LETTER TO SHAREHOLDERS
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 limited
characteristics of principal volatility. 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 $12.76. As a result
of our investment strategy, each share was able to weather the market's
volatility and end the period unchanged at $12.76. The Portfolio generated
over this six-month period tax-free income dividends of approximately $.378
per share for an annualized distribution rate per share of 5.97% after
adjustment for capital gain distributions of $0.0013 paid in December of
1994.**
We appreciate your investment in the Dreyfus BASIC 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, adjusted for capital
gain distributions. Some income may be subject to the Federal Alternative
Minimum Tax (AMT) for certain shareholders.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--80.7% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA--2.7%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 761,903
Birmingham, GO, Refunding 6.25%, 4/1/2016................................... 250,000 252,917
CALIFORNIA--2.6%
California Higher Education Loan Authority,
Student Loan Revenue, Refunding 6.50%, 6/1/2005......................... 250,000 260,805
California Public Works Board, LR (Various Universities Projects)
5.50%, 6/1/2019......................................................... 550,000 486,910
Sacramento Municipal Utility District, Electric Revenue 5.75%, 5/15/2022.... 250,000 233,410
COLORADO--1.9%
Colorado Springs, Utility Revenue, Refunding 6.75%, 11/15/2021.............. 500,000 525,100
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 200,000 195,530
CONNECTICUT--.5%
Connecticut Health and Educational Facilities Authority, Revenue
(The Griffin Hospital) 6%, 7/1/2013..................................... 200,000 178,926
FLORIDA--4.0%
Florida Board of Education, Capital Outlay (Public Education) 6.625%, 6/1/2017 750,000 787,050
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 195,228
Port St. Lucie, Utility Revenue 6%, 9/1/2014 (Insured; FGIC)................ 500,000 503,230
GEORGIA--3.3%
Atlanta, GO 6.125%, 12/1/2023............................................... 500,000 501,810
Burke County Development Authority, PCR (Georgia Power Co. - Plant Vogtle)
6.375%, 8/1/2024........................................................ 500,000 495,050
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Health Care) 6.25%, 9/1/2013........................... 250,000 223,345
ILLINOIS--6.1%
Chicago State University, Revenue, Auxiliary Facilities System
6.10%,12/1/2017 (Insured; MBIA)......................................... 250,000 249,970
Cicero, Tax Increment Revenue, Refunding 6.50%, 12/1/2014................... 500,000 519,955
Illinois Development Finance Authority, PCR, Refunding
(Commonwealth Edison Co. Project) 7.25%, 6/1/2011....................... 175,000 180,891
Illinois Health Facilities Authority, Revenue, Refunding
(Northwestern Memorial Hospital) 6.10%, 8/15/2014....................... 250,000 243,607
Robbins, RRR (Robbins Resource Recovery Partners) 9.25%, 10/15/2016......... 1,000,000 1,065,970
INDIANA--.7%
Indiana Municipal Power Agency, Power Supply System Revenue
6.125%, 1/1/2019 (Insured; MBIA)........................................ 250,000 247,963
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
KENTUCKY--.5%
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ $ 200,000 $ 202,964
LOUISIANA--1.4%
West Feliciana Parish, PCR, Refunding (Gulf States Utilities Co. Project)
8%, 12/1/2024........................................................... 500,000 529,560
MARYLAND--.7%
Maryland Community Development Administration, Department of Housing and
Community Development Revenue (Single Family Program) 6.75%, 4/1/2026... 250,000 251,527
MASSACHUSETTS--4.8%
Massachusetts Bay Transportation Authority, Transportation System Revenue
6.10%, 3/1/2023......................................................... 500,000 499,325
