DREYFUS BASIC MUNICIPAL MONEY MARKET FUND INC /MD/, 485BPOS, 1996-12-30

DREYFUS BASIC MUNICIPAL MONEY MARKET FUND INC /MD/
485BPOS, 1996-12-30

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File Nos. 33-42162
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. 12 [ X ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 12 [ 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

Mark N. Jacobs, 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 January 2, 1997 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, 1996 was filed on October 30, 1996.

DREYFUS BASIC MUNICIPAL FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(b)

Items in Money Market Portfolio
Portfolio Interm Bond Portfolio New Jersey
Form N-1A Caption Bond Portfolio Portfolio
_________ _______ ____________________ __________

1 Cover Page Cover Cover

2 Synopsis 3 3

3 Condensed Financial 4 4
Information

4 General Description of 5 5
Registrant

5 Management of the Fund 10 8

5(a) Management's Discussion * *
of Fund' s Performance

6 Capital Stock and Other 9 17
Securities

7 Purchase of Securities 12 9
Being offered

8 Redemption or Repurchase 15 12

9 Pending Legal Proceedings * *

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-18
Holders of Securities

16 Investment Advisory and Other B-18
Services

_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.

DREYFUS BASIC MUNICIPAL FUND, INC.
Cross-Reference Sheet Pursuant to Rule 495(b) (continued)

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-21, B-22,
of Securities Being Offered B-27

20 Tax Status B-28

21 Underwriters B-21

22 Calculations of Performance Data B-30

23 Financial Statements B-46

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.

- ------------------------------------------------------------------------------

PROSPECTUS JANUARY 2, 1997

DREYFUS BASIC MUNICIPAL FUND, INC.
- ------------------------------------------------------------------------------
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 (TH
E "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 JANUARY 2, 1997, 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. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, 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. THE NET ASSET VALUE OF ALL BOND MUTUAL FUNDS WILL FLUCTUATE FROM TIME
TO TIME.
- ------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------

TABLE OF CONTENTS

Page
Fee Table......................................... 3
Condensed Financial Information................... 4
Performance Information........................... 5
Description of the Portfolios..................... 6
Management of the Fund............................ 10
How to Buy Shares................................. 12
Fund Exchanges.................................... 14
How to Redeem Shares.............................. 15
Shareholder Services Plan......................... 17
Dividends, Distributions and Taxes................ 17
General Information............................... 19
Appendix.......................................... 21

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)............... .35% .20% .14%
Other Expenses.............................................. .10% .25% .31%
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>

- ------------------------------------------------------------------------------
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 that, until such time as it gives shareholders at least 90 days'
notice to the contrary, in the case of the MONEY MARKET PORTFOLIO, and until
June 30, 1998, in the case of the INTERMEDIATE BOND PORTFOLIO and BOND
PORTFOLIO, 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
Portfolio Operating Expenses--.60% with respect to the MONEY MARKET PORTFOLIO,
.85% with respect to the INTERMEDIATE BOND PORTFOLIO and .91% 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.
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 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income -- net................................. .024 .027 .026 .037 .034
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income -- net.................. (.024) (.027) (.026) (.037) (.034)
------- ------- ------- ------- -------
Net asset value, end of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN...................................... 3.41%(2) 2.73% 2.60% 3.80% 3.42%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. ._ .02% .09% .14% .38%
Ratio of net investment income to average net assets..... 3.22%(2) 2.64% 2.58% 3.73% 3.40%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation................ .77%(2) .64% .50% .45% .22%
Net Assets, end of year (000's omitted).................. $228,708 $685,540 $1,027,377 $1,099,434..$804,257

(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 1996
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of year................................... $12.50 $12.65 $12.95
------- ------- -------
INVESTMENT OPERATIONS:
Investment income -- net............................................. .24 .68 .65
Net realized and unrealized gain (loss) on investments............... .15 .30 (.12)
------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS..................................... .39 .98 .53
------- ------- -------
DISTRIBUTIONS:
Dividends from investment income -- net.............................. (.24) (.68) (.65)
------- ------- -------
Net asset value, end of year......................................... $12.65 $12.95 $12.83
======= ======= =======
TOTAL INVESTMENT RETURN................................................ 3.11%(2) 8.09% 4.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............................. .-- .11% .39%
Ratio of net investment income to average net assets................. 5.53%(3) 5.45% 5.01%
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation........................... 1.54%(3) .81% .46%
Portfolio Turnover Rate.............................................. 41.15%(2) 34.12% 54.99%
Net Assets, end of year (000's omitted).............................. $28,275 $43,155 $46,598

(1) From May 5, 1994 (commencement of operations) to August 31, 1994.

