequent
investments, your Fund account number should appear on the check and an
investment slip should be enclosed and sent to The Dreyfus Family of Funds,
P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor subsequent
investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the applicable
Portfolio's DDA# as shown below, for purchase of Portfolio shares in your
name: DDA# 8900208767/Dreyfus BASIC Municipal Fund, Inc./Dreyfus BASIC
Municipal Money Market Portfolio;
Page 12
DDA# 8900088451/Dreyfus BASIC Municipal Fund, Inc./Dreyfus BASIC Intermediate
Municipal Bond Portfolio; or DDA# 8900088443/Dreyfus BASIC Municipal Fund,
Inc./Dreyfus BASIC Municipal Bond Portfolio. The wire must include your Fund
account number (for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), account registration and dealer number, if
applicable. If your initial purchase of Portfolio shares is by wire, please
call 1-800-645-6561 after completing your wire payment to obtain your Fund
account number. Please include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid additional
fees and delays, should be drawn only on U.S. banks. A charge will be imposed
if any check used for investment in your account does not clear. The Fund
makes available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Shares of the MONEY MARKET PORTFOLIO are sold on a continuous basis
at the net asset value per share next determined after an order in proper
form and Federal Funds (monies of member banks within the Federal Reserve
System which are held on deposit at a Federal Reserve Bank) are received by
the Transfer Agent. If you do not remit Federal Funds, your payment must be
converted into Federal Funds. This usually occurs within one business day of
receipt of a bank wire or within two business days of receipt of a check
drawn on a member bank of the Federal Reserve System. Checks drawn on banks
which are not members of the Federal Reserve System may take considerably
longer to convert into Federal Funds. Prior to receipt of Federal Funds, your
money will not be invested.
The MONEY MARKET PORTFOLIO'S net asset value per share is determined
as of 12:00 Noon, New York time, on each day the New York Stock Exchange is
open for business. Net asset value per share is computed by dividing the
value of the MONEY MARKET PORTFOLIO'S net assets (i.e., the value of its
assets less liabilities) by the total number of MONEY MARKET PORTFOLIO'S
shares outstanding. See "Determination of Net Asset Value" in the Statement
of Additional Information.
If your payments for shares of the MONEY MARKET PORTFOLIO are
received in or converted into Federal Funds by 12:00 Noon, New York time, by
the Transfer Agent, you will receive the dividend declared that day. If your
payments are received in or converted into Federal Funds after 12:00 Noon,
New York time, by the Transfer Agent, you will begin to accrue dividends on
the following business day.
Qualified institutions may telephone orders for purchase of the MONEY
MARKET PORTFOLIO'S shares. These orders will become effective at the price
determined at 12:00 Noon, New York time, and the shares purchased will
receive the dividend on Portfolio shares declared on that day if the
telephone order is placed by 12:00 Noon, New York time, and Federal Funds are
received by 4:00 p.m., New York time, on that day.
Shares of each LONGER TERM PORTFOLIO are sold on a continuous basis
at the net asset value per share next determined after an order in proper
form is received by the Transfer Agent. Each LONGER TERM PORTFOLIO'S net
asset value per share is determined as of the close of trading on the floor
of the New York Stock Exchange (currently 4:00 p.m., New York time), on each
day that the New York Stock Exchange is open for business. For purposes of
determining the net asset value of each LONGER TERM PORTFOLIO, options and
futures contracts will be valued 15 minutes after the close of trading on the
floor of the New York Stock Exchange. Net asset value per share is computed
by dividing the value of the specific LONGER TERM PORTFOLIO'S net assets
(i.e., the value of its assets less liabilities) by the total
Page 13
number of such Portfolio's shares outstanding. The investments of each LONGER
TERM PORTFOLIO are valued by an independent pricing service approved by the
Fund's Board of Directors, and are valued at fair value as determined by the
pricing service. The pricing service's procedures are reviewed under the
general supervision of the Fund's Board. For further information regarding
the methods employed in valuing each LONGER TERM PORTFOLIO'S investments, see
"Determination of Net Asset Value" in the Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE - You may purchase shares (minimum $1,000
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application
or have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one of
these documents and your Fund account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be so designated. The Fund may modify or terminate this Privilege at any
time. No fee currently is contemplated for purchases of Portfolio shares
pursuant to this Privilege.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call
1-401-455-3306.
FUND EXCHANGES
You may purchase up to four times a calendar year, in exchange for
shares of a Portfolio, shares in one of the Fund's other Portfolios or shares
of certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. You will
be charged a $5.00 fee for each exchange you make out of a Fund portfolio.
This fee will be deducted from your account and paid to the Transfer Agent.
To request an exchange you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange into a fund or
Portfolio offered by another prospectus, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is being
made. Prospectuses may be obtained by calling 1-800-645-6561. Except in the
case of personal retirement plans, the shares being exchanged must have a
current value of at least $1,000; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value of at least
the minimum initial investment required for the fund into which the exchange
is being made. The ability to issue exchange instructions by telephone is
given to all Fund shareholders automatically, unless you check the applicable
"No"box on the Account Application, indicating that you specifically refuse
this Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate signed Shareholder Services Form, also available by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if you are calling from overseas, call 1-401-455-3306. See "How to Redeem
Shares_Procedures." Upon an exchange into a new account, the following
shareholder services and privileges, as applicable and where available, will
be automatically carried over to the fund into which the exchange is made:
Telephone Exchange Privilege, Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and
the dividend/capital gain distribution option selected by the investor.
Page 14
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 "Fund Exchanges" in the Statement of Additional Information. The
Fund reserves the right to reject any exchange request in whole or in part
and will reject any request to exchange out of one of the Portfolios in
excess of four during any calendar year. The availability of Fund Exchanges
may be modified or terminated at any time upon notice to shareholders.
The exchange of shares of one fund or Portfolio for shares of another
is treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
HOW TO REDEEM SHARES
GENERAL _ You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
YOU WILL BE CHARGED $5.00 WHEN YOU REDEEM ALL SHARES IN YOUR ACCOUNT
OR YOUR ACCOUNT IS OTHERWISE CLOSED OUT. The fee will be deducted from your
redemption proceeds and paid to the Transfer Agent. The account closeout fee
does not apply to exchanges out of a Portfolio or to wire or Dreyfus
TELETRANSFER redemptions, for each of which a $5.00 fee applies. Securities
dealers, banks and other financial institutions may charge their clients a
nominal fee for effecting redemptions of Portfolio shares. Any certificates
representing Portfolio shares being redeemed must be submitted with the
redemption request. The value of the shares redeemed may be more or less than
their original cost, depending upon the Portfolio's then current net asset
value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED PORTFOLIO SHARES BY CHECK OR BY
THE DREYFUS TELETRANSFER PRIVILEGE 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 OR DREYFUS TELETRANSFER PURCHASE ORDER,
WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL
NOT HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL
REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE
DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR DREYFUS TELETRANSFER
PURCHASE ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES
WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU
OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS
ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO
EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. 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
Page 15
PORTFOLIO or $5,000 or less in the case of a LONGER TERM PORTFOLIO, and
remains so during the notice period. The $5.00 account closeout fee would be
charged in such case.
PROCEDURES _ You may redeem Portfolio shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege or the Telephone
Redemption Privilege, or the Dreyfus TELETRANSFER Privilege. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities. The Fund reserves the
right to refuse any request made by wire or telephone, including requests
made shortly after a change of address, and may limit the amount involved or
the number of such requests. The Fund may modify or terminate any redemption
Privilege at any time.
You may redeem Portfolio shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Portfolio shares. In such cases, you
should consider using the other redemption procedures described herein. Use
of these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used. During the delay, a LONGER TERM PORTFOLIO'S net
asset value may fluctuate.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each shareholder, including each owner of a joint account,
and each signature must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper
form generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. If you have any questions with respect to signature-guarantees,
please call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $5,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $1,000 or more. Potential fluctuations in the net
asset value of the shares of each LONGER TERM PORTFOLIO should be considered
in determining the amount of the check. Redemption Checks should not be used
to close your account. Your account will be charged $2.00 for each Redemption
Check you write. The Transfer Agent also will impose a fee for stopping
payment of a Redemption Check upon your request or if the
Page 16
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. With respect to the LONGER TERM PORTFOLIOS only, this
Privilege will be terminated immediately, without notice, with respect to any
account which is, or becomes, subject to backup withholding on redemptions
(see "Dividends, Distributions and Taxes"). Any redemption check written on
an account in a LONGER TERM PORTFOLIO which has become subject to backup
withholding on redemptions will not be honored by the Transfer Agent.
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. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $5,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
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 request by telephone that
redemption proceeds (maximum $150,000 per day) 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.
Shares for which certificates have been issued are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE _ You may request by telephone that
redemption proceeds (minimum $1,000 per day) be transferred between your
Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be designated. Redemption proceeds will be on deposit in your account at
an Automated Clearing House member bank ordinarily two days after receipt of
the redemption request or, at your request, paid by check (maximum $150,000
per day) and mailed to your address. Holders of jointly registered Fund or
bank accounts may redeem through the Dreyfus TELETRANSFER Privilege for
transfer to their bank account not more than $250,000 within any 30-day
period. You will be charged a $5.00 TELETRANSFER fee for each Dreyfus
TELETRANSFER redemption, which will be deducted from your account and paid
to the Transfer Agent.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-40l-455-3306.
Shares issued in certificate form are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus Corporation, an amount not to exceed an annual rate of .25 of l%
of the value of each Portfolio's average daily net assets for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
Page 17
regarding the Portfolio and providing reports and other information, and
services related to the maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Code, each Portfolio is treated as a separate corporation
for purposes of qualification and taxation as a regulated investment company.
Each Portfolio ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange is open for business. Dividends
usually are paid on the last business day (calendar day in the case of the
MONEY MARKET PORTFOLIO) of each month and are automatically reinvested in
additional Portfolio shares at net asset value or, at your option, paid in
cash. The Portfolio's earnings for Saturdays, Sundays and holidays are
declared as dividends on the preceding business day in the case of the MONEY
MARKET PORTFOLIO and on the next business day in the case of the LONGER TERM
PORTFOLIO. With respect to each LONGER TERM PORTFOLIO, Portfolio shares begin
earning income dividends on the day following the date of purchase. If you
redeem all shares in your account at any time during the month, all dividends
to which you are entitled will be paid to you along with the proceeds of the
redemption, after deduction of any fees. If you are an omnibus accountholder
and indicate in a partial redemption request that a portion of any accrued
dividends to which such account is entitled belongs to an underlying
accountholder who has redeemed all shares in his or her account, such portion
of the accrued dividends will be paid to you along with the proceeds of the
redemption, after the deduction of any fees. Distributions from net realized
securities gains, if any, generally are declared and paid once a year, but
each Portfolio may make distributions on a more frequent basis to comply with
the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the Investment Company Act of 1940. No
Portfolio will make distributions from net realized securities gains unless
capital loss carryovers, if any, have been utilized or have expired. You may
choose whether to receive distributions in cash or to reinvest in additional
Portfolio shares at net asset value. All expenses are accrued daily and
deducted before declaration of dividends to investors.
Except for dividends from Taxable Investments, each Portfolio
anticipates that substantially all dividends paid by such Portfolio will not
be subject to Federal income tax. Dividends derived from Taxable Investments,
together with distributions from any net realized short-term securities gains
and all or a portion of any gains realized from the sale or other disposition
of certain market discount bonds, paid by a Portfolio are subject to Federal
income tax as ordinary income whether or not reinvested. No dividend paid by
a Portfolio will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions from net realized long-term
securities gains of each Portfolio generally are taxable as long-term capital
gains for Federal income tax purposes if you are a citizen or resident of the
United States. The Code provides that the net capital gain of an individual
generally will not be subject to Federal income tax at a rate in excess of
28%. Under the Code, interest on indebtedness incurred or continued to
purchase or carry Portfolio shares which is deemed to relate to
exempt-interest dividends is not deductible. Dividends and distributions may
be subject to state and local taxes.
Taxable dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by a Portfolio to a foreign investor generally
are subject to U.S. nonresident withholding taxes at the rate of 30%, unless
the foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by a
Portfolio to a foreign investor as well as, in the case of a LONGER TERM
PORTFOLIO, the proceeds of any redemptions from a foreign investor's account,
regardless of the extent to which gains or loss may be realized, generally
will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below,
unless the foreign investor certifies his non-U.S. residency status.
Although all or a substantial portion of the dividends paid by a
Portfolio may be excluded by its shareholders from their gross income for
Federal income tax purposes, such Portfolio may purchase
Page 18
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a component
of the "adjusted current earnings" preference item for purposes of the
corporate alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If a Portfolio
purchases such securities, the portion of its dividends related thereto will
not necessarily be tax exempt to an investor who is subject to the
alternative minimum tax and/or tax on Social Security benefits and may cause
an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in a Portfolio. If a Portfolio
pays dividends derived from taxable income, it intends to designate as
taxable the same percentage of the day's dividend as the actual taxable
income earned on that day bears to total income earned on that day. Thus, the
percentage of the dividend designated as taxable, if any, may vary from day
to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains of a Portfolio and, in the
case of a LONGER TERM PORTFOLIO, the proceeds of redemption, regardless of
the extent to which gain or loss may be realized, paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or
if a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that each Portfolio has qualified for
the fiscal year ended August 31, 1995 as a "regulated investment company"
under the Code. Each Portfolio intends to continue to so qualify if such
qualification is in the best interests of its shareholders. Qualification as
a "regulated investment company" relieves the Portfolio of any liability for
Federal income taxes to the extent its earnings are distributed in accordance
with applicable provisions of the Code. Each Portfolio is subject to a
non-deductible 4% excise tax, measured with respect to certain undistributed
amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on August 8, 1991, and
commenced operations on December 16, 1991. On December 24, 1992, the Fund's
name was changed from Dreyfus Investors Municipal Money Market Fund, Inc. to
Dreyfus BASIC Municipal Money Market Fund, Inc., and, on October 21, 1994, to
Dreyfus BASIC Municipal Fund, Inc. The Fund is authorized to issue five
billion shares of Common Stock (with three billion shares allocated to the
MONEY MARKET PORTFOLIO and five hundred million shares allocated to each
LONGER TERM PORTFOLIO) par value $.001 per share. Each share has one vote.
Unless otherwise required by the 1940 Act, 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
Page 19
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.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. By this Prospectus, shares of the Money Market,
Intermediate Bond and Bond Portfolios are being offered. Other Portfolios are
sold pursuant to other offering documents.
To date, the Fund's Board has authorized the creation of four series
of shares. All consideration received by the Fund for shares of one of the
portfolios and all assets in which such consideration is invested will belong
to that portfolio (subject only to the rights of creditors of the Fund) and
will be subject to the liabilities related thereto. The income attributable
to, and the expenses of, one portfolio are treated separately from those of
the other portfolios. The Fund has the ability to create, from time to time,
new portfolios without shareholder approval.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account. The Fund sends an annual and
semi-annual financial report to all its shareholders.
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; outside the U.S.
and Canada call 516-794-5452.
Page 20
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY _ As a fundamental policy, each LONGER TERM PORTFOLIO is
permitted to borrow to the extent permitted under the 1940 Act, which permits
an investment company to borrow in an amount up to 331\3% of the value of
such company's total assets. Each LONGER TERM PORTFOLIO currently intends to,
and the MONEY MARKET PORTFOLIO may, borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 15% of the value of
such Portfolio's total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While borrowings exceed 5% of a
Portfolio's total assets, such Portfolio will not make any additional
investments.
FORWARD COMMITMENTS _ Each Portfolio may purchase municipal obligations and
other securities on a forward commitment or when-issued basis, which means
that delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation and the interest rate that
will be received on a forward commitment or when-issued security are fixed at
the time the Portfolio enters into the commitment. However, the Portfolio
does not make a payment until it receives delivery from the other party to the
transaction. Each Portfolio will make commitments to purchase such
securities only with the intention of actually acquiring the securities, but
the Portfolio may sell these securities before the settlement date if it is
deemed advisable. A segregated account of the Portfolio 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 commitments
will be established and maintained at the Fund's custodian bank.
USE OF DERIVATIVES _ (LONGER TERM PORTFOLIOS ONLY) Although neither the Fund
nor the LONGER TERM PORTFOLIOS will be a commodity pool, Derivatives subject
the LONGER TERM PORTFOLIOS to the rules of the Commodity Futures Trading
Commission which limit the extent to which the LONGER TERM PORTFOLIOS can
invest in certain Derivatives. Each LONGER TERM PORTFOLIO may invest in
futures contracts and options with respect thereto for hedging purposes
without limit. However, neither LONGER TERM PORTFOLIO may invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceed 5% of the
liquidation value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the
5% limitation.
Each LONGER TERM PORTFOLIO may invest up to 5% of its assets,
represented by the premium paid, in the purchase of call and put options.
Each LONGER TERM PORTFOLIO may write (i.e., sell) covered call and put option
contracts to the extent of 20% of the value of its net assets at the time
such option contracts are written. When required by the Securities and
Exchange Commission, such Portfolio will set aside permissible liquid assets
in a segregated account to cover its obligations relating to its purchase of
Derivatives. To maintain this required cover, the Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on each LONGER TERM PORTFOLIO'S
performance.
If a LONGER TERM PORTFOLIO invests in Derivatives at inappropriate
times or judges market conditions incorrectly, such investments may lower the
Portfolio's return or result in a loss. The LONGER TERM PORTFOLIO also could
experience losses if its Derivatives were poorly correlated with its other
Page 21
investments, or if the Portfolio were unable to liquidate its position
because of an illiquid secondary market. The market for many Derivatives is,
or suddenly can become, illiquid. Changes in liquidity may result in
significant, rapid and unpredictable changes in the prices for Derivatives.
LENDING PORTFOLIO SECURITIES _ (LONGER TERM PORTFOLIOS ONLY) Each LONGER
TERM PORTFOLIO may lend securities from its portfolio to brokers, dealers and
other financial institutions needing to borrow securities to complete certain
transactions. In connection with such loans, the LONGER TERM PORTFOLIO
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned securities. Loans of portfolio
securities afford the LONGER TERM PORTFOLIO and opportunity to earn interest
on the amount of the loan and at the same time to earn income on the loaned
securities' collateral. Loans of portfolio securities may not exceed 331\3%
of the value of a LONGER TERM PORTFOLIO'S total assets. In connection with
such loans, the LONGER TERM PORTFOLIO will receive collateral consisting of
cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the LONGER
TERM PORTFOLIO at any time upon specified notice. A LONGER TERM PORTFOLIO
might experience risk of loss if the institution with which it has engaged in
a portfolio loan transaction breaches its agreement with the Portfolio.
SHORT-SELLING _ (LONGER TERM PORTFOLIOS ONLY) Each LONGER TERM PORTFOLIO
may make short sales, which are transactions in which the Portfolio sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete such a transaction, the Portfolio must borrow the
security to make delivery to the buyer. The Portfolio then is obligated to
replace the security borrowed by purchasing it at the market price at the
time of replacement. The price at such time may be more or less than the
price at which the security was sold by the Portfolio. A LONGER TERM
PORTFOLIO will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which
the Portfolio replaces the borrowed security. A LONGER TERM PORTFOLIO will
realize a gain if the security declines in price between those dates.
No securities will be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of such Portfolio's net assets. Neither LONGER TERM
PORTFOLIO may sell short the securities of any class of an issuer to the
extent, at the time of the transaction, of more than 5% of the outstanding
securities of that class.
In addition to the short sales discussed above, each LONGER TERM
PORTFOLIO may make short sales "against the box," a transaction in which the
Portfolio enters into a short sale of a security which the Portfolio owns.
Neither LONGER TERM PORTFOLIO will at any time have more than 15% of the
value of its net assets in deposits on short sales against the box. It
currently is anticipated that each LONGER TERM PORTFOLIO will make short
sales against the box for purposes of protecting the value of the Portfolio's
net assets.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS _ Each Portfolio may purchase floating or
variable rate demand notes, which are tax exempt obligations ordinarily
having stated maturities in excess of 13 months, but which permit the holder
to demand payment of principal at any time, or at specified intervals, which
for the MONEY MARKET PORTFOLIO will not exceed 13 months, and in each case
will be upon not more than 30 days' notice. Variable rate demand notes
include master demand notes which are obligations that permit each Portfolio
to invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Portfolio, as lender, and the borrower. These
obligations permit daily changes in the amounts borrowed. 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
Page 22
value, plus accrued interest. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the
Portfolio's right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Each obligation purchased by a
Portfolio will meet the quality criteria established for its purchase of
Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS _ Each Portfolio may purchase from
financial institutions participation interests in Municipal Obligations (such
as industrial development bonds and municipal lease/purchase agreements). A
participation interest gives a Portfolio an undivided interest in the
Municipal Obligation in the proportion that the Portfolio's participation
bears to the total principal amount of the Municipal Obligation. These
instruments may have fixed, floating or variable rates of interest and, in
the case of the MONEY MARKET PORTFOLIO, will have remaining maturities of 13
months or less. If the participation interest is unrated, it will be backed
by an irrevocable letter of credit or guarantee of a bank that the Fund's
Board has determined meets the prescribed quality standards for banks set
forth below, or the payment obligation otherwise will be collateralized by
U.S. Government securities. For certain participation interests, a Portfolio
will have the right to demand payment, on not more than seven days' notice,
for all or any part of the Portfolio's participation interest in the
Municipal Obligation, plus accrued interest. As to these instruments, each
Portfolio intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity
to meet redemptions, or to maintain or improve the quality of its investment
portfolio.