Massachusetts Health and Educational Facilities Authority, Revenue
(Mt. Auburn Hospital Issue) 6.30%, 8/15/2024 (Insured; MBIA)............ 750,000 759,128
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 516,150
MICHIGAN--3.3%
Michigan Municipal Bond Authority, Revenue (Local Government Loan Program)
6.125%, 12/1/2018 (Insured; FGIC)....................................... 750,000 755,220
Wayne Charter County, Airport Revenue (Detroit Metropolitan-Wayne County)
6.125%, 12/1/2024 (Insured; MBIA)....................................... 500,000 496,215
MINNESOTA--.7%
Minnesota Housing Finance Agency, SFHR 6.90%, 7/1/2022...................... 250,000 257,665
NEBRASKA--1.2%
Nebraska Public Power District, Power Supply System Revenue, Refunding
6.125%, 1/1/2015........................................................ 450,000 451,768
NEVADA--.7%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 255,350
NEW HAMPSHIRE--.7%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 258,538
NEW JERSEY--4.2%
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.70%, 4/1/2016 (Insured; MBIA)......................................... 500,000 521,255
New Jersey Turnpike Authority, Turnpike Revenue, Refunding 6.50%, 1/1/2016.. 1,000,000 1,054,010
NEW YORK--7.9%
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 499,335
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue
5.75%, 6/15/2020 (Insured; MBIA)........................................ 500,000 481,895
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
NEW YORK (CONTINUED)
New York State Dormitory Authority, Revenue:
Court Facilities Lease 5.50%, 5/15/2023................................. $ 750,000 $ 657,000
Refunding, State University Educational Facilities:
5.875%, 5/15/2017..................................................... 250,000 236,502
6%, 5/15/2017......................................................... 500,000 477,825
New York State Energy Research and Development Authority,
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 286,044
New York State Local Government Assistance Corp. 6%, 4/1/2012............... 325,000 324,288
NORTH CAROLINA--1.4%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. 250,000 264,318
North Carolina Municipal Power Agency, Catawba Electric Revenue,
Refunding 6.25%, 1/1/2017............................................... 250,000 244,442
OHIO--9.2%
Hamilton, Electric System Mortgage Revenue 6%, 10/15/2023 (Insured; FGIC)... 750,000 754,838
Lorain, Hospital Improvement Revenue, Refunding (Lakeland Community Hospital,
Inc.)
6.50%, 11/15/2012....................................................... 500,000 497,855
Montgomery County, Water Revenue (Greater Moraine-Beaver Creek)
6.25%, 11/15/2012 (Insured; FGIC)....................................... 500,000 522,135
Ohio, GO, College Savings Revenue, Zero Coupon 8/1/2013..................... 1,000,000 336,470
Ohio Air Quality Development Authority, Revenue (Columbus and Southern Ohio)
6.375%, 12/1/2020 (Insured; FGIC)....................................... 505,000 520,655
Ohio Building Authority (State Facilities-Juvenile Correctional Projects)
6.60%, 10/1/2014 (Insured; AMBAC)....................................... 750,000 796,163
PENNSYLVANIA--5.9%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 254,122
Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue
(MacMillan Limited Partnership Project) 7.60%, 12/1/2020................ 500,000 524,095
Pennsylvania Higher Educational Facilities Authority, College and University
Revenue
(Duquesne University Project) 6.35%, 1/15/2017 (Insured; MBIA).......... 500,000 506,615
Pennsylvania Intergovernmental Cooperative Authority, Special Tax Revenue
(City of Philadelphia) 5.625%, 6/15/2023 (Insured; MBIA)................ 500,000 470,040
Philadelphia Hospitals and Higher Education Facilities Authority, HR,
Refunding
(Children's Hospital-Philadelphia) 5.375%, 2/15/2014.................... 500,000 442,650
RHODE ISLAND--1.2%
Rhode Island Housing and Mortgage Finance Corp. (Homeownership Opportunity)