(2) Not annualized.

(3) Annualized.
</TABLE>

<TABLE>
<CAPTION>
Page 4

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 1996
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of year................................... $12.50 $12.76 $13.01
------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net................................................ .19 .76 .73
Net realized and unrealized gain on investments...................... .26 .25 .06
------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS..................................... .45 1.01 .79
------- ------- -------
DISTRIBUTIONS:
Dividends from investment income -- net.............................. (.19) (.76) (.72)
Dividends from net realized gains on investments..................... .-- .-- (.05)
------- ------- -------
TOTAL DISTRIBUTIONS.................................................. (.19) (.76) (.77)
------- ------- -------
Net asset value, end of year......................................... $12.76 $13.01 $13.03
======= ======= =======
TOTAL INVESTMENT RETURN................................................ 4.13%(2) 8.30% 6.17%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............................. .-- .20% .39%
Ratio of net investment income to average net assets................. 6.03%(3) 5.99% 5.52%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation.............................. 2.06%(3) .77% .52%
Portfolio Turnover Rate.............................................. 8.82%(2) 58.91% 59.23%
Net Assets, end of year (000's omitted).............................. $15,334 $42,913 $56,449

(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's Money Fund Reporttrademark, 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 also is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield 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 PORTFOLIO only,
the maintenance of liquidity. Each Portfolio invests primarily in Municipal
Obligations
Page 6

(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 invests 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.

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, which Rule
includes various maturity, quality and diversification requirements, certain
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 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
Page 7

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 ("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 -- At least 65% of the
value of each LONGER TERM PORTFOLIO'S 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. Although
there is no current intention of doing so, 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.

The annual portfolio turnover rate for each LONGER TERM PORTFOLIO'S
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. For a discussion of the
investment techniques and their related risks, see "Investment Considerations
and Risks," "Appendix_Investment Techniques" and "Dividends, Distributions
and Taxes" 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.

Each Portfolio also may invest in Taxable Investments of the quality
described under "Appendix -- Certain Portfolio Securities -- Taxable
Investments."

Page 8

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. Once the rating
of a LONGER TERM PORTFOLIO security has been changed, the Fund will consider
all circumstances deemed relevant in determining whether to continue to hold
the security. 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/
purchase obligation that is unrated, The Dreyfus Corporation will consider, on
an ongoing basis, a number of factors including the likelihood that the
issuing municipality will discontinue appropriating funding for the leased
property.
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 (LONGER TERM PORTFOLIOS 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, 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 may be subject to certain risks
with respect to the
Page 9

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. See "Appendix
- -- Certain Portfolio Securities -- Ratings." Lower rated bonds as discussed
herein are not eligible investments for the MONEY MARKET PORTFOLIO.

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 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_The classification of each Portfolio 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, with respect to 75% of its total assets,
to invest 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 securities 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 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. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as a Portfolio, available investments
opportunities for sales will be allocated equitably to each. 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, 1996, The Dreyfus Corporation managed or
administered approximately $82 billion in assets for more than 1.7 million
investor accounts nationwide.

Page 10

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 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 and 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., 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
$226 billion in assets as of September 30, 1996, including approximately $85
billion in proprietary mutual fund assets. As of September 30, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $905 billion in assets
including approximately $60 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 expense ratio of that Portfolio and
increasing yield to investors. 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, 1996, the Fund paid The Dreyfus Corporation monthly management
fees at the effective annual rates of .28 of 1% of the MONEY MARKET PORTFOLIO'
S, .14 of 1% of the INTERMEDIATES BOND PORTFOLIO'S and .08 of 1% of the BOND
PORTFOLIO'S, respective average daily net assets pursuant to undertakings by
The Dreyfus Corporation.