TENDER OPTION BONDS _ Each Portfolio may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest
at a fixed rate substantially higher than prevailing short-term tax exempt
rates, that has been coupled with the agreement of a third party, such as a
bank, broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing
or similar agent at or near the commencement of such period, that would cause
the securities, coupled with the tender option, to trade at par on the date
of such determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Dreyfus Corporation, on behalf of each
Portfolio, will consider on an ongoing basis the creditworthiness of the
issuer of the underlying Municipal Obligation, of any custodian and of the
third party provider of the tender option. In certain instances and for
certain tender option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying Municipal
Obligations and for other reasons.
CUSTODIAL RECEIPTS _ (LONGER TERM PORTFOLIOS ONLY) Each LONGER TERM
PORTFOLIO may purchase custodial receipts representing the right to receive
certain future principal and interest payments on Municipal Obligations which
underlie the custodial receipts. A number of different arrangements are
possible. In a typical custodial receipt arrangement, an issuer or a third
party owner of Municipal Obligations deposits such obligations with a
custodian in exchange for two classes of custodial receipts. The two classes
have different characteristics, but, in each case, payments on the two
classes are based on payments received on the underlying Municipal
Obligations. One class has the characteristics of a typical auction rate
security, where at specified intervals its interest rate is adjusted, and
ownership changes, based on an auction mechanism. This class's interest rate
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
Page 23
security of comparable quality and maturity; this rate also is adjusted, but
in this case inversely to changes in the rate of interest of the first class.
If the interest rate on the first class exceeds the coupon rate of the
underlying Municipal Obligations, its interest rate will exceed the rate paid
on the second class. In no event will the aggregate interest paid with respect
to the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should be
expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by a LONGER TERM PORTFOLIO
should increase the volatility of its net asset value and, thus, its price per
share. These custodial receipts are sold in private placements. Each LONGER
TERM PORTFOLIO also may purchase directly from issuers, and not in a private
placement, Municipal Obligations having characteristics similar to custodial
receipts. These securities may be issued as part of a multi-class offering
and the interest rate on certain classes may be subject to a cap or a floor.
STAND-BY COMMITMENTS _ Each Portfolio may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under a stand-by
commitment, a Portfolio obligates a broker, dealer or bank to repurchase, at
such Portfolio's option, specified securities at a specified price and, in
this respect, stand-by commitments are comparable to put options. The
exercise of a stand-by commitment therefore is subject to the ability of the
seller to make payment on demand. Each Portfolio will acquire stand-by commitm
ents solely to facilitate portfolio liquidity and does not intend to exercise
any such rights thereunder for trading purposes. Each Portfolio may pay for
stand-by commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly
decreasing such security's yield to investors. Gains realized in connection
with stand-by commitments will be taxable. The LONGER TERM PORTFOLIOS also
may acquire call options on specific Municipal Obligations. A LONGER TERM
PORTFOLIO generally would purchase these call options to protect it from the
issuer of the related Municipal Obligation redeeming, or other holder of the
call option from calling away, the Municipal Obligation before maturity. The
sale by a LONGER TERM PORTFOLIO of a call option that it owns on a specific
Municipal Obligation could result in the receipt of taxable income by the
Portfolio.
ZERO COUPON SECURITIES _ (LONGER TERM PORTFOLIOS ONLY) Each LONGER TERM
PORTFOLIO may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of debt
securities that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interest in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
interest-bearing securities and are likely to respond to a greater degree to
changes in interest rates than interest-bearing securities having similar
maturities and credit qualities.
ILLIQUID SECURITIES _ Each Portfolio may invest up to 15% (10% in the case
of the MONEY MARKET PORTFOLIO) of the value of its net assets in securities
as to which a liquid trading market does not exist, provided such investments
are consistent with the Portfolio's investment objective. Such securities may
include securities that are not readily marketable, such as certain
securities that are subject to legal or contractual restrictions on resale,
and repurchase agreements providing for settlement in more than seven days
after notice. As to these securities, the Portfolio investing in such
securities is subject to a risk that should the Portfolio desire to sell them
when a ready buyer is not available at a price the Fund deems representative
of their value, the value of the Portfolio's net assets could be adversely
affected.
TAXABLE INVESTMENTS _ From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of its net
assets) or for temporary defensive purposes, a
Page 24
Portfolio may invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of purchase, a quality
rating within the two highest grades of Moody's, S&P or Fitch; obligations
of the U.S. Government, its agencies or instrumentalities; commercial paper
rated not lower than P-2 by Moody's, A-2 by S&P or F-2 by Fitch; certificates
of deposit of U.S. domestic banks, including foreign branches of domestic
banks, with assets of one billion dollars or more; time deposits; bankers'
acceptances and other short-term bank obligations; and repurchase agreements
in respect of any of the foregoing. Dividends paid by a Portfolio that are
attributable to income earned by such Portfolio from Taxable Investments will
be taxable to investors. See "Dividends, Distributions and Taxes." Except for
temporary defensive purposes, at no time will more than 20% of the value of a
Portfolio's net assets be invested in Taxable Investments. If the MONEY
MARKET PORTFOLIO purchases Taxable Investments, it will value them using the
amortized cost method and comply with Rule 2a-7 relating to purchases of
taxable instruments. Under normal market conditions, each Portfolio
anticipates that not more than 5% of the value of its total assets will be
invested in any one category of Taxable Investments. Taxable Investments are
more fully described in the Statement of Additional Information, to which
reference hereby is made.
RATINGS _ (LONGER TERM PORTFOLIOS ONLY) 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 Municipal Obligations, though high yielding, are
characterized by great risk. See "Appendix B" in the Statement of Additional
Information for a general description of Moody's, S&P and Fitch ratings of
Municipal Obligations. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they undertake
to rate. It should be emphasized, however, that ratings are relative and
subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk
of these bonds. Therefore, although these ratings may be an initial criterion
for selection of portfolio investments, The Dreyfus Corporation also will
evaluate these securities and the ability of the issuers of such securities
to pay interest and principal. The ability of a LONGER TERM PORTFOLIO to
achieve its investment objective may be more dependent on The Dreyfus
Corporation's credit analysis than might be the case for a fund that invested
in higher rated securities. Once the rating of a portfolio security held by a
LONGER TERM PORTFOLIO has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.
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 25
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Page 26
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27
DREYFUS
Basic Municipal Fund, Inc.
* Dreyfus BASIC Municipal
Money Market Portfolio
* Dreyfus BASIC Intermediate
Municipal Bond Portfolio
* Dreyfus BASIC Municipal
Bond Portfolio
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995 Dreyfus Service Corporation
BMBp3120195
______________________________________________________________________________
PROSPECTUS DECEMBER 1, 1995
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
______________________________________________________________________________
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO (THE "NEW
JERSEY PORTFOLIO" OR THE "PORTFOLIO") IS A SEPARATE NON-DIVERSIFIED PORTFOLIO
OF DREYFUS BASIC MUNICIPAL FUND, INC. (THE "FUND"), AN OPEN-END, MANAGEMENT
INVESTMENT COMPANY, KNOWN AS A SERIES MUTUAL FUND. THE NEW JERSEY PORTFOLIO'S
INVESTMENT OBJECTIVE IS TO PROVIDE YOU WITH AS HIGH A LEVEL OF CURRENT INCOME
EXEMPT FROM FEDERAL AND NEW JERSEY INCOME TAXES AS IS CONSISTENT WITH THE
PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
THE NEW JERSEY PORTFOLIO IS DESIGNED TO BENEFIT INVESTORS WHO WILL
NOT ENGAGE IN FREQUENT TRANSACTIONS IN PORTFOLIO SHARES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION WILL PROFESSIONALLY MANAGE THE NEW JERSEY
PORTFOLIO.
AN INVESTMENT IN THE NEW JERSEY PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE NEW
JERSEY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE NEW JERSEY
PORTFOLIO THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 1, 1995,
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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
______________________________________________________________________________
TABLE OF CONTENT
Page
Fee Table......................................... 3
Description of the Portfolio...................... 3
Management of the Fund............................ 6
How to Buy Shares................................. 7
Fund Exchanges.................................... 9
How to Redeem Shares.............................. 10
Shareholder Services Plan......................... 12
Dividends, Distributions and Taxes................ 13
Yield Information................................. 15
General Information............................... 15
Appendix.......................................... 17
______________________________________________________________________________
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.
______________________________________________________________________________
Page 2
[This Page Intentionally Left Blank]
<TABLE>
<CAPTION>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
Exchange Fee ................................................. $5.00
Account Closeout Fee.......................................... $5.00
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (after expense reimbursement).................... .30%
Other Expenses.................................................... .15%
Total Portfolio Operating Expenses (after expense reimbursement).... .45%
EXAMPLE: 1 YEAR 3 YEARS
_______ ________
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: $10 $19
</TABLE>
______________________________________________________________________________
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
______________________________________________________________________________
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the NEW JERSEY PORTFOLIO and investors, the
payment of which will reduce investors' annual return. Other Expenses are
based on estimated amounts for the current fiscal year. The Dreyfus
Corporation has agreed until June 30, 1998, that if in any fiscal year
certain expenses of the NEW JERSEY PORTFOLIO, including the management fee,
exceed .45% of the value of the Portfolio's 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. The
expenses noted above, without reimbursement, would be: Management Fees_.50%;
and Total Portfolio Operating Expenses_.65%; and the amount of expenses that
an investor would pay, assuming redemption after one and three years, would
be $12 and $26, respectively. 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 exchange
made and for each redemption you make by wire or pursuant to the Dreyfus
TELETRANSFER Privilege, or if you otherwise closeout your account. These
charges will be paid to the Fund's transfer agent and will reduce the transfer
agency charges otherwise payable by the NEW JERSEY PORTFOLIO. See "Fund
Exchanges" and "How to Redeem Shares." In addition, certain securities
dealers,banks or other financial institutions may charge their clients direct
fees for effecting transactions in Portfolio shares; such fees are not
reflected in the foregoing table. See "Management of the Fund" and
"Shareholder Services Plan."
DESCRIPTION OF THE PORTFOLIO
INVESTMENT OBJECTIVE
The NEW JERSEY PORTFOLIO'S investment objective is to provide you
with as high a level of current income exempt from Federal and New Jersey
income taxes as is consistent with the preservation of capital and the
maintenance of liquidity. To accomplish its investment objective, the NEW
JERSEY PORTFOLIO invests primarily in the debt securities of the State of New
Jersey, its political subdivisions, authorities and corporations, and certain
other specified securities, the interest from which is, in the opinion of
bond counsel to the issuer, exempt from Federal and New Jersey income taxes
(collectively, "New Jersey Municipal Obligations"). To the extent acceptable
New Jersey Municipal Obligations are at any time unavailable for investment
by the NEW JERSEY PORTFOLIO, the Portfolio will invest temporarily in other
debt securities the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal, but not New Jersey income taxes. The NEW
JERSEY PORTFOLIO'S investment objective cannot be changed without approval by
the holders of a majority (as defined in the
Page 3
Investment Company Act of 1940, as amended (the "1940 Act")) of the
Portfolio's outstanding voting shares. There can be no assurance that the NEW
JERSEY PORTFOLIO'S investment objective will be achieved. Securities in which
the NEW JERSEY PORTFOLIO invests 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.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development bonds
issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds that do not
carry the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. Municipal Obligations
bear fixed, floating or variable rates of interest.
MANAGEMENT POLICIES
It is a fundamental policy of the NEW JERSEY PORTFOLIO that it will
invest at least 80% of the value of its net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. Under normal
circumstances, at least 65% of the value of the NEW JERSEY PORTFOLIO'S net
assets will be invested in New Jersey Municipal Obligations and the remainder
may be invested in securities that are not New Jersey Municipal Obligations
and therefore may be subject to New Jersey income taxes. See "Investment
Considerations and Risks_Investing in New Jersey Municipal Obligations"
below, and "Dividends, Distributions and Taxes." The Portfolio also may
invest in Taxable Investments of the quality described under
"Appendix_Certain Portfolio Securities_Taxable Investments."
The NEW JERSEY PORTFOLIO seeks to maintain a net asset value of $1.00
per share for purchases and redemptions. To do so, the NEW JERSEY PORTFOLIO
uses the amortized cost method of valuing its securities pursuant to Rule
2a-7 under the 1940 Act, certain requirements of which are summarized as
follows. In accordance with Rule 2a-7, the NEW JERSEY PORTFOLIO will 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 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. The
nationally recognized statistical rating organizations currently rating
instruments of the type the NEW JERSEY PORTFOLIO may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies, Inc. ("S&P") and Fitch Investors
Service, L.P. ("Fitch") and their rating criteria are described in Appendix B
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 NEW JERSEY PORTFOLIO will be able to maintain a stable net
asset value of $1.00 per share.
Page 4
From time to time, the NEW JERSEY PORTFOLIO may invest more than 25%
of the value of its total assets in industrial development bonds which,
although issued by industrial development authorities, may be backed only by
the assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code of
1986, as amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company may be treated as such a preference item to shareholders. The NEW
JERSEY PORTFOLIO may invest without limitation in such Municipal Obligations
if The Dreyfus Corporation determines that their purchase is consistent with
the Portfolio's investment objective. See "Investment Considerations and
Risks" below.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL _ The Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of Portfolio shares. Because charges may
apply to redemptions and exchanges of Portfolio shares, the Fund may not be
an appropriate investment for an investor who intends to engage frequently in
such transactions.
Even though interest-bearing securities are investments which promise
a stable stream of income, the prices of such securities are inversely
affected by changes in interest rates and, therefore, are subject to the risk
of market price fluctuations. The values of fixed-income securities also may
be affected by changes in the credit rating or financial condition of the
issuing entities.
INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS _ You should consider
carefully the special risks inherent in the NEW JERSEY PORTFOLIO'S investment
in New Jersey Municipal Obligations. If there should be a default or other
financial crisis relating to the State of New Jersey or an agency or
municipality thereof, the market value and marketability of outstanding New
Jersey Municipal Obligations in the NEW JERSEY PORTFOLIO'S portfolio and
interest income to the Portfolio could be adversely affected. Although New
Jersey enjoyed a period of economic growth with unemployment levels below the
national average during the mid-1980s, the State's economy slowed down well
before the onset of the national recession, which, according to the National
Bureau of Economic Research, began in July 1990. Reflecting the economic
downturn, the State's unemployment rate rose from a low of 3.6% in the first
quarter of 1989 to a recessionary peak of 9.3% during 1992. Since then, the
State's unemployment rate fell to 6.7% during the fourth quarter of 1993 and
averaged 7.1% during the first nine months of 1994. In July l991, S&P lowered
its rating of the State's general obligation debt from AAA to AA+. You should
obtain and review a copy of the Statement of Additional Information which
more fully sets forth these and other risk factors.
INVESTING IN MUNICIPAL OBLIGATIONS _ The NEW JERSEY PORTFOLIO may
invest more than 25% of the value of its total assets in Municipal
Obligations which are related in such a way that an economic, business or
political development or change affecting one such security also would affect
the other securities; for example, securities the interest upon which is paid
from revenues of similar types of projects. As a result, the NEW JERSEY
PORTFOLIO may be subject to greater risk as compared to a fund that does not
follow this practice.
Certain municipal lease/purchase obligations in which the NEW JERSEY
PORTFOLIO may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by the
leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus Corporation
will consid
Page 5
er, on an ongoing basis, a number of factors including the likelihood that
the issuing municipality will discontinue appropriating funding for the
leased property.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the NEW
JERSEY PORTFOLIO and thus reduce available yield. Shareholders should consult
their tax advisers concerning the effect of these provisions on an investment
in the NEW JERSEY PORTFOLIO. Proposals that may restrict or eliminate the
income tax exemption for interest on Municipal Obligations may be introduced
in the future. If any such proposal were enacted that would reduce the
availability of Municipal Obligations for investment by the NEW JERSEY
PORTFOLIO so as to adversely affect Portfolio shareholders, the Portfolio
would reevaluate its investment objective and policies and submit possible
changes in the Portfolio's structure to shareholders for their consideration.
If legislation were enacted that would treat a type of Municipal Obligation
as taxable, the NEW JERSEY PORTFOLIO would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
NON-DIVERSIFIED STATUS _ The NEW JERSEY PORTFOLIO'S classification as a
"non-diversified" investment company means that the proportion of the NEW
JERSEY PORTFOLIO'S assets that may be invested in the securities of a single
issuer is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act generally to invest, with respect to 75% of its
total assets, not more than 5% of such assets in the securities of a single
issuer. Since a relatively high percentage of the NEW JERSEY PORTFOLIO'S
assets may be invested in the obligations of a limited number of issuers, the
Portfolio's investments may be more sensitive to changes in the market value
of a single issuer. However, to meet Federal tax requirements, at the close
of each quarter the Portfolio may not have more than 25% of its total assets
invested in any one issuer and, with respect to 50% of its total assets, more
than 5% of its total assets invested in any one issuer. These limitations do
not apply to U.S. Government securities.
SIMULTANEOUS INVESTMENTS _ Investment decisions for the NEW JERSEY PORTFOLIO
are made independently from those of other investment companies advised by
The Dreyfus Corporation. However, if such other investment companies are
prepared to invest in, or desire to dispose of, Municipal Obligations or
Taxable Investments at the same time as the NEW JERSEY PORTFOLIO, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the NEW JERSEY PORTFOLIO
or the price paid or received by the Portfolio.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of October 31, 1995, The Dreyfus Corporation
managed or administered approximately $81 billion in assets for more than 1.8
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 in accordance with
Maryland law.
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)
Page 6
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit
Corporation and a number of companies known as Mellon Financial Services
Corporations. Through its subsidiaries, including The Dreyfus Corporation,
Mellon managed more than $209 billion in assets as of September 30, 1995,
including approximately $80 billion in proprietary mutual fund assets. As of
September 30, 1995, Mellon, through various subsidiaries, provided
non-investment services, such as custodial or administration services, for
more than $717 billion in assets, including approximately $55 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 .50 of 1% of
the value of the NEW JERSEY PORTFOLIO'S average daily net assets. From time
to time, The Dreyfus Corporation may waive receipt of its fees and/or
voluntarily assume certain expenses of the NEW JERSEY PORTFOLIO, which would
have the effect of lowering the overall expense ratio of the NEW JERSEY
PORTFOLIO and increasing yield to investors at the time such amounts are
waived or assumed, as the case may be. The NEW JERSEY PORTFOLIO will not pay
The Dreyfus Corporation at a later time for any amounts it may waive, nor
will the Portfolio reimburse The Dreyfus Corporation for any amounts it may
assume. The Dreyfus Corporation has agreed until June 30, 1998, that if in
any fiscal year the aggregate expenses of the Portfolio, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but including
the management fee, exceed .45 of 1% of the value of the Portfolio's average
daily net assets for the fiscal year, the Fund may deduct from the payment to
be made to The Dreyfus Corporation under the Management Agreement, or The
Dreyfus Corporation will bear, such excess expense.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
DISTRIBUTOR_ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent company is Boston Institutional
Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN _ Dreyfus Transfer, Inc.
a wholly-owned subsidiary of The Dreyfus Corporation, One American Express
Plaza, Providence, Rhode Island 02903, 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 and
Dreyfus TELETRANSFER redemption fee, and the $2.00 checkwriting charge,
described below. A sufficient number of shares will be redeemed automatically
to pay these amounts. These payments will reduce the transfer agency fee
otherwise payable by the Portfolio. By purchasing shares of the Portfolio you
are deemed to have consented to this procedure. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY SHARES
Portfolio shares are sold without a sales charge. You may be charged
a nominal fee if you effect transactions in Portfolio shares through a
securities dealer, bank or other financial institution. Share certificates
are issued only upon your written request. No certificates are issued for
fractional shares. It is not recommended that the NEW JERSEY PORTFOLIO be
used as a vehicle for Keogh, IRA or other qualified plans. The Fund reserves
the right to reject any purchase order.
The minimum initial investment for the NEW JERSEY PORTFOLIO is
$25,000. Subsequent investments must be at least $1,000. The initial
investment must be accompanied by the Fund's Account Application.
Page 7
You may purchase Portfolio shares by check or wire, or through the
Dreyfus TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds." 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, DDA #8900279923/Dreyfus BASIC
Municipal Fund, Inc./Dreyfus BASIC New Jersey Municipal Money Market
Portfolio, for purchase of NEW JERSEY PORTFOLIO shares in your name. The wire
must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of NEW
JERSEY PORTFOLIO shares is by wire, please call 1-800-645-6561 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Fund's Account Application and
promptly mail the Account Application to the Fund, as no redemptions will be
permitted until the Account Application is received. You may obtain further
information about remitting funds in this manner from your bank. All payments
should be made in U.S. dollars and, to avoid 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."
NEW JERSEY PORTFOLIO shares 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 NEW JERSEY PORTFOLIO'S net asset value per share is determined as
of 12:00 Noon, New York time, on each day the New York Stock Exchange is open
for business. Net asset value per share is computed by dividing the value of
the Portfolio's net assets (i.e., the value of its assets less liabilities)
by the total number of Portfolio shares outstanding. See "Determination of
Net Asset Value" in the Statement of Additional Information.
If your payments for NEW JERSEY PORTFOLIO shares 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
Page 8
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 NEW
JERSEY PORTFOLIO shares. These orders will become effective at the price
determined at 12:00 Noon, New York time, and the shares purchased will
receive the dividend on Portfolio shares declared on that day, if the
telephone order is placed by 12:00 Noon, New York time, and Federal Funds are
received by 4:00 p.m., New York time, on that day.
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").