6.50%, 4/1/2027......................................................... 200,000 197,330
Rhode Island Port Authority and Economic Development Corp.,
Airport Revenue 6.625%, 7/1/2024........................................ 250,000 254,055
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
TENNESSEE--.7%
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... $ 250,000 $ 254,692
TEXAS--4.1%
Bexar County Health Facilities Development Corp., HR, Refunding
(Baptist Memorial Hospital Systems Project) 6.90%, 8/15/2014 (Insured; MBIA) 750,000 800,857
Harris County, Toll Road, Senior Lien 6.50%, 8/15/2017 (Insured; AMBAC)..... 250,000 258,917
Tarrant County, Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... 500,000 469,845
VIRGINIA--4.8%
Richmond, Public Improvement, Refunding 6.25%, 1/15/2018.................... 500,000 503,660
Virginia Public Building Authority, Building Revenue 6.25%, 8/1/2014........ 750,000 770,918
Virginia Transportation Board, Transportation Contract Revenue
(Northern Virginia Transportation District Program) 6.25%, 5/15/2012.... 500,000 515,185
WASHINGTON--3.6%
Seatac, Local Option Transportation, Tax Revenue 6.50%, 12/1/2013 (Insured; MBIA) 500,000 519,145
Washington Health Care Facilities Authority, Revenue
(Childrens Hospital and Medical Center) 6.25%, 10/1/2018 (Insured; FGIC) 200,000 199,496
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 635,000 626,345
WYOMING--.5%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 199,474
U.S. RELATED--1.4%
Puerto Rico Industrial Tourists Educational Medical and Environmental Control
Facilities Financing Authority, HR (Hospital Auxilio Mutuo Obligation
Group)
6.25%, 7/1/2024 (Insured; MBIA)......................................... 500,000 512,995
-------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $29,137,403).................... $30,098,446
=============
SHORT-TERM MUNICIPAL INVESTMENTS--19.3%
CONNECTICUT--2.7%
Connecticut, Special Tax Obligation Revenue, Second Lien-Transportation, VRDN
4% (LOC; Industrial Bank of Japan) (a,b)................................ $ 1,000,000 $ 1,000,000
KENTUCKY--2.7%
Daviess County, SWDR (Scott Paper Co. Project) VRDN 4.20% (a)............... 1,000,000 1,000,000
MICHIGAN--5.1%
Michigan Strategic Fund, LOR (Coil Center Corp. Project) VRDN
5% (LOC; The Tokai Bank) (a,b).......................................... 1,700,000 1,700,000
Midland County Economic Development Corp., LOR (Dow Chemical Co. Project)
VRDN
4.20% (a)............................................................... 200,000 200,000
NORTH CAROLINA--4.0%
North Carolina Medical Care, Community Hospital Revenue (Pooled Financing
Program)
VRDN 3.90% (LOC; First Union National Bank of North Carolina) (a,b)..... 1,500,000 1,500,000
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED)
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
TEXAS--4.0%
Harris County, Industrial Development Corp., SWDR (Deer Park Limited
Partnership)
VRDN 4.30% (a).......................................................... $ 1,500,000 $ 1,500,000
U.S. RELATED--.8%
Puerto Rico Electric Power Authority, Power Revenue 4% (c).................. 300,000 300,000
-------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $7,200,000).................... $ 7,200,000
=============
TOTAL INVESTMENTS--100.0%
(cost $36,337,403)...................................................... $37,298,446
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
GO General Obligation PCR Pollution Control Revenue
HR Hospital Revenue RRR Resource Recovery Revenue
IDR Industrial Development Revenue SFHR Single Family Housing Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
LOR Limited Obligation Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 31.4%
AA Aa AA 20.0
A A A 14.2
BBB Baa BBB 10.6
BB Ba BB 1.3
F1 VMIG1 A1 18.5
Not Rated (e) Not Rated (e) Not Rated (e) 4.0
--------
100.0%
=======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit.
(c) Inverse floater security-the interest rate is subject to change
periodically.