The Dreyfus Corporation has agreed that, until such time as it gives
shareholders at least 90 days' notice to the contrary, in the case of the
MONEY MARKET PORTFOLIO, and until June 30, 1998, in the case of each LONGER
TERM PORTFOLIO, if in any fiscal 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.

In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus Corporation
may consider, among other things, the receipt of research services and/or the
sale of shares of the Fund or other funds managed, advised or administered by
The Dreyfus Corporation as factors in the selection of broker-dealers to
execute portfolio transactions for the Fund. See "Portfolio Transactions" in
the Statement of Additional Information.

Fund. The Fund's distributor may use part or all of such payments to pay
securities dealers, banks or other financial institutions in respect of these
services.

Distributor_The Fund's distributor is Premier Mutual Fund Services,
Inc. (the "Distributor"), located at 60 State Street, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.

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 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; 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 Account Application and promptly mail
the Account
Page 12

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 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 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 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,
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.

Page 13

Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the 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 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 calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.

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 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
Fund portfolio offered by another prospectus, you must obtain and should
review a copy of the current prospectus of the fund or portfolio 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, by a separate signed
Shareholder Services Form, available by calling 1-800-645-6561, or by oral
request from any of the authorized signatories on the account by calling
1-800-645-6561. If you have established the Telephone Exchange Privilege, you
may telephone exchange instructions (including over The Dreyfus Touch
Registration Mark automated telephone system) by calling 1-800-645-6561 If you
are calling from overseas, call 516-794-5452. 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.

dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the 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. See "Dividends, Distributions and Taxes."

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 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,
Page 15

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 upon notice to shareholders. Shares for which certificates have been
issued are not eligible for the Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption or Dreyfus TELETRANSFER Privilege.

You may redeem Portfolio shares by telephone if you have checked the
appropriate box on the 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 (including over The Dreyfus TouchRegistration Mark automated
telephone system) 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 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
Page 16

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
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.

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 calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.

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
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
Page 17

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 each 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 1940 Act. 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. Dividends and distributions attributable to income or gain
derived from securities transactions and from the use of certain of the
investment techniques described under "Appendix_Investment Techniques" will
be subject to Federal income tax. 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 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
Page 18

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.
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.
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, 1996 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. Prior to December 24, 1992, the
Fund's name was changed from Dreyfus Investors Municipal Money Market Fund,
Inc. and thereafter until October 21, 1994 its name was Dreyfus BASIC
Municipal Money Market 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.

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 Board member from office and for any other purpose. Fund
shareholders may remove a Board member by the affirmative vote of a majority
of the Fund's outstanding voting shares. In addition, the Fund's Board will
call a meeting of shareholders for the purpose of electing Board members if,
at any time, less than a majority of the Board members 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, INTER
MEDIATE 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 -- 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 its 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
receivable on a forward commitment or when-issued security are fixed when the
Portfolio enters into the commitment, but the Portfolio does not make payment
until it receives delivery from the counterparty. Each Portfolio will commit t
o 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 permissible liquid assets 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) Each LONGER TERM
PORTFOLIO may invest in the types of Derivatives enumerated under
"Description of the Portfolios -- Investment Considerations and Risks -- Use
of Derivatives." These Instruments and certain related risks are described
more specifically under "Investment Objective and Management Policies --
Management Policies -- Derivatives" in the Statement of Additional
Information. 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
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.

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, exceeds 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
Page 21

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.

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. Each LONGER TERM PORTFOLIO continues to be entitled to payments
in amounts equal to the interest or other distributions payable on the loaned
securities which affords the LONGER TERM PORTFOLIO an opportunity to earn
interest on the amount of the loan and 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, and 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 the transaction, the Portfolio must borrow the
security to make delivery to the buyer. The Portfolio is obligated to replace
the security borrowed by purchasing it subsequently 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, which would result in
a loss or gain, respectively.