DREYFUS TELETRANSFER PRIVILEGE _ You may purchase shares (minimum $1,000,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application
or have filed a Shareholder Services Form with the Transfer Agent. The
proceeds will be transferred between the bank account designated in one of
these documents and your Fund account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be so designated. The Fund may modify or terminate this Privilege at any
time. No fee currently is contemplated for purchases of shares pursuant to
this Privilege.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
FUND EXCHANGES
You may purchase up to four times per calendar year, in exchange for
shares of the NEW JERSEY PORTFOLIO, shares in one of the Fund's other
portfolios or shares of certain other funds managed or administered by The
Dreyfus Corporation, to the extent such shares are offered for sale in your
state of residence. These funds have different investment objectives which
may be of interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any other
conditions are imposed on its use. You will be charged a $5.00 fee for each
exchange you make out of the Portfolio. This fee will be deducted from your
account and paid to the Transfer Agent.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange into a fund or
Portfolio offered by another prospectus, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is being
made. Prospectuses may be obtained by calling 1-800-645-6561. Except in the
case of personal retirement plans, the shares being exchanged must have a
current value of at least $1,000; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value of at least
the minimum initial investment required for the fund into which the exchange
is being made. The ability to issue exchange instructions by telephone is
given to all Fund shareholders automatically, unless you check the applicable
"No" box on the Account Application, indicating that you specifically refuse
this Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
Account, or by a separate signed Shareholder Services Form, also available by
calling 1-800-645-6561. If you have established the Telephone Exchange
Privilege, you may telephone exchange instructions by calling 1-800-221-4060
or, if you are calling from overseas, call 1-401-455-3306. See "How to Redeem
Shares_Procedures." Upon an exchange into a new account, the following
shareholder services and privileges, as applicable and where available, will
be automatically carried over to the fund in which the exchange is made:
Telephone Exchange Privilege, Check
Page 9
Redemption Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus TELETRANSFER 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 "Fund Exchanges" 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 the Portfolio in excess of
four during any calendar year. The availability of Fund Exchanges may be
modified or terminated at any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
HOW TO REDEEM 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 the NEW JERSEY PORTFOLIO or to wire or
Dreyfus TELETRANSFER redemptions, for each of which a $5.00 fee applies.
Securities dealers, banks and other financial institutions may charge their
clients a nominal fee for effecting redemptions of Fund shares. Any
certificates representing Portfolio shares being redeemed must be submitted
with the redemption request. The value of the shares redeemed may be more or
less than their original cost, depending upon the Portfolio's then-current
net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED NEW JERSEY PORTFOLIO SHARES BY
CHECK OR BY THE DREYFUS TELETRANSFER PRIVILEGE 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 OR DREYFUS TELETRANSFER PURCHASE
ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE
FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE,
AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO
THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER
RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE DREYFUS
TELETRANSFER PURCHASE ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED.
THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE
PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
Page 10
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 and remains so during the notice period. The $5.00 account
closeout fee would be charged in such case.
PROCEDURES _ You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege, or the Dreyfus TELETRANSFER Privilege. The Fund makes available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities. The Fund reserves the right to refuse
any request made by wire or telephone, including requests made shortly after
a change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption Privilege at any
time.
You may redeem Portfolio shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Portfolio shares. In such cases, you
should consider using the other redemption procedures described herein. Use
of these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone
redemption had been used.
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
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 write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $1,000 or more. 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
Page 11
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 an unpaid 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
postdate your Redemption Checks. If you do, the Transfer Agent will honor,
upon presentment, even if presented before the date of the check,all
postdated Redemption Checks which are dated within six months of
presentment for payment, if they are otherwise in good order. Shares for
which certificates have been issued may not be redeemed by Redemption Check.
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. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day)made out to the owners of record and mailed
to your address. Redemption proceeds of less than $5,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
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 request by telephone that
redemption proceeds (maximum $150,000 per day) 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.
Shares for which certificates have been issued are not eligible for this
Privilege.
DREYFUS TELETRANSFER PRIVILEGE _ You may request by telephone that
redemption proceeds (minimum $1,000 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. You
will be charged a $5.00 TELETRANSFER fee for each Dreyfus TELETRANSFER
redemption, which will be deducted from your account and paid to the Transfer
Agent.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306.
Shares issued in certificate form are not eligible for this Privilege.
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 1%
of the value of the NEW JERSEY PORTFOLIO'S average daily net assets for
certain allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Portfolio and providing reports and other information, and
services related to the maintenance of shareholder accounts.
Page 12
DIVIDENDS, DISTRIBUTIONS AND TAXES
Under the Code, the Portfolio is treated as a separate corporation
for purposes of qualification and taxation as a regulated investment company.
The NEW JERSEY PORTFOLIO ordinarily declares dividends from net investment
income on each day the New York Stock Exchange is open for business.
Dividends usually are paid on the last calendar day of each month and are
automatically reinvested in additional NEW JERSEY PORTFOLIO shares at net
asset value or, at your option, paid in cash. The NEW JERSEY PORTFOLIO'S
earnings for Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any time
during the month, all dividends to which you are entitled will be paid to you
along with the proceeds of the redemption, after the deduction of any fees.
If you are an omnibus accountholder and indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption, after the deduction of any
fees. Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the NEW JERSEY PORTFOLIO may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The NEW JERSEY PORTFOLIO will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional NEW
JERSEY PORTFOLIO shares at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors.
The NEW JERSEY PORTFOLIO intends to be a "qualified investment fund"
within the meaning of the New Jersey gross income tax. The primary criteria
for constituting a "qualified investment fund" are that (i) the NEW JERSEY
PORTFOLIO is an investment company registered with the Securities and
Exchange Commission which, for the calendar year in which the dividends and
distributions (if any) are paid, has no investments other than
interest-bearing obligations, obligations issued at a discount, and cash and
cash items, including receivables, and financial options, futures and forward
contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto and (ii) at the close of each quarter of the taxable
year, the Fund has not less than 80% of the aggregate principal amount of all
of its investments, excluding financial options, futures and forward
contracts, or other similar financial instruments, related to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto, cash and cash items, which cash items shall include
receivables, in New Jersey Municipal Obligations, including obligations of
Puerto Rico, the Virgin Islands and other territories and possessions of the
United States and certain other specified securities exempt from Federal and
New Jersey income taxes. Additionally, a qualified investment fund must
comply with certain continuing reporting requirements.
If the NEW JERSEY PORTFOLIO qualifies as a qualified investment fund
and the Portfolio complies with its reporting obligations, (a) dividends and
distributions by the Fund to a New Jersey resident individual shareholder
will not be subject to New Jersey gross income tax to the extent that the
dividends and distributions are attributable to income earned by the
Portfolio as interest on or gain from New Jersey Municipal Obligations, and
(b) gain from the sale of Portfolio shares by a New Jersey resident
individual shareholder will not be subject to the New Jersey gross income
tax. Shares of the Portfolio are not subject to property taxation by New
Jersey or its political subdivisions. To the extent that you are subject to
state and local taxes outside of New Jersey, dividends and distributions
earned by an investment in the NEW JERSEY PORTFOLIO may represent taxable
income.
Page 13
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the NEW JERSEY PORTFOLIO 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, are subject to Federal income tax as
ordinary income, whether or not reinvested in additional Fund shares. No
dividend paid by the NEW JERSEY PORTFOLIO will qualify for the dividends
received deduction allowable to certain U.S. corporations. Distributions from
net realized long-term securities gains of the NEW JERSEY PORTFOLIO generally
are taxable as long-term capital gains for Federal income tax purposes if you
are a citizen or resident of the United States. The Code provides that the
net capital gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%. Under the Code, interest on
indebtedness incurred or continued to purchase or carry Fund shares which is
deemed to relate to exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid by the NEW
JERSEY PORTFOLIO may be excluded by shareholders of the Portfolio from their
gross income for Federal income tax purposes, the Portfolio may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a component
of the "adjusted current earnings" preference item for purposes of the
corporate alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If the NEW JERSEY
PORTFOLIO purchases such securities, the portion of the Portfolio's dividends
related thereto will not necessarily be tax exempt to an investor who is
subject to the alternative minimum tax and/or the tax on Social Security
benefits and may cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in the NEW JERSEY PORTFOLIO. If
the NEW JERSEY PORTFOLIO pays dividends derived from taxable income, it
intends to designate as taxable the same percentage of the day's dividends 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 and
distributions from net realized securities gains of the Fund 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 in
terest 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 not properly reported
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 expects that the NEW JERSEY PORTFOLIO will
qualify as a "regulated investment company" under the Code if such
qualification is in the best interests of its shareholders. Such
qualification relieves the Portfolio of any liability for Federal income
taxes to the extent its earn-
Page 14
ings are distributed in accordance with applicable provisions of the Code.
The NEW JERSEY PORTFOLIO is subject to a non-deductible 4% excise tax,
measured with respect to certain undistributed amounts of taxable investment
income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
YIELD INFORMATION
From time to time, the NEW JERSEY PORTFOLIO will advertise 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 NEW JERSEY
PORTFOLIO refers to the income generated by an investment in the NEW JERSEY
PORTFOLIO over a seven-day period (which period will be stated in the
advertisement). This income is then annualized. That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly, but, when annualized, the income
earned by an investment in the NEW JERSEY PORTFOLIO is assumed to be
reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The NEW
JERSEY PORTFOLIO'S yield and effective yield may reflect absorbed expenses
pursuant to any undertaking that may be in effect. See "Management of the
Fund."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to a stated
yield or effective yield calculated as described above.
Yield information is useful in reviewing the NEW JERSEY PORTFOLIO'S
performance, but because yields will fluctuate, such information under
certain conditions may not provide a basis for comparison with domestic bank
deposits, other investments which pay a fixed yield for a stated period of
time, or other investment companies which may use a different method of
computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Portfolio's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm Beach, Fla.
33408, IBC/Donoghue's Money Fund ReportRegistration Mark, Morningstar, Inc.
and other industry publications.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on August 8, 1991, and
commenced operations on December 16, 1991. On December 24, 1992, the Fund's
name was changed from Dreyfus Investors Municipal Money Market Fund, Inc. to
Dreyfus BASIC Municipal Money Market Fund, Inc. and, on October 21, 1994, to
Dreyfus BASIC Municipal Fund, Inc. The Fund is authorized to issue five
billion shares of Common Stock (with one billion shares allocated to the NEW
JERSEY PORTFOLIO), par value $.001 per share. Each share has one vote.
Unless otherwise required by the 1940 Act, 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 the purpose of
removing a Director from office and the holders of at least 25% of such
shares may require the Fund to hold a special meeting of shareholders 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
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.
Page 15
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one portfolio is not deemed to be a shareholder of any other portfolio. For
certain matters shareholders vote together as a group; as to others they vote
separately by portfolio. By this Prospectus, shares of the NEW JERSEY
PORTFOLIO are being offered. Other portfolios are sold pursuant to other
offering documents.
To date, the Fund's Board has authorized the creation of four series
of shares. All consideration received by the Fund for shares of one of the
portfolios and all assets in which such consideration is invested will belong
to that portfolio (subject only to the rights of creditors of the Fund) and
will be subject to the liabilities related thereto. The income attributable
to, and the expenses of, one portfolio are treated separately from those of
the other portfolios. The Fund has the ability to create, from time to time,
new portfolios without shareholder approval.
The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account. The Fund sends annual and
semi-annual financial reports to all its shareholders.
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; outside the U. S. and
Canada, call 516-794-5452.
Page 16
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY _ The NEW JERSEY PORTFOLIO is permitted to borrow to the
extent permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331\3% of the value of such company's total assets.
The NEW JERSEY PORTFOLIO currently intends to borrow money 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 NEW JERSEY
PORTFOLIO'S total assets, the Portfolio will not make any addition
investments.
FORWARD COMMITMENTS _ The NEW JERSEY PORTFOLIO may purchase municipal
obligations and other securities on a forward commitment or when-issued
basis, which means that delivery and payment take place a number of days
after the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on a forward commitment or when-issued
security are fixed at the time the Portfolio enters into the commitment.
However, the Portfolio does not make a payment until it receives delivery
from the other party to the transaction. The Portfolio will make commitments
to purchase such securities only with the intention of actually acquiring the
securities, but the Portfolio may sell these securities before the settlement
date if it is deemed advisable. A segregated account of the Portfolio
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 commitments will be established and maintained at the Fund's custodian
bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS _ The NEW JERSEY PORTFOLIO may purchase
floating and variable rate demand notes and bonds, 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 not exceeding 13 months, in each case upon not more than
30 days' notice. Variable rate demand notes include master demand notes which
are obligations that permit the NEW JERSEY PORTFOLIO to invest fluctuating
amounts, at varying rates of interest, pursuant to direct arrangements
between the Portfolio, as lender, and the borrower. These obligations permit
daily changes in the amounts borrowed. Because these obligations are direct
lending arrangements between the lender and borrower, it is not contemplated
that such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the NEW JERSEY PORTFOLIO'S right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the NEW JERSEY PORTFOLIO will meet the quality
criteria established for the purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS _ The NEW JERSEY PORTFOLIO may purchase
from financial institutions participation interests in Municipal Obligations
(such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the NEW JERSEY PORTFOLIO an
undivided interest in the Municipal Obligation in the proportion that the
Portfolio's participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest, with remaining maturities of 13 months or less. If the
participation interest is unrated, or has been given a rating below that
which otherwise is permissible for purchase by the NEW JERSEY PORTFOLIO, the
participation interest will be backed by an irrevocable letter of credit or
guarantee of a bank that the Fund's Board has determined meets the prescribed
quality standards for banks set forth below, or the payment obligation
otherwise will be collateralized by U.S.
Page 17
Government securities. For certain participation interests, the NEW JERSEY
PORTFOLIO will have the right to demand payment, on not more than seven days'
notice, for all or any part of the Portfolio's participation interest in the
Municipal Obligation, plus accrued interest. As to these instruments, the NEW
JERSEY PORTFOLIO intends to exercise its right to demand payment only upon a
default under the terms of the Municipal Obligation, as needed to provide
liquidity to meet redemptions, or to maintain or improve the quality of its
investment portfolio.
TENDER OPTION BONDS _ The NEW JERSEY PORTFOLIO may purchase tender option
bonds. A tender option bond is a Municipal Obligation (generally held
pursuant to a custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing
short-term tax exempt rates, that has been coupled with the agreement of a
third party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the option, at
periodic intervals, to tender their securities to the institution and receive
the face value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference between
the Municipal Obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to trade at par
on the date of such determination. Thus, after payment of this fee, the
security holder effectively holds a demand obligation that bears interest at
the prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the NEW JERSEY PORTFOLIO, will consider on an ongoing basis the
creditworthiness of the issuers of the underlying Municipal Obligations, of
any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on
the underlying Municipal Obligations and for other reasons.
STAND-BY COMMITMENTS _ To the extent consistent with the requirements for a
"qualified investment fund" under the New Jersey gross income tax, the NEW
JERSEY PORTFOLIO may acquire "stand-by commitments" with respect to Municipal
Obligations held in its portfolio. Under a stand-by commitment, the NEW
JERSEY PORTFOLIO obligates a broker, dealer or bank to repurchase, at the
Portfolio's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of
a stand-by commitment therefore is subject to the ability of the seller to
make payment on demand. The NEW JERSEY PORTFOLIO will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. The NEW JERSEY PORTFOLIO
may pay for stand-by commitments if such action is deemed necessary, thus
increasing to a degree the cost of the underlying Municipal Obligation and
similarly decreasing such security's yield to investors.
ILLIQUID SECURITIES _ The NEW JERSEY PORTFOLIO may invest up to 10% of the
value of its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the Portfolio's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities, the
NEW JERSEY PORTFOLIO is subject to a risk that should the Portfolio desire to
sell them when a ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net assets could
be adversely affected.
TAXABLE INVESTMENTS _ From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value of the NEW
JERSEY PORTFOLIO'S net assets) or for temporary defensive purposes, the NEW
JERSEY PORTFOLIO may invest in taxable short-term investments
Page 18
("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
the NEW JERSEY PORTFOLIO that are attributable to income earned by the
Portfolio from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive purposes,
at no time will more than 20% of the value of the Portfolio's net assets be
invested in Taxable Investments. If the NEW JERSEY PORTFOLIO purchases Taxable
Investments, it will value them using the amortized cost method and comply
with the provisions of Rule 2a-7 relating to purchases of taxable
instruments. When the NEW JERSEY PORTFOLIO has adopted a temporary defensive
position, including when acceptable New Jersey Municipal Obligations are
unavailable for investment by the Portfolio, in excess of 35% of the
Portfolio's net assets may be invested in securities that are not exempt from
State of New Jersey income tax. Under normal market conditions, the NEW
JERSEY PORTFOLIO anticipates that not more than 5% of the value of its total
assets will be invested in any one category of Taxable Investments. Taxable
Investments are more fully described in the Statement of Additional
Information to which reference hereby is made.
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 19
DREYFUS
BASIC New Jersey
Municipal Money
Market Portfolio
Prospectus
(LION LOGO)
Copy Rights 1995 Dreyfus Service Corporation
127p1120195
Registration Mark
DREYFUS BASIC MUNICIPAL FUND, INC.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
DECEMBER 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of the series named above (each, a "Portfolio") of Dreyfus BASIC Municipal
Fund, Inc. (the "Fund"), dated December 1, 1995, as each may be revised
from time to time. To obtain a copy of the relevant Portfolio'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
Outside the U.S. and Canada -- Call 516-794-5452
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-14
Management Agreement . . . . . . . . . . . . . . . . . . . . . . B-17
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . B-19
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . B-20
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . B-21
Fund Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . B-24
Determination of Net Asset Value . . . . . . . . . . . . . . . . B-25
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . B-26
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . B-28
Performance Information. . . . . . . . . . . . . . . . . . . . . B-28
Information About the Fund . . . . . . . . . . . . . . . . . . . B-31
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . B-31
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Financial Statements and Reports of Independent Auditors
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . B-43, B-55
Intermediate Bond Portfolio . . . . . . . . . . . . . . . . . B-56, B-67
Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . . . B-68, B-79
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in each Portfolio's Prospectus entitled
"Description of the Portfolio(s)" and "Appendix."
Portfolio Securities
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended August 31, 1995 for each
Portfolio, other than the New Jersey Money Market Portfolio, in each case
computed on a monthly basis, was as follows (as of the date of this
Statement of Additional Information, the New Jersey Portfolio had not
commenced operations):
<TABLE>
<CAPTION>
Fitch or Moody's or Standard & Percentage of Value
Investors Investors Poor's ----------------------------------------------
Service, L.P. Service, Inc. Ratings Group Money Market Intermediate Bond
("Fitch") ("Moody's") ("S&P") Portfolio Bond Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
F1+/F1 MIG 1/VMIG 1, SP-1+/SP-1, 87.6% 6.8% 8.0%
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA 3.3% 23.8% 31.4%
AA Aa AA - 23.7% 24.1%
A A A - 23.0% 16.7%
BBB Baa BBB - 22.3% 16.8%
BB Ba BB - 0.4% 2.5%
B B B - - 0.5%
Not Rated Not Rated Not Rated 9.1% - -
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal (upon not more than
30 days' notice in the case of the Money Market Portfolio and the New
Jersey Portfolio (collectively, the "Short Term Portfolios") at any time or
at specified intervals, which, in the case of the Short Term Portfolios,
may not exceed 13 months. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the management fee, as well as other operating expenses,
will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The Short Term Portfolios 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 a Short Term Portfolio providing that the seller or other
responsible third party will either remarket or repurchase the lease
obligation within a short period after demand by such Short Term Portfolio.
The staff of the Securities and Exchange Commission currently considers
certain lease obligations to be illiquid. Determination as to the
liquidity of such securities is made in accordance with guidelines
established by the Fund's Board. Pursuant to such guidelines, the Board
has directed the Manager to monitor carefully the Fund's investment in such
securities with particular regard to (1) the frequency of trades and
quotes for the lease obligation; (2) the number of dealers willing to
purchase or sell the lease obligation and the number of the potential
buyers; (3) the willingness of dealers to undertake to make a market in the
lease obligation; (4) the nature of the marketplace trades, including the
time needed to dispose of the mechanics of transfer; and (5) such other
factors concerning the trading market for the lease obligation as the
Manager may deem relevant. In addition, in evaluating the liquidity and
credit quality of a lease obligation that is unrated, the Fund's Board has
directed the Manager to consider (a) whether the lease can be cancelled;
(b) what assurance there is that the assets represented by the lease can be
sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. Accordingly, not more than 15% of the value of
the net assets of a Longer Term Portfolio, or 10% in the case of a Short
Term Portfolio, will be invested in lease obligations that are illiquid and
in other illiquid securities.
Neither Short Term Portfolio will purchase tender option bonds unless
(a) the demand feature applicable thereto is exercisable by such Portfolio
within 13 months of the date of such purchase upon no more than 30 days'
notice and thereafter is exercisable by the Portfolio no less frequently
than annually upon no more than 30 days' notice and (b) at the time of such
purchase, the Manager reasonably expects (i) based upon its assessment of
current and historical interest rate trends, that prevailing short-term tax
exempt rates will not exceed the stated interest rate on the underlying
Municipal Obligations at the time of the next tender fee adjustment and
(ii) that the circumstances which might entitle the grantor of a tender
option to terminate the tender option would not occur prior to the time of
the next tender opportunity. At the time of each tender opportunity, a
Short Term Portfolio will exercise the tender option with respect to any
tender option bonds unless the Manager reasonably expects, (x) based upon
its assessment of current and historical interest rate trends, that
prevailing short-term tax exempt rates will not exceed the stated interest
rate on the underlying Municipal Obligations at the time of the next tender
fee adjustment, and (y) that the circumstances which entitle the grantor of
a tender option to terminate the tender option would not occur prior to the
time of the next tender opportunity. The Short Term Portfolios 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. Each Short Term Portfolio otherwise
will comply with the provisions of Rule 2a-7 in connection with the
purchase of tender option bonds, including, without limitation, the
requisite determination by the Fund's Board 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 particular Short Term Portfolio would look to the maturity
date of the underlying security for purposes of compliance with Rule 2a-7
and, if its remaining maturity was greater than 13 months, the security
would be sold as soon as would be practicable.
