LETTER TO SHAREHOLDERS
Dear Shareholder:
The six-month period ended February 28, 1995 witnessed a continuation of
the volatility which has characterized the trading of fixed-income securities
for much of the past year. At the start of this period, market participants
were enjoying a strong sense of confidence that the Federal Reserve Board had
achieved its stated objectives for monetary policy with its increases in both
the Federal Funds and discount rates in late August. As the fourth quarter
progressed, however, and investors were able to gauge the resilience of the
economy's expansion based on data covering such areas as job creation,
capacity utilization and retail sales, that same sense of confidence that had
generated some stability in long-term Government bond yields around 7.45%
began to erode. By early November, prices of these securities had declined
and propelled yields to more than 8%, a level not seen in more than three
years. As yields rose, price action was further exacerbated by capital
outflows resulting from investors repositioning themselves toward
shorter-dated maturities. Shortly after yields peaked at 8.17% in early
November, the Federal Reserve emphasized its anti-inflation commitment by
raising both the Federal Funds and discount rates by 75 basis points (.75%).
In the weeks that followed, investors began once again to find comfort with
long-term bonds as perceptions began to focus on subtle indications that the
Fed was indeed engineering the much desired "soft landing" in the economy so
often sought in the past. Prices continued to improve into the early part of
this year as data covering such areas as retail consumption and auto sales
began to show more and more evidence of an abatement in economic activity.
With the decision by the Fed to raise rates once again at its February Open
Market Committee meeting, anxieties were sufficiently allayed for yields to
end the six-month period essentially unchanged.
Throughout this period, municipal securities were hard pressed to escape
the volatility witnessed by the markets in general. Ultimately, the technical
dynamic of strong demand and limited supply that has supported the tax exempt
arena for some time prevailed to enable municipals to outperform their
taxable counterparts. While new issue volume during this six-month period
totaled some $60 billion, this figure represented a contraction of more than
50 percent from the same period of the previous year. So while the yield on
long-term Treasuries ultimately posted a rise of 2 basis points (.02%),
municipal yields as represented by the Bond Buyer Revenue Bond Index ended
the six-month period at 6.34%, having declined by 12 basis points (.12%).*
To capitalize on the opportunities inherent in such an environment,
portfolio decisions were guided by a decidedly conservative posture
throughout this period. Emphasis was placed on those issues offering generous
levels of tax-free income, good qualities of creditworthiness and maturity
and duration structures that enabled us to maintain an average life in the
portfolio of eight years or less. As indicated in our last letter, we
continued to focus on generally higher-quality issues bearing broad levels of
market acceptance and liquidity. As trading activity became more uncertain
and cash flows more erratic at times, portfolio liquidity was further
enhanced by maintaining higher than usual cash reserve positions in the
Portfolio.
When we reported the results of your Portfolio's initial fiscal period
ended August 31, 1994, each share's net asset value was $12.65. As a result
of this investment strategy and the market's volatility, each share
experienced a marginal decline of .71% to end the period at $12.56. The
Portfolio generated over this six-month period tax-free income dividends per
share of approximately $.337 for an annualized distribution rate per share of
5.42%.**
We appreciate your investment in the Dreyfus BASIC Intermediate Municipal
Bond Portfolio, and we want to assure you that we are, at all times, working
in the Portfolio's best interest.
Very truly yours,
(Richard J. Moynihan signature logo)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
March 27, 1995
New York, N.Y.
* The Bond Buyer Revenue Bond Index is a weekly index published by the
Bond Buyer giving the average yield of 25 long-term
revenue bonds currently available in the marketplace.
** Annualized distribution rate per share is based upon dividends per
share paid from net investment income during the period, divided by the
net asset value per share at the end of the period. Some income may be
subject to the Federal Alternative Minimum Tax (AMT) for certain
shareholders.