(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 rated securities in which the Fund may invest.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC 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 $36,337,403)-see statement...................................... $37,298,446
Receivable for investment securities sold............................... 971,343
Interest receivable..................................................... 489,980
Prepaid expenses........................................................ 56,168
Due from The Dreyfus Corporation........................................ 10,888
-------------
38,826,825
LIABILITIES:
Due to Custodian........................................................ $ 352,248
Payable for investment securities purchased............................. 4,819,182
Accrued expenses and other liabilities.................................. 35,733 5,207,163
-------------- -----------
NET ASSETS ................................................................ $33,619,662
=============
REPRESENTED BY:
Paid-in capital......................................................... $33,052,761
Accumulated net realized (loss) on investments.......................... (394,142)
Accumulated net unrealized appreciation on investments-Note 3........... 961,043
-------------
NET ASSETS at value, applicable to 2,634,560 outstanding shares of
Common Stock, equivalent to $12.76 per share (500 million shares of
$.001 par value authorized)............................................. $33,619,662
=============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 658,836
EXPENSES:
Management fee-Note 2(a).............................................. $ 63,290
Registration fees..................................................... 14,385
Professional fees..................................................... 11,576
Shareholder servicing costs-Note 2(b)................................. 6,431
Organization expenses................................................. 5,831
Prospectus and shareholders' reports.................................. 3,000
Custodian fees........................................................ 1,897
Directors' fees and expenses-Note 2(c)................................ 163
Miscellaneous......................................................... 4,311
----------
110,884
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 110,884
----------
TOTAL EXPENSES.................................................... ----
------------
INVESTMENT INCOME--NET............................................ 658,836
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(394,060)
Net unrealized appreciation on investments.............................. 882,486
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 488,426
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,147,262
============
See independent accountants' review report and 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 SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1995
1994* (UNAUDITED)
------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 128,111 $ 658,836
Net realized gain (loss) on investments................................. 1,875 (394,060)
Net unrealized appreciation on investments for the period............... 78,557 882,486
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 208,543 1,147,262
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (128,111) (658,836)
Net realized gain on investments........................................ ___ (1,957)
------------- -------------
TOTAL DIVIDENDS....................................................... (128,111) (660,793)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 19,178,689 30,555,999
Dividends reinvested.................................................... 81,312 462,517
Cost of shares redeemed................................................. (4,006,334) (13,219,422)
------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 15,253,667 17,799,094
------------- -------------
TOTAL INCREASE IN NET ASSETS...................................... 15,334,099 18,285,563
NET ASSETS:
Beginning of period..................................................... ___ 15,334,099
------------- -------------
End of period........................................................... $15,334,099 $33,619,662
============= =============
SHARES SHARES
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,509,942 2,491,651
Shares issued for dividends reinvested.................................. 6,385 37,535
Shares redeemed......................................................... (315,038) (1,095,915)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING.................................... 1,201,289 1,433,271
============= =============
- ------------------
* From May 6, 1994 (commencement of operations) to August 31, 1994.
See independent accountants' review report and 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 period indicated. This
information has been derived from the Series' financial statements.
YEAR ENDED SIX MONTHS ENDED
AUGUST 31, FEBRUARY 28, 1995
1994(1) (UNAUDITED)
------------- -------------------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period.................................... $12.50 $12.76
------- -------
INVESTMENT OPERATIONS:
Investment income--net.................................................. .19 .38
Net realized and unrealized gain on investments......................... .26 --
------- -------
TOTAL FROM INVESTMENT OPERATIONS...................................... .45 .38
------- -------
DISTRIBUTIONS:
Dividends from investment income--net................................... (.19) (.38)
Dividends from net realized gain on investments......................... -- --
------- -------
TOTAL DISTRIBUTIONS................................................... (.19) (.38)
------- -------
Net asset value, end of period.......................................... $12.76 $12.76
====== ======
TOTAL INVESTMENT RETURN..................................................... 4.13%(2) 6.31%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ................................ -- --
Ratio of net investment income to average net assets ................... 6.03%(3) 6.25%(3)
Decrease reflected in above expense ratios due to undertaking
by the Manager........................................................ 2.06%(3) 1.05%(3)
Portfolio Turnover Rate................................................. 8.82%(2) 36.84%(2)
Net Assets, end of period (000's Omitted)............................... $15,334 $33,620
- ------------------------------
(1) From May 6, 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 MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC 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 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 Bond 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
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
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 $110,884 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 Fund's
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Shareholder Services Plan, the Series pays Dreyfus
Service Corporation, at an amount not to exceed an annual rate of .25 of 1%
of the value of the average daily net assets for servicing shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Series and providing reports and other information, and services related to
the maintenance of shareholder accounts. For the six months ended February
28, 1995, no amounts were charged to the Series pursuant to the Shareholder
Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. 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 $49,561,011 and $28,114,779, 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 $961,043, consisting of $1,025,117 gross unrealized
appreciation and $64,074 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 MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)--SEE NOTE 1
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Bond
Portfolio (formerly Dreyfus BASIC 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 accepting
auditing standards, the statement of changes in net assets and financial
highlights for the period from May 6, 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 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. 125SA952
BASIC Municipal
Bond Portfolio
Semi-Annual
Report
February 28, 1995