A Longer Term Portfolio will purchase tender option bonds only when
the Fund is satisfied that the custodial and tender option arrangements
will not adversely affect the tax exempt status of the underlying Municipal
Obligations and that payment of any tender fees will not have the effect of
creating taxable income for the Portfolio. Based on the tender option bond
agreement, the Fund expects to be able to value the tender option bond at
par; however, the value of the instrument will be monitored to assure that
it is valued at fair value.
Ratings of Municipal Obligations. If, subsequent to being purchased
by a Short Term Portfolio, (a) an issue of rated Municipal Obligations
ceases to be rated in the highest rating category by at least two rating
organizations (or one rating organization if the instrument was rated by
only one organization), or the Fund's Board 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 will reassess promptly whether
such security presents minimal credit risk and will cause a Short Term
Portfolio to take such action as it determines is in the best interest of a
Short Term Portfolio and its shareholders, provided that the reassessment
required by clause (b) is not required if the portfolio security is
disposed of or matures within five business days of the Manager becoming
aware of the new rating and the Fund's Board is subsequently notified of
the Manager's actions. Subsequent to being purchased by a Longer Term
Portfolio, an issue of rated Municipal Obligations may cease to be rated or
its rating may be reduced below the minimum required for purchase by the
Portfolio. Neither event will require the sale of such Municipal
Obligations by a Longer Term Portfolio, but the Manager will consider such
event in determining whether the Portfolio should continue to hold the
Municipal Obligations.
To the extent the ratings by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or
their rating systems, the Fund will attempt to use comparable ratings as
standards for Portfolio investments in accordance with the investment
policies contained in the Prospectus and this Statement of Additional
Information. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities and
the creditworthiness of the issuers of such securities.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted securities held by a
Portfolio, the Fund intends to treat such securities as liquid securities
in accordance with procedures approved by the Fund's Board. Because it is
not possible to predict with assurance how the market for restricted
securities pursuant to Rule 144A will develop, the Fund's Board has
directed the Manager to monitor carefully each Portfolio's investments in
such securities with particular regard to trading activity, availability of
reliable price information and other relevant information. To the extent
that, for a period of time, qualified institutional buyers cease purchasing
restricted securities pursuant to Rule 144A, a Portfolio's investment in
such securities may have the effect of increasing the level of illiquidity
in the Portfolio's investments during such period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. 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.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by a Portfolio will not benefit from
insurance from the Bank Insurance Fund or the Savings Association Insurance
Fund administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
In a repurchase agreement, the Portfolio buys, and the seller agrees
to repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian or sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Portfolio under a repurchase
agreement. Repurchase agreements are considered by the Staff of the
Securities and Exchange Commission to be loans by the Portfolio that enters
into them. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, a Portfolio will enter into repurchase agreements
only with domestic banks with total assets in excess of one billion dollars
or primary government securities dealers reporting to the Federal Reserve
Bank of New York, with respect to securities of the type in which the
Portfolio may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. Repurchase agreements could involve risks in the event
of a default or insolvency of the other party to the agreement, including
possible delays or restrictions upon the Portfolio ability to dispose of
the underlying securities. The Portfolio may enter into repurchase
agreements with certain banks or non-bank dealers.
Management Policies
Derivatives. (Longer Term Portfolios only) Each Longer Term Portfolio
may invest in Derivatives (as defined in the Longer Term Portfolios'
Prospectus) for a variety of reasons, including to hedge certain market
risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for a Longer Term
Portfolio to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit each Longer Term Portfolio to
increase, decrease or change the level of risk to which its portfolio is
exposed in much the same way as such Portfolio can increase, decrease or
change the risk of its portfolio by making investments in specific
securities.
When required by the Securities and Exchange Commission, a Longer Term
Portfolio will set aside permissible liquid assets in a segregated account
to cover its obligations relating to its purchase of Derivatives. To
maintain this required cover, a Longer Term Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a Derivative position at a reasonable price.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such Derivatives. This guarantee
usually is supported by a daily payment system (i.e., margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As
a result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an
exchange. By contrast, no clearing agency guarantees over-the-counter
Derivatives. Therefore, each party to an over-the-counter Derivative bears
the risk that the counterparty will default. Accordingly, the Manager will
consider the creditworthiness of counterparties to over-the-counter
Derivatives in the same manner as it would review the credit quality of a
security to be purchased by a Longer Term Portfolio. Over-the-counter
Derivatives are less liquid than exchange-traded Derivatives since the
other party to the transaction may be the only investor with sufficient
understanding of the Derivative to be interested in bidding for it.
Futures Transactions--In General. Each Longer Term Portfolio may
enter into futures contracts in U.S. domestic markets, such as the Chicago
Board of Trade. Engaging in these transactions involves risk of loss to
the Longer Term Portfolio which could adversely affect the value of the
Portfolio's net assets. Although each Longer Term Portfolio intends to
purchase or sell futures contracts only if there is an active market for
such contracts, no assurance can be given that a liquid market will exist
for any particular contract at any particular time. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Longer Term Portfolio to substantial losses.
Successful use of futures by a Longer Term Portfolio also is subject
to the ability of the Manager to predict correctly movements in the
direction of the relevant market and, to the extent the transaction is
entered into for hedging purposes, to ascertain the appropriate correlation
between the transaction being hedged and the price movements of the futures
contract. For example, if a Longer Term Portfolio uses futures to hedge
against the possibility of a decline in the market value of securities held
in its portfolio and the prices of such securities instead increase, such
Portfolio will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting losses in
its futures positions. Furthermore, if in such circumstances a Longer Term
Portfolio has insufficient cash, it may have to sell securities to meet
daily variation margin requirements, in which case the Portfolio may have
to sell such securities at a time when it may be disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, each Longer Term Portfolio may be required to
segregate cash or high quality money market instruments in connection with
its commodities transactions in an amount generally equal to the value of
the underlying commodity. The segregation of such assets will have the
effect of limiting such Portfolio's ability otherwise to invest those
assets.
Specific Futures Transactions. Each Longer Term Portfolio may
purchase and sell interest rate futures contracts. An interest rate future
obligates the Portfolio to purchase or sell an amount of a specific debt
security at a future date at a specific price.
Options--In General. (Longer Term Portfolios only) Each Longer Term
Portfolio may purchase and write (i.e., sell) call or put options with
respect to specific securities. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, the underlying
security or securities at the exercise price at any time during the option
period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy,
the underlying security or securities at the exercise price at any time
during the option period.
A covered call option written by a Longer Term Portfolio is a call
option with respect to which the Portfolio owns the underlying security or
otherwise covers the transaction by segregating cash or other securities.
A put option written by a Longer Term Portfolio is covered when, among
other things, cash or liquid securities having a value equal to or greater
than the exercise price of the option are placed in a segregated account
with the Fund's custodian to fulfill the obligation undertaken. The
principal reason for writing covered call and put options is to realize,
through the receipt of premiums, a greater return than would be realized on
the underlying securities alone. The relevant Longer Term Portfolio
receives a premium from writing covered call or put options which it
retains whether or not the option is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events, or events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If,
as a covered call option writer, a Longer Term Portfolio is unable to
effect a closing purchase transaction in the secondary market, it will not
be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise or it otherwise covers its
position.
Future Developments. (Longer Term Portfolios only) Each Longer Term
Portfolio may take advantage of opportunities in the area of options and
futures contracts and options on futures contracts and any other
Derivatives which are not presently contemplated for use by a Longer Term
Portfolio or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the Portfolio's
investment objective and legally permissible for such Portfolio. Before
entering into such transactions or making any such investment, appropriate
disclosure will be provided in the Longer Term Portfolios' Prospectus or
this Statement of Additional Information.
Lending Portfolio Securities. (Longer Term Portfolios only) In
connection with its securities lending transactions, a Longer Term
Portfolio 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 from securities
loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Longer Term Portfolio must receive at least 100% cash collateral
from the borrower; (2) the borrower must increase such collateral whenever
the market value of the securities rises above the level of such
collateral; (3) the Longer Term Portfolio must be able to terminate the
loan at any time; (4) the Longer Term Portfolio must receive reasonable
interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Longer Term Portfolio may pay only reasonable custodian
fees in connection with the loan. These conditions may be subject to
future modification.
Short Sales. (Longer Term Portfolios only). Until the Portfolio
replaces a borrowed security in connection with a short sale, the Portfolio
will: (a) maintain daily a segregated account, containing cash or U.S.
Government securities, at such a level that (i) the amount deposited in the
account plus the amount deposited with the broker as collateral will equal
the current value of the security sold short or (b) otherwise cover its
short position.
Forward Commitments. Municipal obligations and other securities
purchased on a forward commitment or when-issued basis are subject to
changes in value (generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates.
Securities purchased on a when-issued basis may expose a Portfolio to risks
because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. Purchasing securities on a when-issued basis when a Portfolio is
fully or almost fully invested may result in greater potential fluctuation
in the value of the Portfolio's net assets and its net asset value per
share.
Investment Considerations and Risks
Lower Rated Bonds. (Longer Term Portfolios only) Lower rated bonds
as described herein are not eligible investments for the Short Term
Portfolios. Each Longer Term Portfolio is permitted to invest in
securities rated below Baa by Moody's and below BBB by S&P or Fitch. Such
bonds, though higher yielding, are characterized by risk. See in the
Prospectus "Description of the Portfolios--Investment Considerations and
Risks--Lower Rated Bonds" and "Appendix-Certain Portfolio Securities-
Ratings" for a discussion of certain risks and Appendix B of this Statement
of Additional Information for a general description of Moody's, S&P and
Fitch ratings of Municipal Obligations. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these bonds. Each Longer Term Portfolio
will rely on the Manager's judgment, analysis and experience in evaluating
the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by Moody's, S&P and
Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and a Longer Term Portfolio's ability to dispose of
particular issues when necessary to meet its liquidity needs or in response
to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for a Longer Term
Portfolio to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of these securities. In such cases,
judgment may play a greater role in valuation because less reliable,
objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could severely disrupt the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default of such securities.
Each Longer Term Portfolio may acquire these bonds during an initial
offering. Such securities may involve special risks because they are new
issues. Neither Longer Term Portfolio has any arrangements with any
persons concerning the acquisition of such securities, and the Manager will
review carefully the credit and other characteristics pertinent to such new
issues.
Lower rated zero coupon securities, in which each Longer Term
Portfolio may invest up to 5% of its total assets, involve special
consideration. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon bonds. Such zero coupon
bonds carry an additional risk in that, unlike bonds which pay interest
throughout the period to maturity, the Portfolio will realize no cash until
the cash payment date unless a portion of such securities are sold and, if
the issuer defaults, the Longer Term Portfolio may obtain no return at all
on its investment. See "Dividends, Distributions and Taxes."
Investing in New Jersey Municipal Obligations. (New Jersey Portfolio
only) Investors in the New Jersey Portfolio should consider carefully the
special risks inherent in the New Jersey Portfolio's investment in New
Jersey Municipal Obligations. These risks result from the financial
condition of the State of New Jersey. If there should be a default or
other financial crisis relating to the State of New Jersey or an agency of
municipality thereof, the market value and marketability of outstanding New
Jersey Municipal Obligations in the New Jersey Portfolio and interest
income to the Fund could be adversely affected. Although New Jersey
enjoyed a period of economic growth in the mid-1980s, the State's economy
slowed down well before the onset of the national recession which,
according to the National Bureau of Economic Research, began in July 1990.
Reflecting the downturn, the State's unemployment rate rose from a low of
3.6% in the first quarter of 1989 to a recessionary peak of 9.3% during
1992. Since then, the State's unemployment rate fell to 6.7% during the
fourth quarter of 1993 and averaged 7.1% during the first nine months of
1994. In July 1991, S&P lowered its rating of the State's general
obligation debt from AAA to AA+. Investors in the New Jersey Portfolio
should review "Appendix A" which sets forth these and other risk factors.
Investment Restrictions
Money Market Portfolio only. The Money Market Portfolio has adopted
investment restrictions numbered 1 through 10 as fundamental policies,
which cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of such Portfolio's outstanding voting shares.
Investment restriction number 11 is a non-fundamental policy and may be
changed by a vote of a majority of the Fund's Directors at any time. The
Money Market Portfolio may not:
1. Purchase securities other than Municipal Obligations and
Taxable Investments as those terms are defined above and in the relevant
Prospectus for the Portfolio.
2. Borrow money, except from banks for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the value of the
Portfolio's total assets (including the amount borrowed) based on the lesser
of cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that the
Portfolio may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available.
6. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Portfolio from investing in Municipal
Obligations secured by real estate or interests therein.
7. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Prospectus for the Portfolio.
8. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of its net assets would be so invested.
Intermediate Bond Portfolio, Bond Portfolio and New Jersey Portfolio.
Each Longer Term Portfolio and the New Jersey Portfolio has adopted
investment restrictions numbered 1 through 7 as fundamental policies, which
cannot be changed, as to a Portfolio, without approval by the holders of a
majority (as defined in the 1940 Act) of such Portfolio's outstanding
voting shares. Investment restrictions numbered 8 through 13 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Directors at any time. Neither of these Portfolios 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 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Portfolio's total assets). For purposes of this investment
restriction, the entry into options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices shall not constitute borrowing.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not prevent the Portfolio
from investing in Municipal Obligations secured by real estate or interests
therein, or prevent the Portfolio from purchasing and selling options,
forward contracts, futures contracts, including those relating to indices,
and options on futures contracts or indices.
4. Underwrite the securities of other issuers, except that the
Portfolio may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements; however, the
Portfolio may lend its portfolio securities in an amount not to exceed 33-
1/3% of the value of its total assets. Any loans of portfolio securities
will be made according to guidelines established by the Securities and
Exchange Commission and the Fund's Board.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities permitted
in Investment Restrictions numbered 2, 3, 10 and 11 may be deemed to give
rise to a senior security.
7. Purchase securities on margin, but the Portfolio may take
margin deposits in connection with transactions in options, forward contracts,
futures contracts, including those relating to indices, and options on
futures contracts or indices.
8. Purchase securities other than Municipal Obligations and
Taxable Investments and those arising out of transactions in futures and options
or as otherwise provided in the Portfolio's Prospectus.
9. Invest in securities of other investment companies, except to
the extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with the
purchase of securities on a when-issued or delayed-delivery basis and
collateral and initial or variation margin arrangements with respect to
options, forward contracts, futures contracts, including those related to
indices, and options on futures contracts or indices.
11. Purchase, sell or write puts, calls or combinations thereof,
except as described in the Portfolio's Prospectus and Statement of
Additional Information.
12. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests (including
municipal lease/purchase agreements) and floating and variable rate demand
obligations as to which the Portfolio cannot exercise the demand feature as
described in the Portfolio's Prospectus on less than seven days' notice and
as to which there is no secondary market), if, in the aggregate, more than
15% (10% in the case of the New Jersey Portfolio) of its net assets would
be so invested.
13. Invest in companies for the purpose of exercising control.
For purposes of Investment Restriction No. 8 with respect to the Money
Market Portfolio, and Investment Restriction No. 1 with respect to each
other Portfolio, industrial development bonds, where the payment of
principal and interest is the ultimate responsibility of companies within
the same industry, are grouped together as an "industry." If a percentage
restriction is adhered to at the time of investment, a later increase or
decrease in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Portfolio shares in certain
states. Should the Fund determine that a commitment is no longer in the
best interest of the Portfolio and its shareholders, the Fund reserves the
right to revoke the commitment by terminating the sale of such Portfolio's
shares in the state involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the 1940 Act, is indicated by an asterisk.
Directors of the Fund
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board for various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to December
31, 1994, he was a director of Mellon Bank Corporation. He is
Chairman of the Board of Noel Group, Inc., a venture capital company;
a trustee of Bucknell University; and a director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, Belding
Heminway Company, Inc., Curtis Industries, Inc., Simmons Outdoor
Corporation and Staffing Resources, Inc. He is 52 years old and his
address is 200 Park Avenue, New York, New York 10166.
*DAVID W. BURKE, Director. Consultant to the Manager since August 1994.
From October 1990 to August 1994, he was Vice President and Chief
Administrative Officer of the Manager. From 1977 to 1990, Mr. Burke
was involved in the management of national television news, as Vice
President and Executive Vice President of ABC News, and subsequently
as President of CBS News. He is 59 years old and 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 1990, Chairman of Chase, Brown & Blaxall, Inc.,
economic consulting firms. He is 63 years old and his address is 4410
Massachusetts Avenue, N.W., Suite 408, Washington, D.C. 20016.
GORDON J. DAVIS, Director. Since October 1994, a senior partner with the
law firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September
1994, Mr. Davis was a senior partner with the law firm of Lord Day &
Lord, Barrett Smith. From 1978 to 1983, he was Commissioner of Parks
and Recreation for the City of New York. He is also a director of
Consolidated Edison, a utility company, and Phoenix Home Life
Insurance Company and a member of various other corporate and not-for
profit boards. He is 54 years old and his address is 241 Central Park
West, New York, New York 10023.
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. She is 50 years
old and 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. He is 68 years old and 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 Bionaire, Inc. and Intercostal
Health Systems, Inc. He is 72 years old and 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. He is 44 years old and his address is 18 East
64th Street, Suite 3D, New York, New York 10021.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year
ended August 31, 1995, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for
the year ended December 31, 1994, was as follows:
<TABLE>
<CAPTION>
(5)
(3) Total Compensation
(2) Pension or (4) From Fund and
(1) Aggregate Retirement Benefits Estimated Annual From Fund Complex
Name of Board Compensation from Accrued as Part of Benefits Upon Paid to Board
Member Fund* Fund's Expenses Retirement Member
- ------------ ----------------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Joseph S. DiMartino $ 1,153 none none $445,000** (93)
David W. Burke $ 2,250 none none $ 27,898 (51)
Samuel Chase $ 2,250 none none $ 46,250 (13)
Gordon J. Davis $ 922 none none $ 29,602 (24)
Joni Evans $ 2,000 none none $ 46,250 (13)
Arnold S. Hiatt $ 2,000 none none $ 42,750 (13)
David J. Mahoney $ 1,750 none none $ 43,000 (13)
Burton N. Wallack $ 2,250 none none $ 46,250 (13)
_____________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $387 for all Directors as a group.
** Estimated amount for the year ending December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
associate at Ropes & Gray. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Counsel of the
Distributor and an officer of other investment companies advised or
administered by the Manager. Ms. Bachman also is counsel to Funds
Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. She is __ years old.
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. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, was Assistant
Vice President in the Mutual Fund Accounting Department of the
Manager. He is 60 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
each Portfolio's common stock outstanding on as of November 27, 1995.
The following persons are known by the Fund to be the holders of
record of 5% or more of a Portfolio's shares of common stock outstanding as
of November 27, 1995: (1) Bond Portfolio - Laurel Schwartz, c/o Bert
Distelburger, 700 Fairfield Avenue, Stamford, CT 06902-7526 (198,473.018
shares - 5.54%); (2) Intermediate Bond Portfolio - Edgar Wachenheim, III,
c/o Central National-Gottesman, Inc., 3 Manhattanville Rd., Purchase, NY
10577-2116 (178,992.61 shares - 5.34%).
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"Management of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994, with the Fund. As to
each Portfolio, the Agreement is subject to annual approval by (i) the
Fund's Board or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Portfolio, provided that in either
event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Fund
or the Manager, by vote cast in person at a meeting called for the purpose
of voting on such approval. The Agreement was approved by shareholders of
each Portfolio (other than the New Jersey Portfolio) on August 2, 1994. It
was last approved by the Fund's Board, including a majority of the Board
members who are not "interested persons" of any party to the Agreement, at
a meeting held on October 11, 1995, with respect to the New Jersey
Portfolio and on July 26, 1995 with respect to reach other Portfolio. As to
each Portfolio, the Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of such
Portfolio's shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically, as to the relevant Portfolio,
in the event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman--Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman--Operations and
Administration and a director; David Mossman, Acting Chief Financial
Officer; Daniel C. Maclean, Vice President and General Counsel; Barbara E.
Casey, Vice President--Dreyfus Retirement Services; Diane Coffey, Vice
President--Corporate Communications; Elie M. Genadry, Vice President--
Institutional; Henry D. Gottmann, Vice President--Retail Sales and Service;
William F. Glavin, Jr., Vice President--Corporate Development; Andrew S.
Wasser, Vice President--Information Services; Mark N. Jacobs, Vice
President--Fund Legal and Compliance and Secretary; Jeffrey N. Nachman,
Vice President--Mutual Fund Accounting; Katherine C. Wickham, Vice
President--Human Resources; Maurice Bendrihem, Controller; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E.
Friedman, Lawrence M. Greene, Julian Smerling and David B. Truman,
directors.