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--89.6% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ARIZONA--3.3%
Central Water Conservation District, Contract Revenue (Central Arizona
Project)
6.50%, 5/1/2001......................................................... $ 250,000 $ 271,565
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 1,001,620
CALIFORNIA--4.3%
Foothill Transit Zone 5.35%, 5/1/2003....................................... 200,000 188,006
Hemet, COP 6.50%, 2/1/2003.................................................. 200,000 193,510
Los Angeles City, COP, Refunding (Real Property Acquisition Program)
5.75%, 8/1/2004......................................................... 1,000,000 978,630
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998......................................................... 185,000 184,959
7.50%, 6/1/1999......................................................... 110,000 109,972
COLORADO--2.5%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 758,407
7.25%, 11/15/2007....................................................... 200,000 203,592
CONNECTICUT--1.4%
Connecticut 6.50%, 3/15/2002................................................ 500,000 544,580
GEORGIA--2.9%
Georgia 6.80%, 8/1/2004..................................................... 1,000,000 1,115,600
HAWAII--2.7%
Hawaii 5.80%, 1/1/2005...................................................... 1,000,000 1,026,300
ILLINOIS--3.2%
Chicago, Wastewater Transmission Revenue
6.75%, 11/15/2000 (Insured; FGIC)....................................... 250,000 274,470
Du Page County, Revenue (Stormwater Project)
6.50%, 1/1/2012 (Prerefunded 1/1/2002) (a).............................. 500,000 544,315
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Development Project)
6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.)...................... 200,000 203,642
Illinois Educational Facilities Authority, Revenue, Refunding
(Illinois Institute of Technology) 6%, 12/1/2004........................ 200,000 192,328
INDIANA--3.2%
Franklin, EDR, Refunding (Hoover Universal, Inc. Project)
6.10%, 12/1/2004 (Guaranteed; Johnson Controls, Inc.)................... 200,000 201,878
Indiana Transportation Finance Authority, Airport Facilities LR
(United Air) 6.25%, 11/1/2003........................................... 1,000,000 1,032,980
KENTUCKY--2.6%
Kentucky Turnpike Authority, EDR, Refunding (Revitalization Projects)
5.80%, 1/1/2004......................................................... 1,000,000 1,019,990
MARYLAND--5.1%
Baltimore County, Consolidated Public Improvement 6.125%, 7/1/2007.......... 800,000 838,456
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
MARYLAND (CONTINUED)
Prince George County, HR (Dimensions Health Corp.)
7%, 7/1/2022 (Prerefunded 7/1/2002) (a)................................. $ 1,000,000 $ 1,121,660
MASSACHUSETTS--1.3%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 242,303
Massachusetts Municipal Wheelhouse Electric Co., Power Supply Systems Revenue
6.75%, 7/1/2002......................................................... 250,000 276,805
MICHIGAN--5.3%
Detroit 7.25%, 4/1/2009..................................................... 1,000,000 1,032,080
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health Systems)
7.10%, 10/1/2002........................................................ 1,000,000 1,020,030
MINNESOTA--2.0%
Washington County Housing and Redevelopment Authority, Jail Facility Revenue
Unlimited Tax Lease Obligation 7%, 2/1/2012 (Insured; MBIA)
(Prerefunded 2/1/2002) (a).............................................. 685,000 756,315
MISSOURI--3.1%
Liberty Industrial Development Authority, IDR, Refunding (Kmart Corp.
Project)
6.80%, 11/1/2004........................................................ 1,175,000 1,192,296
NEW JERSEY--10.5%
New Jersey 5.90%, 8/1/2002.................................................. 1,000,000 1,043,240
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,116,170
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................ 1,290,000 1,333,654
Ocean County 7.50%, 10/15/2001.............................................. 500,000 563,755
NEW YORK--3.5%
New York City 6.25%, 8/1/2003............................................... 100,000 101,279
New York State Dormitory Authority, Court Facilities LR 6%, 5/15/2003....... 100,000 100,684
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 651,135
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 6%, 4/1/2002................................. 500,000 506,715
NORTH CAROLINA--5.3%
North Carolina Eastern Municipal Power Agency, Power Systems Revenue,
Refunding:
6%, 1/1/2005............................................................ 1,000,000 976,710
7%, 1/1/2008............................................................ 1,000,000 1,057,270
OHIO--1.3%
Cuyahoga County, HR (Meridia Health Systems) 6.20%, 8/15/2005............... 505,000 517,676
PENNSYLVANIA--4.3%
Pennsylvania, Refunding 6.75%, 1/1/2005 (Prerefunded 1/1/2001) (a).......... 500,000 545,710
Pennsylvania Convention Center Authority, Revenue, Refunding 6.25%, 9/1/2004 200,000 198,496
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
PENNSYLVANIA (CONTINUED)
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Research, Inc.) 6.50%, 1/1/2010...................... $ 970,000 $ 902,740
TEXAS--11.0%
Brazos Higher Education Authority, Student Loan Revenue, Refunding:
6.20%, 12/1/2002........................................................ 200,000 205,420
5.875%, 6/1/2004........................................................ 1,100,000 1,103,377
Houston, Water and Sewer Systems Revenue 5.60%, 12/1/2001................... 200,000 200,426