The Manager manages each Portfolio's investments in accordance with
the stated policies of the Portfolio, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions and provides
the Fund with portfolio managers who are authorized by the Fund's Board to
execute purchases and sales of securities. The Fund's portfolio managers
are Richard J. Moynihan, Joseph P. Darcy, A. Paul Disdier, Karen M. Hand,
Stephen C. Kris, 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 Board's
review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, interest and distributions paid on securities sold
short, brokerage fees and commissions, if any, fees of certain Board
members, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and corporate meetings,
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. Expenses attributable to a
particular Portfolio are charged against the assets of that Portfolio; other
expenses of the Fund are allocated among the Portfolios on the basis
determined by the Board, including, but not limited to, proportionately
in relation to the net assets of each Portfolio.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .50 of 1% of the
value of each Short Term Portfolio's average daily net assets, and .60 of
1% of the value of each Longer Term Portfolio's average daily net assets.
All fees and expenses are accrued daily and deducted before the declaration
of dividends to shareholders. For the fiscal years ended August 31, 1993
and 1994, no management fee was paid by the Fund with respect to the Money
Market Portfolio pursuant to undertakings by the Manager. For the fiscal
year ended August 31, 1995, the management fee payable by the Fund with
respect to the Money Market Portfolio amounted to $5,219,151 which fee was
reduced by $4,674,468 pursuant to an undertaking by the Manager, resulting
in a net fee of $544,683 paid by the Money Market Portfolio. For the
periods May 5 and May 6, 1994 (commencement of operations of the
Intermediate Bond Portfolio and Bond Portfolio, respectively) through
August 31, 1994, and for the fiscal year ended August 31, 1995, no
management fee was paid by the Fund with respect to either Longer Term
Portfolio, pursuant to separate undertakings by the Manager. As of the
date of this Statement of Additional Information, the New Jersey Portfolio
had not commenced operations.
As to each Portfolio, the Manager has agreed that if in any fiscal
year the aggregate expenses of such Portfolio, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of
the necessary state securities commissions) extraordinary expenses, but
including the management fee, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the payment to
be made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund, with respect to each Portfolio, reimburses Dreyfus
Service Corporation 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 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, with
respect to each Portfolio, and the purposes for which such expenditures
were incurred, must be made to the Fund's Board for their review. In
addition, the Plan provides that material amendments of the Plan must be
approved by the Fund's Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the 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
Board members cast in person at a meeting called for the purpose of voting
on the Plan. The Plan is terminable at any time with respect to each
Portfolio by vote of a majority of the Board members 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, 1995, $265,786 was chargeable to
the Money Market Portfolio, $16,178 was chargeable to the Intermediate Bond
Portfolio, and $22,555 was chargeable to the Bond Portfolio under the Plan.
As of the date of this Statement of Additional Information, the New Jersey
Portfolio had not commenced operations.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled "How
to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies. In some
states, banks or other institutions effecting transactions in Portfolio
shares may be required to register as dealers pursuant to state law.
Using Federal Funds. The following information is applicable to the
Short Term Portfolios only. Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), or the Fund may
attempt to notify the investor upon receipt of checks drawn on banks that
are not members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means
of transmitting the money. If the investor is a customer of a securities
dealer, bank or other financial institution and his order to purchase
shares of a Short Term Portfolio 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 shares of a Short Term
Portfolio placed by an investor with sufficient Federal Funds or cash
balance in his brokerage account with a securities dealer, bank or other
financial institution will become effective on the day that the order,
including Federal Funds, is received by the Transfer Agent.
Transactions Through Securities Dealers. Portfolio shares may be
purchased and redeemed through securities dealers which may charge a
nominal transaction fee for such services. Some dealers will place
Portfolio shares in an account with their firm. Dealers also may require
that the customer not take physical delivery of stock certificates; the
customer not request redemption checks to be issued in the customer's name;
fractional shares not be purchased; monthly income distributions be taken
in cash; or other conditions.
There is no sales charge by the Fund or the Distributor, although
securities dealers, banks and other institutions may make reasonable
charges to investors for their services. The services provided and the
applicable fees are established by each dealer or other institution acting
independently of the Fund. The Fund has been given to understand that
these fees may be charged for customer services, including, but not limited
to, same-day investment of client funds; same-day access to client funds;
advice to customers about the status of their accounts, yield currently
being paid or income earned to date; provision of periodic account
statements showing security and money market positions; other services
available from the dealer, bank or other institution; and assistance with
inquiries related to their investment. Any such fees will be deducted
monthly from the investor's account, which on smaller accounts could
constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the best
interest of investors. Investors should be aware that they may purchase
Portfolio shares directly from the Fund without imposition of any
maintenance or service charges, other than those already described herein.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that the Transfer Agent and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 P.M., New York time, on any business day
the Transfer Agent and the New York Stock Exchange are open for business,
or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of Portfolio shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares--Dreyfus TeleTransfer Privilege."
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 SHARES
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled "How
to Redeem 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, Shareholder Services Form or later written request
must be manually signed by the registered owner(s). Checks may be made
payable to the order of any person in an amount of $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 $5.00 fee for each wire redemption, which will
be deducted from the investor's account and paid to the Transfer Agent.
Ordinarily, the Fund will initiate payment for shares of a Short Term
Portfolio redeemed pursuant to this Privilege on the same business day if
the Transfer Agent receives the redemption request in proper form prior to
Noon on such day; otherwise, and with respect to all Longer Term Portfolio
shares redeemed pursuant to this Privilege, the Fund will initiate payment
on the next business day. Redemption proceeds ($ 5,000 minimum) 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, or to a correspondent bank if the investor's bank is not a
member of the Federal Reserve System. 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."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have also selected the Dreyfus TeleTransfer Privilege, any request for
a wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. Investors will be
charged a $5.00 fee for each redemption made pursuant to this Privilege,
which will be deducted from the investor's account and paid to the Transfer
Agent. See "Purchase of Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Portfolio,
limited in amount during any 90-day period to the lesser of $250,000 or 1%
of the value of such Portfolio's net assets at the beginning of such
period. Such commitment is irrevocable without the prior approval of the
Securities and Exchange Commission. In the case of requests for redemption
in excess of such amount, the Fund's Board reserves the right to make
payments in whole or in part in securities or other assets in case of an
emergency or any time a cash distribution would impair the liquidity of the
Portfolio to the detriment of the existing shareholders. In such event,
the securities would be valued in the same manner as the portfolio of the
Portfolio is valued. If the recipient sold such securities, brokerage
charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
FUND EXCHANGES
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled "Fund
Exchanges."
Shares of other Portfolios of the Fund or other funds purchased by
exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference will
be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions 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. Exchanges out of the Fund pursuant
to the Exchange Privilege are limited on a per Portfolio basis to four per
calendar year.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
personal retirement plans, the shares exchanged must have a current value
of at least $100.
This Privilege is available to shareholders resident in any state in
which shares of the fund being acquired may legally be sold. Shares may be
exchanged only between accounts having identical names and other
identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Exchange service 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 each Portfolio's Prospectus entitled "How
to Buy Shares."
Amortized Cost Pricing. The information contained in this section is
applicable only to each Short Term Portfolio. The valuation of each Short
Term Portfolio's portfolio securities is based upon their amortized cost
which does not take into account unrealized capital gains or losses. This
involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
instrument. While this method provides certainty in valuation, it may
result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Portfolio would receive if it sold the
instrument.
The Fund's Board has established, as a particular responsibility
within the overall duty of care owed to the Short Term Portfolios'
investors, procedures reasonably designed to stabilize each Portfolio's
price per share as computed for purposes of sales and redemptions at $1.00.
Such procedures include review of each Short Term Portfolio's portfolio
holdings by the Fund's Board at such intervals as it deems appropriate, to
determine whether such Portfolio's net asset value calculated by using
available market quotations or market equivalents deviates from $1.00 per
share based on amortized cost. Market quotations and market equivalents
used in such review are obtained from an independent pricing service (the
"Service") approved by the Fund's Board. The Service values each Short
Term Portfolio's investments based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications of values from dealers; and general market
conditions. The Service also may employ electronic data processing
techniques and/or a matrix system to determine valuations.
The extent of any deviation between a Short Term Portfolio's net asset
value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Fund's
Board. If such deviation exceeds 1/2 of 1%, the Fund's Board will consider
what actions, if any, will be initiated. In the event the Fund's Board
determines that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, it has agreed
to take such corrective action as it regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market equivalents.
Valuation of Portfolio Securities. The information contained in this
section is applicable to each Longer Term Portfolio only. The investments
of each Longer Term Portfolio are valued each business day by an
independent pricing service (the "Service") approved by the Fund's Board of
Directors. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of municipal bonds of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. The Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Portfolio's officers under the general supervision of
the Fund's Board. Expenses and fees, including the management fee (reduced
by the expense limitation, if any), are accrued daily and are taken into
account for the purpose of determining the net asset value of Portfolio
shares.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"Dividends, Distributions and Taxes."
In the case of a Short Term Portfolio's shares redeemed in connection
with any exchange or redemption fees, a shareholder will recognize a
capital loss in the amount of the fee paid. In the case of Longer Term
Portfolio's shares redeemed in connection with any exchange or redemption
fees, such fees will either decrease a capital gain or increase a capital
loss realized in such disposition. In general, such loss will be treated
as a short-term capital loss if the shares were held for one year or less,
or, in the case of shares held for greater than one year, a long-term
capital loss.
The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six months
(or such shorter time as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be
disallowed to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Longer
Term Portfolio from certain financial futures and options transactions will
be treated as 60% long-term capital gain or loss and 40% short-term capital
gain or loss. Gain or loss will arise upon exercise or lapse of such
futures and options as well as from closing transactions. In addition,
such futures and options remaining unexercised at the end of a Longer Term
Portfolio's taxable year will be treated as sold for their fair market
value, resulting in additional gain or loss to a Longer Term Portfolio
characterized in the manner described above.
Offsetting positions held by a Longer Term Portfolio involving certain
futures and options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section
1256. As such, all or a portion of any short or long-term capital gain
from certain "straddle" transactions may be recharacterized to ordinary
income.
If a Longer Term Portfolio were treated as entering into "straddles"
by reason of its engaging in certain futures or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options transactions comprising a part of such "straddles" were governed by
Section 1256 of the Code. The Portfolio may make one or more elections
with respect to "mixed straddles." Depending on which election is made, if
any, the results to the Portfolio may differ. If no election is made, to
the extent the "straddle" rules apply to positions established by the
Portfolio, losses realized by the Portfolio will be deferred to the extent
of unrealized gain in any offsetting positions. Moreover, as a result of
the "straddle" and "conversion transaction" rules, short-term capital
losses on "straddle" positions may be recharacterized as long-term capital
losses and long-term capital gains may be recharacterized to short-term
capital gains or ordinary income.
Investment by the Longer Term Portfolio in securities issued at a
discount or providing for deferred interest or for payment of interest in
the form of additional obligations could, under special tax rules, affect
the amount, timing and character of distributions to shareholders. For
example, a Longer Term Portfolio could be required to take into account
annually a portion of the discount (or deemed discount) at which such
securities were issued and to distribute such portion in order to maintain
its qualifications as a regulated investment company. In that case, the
Portfolio may have to dispose of securities which it might otherwise have
continued to hold in order to generate cash to satisfy these distribution
requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by a Portfolio for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to underwriters
of newly-issued securities usually include a concession paid by the issuer
to the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by any Portfolio to date.
Transactions are allocated to various dealers by a Portfolio's
portfolio managers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to supplement
its own research and analysis with the views and information of other
securities firms.
Research services furnished by brokers through which a Portfolio
effects securities transactions may be used by the Manager in advising
other funds it advises and, conversely, research services furnished to the
Manager by brokers in connection with other funds the Manager advises may
be used by the Manager in advising a Portfolio. Although it is not
possible to place a dollar value on these services, it is the opinion of
the Manager that the receipt and study of such services should not reduce
the overall expenses of its research department.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the New Jersey Portfolio's Prospectus
entitled "Yield Information" or in each other Portfolio's Prospectus
entitled "Performance Information."
As of the date of this Statement of Additional Information, the New
Jersey Portfolio had not commenced operations and, therefore, no
performance data is provided.
Money Market Portfolio. For the seven-day period ended August 31,
1995, the Money Market Portfolio's yield was 3.77% and effective yield was
3.84%. These yields reflect the waiver of a portion of the management fee
by the Manager, without which the Money Market Portfolio's seven-day yield
and effective yield for the period ended August 31, 1995 would have been
3.53% and 3.59%, respectively. See "Management of the Fund" in the
Portfolio's Prospectus.
Based upon the highest 1995 Federal income tax rate of 39.6%, the
Money Market Portfolio's tax equivalent yield for the seven-day period
ended August 31, 1995 was 6.24%. Without the waiver of a portion of the
management fee then in effect, the Money Market Portfolio's tax equivalent
yield for the seven-day period ended August 31, 1995 would have been 5.84%.
Short Term Portfolios. Yield is computed in accordance with a
standardized method which involves determining the net change in the value
of a hypothetical pre-existing Fund account having a balance of one share
at the beginning of a seven calendar day period for which yield is to be
quoted, dividing the net change by the value of the account at the
beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Portfolio's average
account size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding 1 to
the base period return (calculated as described above), raising that sum to
a power equal to 365 divided by 7, and subtracting 1 from the result.
Longer Term Portfolios. The Intermediate Bond Portfolio's yield for
the 30-day period ended August 31, 1995 was 4.84%. The Bond Fund's yield
for the 30-day period ended August 31, 1995 was 5.80%. These yields
reflect the waiver of the management fee and absorption of expenses by the
Manager, without which the Intermediate Bond Portfolio's yield for the 30-
day period ended August 31, 1995 would have been 4.79% and the Bond
Portfolio's yield for the 30-day period ended August 31, 1995 would have
been 5.75%. See "Management of the Fund" in the relevant Portfolios'
Prospectus. Current yield for a Longer Term Portfolio is computed pursuant
to a formula which operates as follows: the amount of the Portfolio's
expenses accrued for a 30-day period (net of reimbursements) is subtracted
from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) by it during the period. That
result is then divided by the product of: (a) the average daily number of
shares outstanding during the period that were entitled to receive
dividends, and (b) the net asset value per share on the last day of the
period less any undistributed earned income per share reasonably expected
to be declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result
by 2.
Based upon a 1995 Federal income tax rate of 39.6%, the Intermediate
Bond Portfolio's tax equivalent yield for the 30-day period ended August
31, 1995 was 8.01% and the Bond Portfolio's tax equivalent yield for the
30-day period ended August 31, 1995 was 9.60%. Without the waiver
discussed above then in effect, the Intermediate Bond Portfolio's tax
equivalent yield for the 30-day period ended August 31, 1995 would have
been 7.93% and the Bond Portfolio's tax equivalent yield for the 30-day
period ended August 31, 1995 would have been 9.52%.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.
The Intermediate Bond Portfolio's total return for the period May 5,
1994 (commencement of operations) to August 31, 1995 was 11.46%. The Bond
Portfolio's total return for the period May 6, 1994 (commencement of
operations) to August 31, 1995 was 12.78%. Without the waiver discussed
above then in effect, returns would have been lower. Total return is
calculated by subtracting the amount of the Portfolio's net asset value per
share at the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the reinvestment of
dividends and distributions during the period), and dividing the result by
the net asset value per share at the beginning of the period.
All Portfolios. Tax equivalent yield is computed by dividing that
portion of the yield or effective yield (calculated as described above)
which is tax exempt by 1 minus a stated tax rate and adding the quotient to
that portion, if any, of the yield of the Portfolio that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The
tax equivalent figure, however, does not include the potential effect of
any state or local (including, but not limited to, county, district or
city) taxes, including applicable surcharges. In addition, there may be
pending legislation which could affect such stated tax rate or yields.
Each investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.
Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the
type and quality of the instruments in the portfolio, portfolio maturity
and operating expenses. An investor's principal in a Portfolio is not
guaranteed. See "Determination of Net Asset Value" for a discussion of the
manner in which a Portfolio's price per share is determined.
From time to time, a Portfolio may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not indicative of the
Portfolio's past or future performance.
Advertising materials for a Portfolio also may refer to or discuss
then current or past economic conditions, developments, and/or events,
including those relating to actual or proposed legislation. From time to
time, advertising materials for a Portfolio also may refer to statistical
or other information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company Institute.
From time to time, advertising materials for a Portfolio may refer to
Morningstar, Inc. ratings and related analysis supporting the ratings.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"General Information."
Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Portfolio shares are of one class and have equal rights as
to dividends and in liquidation. Shares have no preemptive, subscription
or conversion rights and are freely transferable.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an
investment company, such as the Fund, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each Portfolio affected by such matter. Rule 18f-2
further provides that a Portfolio shall be deemed to have been affectively
acted upon unless approved by the holders of a majority of the outstanding
shares of each Portfolio affected by such matter. Rule 18f-2 further
provides that a Portfolio shall be deemed to be affected by a matter unless
it clear that the interests of each Portfolio in the matter are identical
or that the matter does not affect any interest of such Portfolio.
However, the Rule exempts the selection of independent accountants and the
election of Directors from the separate voting requirements of the Rule.
The 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, 90 Washington Street, New York, New York 10286,
is the Fund's custodian. Dreyfus Transfer, Inc., a wholly-owned subsidiary
of the Manager, is located at One American Express Plaza, Providence,
Rhode Island 02903, and serves as the Company's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the
Transfer Agent arranges for the maintenance of shareholder account records
for the Fund, the handling of certain communications between shareholders
and the Fund and the payment of dividends and distributions payable by the
Fund. For these services, the Transfer Agent receives a monthly fee
computed on the basis of the number of shareholder accounts during the
month, and is reimbursed for certain out-of-pocket expenses. Neither The
Bank of New York nor the Transfer Agent 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 Prospectuses.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS
This Appendix A relates to the New Jersey Portfolio only.
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn
from official statements relating to securities offerings of the State of
New Jersey and various local agencies available as of the date of this
Statement of Additional Information. While the Fund has not independently
verified this information, it has no reason to believe that such
information is not correct in all material respects.
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's principal
manufacturing industries produce chemicals, pharmaceutical, electrical
equipment and instruments, machinery, printing and food products. Other
economic activities include services, wholesale and retail trade,
insurance, tourism, petroleum refining and truck farming.
While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. Initially, this
slowdown was an expected response to the State's tight labor market and the
decrease in the number of persons entering the labor force. Late in the
decade, a decline in construction demand and in the rate of growth in
consumer spending as well as continued softness in the State's
manufacturing sector set the stage for recession in New Jersey. By the
beginning of the national recession in July 1990 (according to the National
Bureau of Economic Research), construction activity had already been
declining in New Jersey for nearly two years. As the rapid acceleration
for real estate prices forced many would-be homeowners out of the market
and high non-residential vacancy rates reduced new commitments for offices
and commercial facilities, construction employment began to decline; also
growth had tapered off markedly in the service sectors and the long-term
downward trend of factory employment had accelerated, partly because of a
leveling off of industrial demand nationally. The onset of recession
caused an acceleration of New Jersey's job losses in construction and
manufacturing, as well as an employment downturn in such previously growing
sectors as wholesale trade, retail trade, finance, utilities and trucking
and warehousing. The net effect was a decline in the State's total nonfarm
wage and salary employment from a peak of 3,706,400 in March 1989 to a low
of 3,445,000 in March 1992. This loss has been followed by an employment
gain of 118,700 from March 1992 to September 1994. In July 1991, S&P
lowered its rating of the State's general obligation debt from AAA to AA+.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary peak
of 9.3% during 1992. Since then, the unemployment rate fell to 6.7% during
the fourth quarter of 1993. The jobless rate averaged 7.1% during the
first nine months of 1994. In the first nine months of 1994, relative to
the same period a year ago, job growth took place in services (3.5%) and
construction (5.7%), more moderate growth took place in trade (1.9%),
transportation and utilities (1.2%) and finance/insurance/real estate
(1.4%), while manufacturing and government declined (by 1.5% and 0.1%,
respectively). The net result was a 1.6% increase in average employment
during the first nine months of 1994 compared to the first nine months of
1993.
The fiscal year ending June 30, 1995 Appropriations Act forecasts
Sales and Use Tax collections for fiscal year 1995 of $3.98 billion, a 5.3%
increase from unaudited revenue for Fiscal Year 1994. Unaudited revenue
for fiscal year 1994 for the Sales and Use Tax of $3.778 billion represents
a 3.5% increase from actual receipts for fiscal year 1993.
The fiscal year 1995 Appropriations Act forecasts Gross Income Tax
collections for Fiscal Year 1995 of $4.582 billion, a 2.4% increase from
unaudited revenue for fiscal year 1994. Included in the fiscal year 1995
Gross Income Tax forecast is a 5% reduction of personal income tax rates
effective January 1, 1994 and a further 10% reduction of personal income
tax rates effective January 1, 1995. The fiscal year 1995 Gross Income Tax
estimates a $549 million reduction related to these tax cuts. Unaudited
revenue for fiscal year 1994 for the Gross Income Tax of $4.475 billion
represents a 2.9% increase from actual receipts for fiscal year 1993.
The fiscal year 1995 Appropriations Act forecasts Corporation Business
Tax collections for fiscal year 1995 of $915 million, a 14% decrease from
unaudited revenue for fiscal year 1994. Included in the Corporation
Business Tax forecast is a reduction in the Corporation Business Tax rate
from 9.375% to 9.0% of net New Jersey income. Unaudited revenue for fiscal
year 1994 for the Corporation Business Tax of $1.063 billion, represents a
10.6% increase from actual receipts for fiscal 1993.
The fiscal year 1995 Appropriations Act forecasts Other Miscellaneous
Taxes Fees and Revenues collections for fiscal year 1995 of $1.338 billion,
represents a 15.6% decrease from unaudited revenue for fiscal year 1994 for
Other Miscellaneous Taxes, Fees and Revenues. Included in the Other
Miscellaneous Taxes Fees and Revenues forecast is a decline of $426 million
in the Public Utility Gross receipts and Franchise tax in accordance with
the collection date changes that were legislated in 1991.