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC).................................. 1,000,000 648,490
San Antonio, Water Revenue, Refunding 6.30%, 5/15/2004 (Insured; FGIC) ..... 1,000,000 1,066,420
Texas Veterans Housing Assistance Fund 6.20%, 6/1/2004...................... 1,000,000 1,020,330
VIRGINIA--2.6%
Virginia Housing Development Authority, Commonwealth Mortgage 5.75%, 1/1/2001 1,000,000 1,003,840
WASHINGTON--2.0%
King County School District (Shoreline) 5.85%, 7/1/2004..................... 500,000 513,710
Washington 6.70%, 6/1/2016 (Prerefunded 6/1/2001) (a)....................... 250,000 270,203
WISCONSIN--4.7%
Wisconsin:
Clean Water Revenue 6.75%, 6/1/2008 (Prerefunded 6/1/2001) (a).......... 750,000 821,378
Transportation Revenue 5.40%, 7/1/2004.................................. 1,000,000 997,740
WYOMING--1.5%
Wyoming Farm Loan Board, Capital Facilities Revenue Zero Coupon, 10/1/2004.. 1,000,000 578,410
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $34,197,066).................... $34,571,267
=============
SHORT-TERM MUNICIPAL INVESTMENTS--10.4%
MARYLAND--1.8%
Maryland Energy Financing Administration, Limited Obligation Revenue, VRDN
(Baltimore First Project) 4.10% (LOC; Credit Suisse) (b,c).............. $ 700,000 $ 700,000
MICHIGAN--4.4%
Midland County Economic Development Corp., Limited Obligation Revenue, VRDN
(Dow Chemical Co. Project) 4.20% (b).................................... 1,700,000 1,700,000
MINNESOTA--.8%
Golden Valley, IDR, Refunding, VRDN (Graco, Inc. Project)
4.35% (LOC; Fuji Bank) (b,c)............................................ 300,000 300,000
NEW MEXICO--2.6%
Farmington, PCR, Refunding, VRDN (Arizona Public Service Co.)
3.90% (LOC; Barclays Bank) (b,c)........................................ 1,000,000 1,000,000
TEXAS--.8%
Harris County Industrial Development Corp., SWDR, VRDN
(Deer Park Limited Partnership) 4.30% (b)............................... 300,000 300,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,000,000).................... $ 4,000,000
=============
TOTAL INVESTMENTS--100.0% (cost $38,197,066)................................ $38,571,267
=============
</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 LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 22.8%
AA Aa AA 21.7
A A A 23.1
BBB Baa BBB 21.5
BB Ba BB .5
F1+ & F1 VMIG1, MIG1 & P1 SP1 & A1 10.4
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) 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.
(b) 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.
(c) Secured by letters of credit.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $38,197,066)--see statement..................................... $38,571,267
Interest receivable..................................................... 487,357
Prepaid expenses........................................................ 44,536
Due from The Dreyfus Corporation........................................ 7,237
-------------
39,110,397
LIABILITIES:
Due to Custodian........................................................ $ 436,938
Payable for investment securities purchased............................. 1,166,026
Accrued expenses and other liabilities.................................. 34,229 1,637,193
------------- ------------
NET ASSETS ................................................................ $37,473,204
============
REPRESENTED BY:
Paid-in capital......................................................... $37,419,562
Accumulated net realized (loss) on investments.......................... (320,559)
Accumulated net unrealized appreciation on investments-Note 3........... 374,201
-------------
NET ASSETS at value applicable to 2,984,469 outstanding shares of
Common Stock, equivalent to $12.56 per share (500 million
shares of $.001 par value authorized)................................... $37,473,204
============
See independent accountants' review report and 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 OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 887,976
EXPENSES:
Management fee--Note 2(a)............................................. $ 96,106
Registration fees..................................................... 18,684
Professional fees..................................................... 11,289
Shareholder servicing costs-Note 2(b)................................. 9,392
Prospectus and shareholders' reports.................................. 3,393
Custodian fees........................................................ 2,561
Organization expenses................................................. 2,300
Directors' fees and expenses-Note 2(c)................................ 183
Miscellaneous......................................................... 3,404
----------
147,312
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 147,312
----------
TOTAL EXPENSES.................................................. --
----------
INVESTMENT INCOME--NET.......................................... 887,976
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $(319,203)
Net unrealized appreciation on investments.............................. 119,969
----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (199,234)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 688,742
==========
See independent accountants' review report and 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 SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1995
1994* (UNAUDITED)
------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 234,613 $ 887,976
Net realized (loss) on investments................................... (1,356) (319,203)
Net unrealized appreciation on investments for the period............ 254,232 119,969