In connection with the current fiscal year 1995 budget, certain unions
and individual plaintiffs have filed a lawsuit concerning the funding of
certain retirement systems.
Should revenues be less than the amount anticipated in the budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent
any expenditure under any appropriation. There are additional means by
which the Governor may ensure that the State is operated efficiently and
does not incur a deficit. No supplemental appropriation may be enacted
after adoption of an appropriations act except where there are sufficient
revenues on hand or anticipated, as certified by the Governor, to meet such
appropriation. In the past when actual revenues have been less than the
amount anticipated in the budget, the Governor has exercised her plenary
powers leading to, among other actions, implementation of a hiring freeze
for all State departments and the discontinuation of programs for which
appropriations were budgeted but not yet spent.
The State appropriated approximately $15.492 billion and $15.291
billion for fiscal 1994 and 1995, respectively. Of the $15.492 billion
appropriated in fiscal year 1995 from the General Fund, the Property Tax
Relief Fund, the Casino Control Funds, the Casino Revenue Fund and
Gubernatorial Elections Fund, $5.782 billion (37.8%) is appropriated for
State Aid to Local Governments, $3.762 billion (24.6%) is appropriated for
Grants-in-Aid (payments to individuals or public or private agencies for
benefits to which a recipient is entitled by law or for the provision of
service on behalf of the State), $5.203 billion (34.0%) for Direct State
Services, $103.5 million (0.7%) for Debt Services on State general
obligation bonds and $440.6 million (2.9%) for Capital Construction.
Should tax revenues be less than the amount anticipated in the Budget
for a fiscal year, the Government may, pursuant to statutory authority,
prevent an expenditure under any appropriation. The appropriations for
fiscal year 1994 are unaudited and for fiscal year 1995 as revised
estimates, as of November 7, 1994, from the amount contained in the fiscal
year 1995 Appropriations Act.
The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1991 through 1994 in the
amounts of $388.5 million, $410.6 million, $444.3 million and $119.9
million, respectively. For fiscal year 1995, $103.5 million has been
appropriated for principal and interest payments for general obligation
bonds.
As of June 30, 1993, the outstanding general obligation bonded
indebtedness of the State was approximately $3.6 billion.
APPENDIX B
Description of certain S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between A and BBB rating is that the latter
shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC
Debt rated BB, B, CCC or CC is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the lowest degree of speculation and CC the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions
to meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to
pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or
minus sign designation, which is used to show relative standing within the
major rating categories, except in the AAA (Prime Grade) category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) sign designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to issues
that are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to
indicate the relative degree of safety. Paper rated A-1 indicates that the
degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign designation.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This description denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
Commercial Paper Rating
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of
interest and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents lowest potential for
recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and
F-1 categories.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS--100.0% AMOUNT VALUE
---------------- ----------------
<S> <C> <C>
ALABAMA--3.3%
Alabama Industrial Development Authority, SWDR, VRDN (Pine City Fiber Co.
Project)
3.75% (LOC; Barclays Bank) (a,b)........................................ $ 20,000,000 $ 20,000,000
City of Phenix Industrial Development Board, EIR, VRDN (Mead Coated Board
Project)
3.65%, Series A (LOC; Sumitomo Bank) (a,b).............................. 16,400,000 16,400,000
CALIFORNIA--7.0%
California Higher Education Loan Authority Inc., Student Loan Revenue, VRDN
3.65%, Series C (LOC; Student Loan Marketing Association) (a,b)......... 10,000,000 10,000,000
California Public Capital Improvement Financing Authority, Revenue (Pooled
Project)
3.70%, Series C, 9/15/95 (LOC; National Westminster Bank) (b)........... 10,000,000 10,000,000
California School Cash Reserve Program Authority
4.75%, Series A, 7/3/96 (LOC; Industrial Bank of Japan) (b)............. 30,000,000 30,241,606
South Coast Local Education Agency, Partnership Pooled, TRAN
5%, Series A, 8/14/96................................................... 15,000,000 15,068,218
Vista Community Development Commission, BAN, Refunding
4.50%, 11/1/95 (LOC; Sumitomo Trust and Banking Co.) (b)................ 10,000,000 10,000,000
COLORADO--2.4%
Colorado Student Obligation Bond Authority, Student Loan Revenue, VRDN
3.55%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 15,000,000 15,000,000
Denver Urban Renewal Authority, Tax Increment Revenue
(Downtown Denver Renewal)
4.20%, Series A, 2/15/96 (Escrowed in; U.S. Treasury Bills)............. 11,640,000 11,640,000
DELAWARE--1.4%
Delaware Economic Development Authority, Gas Facilities Revenue, VRDN
(DelMarva Power and Light)
3.75% (Corp. Guaranty; DelMarva Power and Light) (a).................... 12,000,000 12,000,000
Delaware Health Facilities Authority, Revenue, Pooled Loan Program, VRDN
3.50% (BPA; Morgan Guaranty Trust Co. and Insured; MBIA) (a)............ 3,800,000 3,800,000
DISTRICT OF COLUMBIA--2.8%
District of Columbia, VRDN (General Fund Recovery):
4.30%, Series B (LOC; Union Bank of Switzerland) (a,b).................. 6,900,000 6,900,000
4.30%, Series B-2 (LOC; Westdeutsche Landesbank) (a,b).................. 19,000,000 19,000,000
4.30%, Series B-3 (LOC; Landesbank Hessen) (a,b)........................ 5,000,000 5,000,000
FLORIDA--.6%
Putnam County Development Authority, PCR (Seminole Electric Co-op)
3.40%, Series D, 12/15/95 (Corp. Guaranty; National Rural Utility Co-op) 7,000,000 7,000,000
GEORGIA--1.8%
Savannah Economic Development Authority, Exempt Facility Revenue, VRDN
(Home Depot Project) 3.90%, Series A (Corp. Guaranty; Home Depot) (a)... 20,000,000 20,000,000
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
IDAHO--.9%
State of Idaho, TAN 4.50%, 6/27/96.......................................... $ 10,000,000 $ 10,055,294
ILLINOIS--1.8%
City of Fulton, Solid Waste Disposal Facility, Revenue (C&E Fulton Project)
4.35%, Series A, 9/7/95 (Escrowed in; U.S. Treasury Bills).............. 20,000,000 20,000,000
INDIANA--.7%
Indiana Secondary Market Educational Loans Inc., Education Loan Revenue, VRDN
3.75%, Series B
(Insured; AMBAC and LOC; Student Loan Marketing Association) (a,b)...... 7,000,000 7,000,000
IOWA--3.9%
Iowa Finance Authority, SWDR, VRDN (Cedar River Paper Co. Project)
3.55%, Series A (LOC; Swiss Bank Corp.) (a,b)........................... 11,100,000 11,100,000
Iowa School Corp., Warrant Certificates:
5.75%, Series B, 2/1/96 (Insured; Capital Guaranty)..................... 6,000,000 6,017,958
4.75%, Series A, 6/28/96 (Insured; Capital Guaranty).................... 10,000,000 10,071,220
Louisa County, PCR, Refunding, VRDN (Midwest Power System Inc. Project) 3.60% (a) 14,900,000 14,900,000
KANSAS--.5%
Butler County, Solid Waste Disposal Facilities Revenue, VRDN
(Texaco Refining and Marketing)
3.80%, Series A (Corp. Guaranty; Texaco Oil) (a)........................ 5,700,000 5,700,000
KENTUCKY--7.6%
City of Carroll, Collateralized Solid Waste Disposal Facilities Revenue, VRDN
(Utilities Co. Project) 3.75%, Series A (a)............................. 9,700,000 9,700,000
Daviss County, Solid Waste Disposal Facilities Revenue, VRDN (Scott Paper Co.
Project):
3.75%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 42,200,000 42,200,000
3.80%, Series B (LOC; ABN-Amro Bank) (a,b).............................. 21,500,000 21,500,000
Morgantown, IDR (Sumitomo Electric Wire System)
4.65%, 10/2/95 (LOC; Sumitomo Bank) (b)................................. 10,000,000 10,000,000
LOUISIANA--5.4%
New Orleans Aviation Board, Revenue, VRDN (Passenger Facility Charge
Projects)
3.90% (LOC: Banque Paribas and Canadian Imperial Bank of Commerce) (a,b) 15,000,000 15,000,000
Plaquemines Parish, Environmental Revenue, Refunding, VRDN
(British Petroleum Exploration and Oil)
3.80% (Corp. Guaranty; British Petroleum) (a)........................... 8,000,000 8,000,000
Plaquemines Port, Harbor and Terminal District, Port Facilities Revenue
(International Marine Terminal Project)
4.50%, Series A, 3/15/96 (LOC; Morgan Guaranty Trust Co.) (b)........... 9,275,000 9,275,000
Saint Charles Parish, PCR, VRDN (Shell Oil Co. Norco Project)
3.75% (Corp. Guaranty; Shell Oil Co.) (a)............................... 26,300,000 26,300,000
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
MARYLAND--.6%
Frederick, Improvement Bonds, VRDN 3.95% (LOC; Fuji Bank) (a,b)............. $ 2,000,000 $ 2,000,000
Maryland Energy Financing Administration, LOR, VRDN (Baltimore First Project)
3.65% (LOC; Credit Suisse) (a,b)........................................ 4,200,000 4,200,000
MICHIGAN--6.9%
City of Detroit School District (Wayne County) 4.50%, 5/1/96................ 12,000,000 12,050,338
Grand Rapids Economic Development Corporation, Revenue, VRDN
(Amway/Grand Plaza Hotel Facility #1) 3.65% (LOC; Old Kent Bank and Trust) (a,b) 4,000,000 4,000,000
Michigan Building Authority, CP
3.80%, 9/25/95 (LOC; Canadian Imperial Bank of Commerce) (b)............ 18,285,000 18,285,000
Michigan Higher Education Student Loan Authority, Revenue, VRDN
3.55%, Series XII-F (Insured; AMBAC and Liquidity Agreement; Sumitomo Bank) (a) 5,000,000 5,000,000
State of Michigan, GO Notes 5%, 9/29/95..................................... 35,000,000 35,021,884
MINNESOTA--1.6%
Minnesota Higher Education Coordinating Board, Revenue, VRDN
3.80% (LOC; Norwest Bank of Minnesota) (a,b)............................ 17,000,000 17,000,000
MISSOURI--3.0%
Missouri Higher Education Loan Authority, Student Loan Revenue, Refunding,
VRDN
3.85%, Series B (Insured; MBIA and SBPA; NMB Post Bank Group) (a)....... 9,500,000 9,500,000
Missouri Housing Development Commission, SFMR, VRDN
(Homeowner Loan) 4%, Series B (GIC; FGIC Trinity Funding Corp.) (a)..... 23,245,000 23,245,000
MONTANA--.5%
Montana Board of Investment, RRR, VRDN (Colstrip Project)
3.75% (LOC; Fuji Bank) (a,b)............................................ 5,600,000 5,600,000
NEW JERSEY--3.3%
Hudson County, BAN 4.55%, 10/11/95.......................................... 11,100,000 11,101,737
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program) 3.35% (LOC; Union Bank of Switzerland) (a,b) 8,000,000 8,000,000
New Jersey Housing Mortgage Finance Agency, Revenue
4.20%, Series 1, 9/29/95 (GIC; Bayerische Landesbank)................... 7,415,000 7,415,000
Somerset County, BAN 4.23%, 10/27/95........................................ 10,103,000 10,103,812
NEW MEXICO--.9%
New Mexico Educational Assistance Foundation, Student Loan Revenue, VRDN
3.60%, Series B (Insured; AMBAC and SBPA; International Bank of Nederland) (a) 9,400,000 9,400,000
NORTH CAROLINA--.1%
Craven County, PCR, VRDN (Craven Wood Energy)
3.75%, Series A (LOC; Mitsubishi Bank) (a,b)............................ 1,100,000 1,100,000
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
OHIO--4.8%
Cincinnati City School District Board, BAN 4.65%, 9/22/95................... $ 17,730,000 $ 17,734,896
Greene County, Certificates of Indebtedness, BAN 4.25%, Series B, 7/18/96... 23,580,000 23,669,586
Ohio Water Development Authority, PCR (Edison Project)
4.25%, Series B, 9/1/95 (LOC; Barclays Bank) (b)........................ 7,500,000 7,500,000
Student Loan Funding Corporation, Student Loan Revenue, VRDN
3.60%, Series A-3 (LOC; National Westminster Bank) (a,b)................ 3,400,000 3,400,000
OKLAHOMA--.9%
Holdenville Industrial Authority, Correctional Facility Revenue, VRDN
3.65% (LOC; First Union National Bank) (a,b)............................ 10,000,000 10,000,000
OREGON--2.1%
Klamoth Falls, Electric Revenue, (Salt Caves Hydroelectric)
4.40%, Series A, 5/1/96 (Escrowed in; US Treasury Bills)................ 21,045,000 21,045,000
State of Oregon, EDR, VRDN (Toyo Tanso USA)
4.075%, Series CXLVII (LOC; Bank of Tokyo) (a,b)........................ 2,000,000 2,000,000
PENNSYLVANIA--2.9%
Cambria County Hospital Development Authority, HR (Mercy Hospital Johnstown
Project)
5%, 3/1/96 (LOC; Bank of Tokyo) (b)..................................... 8,440,000 8,440,000
Cambria County Industrial Development Authority, RRR, VRDN (Cambria Cogen
Project)
3.70%, Series V2 (LOC; Fuji Bank) (a,b)................................. 15,700,000 15,700,000
Emmaus General Authority, Local Government Revenue, VRDN
3.90%, Series F4 (LOC; HongKong Shanghai Banking Corp.) (a,b)........... 7,900,000 7,900,000
RHODE ISLAND--.7%
Rhode Island Housing and Mortgage Financing Corporation,
Homeownership Opportunity, VRDN
3.65%, Series 1 (LOC; National Westminster Bank) (a,b).................. 8,000,000 8,000,000
SOUTH CAROLINA--.7%
South Carolina Job Economic Development Authority, EDR, VRDN (Wellman Inc.
Project)
3.85% (LOC; Wachovia Bank and Trust Co.) (a,b).......................... 8,000,000 8,000,000
SOUTH DAKOTA--1.8%
South Dakota Housing Development Authority, Homeownership Mortgage
4.95%, Series H 12/13/95 (Escrowed in; U.S. Treasury Bills)............. 20,000,000 20,000,000
TENNESSEE--2.0%
City of Memphis, VRDN 3.95%, Series B (LOC; Sanwa Bank) (a,b)............... 1,000,000 1,000,000
Metropolitan Government Nashville and Davidson County Health and Education
Facilities Board, Revenue (Vanderbilt University) 5.03%, Series A, 1/15/96 20,250,000 20,250,000
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------
TEXAS--22.2%
Brazos River Authority, PCR, VRDN (Utilities Electric Co.):
3.65%, Series C (LOC; Swiss Bank Corp.) (a,b)........................... $ 15,000,000 $ 15,000,000
3.75%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 15,000,000 15,000,000
3.80% (LOC; Union Bank of Switzerland) (a,b)............................ 53,355,000 53,355,000
Brazos River Harbor Navigation District, Harbor Revenue, VRDN
(Dow Chemical Co. Project):
3.80% (Corp. Guaranty; Dow Chemical Co.) (a).......................... 22,300,000 22,300,000
3.80%, Series A (Corp. Guaranty; Dow Chemical Co.) (a)................ 4,100,000 4,100,000
El Paso Industrial Development Authority Inc., IDR, VRDN
(El Paso School District Limited Project) 3.95% (LOC; Chemical Bank) (a,b) 4,000,000 4,000,000
Grapevine Industrial Development Corporation, Airport Revenue (Singer Co.
Project)
4.75%, Series A, 4/1/96 (LOC; Bank of Montreal) (b)..................... 5,100,000 5,100,000
Greater East Texas Higher Education Authority Inc., Student Loan Revenue, VRDN
(Senior Lien) 3.80%, Series B (LOC; Student Loan Marketing Association) (a,b) .3,000,000 3,000,000
Gulf Coast Industrial Development Authority, VRDN:
Marine Terminal Revenue (Amoco Oil Co. Project)
3.75% (Corp. Guaranty; Amoco Credit Corp.) (a)........................ 28,600,000 28,600,000
SWDR (Citgo Petroleum Corp. Project)
3.80% (LOC; Wachovia Bank of Georgia) (a,b)........................... 9,100,000 9,100,000
Gulf Coast Waste Disposal Authority, PCR, VRDN (Amoco Oil Co. Project):
3.75% (Corp. Guaranty; Amoco Credit Corp.) (a).......................... 27,400,000 27,400,000
SWDR, Refunding 3.65% (Corp. Guaranty; Amoco Credit Corp.) (a).......... 28,000,000 28,000,000
North Texas Higher Education Authority Inc., Student Loan Revenue, Refunding,
VRDN
3.75%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 10,500,000 10,500,000
Panhandle Plains Higher Education Authority Inc., Student Loan Revenue, VRDN
3.55%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 15,000,000 15,000,000
Port Development Corp., IDR, VRDN (Pasadena Terminals Project)
3.95%, Series C (LOC; ABN-Amro Bank) (a,b).............................. 2,420,000 2,420,000
UTAH--1.4%
Intermountain Power Agency, Power Supply, CP
3.80%, Series E, 10/20/95 (Liquidity Facility; Industrial Bank of Japan) 10,400,000 10,400,000
Utah Board of Regents, Student Loan Revenue, Refunding, VRDN
3.75%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 5,000,000 5,000,000
VIRGINIA--3.5%
Campbell County Industrial Development Authority, Exempt Facility Revenue,
VRDN
(Hadson Power Project) 3.85%, Series 12-A (LOC; Barclays Bank) (a,b).... 5,100,000 5,100,000
Hopewell Industrial Development Authority, Exempt Facility Revenue, VRDN
(Hadson Power Project) 3.85%, Series 13-A (LOC; Credit Suisse) (a,b).... 5,700,000 5,700,000
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- --------------
VIRGINIA (CONTINUED)
Richmond Industrial Development Authority, VRDN:
Exempt Facility Revenue (Cogentrix) 3.90%, Series B (LOC; Banque Paribas) (a,b) $ 3,400,000 $ 3,400,000
Revenue (Cogentrix of Richmond Project):
3.90%, Series A (LOC; Banque Paribas) (a,b)........................... 8,300,000 8,300,000
3.90%, Series B (LOC; Banque Paribas) (a,b)........................... 6,000,000 6,000,000
Virginia Housing Development Authority, Commonwealth Mortgage
3.45%, Series A, 9/12/95................................................ 10,000,000 10,000,000
--------------
TOTAL INVESTMENTS (cost $1,093,306,549)..................................... $1,093,306,549
==============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOR Limited Obligation Revenue
BAN Bond Anticipation Notes MBIA Municipal Bond Investors Asssurance
BPA Bond Purchase Agreement Insurance Corporation
CP Commercial Paper PCR Pollution Control Revenue
EDR Economic Development Revenue RRR Resources Recovery Revenue
EIR Environment Improvement Revenue SBPA Standby Bond Purchase Agreement
FGIC Financial Guaranty Insurance Company SFMR Single Family Mortgage Revenue
GIC Guaranteed Investment Contract SWDR Solid Waste Disposal Revenue
GO General Obligation TAN Tax Anticipation Notes
HR Hospital Revenue TRAN Tax and Revenue Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ---------- --------------------- ------------------------
<S> <C> <S> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 87.5%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 4.2
Not Rated (f) Not Rated (f) Not Rated (f) 8.3
-------
100.0%
=======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At August 31, 1995, 50.6% of the
Fund's net assets are backed by letters of credit issued by domestic
banks, foreign banks and government agencies.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) P1 and A1 are the highest ratings assigned tax exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value_Note 1(a)........................... $1,093,306,549
Interest receivable..................................................... 8,391,698
Prepaid expenses........................................................ 77,462
--------------
1,101,775,709
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 105,181
Due to Custodian........................................................ 2,084,097
Accrued expenses and other liabilities.................................. 152,793 2,342,071
------------- ----------
NET ASSETS.................................................................. $1,099,433,638
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,099,525,058
Accumulated net realized (loss) on investments.......................... (91,420)
--------------
NET ASSETS at value applicable to 1,099,525,058 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $1,099,433,638
==============
NET ASSET VALUE, offering and redemption price per share
($1,099,433,638 / 1,099,525,058 shares)................................. $1.00
=====
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 40,340,102
EXPENSES:
Management fee_Note 2(a).............................................. $5,219,151
Shareholder servicing costs_Note 2(b)................................. 556,233
Registration fees..................................................... 96,612
Custodian fees........................................................ 86,449
Professional fees..................................................... 71,047
Prospectus and shareholders' reports.................................. 17,048
Directors' fees and expenses_Note 2(c)................................ 14,641
Miscellaneous......................................................... 37,287
----------
6,098,468
Less_reduction in management fee due to
undertakings_Note 2(a)............................................ 4,674,468
----------
TOTAL EXPENSES.................................................. 1,424,000
--------------
INVESTMENT INCOME--NET...................................................... 38,916,102
NET REALIZED (LOSS) ON INVESTMENTS.......................................... (37,281)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 38,878,821
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-------------------------------------
1994 1995
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................ $ 21,978,331 $ 38,916,102
Net realized (loss) on investments................................... (51,388) (37,281)
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 21,926,943 38,878,821
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net................................................ (21,978,331) (38,916,102)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................ 1,656,500,822 1,715,223,924
Dividends reinvested................................................. 20,702,803 36,684,023
Cost of shares redeemed.............................................. (1,335,315,577) (1,679,813,715)
--------------- ---------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 341,888,048 72,094,232
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................................... 341,836,660 72,056,951
NET ASSETS:
Beginning of year.................................................... 685,540,027 1,027,376,687
--------------- ---------------
End of year.......................................................... $ 1,027,376,687 $ 1,099,433,638
--------------- ===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
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 each year indicated. This information
has been derived from the Series' financial statements.