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 487,489 688,742
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net............................................... (234,613) (887,976)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................ 32,982,409 23,006,501
Dividends reinvested................................................. 166,946 627,051
Cost of shares redeemed.............................................. (5,127,001) (14,236,344)
------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 28,022,354 9,397,208
------------- -------------
TOTAL INCREASE IN NET ASSETS................................... 28,275,230 9,197,974
NET ASSETS:
Beginning of period.................................................. __ 28,275,230
------------- -------------
End of period........................................................ $28,275,230 $37,473,204
============= =============
SHARES SHARES
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 2,629,336 1,867,026
Shares issued for dividends reinvested............................... 13,222 50,925
Shares redeemed...................................................... (407,238) (1,168,802)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING................................. 2,235,320 749,149
============= =============
- --------------------
* From May 5, 1994 (commencement of operations) to August 31, 1994.
See independent accountants' review report and 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 period indicated. This
information has been derived from the Series' financial statements.
YEAR ENDED SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1995
PER SHARE DATA: 1994(1) (UNAUDITED)
------------- --------------------
<S> <C> <C>
Net asset value, beginning of period.................................. $12.50 $12.65
------- -------
INVESTMENT OPERATIONS:
Investment income--net................................................ .24 .34
Net realized and unrealized gain (loss) on investments................ .15 (.09)
------- -------
TOTAL FROM INVESTMENT OPERATIONS.................................... .39 .25
------- -------
DISTRIBUTIONS;
Dividends from investment income--net................................. (.24) (.34)
------- -------
Net asset value, end of period........................................ $12.65 $12.56
======= =======
TOTAL INVESTMENT RETURN 3.11%(2) 4.11%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .............................. -- --
Ratio of net investment income to average net assets ................. 5.53%(3) 5.54%(3)
Decrease reflected in above expense ratios due to undertaking
by the Manager...................................................... 1.54%(3) .92%(3)
Portfolio Turnover Rate............................................... 41.15%(2) 16.54%(2)
Net Assets, end of period (000's Omitted)............................. $28,275 $37,473
- ---------------------
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
(2) Not annualized.
(3) Annualized.
See independent accountants' review report and 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 (UNAUDITED)
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"). Dreyfus Service Corporation, until August 24,
1994, acted as the exclusive distributor of the Fund's shares, which are sold
to the public without a sales charge. Dreyfus Service Corporation is a
wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
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.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, 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 $1,356 available for
Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to August 31, 1994. If not applied, the
carryover expires in fiscal 2002.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken from
September 1, 1994 through March 31, 1995 or until such time as the net assets
of the series exceed $50 million, regardless of whether they remain at that
level, to reimburse all fees and expenses of the Series. The expense
reimbursement, pursuant to the undertaking, amounted to $147,312 for the six
months ended February 28, 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 (excluding certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the six months ended February
28, 1995, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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 $33,135,251 and $21,648,180, respectively, for the six months
ended February 28, 1995, and consisted entirely of long-term and short-term
municipal investments.
At February 28, 1995, accumulated net unrealized appreciation on
investments was $374,201, consisting of $446,915 gross unrealized
appreciation and $72,714 gross unrealized depreciation.
At February 28, 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
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Intermediate
Municipal Bond Portfolio (formerly Dreyfus BASIC Intermediate Municipal Bond
Fund), one of the Series constituting Dreyfus BASIC Municipal Fund, Inc., as
of February 28, 1995, and the related statements of operations and changes in
net assets and financial highlights for the six month period ended February
28, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights for the period from May 5, 1994 to August 31, 1994 and in our
report dated October 4, 1994, we expressed an unqualified opinion on such
statement of changes in net assets and financial highlights.
(Ernst & Young LLP signature logo)
New York, New York
March 31, 1995
(Dreyfus `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. 126SA952
BASIC Intermediate
Municipal Bond
Portfolio
Semi-Annual
Report
February 28, 1995