YEAR ENDED AUGUST 31,
-------------------------------------------------
PER SHARE DATA: 1992(1) 1993 1994 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of year....................... $1.0000 $1.0000 $1.0000 $ .9999
-------- -------- -------- --------
INVESTMENT OPERATIONS:
Investment income_net.................................... .0240 .0270 .0257 .0373
Net realized (loss) on investments....................... -- -- (.0001) --
-------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS....................... .0240 .0270 .0256 .0373
-------- -------- -------- --------
DISTRIBUTIONS;
Dividends from investment income_net..................... (.0240) (.0270) (.0257) (.0373)
-------- -------- -------- --------
Net asset value, end of year............................. $1.0000 $1.0000 $ .9999 $ .9999
======== ======== ========= =========
TOTAL INVESTMENT RETURN...................................... 3.41%(2) 2.73% 2.60% 3.80%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. -- .02% .09% .14%
Ratio of net investment income to average net assets..... 3.22%(2) 2.64% 2.58% 3.73%
Decrease reflected in above expense ratios due to undertakings
by the Manager......................................... .77%(2) .64% .50% .45%
Net Assets, end of year (000's Omitted).................. $228,708 $685,540 $1,027,377 $1,099,434
(1) From December 16, 1991 (commencement of operations) to August 31, 1992.
(2) Annualized.
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Municipal Money Market
Portfolio (the "Series"). Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales charge. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Municipal Money Market Portfolio.
It is the Series' policy to maintain a continuous net asset value per
share of $1.00; the Series has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Series will be able to maintain a stable
net asset value of $1.00.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Series' investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and original issue discounts on investments, is
earned from settlement date and recognized on the accrual basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has an unused capital loss carryover of approximately $54,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $1,700 of the carryover
expires in fiscal 2001, $2,000 expires in fiscal 2002 and $50,300 expires in
fiscal 2003.
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At August 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through October 5, 1994 to waive receipt of the management
fee payable to it by the Series, and thereafter, had undertaken through
August 31, 1995 to reduce the management fee paid by the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The Manager has currently undertaken through December 31,
1995 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 .35 of 1% of the average daily value of the
Series' net assets. The reduction in management fee pursuant to the
undertakings, amounted to $4,674,468 for the year ended August 31, 1995.
In addition, the Manager has undertaken through June 30, 1996 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the 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 pro
viding reports and other information, and services related to the maintenance
of shareholder accounts. During the year ended August 31, 1995, the Series
was charged an aggregate of $427,604 pursuant to the Shareholder Services
Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Money
Market Portfolio (one of the Series constituting Dreyfus BASIC Municipal
Fund, Inc.) as of August 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Money Market Portfolio at August 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
October 4, 1995
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Portfolio hereby designates all
the dividends paid from investment income-net during the fiscal year ended
August 31, 1995 as "exempt-interest dividends" (not generally subject to
regular Federal income tax).
[Dreyfus lion "d" logo]
DREYFUS BASIC MUNICIPAL
MONEY MARKET PORTFOLIO
200 Park Avenue
New York, NY 10166
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. 122AR958
[Dreyfus logo]
BASIC Municipal
Money Market
Portfolio
Annual Report
August 31, 1995
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-95.6% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA-2.5%
Alabama Agricultural and Mechanical University, Revenues
6%, 11/1/2006 (Insured; MBIA) (a)....................................... $ 1,000,000 $ 1,076,700
ARIZONA-2.4%
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 1,018,010
CALIFORNIA-5.3%
Foothill Transit Zone 5.35%, 5/1/2003....................................... 200,000 192,086
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2004................................................... 1,000,000 584,800
Hemet, COP 6.50%, 2/1/2003.................................................. 200,000 198,020
Los Angeles City, COP, Refunding (Real Property Acquisition Program)
5.75%, 8/1/2004......................................................... 1,000,000 1,014,560
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998......................................................... 185,000 184,957
7.50%, 6/1/1999......................................................... 110,000 109,973
COLORADO-2.3%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 783,682
7.25%, 11/15/2007....................................................... 200,000 213,524
GEORGIA-2.7%
Georgia 6.80%, 8/1/2004..................................................... 1,000,000 1,152,260
HAWAII-2.5%
Hawaii 5.80%, 1/1/2005...................................................... 1,000,000 1,065,150
ILLINOIS-2.2%
Du Page County, Revenue (Stormwater Project)
6.50%, 1/1/2012 (Prerefunded 1/1/2002) (b).............................. 500,000 559,140
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Development Project)
6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.)...................... 200,000 206,076
Illinois Educational Facilities Authority, Revenue, Refunding
(Illinois Institute of Technology) 6%, 12/1/2004........................ 200,000 199,136
INDIANA-3.0%
Franklin, EDR, Refunding (Hoover Universal, Inc. Project)
6.10%, 12/1/2004 (Guaranteed; Johnson Controls, Inc.)................... 200,000 207,706
Indiana Transportation Finance Authority, Airport Facilities, LR
(United Air) 6.25%, 11/1/2003........................................... 1,000,000 1,067,680
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
KENTUCKY-2.4%
Kentucky Turnpike Authority, EDR, Refunding (Revitalization Projects)
5.80%, 1/1/2004......................................................... $ 1,000,000 $ 1,057,390
MARYLAND-2.7%
Prince George County, HR (Dimensions Health Corp.)
7%, 7/1/2022 (Prerefunded 7/1/2002) (b)................................. 1,000,000 1,152,340
MASSACHUSETTS-3.1%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 248,398
University of Massachusetts Building Authority, Revenue, Refunding
6.50%, 5/1/2006......................................................... 1,000,000 1,114,860
MICHIGAN-5.0%
Detroit 7.25%, 4/1/2009 (Prerefunded 4/1/1999) (b).......................... 1,000,000 1,112,700
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health System)
7.10%, 10/1/2002........................................................ 1,000,000 1,058,510
MINNESOTA-1.8%
Washington County Housing and Redevelopment Authority, Jail Facility Revenue
7%, 2/1/2012 (Insured; MBIA, Prerefunded 2/1/2002) (b).................. 685,000 774,399
MISSOURI-5.3%
Liberty Industrial Development Authority, IDR, Refunding (Kmart Corp.
Project)
6.80%, 11/1/2004........................................................ 1,175,000 1,211,178
Missouri Board of Public Buildings, Refunding (State Office Building)
6.30%, 12/1/2006........................................................ 1,000,000 1,063,980
MONTANA-2.6%
Montana Higher Education Student Assistance Corp., Student Loan Revenue
5.95%, 12/1/2004........................................................ 1,100,000 1,131,383
NEW JERSEY-9.7%
New Jersey 5.90%, 8/1/2002.................................................. 1,000,000 1,079,910
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,147,770
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................ 1,290,000 1,369,709
Ocean County 7.50%, 10/15/2001.............................................. 500,000 579,165
NEW YORK-5.5%
New York City 6.25%, 8/1/2003............................................... 100,000 102,499
New York State Dormitory Authority, Court Facilities, LR 6%, 5/15/2003...... 100,000 103,795
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 663,351
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NEW YORK (CONTINUED)
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge):
6%, 4/1/2002.......................................................... $ 500,000 $ 520,335
5.75%, 4/1/2006 (c)................................................... 1,000,000 998,370
NORTH CAROLINA-4.8%
North Carolina Eastern Municipal Power Agency, Power Systems Revenue,
Refunding:
6%, 1/1/2005............................................................ 1,000,000 1,004,150
7%, 1/1/2008............................................................ 1,000,000 1,068,140
OHIO-1.2%
Cuyahoga County, HR (Meridia Health System) 6.20%, 8/15/2005................ 505,000 535,381
PENNSYLVANIA-7.1%
Pennsylvania, Refunding 6.75%, 1/1/2005 (Prerefunded 1/1/2001) (b).......... 500,000 558,440
Pennsylvania Convention Center Authority, Revenue, Refunding
6.25%, 9/1/2004......................................................... 200,000 207,802
Philadelphia, Water and Wastewater Revenue, Refunding
5.50%, 6/15/2006 (Insured; AMBAC)....................................... 1,000,000 1,034,470
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Research, Inc.) 6.50%, 1/1/2010...................... 1,250,000 1,262,963
TEXAS-7.1%
Brazos Higher Education Authority, Student Loan Revenue, Refunding
6.20%, 12/1/2002........................................................ 200,000 211,932
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC).................................. 1,000,000 704,190
San Antonio, Water Revenue, Refunding 6.30%, 5/15/2004 (Insured; FGIC)...... 1,000,000 1,095,060
Texas Veterans Housing Assistance Fund 6.20%, 6/1/2004...................... 1,000,000 1,046,580
VIRGINIA-2.4%
Virginia Housing Development Authority, Commonwealth Mortgage
5.75%, 1/1/2001......................................................... 1,000,000 1,028,060
WASHINGTON-6.3%
King County School District (Shoreline) 5.85%, 7/1/2004..................... 500,000 531,845
Snohomish County Public Utility District Number 1, Electric Revenue
6.60%, 1/1/2002 (Insured; FGIC)......................................... 1,000,000 1,098,360
Washington, Refunding 6.625%, 9/1/2006...................................... 1,000,000 1,085,910
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
WISCONSIN-4.3%
Wisconsin:
Clean Water Revenue 6.75%, 6/1/2008 (Prerefunded 6/1/2001) (b)........ $ 750,000 $ 844,163
Transportation Revenue 5.40%, 7/1/2004.................................. 1,000,000 1,029,250
WYOMING-1.4%
Wyoming Farm Loan Board, Capital Facilities Revenue
Zero Coupon, 10/1/2004.................................................. 1,000,000 618,500
--------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $39,802,085).................... $41,288,698
==========
SHORT-TERM MUNICIPAL INVESTMENTS-4.4%
MICHIGAN-3.0%
Grand Rapids, Water Supply System Revenue, Refunding, VRDN
3.35% (LOC; Societe Generale) (d,e)..................................... $ 1,300,000 $ 1,300,000
OHIO-1.4%
Montgomery County, IDR, VRDN (Modern Industrial Plastics Project)
4.075% (LOC; Industrial Bank of Japan) (d,e)............................ 600,000 600,000
--------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,900,000).................... $ 1,900,000
==========
TOTAL INVESTMENTS-100.0%
(cost $41,702,085)...................................................... $43,188,698
==========
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LR Lease Revenue
EDR Economic Development Revenue MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
HR Hospital Revenue RRR Resources Recovery Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- --------------------
<S> <C> <S> <C>
AAA Aaa AAA 24.4%
AA Aa AA 23.1
A A A 23.1
BBB Baa BBB 25.0
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 4.4
------
100.0%
======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(b) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(c) Purchased on a delayed delivery basis.
(d) 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.
(e) Secured by letters of credit.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $41,702,085)-see statement...................................... $43,188,698
Cash.................................................................... 389,710
Interest receivable..................................................... 573,773
Prepaid expenses........................................................ 31,320
==========
44,183,501
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 2,175
Payable for investment securities purchased............................. 992,772
Accrued expenses and other liabilities.................................. 33,635 1,028,582
----------- ----------
NET ASSETS ................................................................ $43,154,919
============
REPRESENTED BY:
Paid-in capital......................................................... $41,879,845
Accumulated net realized (loss) on investments.......................... (211,539)
Accumulated net unrealized appreciation on investments-Note 3........... 1,486,613
------------
NET ASSETS at value applicable to 3,332,344 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $43,154,919
==========
NET ASSET VALUE, offering and redemption price per share
($43,154,919 / 3,332,344 shares)........................................ $12.95
=======
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 2,023,908
EXPENSES:
Management fee-Note 2(a).............................................. $ 218,523
Registration fees..................................................... 42,172
Shareholder servicing costs-Note 2(b)................................. 32,793
Professional fees..................................................... 15,046
Custodian fees........................................................ 5,040
Organization expenses................................................. 4,712
Prospectus and shareholders' reports.................................. 3,927
Directors' fees and expenses-Note 2(c)................................ 496
Miscellaneous......................................................... 11,051
--------
333,760
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 293,531
--------
TOTAL EXPENSES.................................................. 40,229
------
INVESTMENT INCOME-NET........................................... 1,983,679
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (210,183)
Net unrealized appreciation on investments.............................. 1,232,381
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,022,198
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,005,877
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED AUGUST 31,
-------------------------------
1994* 1995
-------------------------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 234,613 $ 1,983,679
Net realized (loss) on investments...................................... (1,356) (210,183)
Net unrealized appreciation on investments for the year................. 254,232 1,232,381
---------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 487,489 3,005,877
---------- ---------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (234,613) (1,983,679)
---------- ---------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 32,982,409 34,818,737
Dividends reinvested.................................................... 166,946 1,446,819
Cost of shares redeemed................................................. (5,127,001) (22,408,065)
---------- ---------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 28,022,354 13,857,491
---------- ---------
TOTAL INCREASE IN NET ASSETS...................................... 28,275,230 14,879,689
NET ASSETS:
Beginning of year....................................................... --- 28,275,230
---------- ---------
End of year............................................................. $28,275,230 $43,154,919
=========== ===========
SHARES SHARES
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,629,336 2,793,004
Shares issued for dividends reinvested.................................. 13,222 115,064
Shares redeemed......................................................... (407,238) (1,811,044)
---------- ---------
NET INCREASE IN SHARES OUTSTANDING.................................... 2,235,320 1,097,024
=========== ===========
* From May 5, 1994 (commencement of operations) to August 31, 1994.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
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 each year indicated. This information
has been derived from the Series' financial statements.
YEAR ENDED AUGUST 31,
------------------------
PER SHARE DATA: 1994(1) 1995
------- -------
<S> <C> <C>
Net asset value, beginning of year............................................... $12.50 $12.65
------- -------
INVESTMENT OPERATIONS:
Investment income-net............................................................ .24 .68
Net realized and unrealized gain on investments.................................. .15 .30
------- -------
TOTAL FROM INVESTMENT OPERATIONS............................................... .39 .98
------- -------
DISTRIBUTIONS;
Dividends from investment income-net............................................. (.24) (.68)
------- -------
Net asset value, end of year..................................................... $12.65 $12.95
======= =======
TOTAL INVESTMENT RETURN.............................................................. 3.11%(2) 8.09%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......................................... -- .11%
Ratio of net investment income to average net assets............................. 5.53%(3) 5.45%
Decrease reflected in above expense ratios due to undertakings
by the Manager................................................................. 1.54%(3) .81%
Portfolio Turnover Rate.......................................................... 41.15%(2) 34.12%
Net Assets, end of year (000's Omitted).......................................... $28,275 $43,155
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
(2) Not annualized.
(3) Annualized.
See notes to financial statements.
</TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Intermediate Municipal
Bond Portfolio (the "Series"). Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales charge. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Intermediate Municipal Bond Portfolio.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has an unused capital loss carryover of approximately $23,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $1,300 of the carryover
expires in fiscal 2002 and $21,700 of the carryover expires in fiscal 2003.
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 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through March 31, 1995 to reimburse all fees and expenses
of the Series, and thereafter, had undertaken through August 31, 1995 to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The expense reimbursement, pursuant to
the undertakings, amounted to $293,531 for the year ended August 31, 1995.
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 (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the 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
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accounts. During the year ended August 31, 1995, the Series was charged an
aggregate of $16,178 pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $53,538,493 and $38,645,332, respectively, for the year ended
August 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1995, accumulated net unrealized appreciation on
investments was $1,486,613, consisting of $1,487,686 gross unrealized
appreciation and $1,073 gross unrealized depreciation.
At August 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Intermediate
Municipal Bond Portfolio (one of the Series constituting Dreyfus BASIC
Municipal Fund, Inc.) as of August 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Intermediate Municipal Bond Portfolio at August 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for the each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
October 4, 1995
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Portfolio hereby designates all
the dividends paid from investment income-net during the fiscal year ended
August 31, 1995 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 1995 calendar year
on Form 1099-DIV which will be mailed by January 31, 1996.
[Dreyfus lion "d" logo]
DREYFUS BASIC INTERMEDIATE
MUNICIPAL BOND PORTFOLIO
200 Park Avenue
New York, NY 10166
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. 126AR958
[Dreyfus logo]
BASIC Intermediate
Municipal Bond
Portfolio
Annual Report
August 31, 1995
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
------------- ------------
<S> <C> <C>
ALABAMA-1.8%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 762,240
COLORADO-3.8%
Colorado Springs, Utility Revenue, Refunding 6.75%, 11/15/2021.............. 500,000 539,845
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 1,000,000 1,017,920
FLORIDA-4.9%
Florida Board of Education, Capital Outlay (Public Education) 6.625%, 6/1/2017 750,000 798,667
Gainesville Utilities System Revenue 6.50%, 10/1/2022....................... 1,000,000 1,049,540
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 199,354
GEORGIA-1.2%
Burke County Development Authority, PCR (Georgia Power Co.-Plant Vogtle)
6.375%, 8/1/2024........................................................ 500,000 503,995
ILLINOIS-4.5%
Chicago State University, Auxiliary Facilities System, Revenue
6.10%, 12/1/2017 (Insured; MBIA)........................................ 250,000 251,385
Cicero, Tax Increment Revenue, Refunding 6.50%, 12/1/2014 (a)............... 500,000 524,350
Robbins, RRR (Robbins Resource Recovery Partners) 9.25%, 10/15/2016......... 1,000,000 1,100,420
KENTUCKY-2.8%
Jefferson County, PCR (Louisville Gas and Electric Co. Project)
5.625%, 8/15/2019 (Guaranteed; Louisville Gas and Electric Co.)......... 1,000,000 966,170
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ 200,000 210,938
LOUISIANA-1.3%
West Feliciana Parish, PCR, Refunding (Gulf States Utilities Co. Project)
8%, 12/1/2024........................................................... 500,000 528,130
MARYLAND-.6%
Maryland Community Development Administration, Department of
Housing and Community Development Revenue (Single Family Program)
6.75%, 4/1/2026......................................................... 250,000 257,020
MASSACHUSETTS-4.3%
Massachussetts Bay Transportation Authority, Transportation System Revenue
6.10%, 3/1/2023......................................................... 500,000 502,960
Massachusetts Health and Educational Facilities Authority, Revenue
(Mt. Auburn Hospital Issue) 6.30%, 8/15/2024 (Insured; MBIA)............ 750,000 764,827
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 522,910
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MICHIGAN-5.5%
Kalamazoo Hospital Finance Authority, Hospital Facility Revenue, Refunding
(Burgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) (a)............ $ 1,000,000 $ 1,048,570
Lowell Area Schools, Refunding Zero Coupon, 5/1/2016 (Insured; FGIC)........ 1,675,000 483,824
Michigan Municipal Bond Authority, Revenue (Local Government Loan Program)
6.125%, 12/1/2018 (Insured; FGIC)....................................... 750,000 761,798
MINNESOTA-.6%
Minnesota Housing Finance Agency, SFHR 6.90%, 7/1/2022...................... 250,000 260,465
MISSISSIPPI-2.5%
Claiborne County, PCR, Refunding (System Energy Resources, Inc.) 7.30%, 5/1/2025 1,000,000 1,030,080
NEVADA-3.0%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 259,070
Washoe County School District 5.75%, 6/1/2012 (Insured; MBIA)............... 1,000,000 992,470
NEW HAMPSHIRE-.6%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 261,448
NEW JERSEY-3.9%
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.70%, 4/1/2016 (Insured; MBIA)......................................... 500,000 530,500
New Jersey Turnpike Authority, Turnpike Revenue, Refunding 6.50%, 1/1/2016.. 1,000,000 1,081,590
NEW YORK-7.9%
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 517,400
New York State Dormitory Authority, Revenue, Refunding
(State University Educational Facilities) 6%, 5/15/2107................. 500,000 485,780
New York State Energy Research and Development Authority:
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 304,047
Facilities Revenue, Refunding (Con Edison Co.) 6.10%, 8/15/2020......... 1,000,000 1,001,560
New York State Local Government Assistance Corp. 6%, 4/1/2024............... 1,000,000 990,490
NORTH CAROLINA-.7%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. 250,000 267,035
OHIO-9.0%
Lorain, Hospital Improvement Revenue, Refunding (Lakeland Community Hospital,
Inc.)
6.50%, 11/15/2012....................................................... 1,000,000 1,017,870
Ohio, GO, College Savings Revenue Zero Coupon, 8/1/2013..................... 1,000,000 364,680
Ohio Air Quality Development Authority, Revenue (Columbus and Southern Ohio)
6.375%, 12/1/2020 (Insured; FGIC)....................................... 505,000 526,235
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
OHIO (CONTINUED)
Ohio Building Authority (State Facilities-Juvenile Correctional Projects)
6.60%, 10/1/2014 (Insured; AMBAC)....................................... $ 750,000 $ 806,130
Ohio Water Development Authority, Revenue (Fresh Water Series)
5.90%, 12/1/2015 (Insured; AMBAC)....................................... 1,000,000 1,013,430
OREGON-2.4%
Oregon Housing and Community Services Department, Mortgage Revenue
(Single Family Mortgage Program) 6.45%, 7/1/2026........................ 1,000,000 1,012,270
PENNSYLVANIA-10.3%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 257,750
Pennsylvania Convention Center Authority, Revenue, Refunding 6.75%, 9/1/2019 1,000,000 1,030,520
Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue
(MacMillan Limited Partnership Project) 7.60%, 12/1/2020................ 500,000 541,485
Pennsylvania Higher Educational Facilities Authority, College and University
Revenue
(Duquesne University Project) 6.35%, 1/15/2017 (Insured; MBIA).......... 500,000 512,030
Pennsylvania Intergovernmental Cooperative Authority, Special Tax Revenue
(City of Philadelphia-Funding Program) 5.75%, 6/15/2015 (Insured; MBIA). 1,000,000 984,810
Philadelphia Hospitals and Higher Education Facilities Authority, HR,
Refunding
(Children's Hospital-Philadelphia) 5.375%, 2/15/2014.................... 1,000,000 932,890
RHODE ISLAND-.5%
Rhode Island Housing and Mortgage Finance Corp. (Homeownership Opportunity)
6.50%, 4/1/2027......................................................... 200,000 202,582
SOUTH CAROLINA-3.4%
South Carolina Public Service Authority, Revenue, Refunding
5.50%, 7/1/2021 (Insured; MBIA, LOC; Societe Generale) (b).............. 1,500,000 1,411,365
TENNESSEE-3.1%
Maury County Industrial Development Board, PCR, Refunding (Saturn Corp.
Project)
6.50%, 9/1/2024 (Guaranteed; General Motors Corp.)...................... 1,000,000 1,021,260
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 259,828
TEXAS-7.4%
Alliance Airport Authority, Special Facilities Revenue
(American Airlines, Inc. Project) 7.50%, 12/1/2029...................... 500,000 525,815
Austin, Airport Systems Revenue 6.125%,11/15/2025 (Insured; MBIA) (c)....... 1,250,000 1,249,000
Bexar County Health Facilities Development Corp., HR, Refunding
(Baptist Memorial Hospital Systems Project) 6.90%, 8/15/2014 (Insured; MBIA) 750,000 813,007
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
TEXAS (CONTINUED)
Tarrant County Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... $ 500,000 $ 485,305
VIRGINIA-6.8%
Loudon County Sanitation Authority, Water and Sewer Revenue, Refunding
6.25%, 1/1/2016 (Insured; FGIC)......................................... 1,000,000 1,026,540
Richmond, Public Improvement, Refunding 6.25%, 1/15/2018.................... 500,000 503,175
Virginia Public Building Authority, Building Revenue 6.25%, 8/1/2014........ 750,000 780,660
Virginia Transportation Board, Transportation Contract Revenue
(Northern Virginia Transportation District Program) 6.25%, 5/15/2012.... 500,000 524,310
WASHINGTON-4.3%
Seatac, Local Option Transportation, Tax Revenue 6.50%, 12/1/2013 (Insured; MBIA) 500,000 526,700
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 1,250,000 1,254,063
WEST VIRGINIA-2.4%
Braxton County, SWDR (Weyerhauser Co. Project) 6.50%, 4/1/2025.............. 1,000,000 1,012,100
WYOMING-.5%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 205,596
---------
TOTAL MUNICIPAL INVESTMENTS (cost $40,170,911).............................. $41,578,204
===========
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
GO General Obligation PCR Pollution Control Revenue
HR Hospital Revenue RRR Resources Recovery Revenue
IDR Industrial Development Revenue SFHR Single Family Housing Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
STANDARD PERCENTAGE
FITCH (D) OR MOODY'S OR & POOR'S OF VALUE
- --------- ------- -------- ---------
<S> <C> <S> <C>
AAA Aaa AAA 36.1%
AA Aa AA 24.6
A A A 19.6
BBB Baa BBB 13.5
BB Ba BB 2.5
Not Rated (e) Not Rated (e) Not Rated (e) 3.7
-------
100.0%
=======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(b) Secured by letters of credit.
(c) Purchased on a delayed delivery basis.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those securities in which the Fund may invest.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $40,170,911)-see statement...................................... $41,578,204
Cash.................................................................... 694,913
Receivable for investment securities sold............................... 1,200,003
Interest receivable..................................................... 651,105
Prepaid expenses........................................................ 44,352
---------
44,168,577
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 4,983
Payable for investment securities purchased............................. 1,209,571
Accrued expenses and other liabilities.................................. 41,221 1,255,775
---------- ---------
NET ASSETS.................................................................. $42,912,802
===========
REPRESENTED BY:
Paid-in capital......................................................... $41,605,296
Accumulated net realized (loss) on investments.......................... (99,787)
Accumulated net unrealized appreciation on investments-Note 3........... 1,407,293
----------
NET ASSETS at value, applicable to 3,297,790 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $42,912,802
===========
NET ASSET VALUE, offering and redemption price per share
($42,912,802 / 3,297,790 shares)........................................ $13.01
======
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 1,868,124
EXPENSES:
Management fee-Note 2(a).............................................. $ 181,126
Shareholder servicing costs-Note 2(b)................................. 33,783
Registration fees..................................................... 30,488
Professional fees..................................................... 15,377
Organization expenses................................................. 10,767
Custodian fees........................................................ 5,207
Prospectus and shareholders' reports.................................. 2,827
Directors' fees and expenses-Note 2(c)................................ 488
Miscellaneous......................................................... 10,963
-------
291,026
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 231,158
--------
TOTAL EXPENSES.................................................. 59,868
-------
INVESTMENT INCOME-NET........................................... 1,808,256
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (99,705)
Net unrealized appreciation on investments.............................. 1,328,736
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,229,031
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,037,287
===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
--------------------------------
1994* 1995
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 128,111 $ 1,808,256
Net realized gain (loss) on investments................................. 1,875 (99,705)
Net unrealized appreciation on investments for the year................. 78,557 1,328,736
--------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 208,543 3,037,287
--------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (128,111) (1,808,256)
Net realized gain on investments........................................ --- (1,957)
--------------- -------------
TOTAL DIVIDENDS....................................................... (128,111) (1,810,213)
--------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 19,178,689 55,483,278
Dividends reinvested.................................................... 81,312 1,288,981
Cost of shares redeemed................................................. (4,006,334) (30,420,630)
--------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 15,253,667 26,351,629
--------------- -------------
TOTAL INCREASE IN NET ASSETS...................................... 15,334,099 27,578,703
NET ASSETS:
Beginning of year....................................................... --- 15,334,099
--------------- -------------
End of year............................................................. $15,334,099 $ 42,912,802
=============== =============
SHARES SHARES
--------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,509,942 4,426,159
Shares issued for dividends reinvested.................................. 6,385 101,534
Shares redeemed......................................................... (315,038) (2,431,192)
--------------- -------------
NET INCREASE IN SHARES OUTSTANDING.................................... 1,201,289 2,096,501
=============== =============
* From May 6, 1994 (commencement of operations) to August 31, 1994.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
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 each year indicated. This information
has been derived from the Series' financial statements.
YEAR ENDED AUGUST 31,
-------------------------
PER SHARE DATA: 1994(1) 1995
-------- ------
<S> <C> <C>
Net asset value, beginning of year............................................... $12.50 $12.76
-------- ------
INVESTMENT OPERATIONS:
Investment income-net............................................................ .19 .76
Net realized and unrealized gain on investments.................................. .26 .25
-------- ------
TOTAL FROM INVESTMENT OPERATIONS............................................... .45 1.01
-------- ------
DISTRIBUTIONS:
Dividends from investment income-net............................................. (.19) (.76)
Dividends from net realized gain on investments.................................. -- --
-------- ------
TOTAL DISTRIBUTIONS............................................................ (.19) (.76)
-------- ------
Net asset value, end of year..................................................... $12.76 $13.01
======== ======
TOTAL INVESTMENT RETURN.............................................................. 4.13%(2) 8.30%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ......................................... -- .20%
Ratio of net investment income to average net assets ............................ 6.03%(3) 5.99%
Decrease reflected in above expense ratios due to undertakings
by the Manager................................................................. 2.06%(3) .77%
Portfolio Turnover Rate.......................................................... 8.82%(2) 58.91%
Net Assets, end of year (000's Omitted).......................................... $15,334 $ 42,913
(1) From May 6, 1994 (commencement of operations) to August 31, 1994.
(2) Not annualized.
(3) Annualized.
See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Municipal Bond Portfolio
(the "Series"). Premier Mutual Fund Services, Inc. (the "Distributor") acts
as the distributor of the Fund's shares, which are sold to the public without
a sales charge. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which in
turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company
of which is Boston Institutional Group, Inc. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Municipal Bond Portfolio.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has unused capital loss carryover of approximately $83,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
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 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through March 31, 1995 to reimburse all fees and expenses
of the Series, and thereafter, through August 31, 1995 to reduce the
management fee and reimburse such excess expenses paid by the Series, to the
extent that the Series' aggregate expenses (exclusive of certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The expense reimbursement, pursuant to the undertakings,
amounted to $231,158 for the year ended August 31, 1995.
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 (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the Series' average daily net assets, for certain allocated expenses of
providing personal servicing 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 pro
viding reports and other information, and services related to the maintenance
of shareholder
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accounts. During the year ended August 31, 1995, the Series was charged an
aggregate of $22,555 pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $85,290,723 and $60,328,292, respectively, for the year ended
August 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1995, accumulated net unrealized appreciation on
investments was $1,407,293, consisting of $1,440,460 gross unrealized
appreciation and $33,167 gross unrealized depreciation.
At August 31, 1995, 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 PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Bond
Portfolio (one of the Series constituting Dreyfus BASIC Municipal Fund, Inc.)
as of August 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Bond Portfolio at August 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
October 4, 1995
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Portfolio hereby designates all
the dividends paid from investment income-net during the fiscal year ended
August 31, 1995 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 Portfolio's taxable ordinary dividends
(if any) and capital gain distributions (if any) paid for the 1995 calendar
year on Form 1099-DIV which will be mailed by January 31, 1996.
[Dreyfus lion "d" logo]
DREYFUS BASIC MUNICIPAL
BOND PORTFOLIO
200 Park Avenue
New York, NY 10166
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. 125AR958
[Dreyfus logo]
BASIC Municipal
Bond Portfolio
Annual Report
August 31, 1995
DREYFUS BASIC MUNICIPAL FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights--for the period December 16, 1991
(commencement of operations) to August 31, 1992 and for
the fiscal years ended August 31, 1993, 1994 and 1995
for the Money Market Portfolio; and for the periods May
5 and 6, 1994 (commencement of operations) to August
31, 1994, and for the fiscal year ended August 31,
1995, for the Intermediate Bond Portfolio and Bond
Portfolio, respectively.
Included in Part B of the Registration Statement:
The National Portfolios Only.
Statement of Investments--as of August 31, 1995.
Statement of Assets and Liabilities--as of August 31,
1995.
Statement of Operations--for the year ended August 31,
1995.
Statement of Changes in Net Assets--Money Market
Portfolio for the years ended August 31, 1994 and
August 31, 1995. Intermediate Bond Portfolio and Bond
Portfolio. For the periods May 5 and 6, 1994
(commencement of operations, respectively) to August
31, 1994 and the year ended August 31, 1995.
Notes to Financial Statements
Reports of Ernst & Young LLP, Independent Auditors,
dated October 4, 1995.
Notes to Financial Statements
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Articles of Incorporation dated August 8, 1991 and Articles of
Amendment thereto are incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 3 to the Registration Statement,
filed on December 15, 1993.
Articles of Amendment dated October 28, 1994 are incorporated by
reference to Exhibit (1) of Post-Effective Amendment No. 6 to the
Registration Statement, filed on December 16, 1994.
(2) By-Laws are incorporated by reference to Exhibit (2) of Post
Effective Amendment No. 3 to the Registration Statement, filed on
December 15, 1993.
(5) Management Agreement dated August 24, 1994, as amended October
11, 1995.
(6) Distribution Agreement dated August 24, 1994, as amended October
11, 1995.
(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 dated August 24, 1994, as amended
October 11, 1995.
(10) Opinion and Consent of Stroock & Stroock & Lavan is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 3 to
the Registration Statement, filed on December 15, 1993.
(11) Consent of Ernst & Young LLP.
(16) Schedule of Computation of Performance Data as to the Money
Market Portfolio is incorporated by reference to Exhibit (16) of
Post-Effective Amendment No. 3 to the Registration Statement,
filed on December 15, 1993.
Schedules of Computation of Performance Data as to the Longer
Term Portfolios are incorporated by reference to Exhibit (16) of
Post-Effective Amendment No. 7 to the Registration Statement,
filed on December 16, 1994.
Other Exhibits
______________
(a) Power of Attorney for Joseph S. DiMartino is
incorporated by reference to the Other Exhibits section
of Post-Effective Amendment No. 8 to the Registration
Statement, filed on September 15, 1995. Powers of
Attorney for David W. Burke, Samuel Chase, Joni Evans,
Arnold S. Hiatt, David J. Mahoney and Burton N.
Wallack, Directors; and for Marie E. Connolly,
President and Treasurer of the Fund are incorporated by
reference to the Other Exhibits section of Post-
Effective Amendment No. 7 to the Registration
Statement, filed on December 16, 1994.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Certificate of Assistant Secretary is incorporated by
reference to the Other Exhibits section of Post-
Effective Amendment No. 7 to the Registration
Statement, filed on December 16, 1994.
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 October 25, 1995
______________ _______________________________
Money Market Intermediate Bond
Portfolio Bond Portfolio Portfolio
---------- ------------- ---------
Common Stock
(Par value $.001) 6,302 496 531
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 27 of
Pre-Effective Amendment No.1, filed in December 1991.
Reference is also made to the Distribution Agreement filed as
Exhibit 6.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser and manager for sponsored investment
companies registered under the Investment Company Act of 1940
and as an investment adviser to institutional and individual
accounts. Dreyfus also serves as sub-investment adviser to
and/or administrator of other investment companies. Dreyfus
Service Corporation, a wholly-owned subsidiary of Dreyfus,
served primarily as distributor of shares of investment
companies sponsored by Dreyfus and of investment companies for
which Dreyfus acts as sub-investment adviser and administrator
prior to August 24, 1994. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management
services to various pension plans, institutions and
individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
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.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
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;
DAVID B. TRUMAN Former Director:
(cont'd) 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 Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****
Vice Chairman of the Board:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President and Chief Mellon Bank Corporation****
Operating Officer The Boston Company*****
Deputy Director:
Mellon Trust****
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*
and a Director Director:
The Dreyfus Trust Company++
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****
Laurel Capital Advisors****
Boston Group Holdings, Inc.
Executive Vice President:
Mellon Bank, N.A.****
Boston Safe Deposit & Trust*****
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President-
Corporate Communications
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++
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals, Inc.*
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*;
Director and Secretary:
Dreyfus Acquisition Corporation*;
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director, Vice President and Treasurer:
Lion Management, Inc.*;
Director:
The Dreyfus Trust Company++;
Secretary:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
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
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
Legal and Secretary Secretary:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Edison Electric Index Fund, Inc.
18) Dreyfus Florida Intermediate Municipal Bond Fund
19) Dreyfus Florida Municipal Money Market Fund
20) Dreyfus Growth and Value Funds, Inc.
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth Opportunity Fund, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Equity Fund, Inc.
33) Dreyfus Investors GNMA Fund
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
38) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Short-Term Income Fund, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Growth, L.P.
70) Dreyfus Strategic Income
71) Dreyfus Strategic Investing
72) Dreyfus Tax Exempt Cash Management
73) The Dreyfus Third Century Fund, Inc.
74) Dreyfus Treasury Cash Management
75) Dreyfus Treasury Prime Cash Management
76) Dreyfus Variable Investment Fund
77) Dreyfus-Wilshire Target Funds, Inc.
78) Dreyfus Worldwide Dollar Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier Capital Growth Fund, Inc.
93) Premier Global Investing, Inc.
94) Premier GNMA Fund
95) Premier Growth Fund, Inc.
96) Premier Municipal Bond Fund
97) Premier New York Municipal Bond Fund
98) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Elizabeth Bachman++ Attorney Vice President
and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Margaret Pardo++ Legal Assistant Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
New York, and State of New York on the 28th day of November 1995.
DREYFUS BASIC MUNICIPAL FUND, INC.
BY: /s/Marie E. Connolly*
-----------------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities
and on the date indicated.
Signatures Title Date
________________________ ______________________________ __________
/s/Marie E. Connolly* President (Principal Executive 11/28/95
- --------------------------- Officer) and Treasurer
Marie E. Connolly (Principal Financial Officer and
Principal Accounting Officer)
/s/David W. Burke* Director 11/28/95
- ---------------------------
David W. Burke
/s/Samuel Chase* Director 11/28/95
- ---------------------------
Samuel Chase
/s/Joseph S. DiMartino* Director 11/28/95
- ---------------------------
Joseph S. DiMartino
/s/Joni Evans* Director 11/28/95
- ---------------------------
Joni Evans
/s/Gordon J. Davis Director 11/28/95
- ---------------------------
Gordon J. Davis
/s/Arnold S. Hiatt* Director 11/28/95
- ---------------------------
Arnold S. Hiatt
/s/David J. Mahoney* Director 11/28/95
- ---------------------------
David J. Mahoney
/s/Burton N. Wallack* Director 11/28/95
- ---------------------------
Burton N. Wallack
*BY: /s/Eric B. Fischman
---------------------------
Eric B. Fischman,
Attorney-in-Fact
DREYFUS BASIC MUNICIPAL FUND, INC.
EXHIBIT INDEX
Exhibit No.
24(b)(5) Management Agreement
24(b)(6) Distribution Agreement
24(b)(9) Shareholder Services Plan
24(b)(11) Consent of Independent Auditors
MANAGEMENT AGREEMENT
DREYFUS BASIC MUNICIPAL FUND, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, October 11, 1995
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 the relevant Series' Prospectus and its
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 Series' Prospectus and its
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 Series'
then-current Prospectus and its then-current Statement of
Additional Information. The fee for the period from the date of
the commencement of the public sale of a Series' shares to the
end of the month during which such sale shall have been
commenced shall be pro-rated according to the proportion which
such period bears to the full monthly period, and upon any
termination of this Agreement before the end of any month, the
fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agree-
ment.
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 FUND,
INC.
By:___________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date
Reapproval Day
Dreyfus BASIC Intermediate .60% August 28, 1995
August 28th
Municipal Bond Portfolio
Dreyfus BASIC Municipal .60% August 28, 1995
August 28th
Bond Portfolio
Dreyfus BASIC Municipal .50% August 28, 1995
August 28th
Money Market Portfolio
Dreyfus BASIC New Jersey .50% August 28, 1997
August 28th
Municipal Money Market
Portfolio
DISTRIBUTION AGREEMENT
DREYFUS BASIC MUNICIPAL FUND, INC.
200 Park Avenue
New York, New York 10166
August 24, 1994
As Amended, October 11, 1995
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 FUND, INC.
By:
Accepted:
PREMIER MUTUAL FUND SERVICES, INC.
By:________________________
EXHIBIT A
Name of Series Reapproval Date
Reapproval Day
Dreyfus BASIC Intermediate August 28, 1995 August
28th
Municipal Bond Portfolio
Dreyfus BASIC Municipal August 28, 1995 August
28th
Bond Portfolio
Dreyfus BASIC Municipal August 28, 1995 August
28th
Money Market Portfolio
Dreyfus BASIC New Jersey August 28, 1997 August
28th
Municipal Money Market
Portfolio
DREYFUS BASIC MUNICIPAL FUND, INC.
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan (the "Plan") under which the Fund would reimburse
Dreyfus Service Corporation ("DSC") for certain allocated
expenses of providing personal services and/or maintaining
shareholder accounts to (a) shareholders of each series of the
Fund or class of Fund shares set forth on Exhibit A hereto, as
such Exhibit may be revised from time to time, or (b) if no
series or classes are set forth on such Exhibit, shareholders of
the Fund. The Plan is not to be adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the
"Act"),
and the fee under the Plan is intended to be a "service fee" as
defined in Article III, Section 26 (a "Service Fee"), of the
NASD
Rules of Fair Practice (the "NASD Rules").
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a
plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall reimburse DSC an amount not to
exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for its allocated expenses of providing
personal services to shareholders and/or maintaining shareholder
accounts; provided that, at no time, shall the amount paid to
DSC
under this Plan, together with amounts otherwise paid by the
Fund, or each series or class identified on Exhibit A, as a
Service Fee under the NASD Rules, exceed the maximum amount then
payable under the NASD Rules as a Service Fee. The amount of
such reimbursement shall be based on an expense allocation
methodology prepared by DSC annually and approved by the Fund's
Board or on any other basis from time to time deemed reasonable
by the Fund's Board.
2. For the purposes of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of the Fund's net assets.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a
majority
of the Board members who are not "interested persons" (as
defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the
Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have
no direct or indirect financial interest in the operation of
this
Plan or in any agreements entered into in connection with this
Plan.
Dated: October 19, 1994
Amended: October 11, 1995
EXHIBIT A
Dreyfus BASIC Intermediate Municipal Bond Portfolio
Dreyfus BASIC Municipal Bond Portfolio
Dreyfus BASIC Municipal Money Market Portfolio
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our reports
dated October 4, 1994 on Dreyfus BASIC Municipal Fund, Inc. (formerly
Dreyfus BASIC Municipal Money Market Fund) (comprising the Dreyfus
BASIC Money Market Portfolio, Dreyfus BASIC Intermediate Municipal
Bond Portfolio and Dreyfus BASIC Municipal Bond Portfolio), in this
Registration Statement (Form N-1A 811-6377) of Dreyfus BASIC Municipal
Fund, Inc.
ERNST & YOUNG LLP
New York, New York
November 21, 1995
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