Securities will not 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 single issuer listed on a
national securities exchange to the extent of more than 5% of the value of
such Portfolio's net assets. A LONGER TERM PORTFOLIO may not make a short
sale which results in the Portfolio having sold short in the aggregate more
than 5% of the outstanding securities of any class of an issuer.

Each LONGER TERM PORTFOLIO also may make short sales "against the
box," in which the Portfolio enters into a short sale of a security which the
Portfolio owns in order to hedge an unrealized gain on the security. 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.

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. Frequently such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Changes in the credit quality of banks and
other financial institutions that provide such credit or liquidity
enhancements to the Fund's portfolio securities could cause losses to the
Fund and affect its share price. 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
Page 22

redeemable at face 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 prescribed quality standards for banks, 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 security of comparable
quality and maturity; this rate also is adjusted,
Page 23

but in this case inversely to changes in the rate of interest of the first
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 commitments
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 securities
that pay interest periodically and are likely to respond to a greater degree
to changes in interest rates than non-zero coupon securities having similar
maturities and credit qualities. Each LONGER TERM PORTFOLIO may invest up to
5% of its assets in zero coupon bonds which are rated below investment grade.

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 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
Page 24

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 Ba by Moody's are judged
to have speculative elements; their future cannot be considered as well
assured and often the protection of interest and principal payments may be
very moderate. Bonds rated BB by S&P are regarded as having predominantly
speculative characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payments. Bonds rated BB by Fitch are considered speculative
and the payment of principal and interest may be affected at any time by
adverse economic changes. Bonds rated C by Moody's are regarded as having
extremely poor prospects of ever attaining any real investment standing.
Bonds rated D by S&P are in default and the payment of interest and/or
repayment of principal is in arrears. Bonds rated DDD, DD or D by Fitch are
in actual or imminent default, are extremely speculative and should be valued
on the basis of their ultimate recovery value in liquidation or
reorganization of the issues; DDD represents the highest potential for
recovery of such bonds; and D represents the lowest potential for recovery.
Such bonds, though high yielding, are characterized by great risk. See
"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.
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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Page 27

Basic Municipal
Fund, Inc.
* Dreyfus BASIC Municipal
Money Market Portfolio
* Dreyfus BASIC Intermediate
Municipal Bond Portfolio
* Dreyfus BASIC Municipal
Bond Portfolio
Prospectus

Registration Mark

Copy Rights 1997 Dreyfus Service Corporation
BMBp010297
Page 28

- ------------------------------------------------------------------------------

PROSPECTUS JANUARY 2, 1997

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 PROFESSIONALLY MANAGES 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. SINCE THE PORTFOLIO MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS
ASSETS IN A SINGLE ISSUER, AN INVESTMENT IN THE PORTFOLIO MAY INVOLVE GREATER
RISK THAN INVESTMENTS IN CERTAIN OTHER TYPES OF MONEY MARKET FUNDS.

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.

Fee Table......................................... 3
Condensed FInancial Information................... 4
Yield Information................................. 4
Description of the Portfolio...................... 5
Management of the Fund............................ 8
How to Buy Shares................................. 9
Shareholder Services.............................. 11
How to Redeem Shares.............................. 12
Shareholder Services Plan......................... 15
Dividends, Distributions and Taxes................ 15
General Information............................... 17
Appendix.......................................... 19

- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
[This Page Intentionally Left Blank]
Page 2

FEE TABLE
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
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)............................................... .21%
Other Expenses.............................................................................. .24%
Total Portfolio Operating Expenses (after expense reimbursement)............................ .45%
</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 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 $30 $62
</TABLE>

- -----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, 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. The Dreyfus
Corporation has agreed that, until June 30, 1998, 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--.74%. 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
"Shareholder Services" 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 table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.

Financial Highlights

Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the period December 1, 1995
(commencement of operations) through August 31, 1996. This information has
been derived from the New Jersey Portfolio's financial statements.

<TABLE>
<CAPTION>
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period...................................... $1.00
------
INVESTMENT OPERATIONS:
Investment income-net..................................................... .025
------
DISTRIBUTIONS:
Dividends from investment income-net...................................... (.025)
------
Net asset value, end of period............................................ $1.00
======
TOTAL INVESTMENT RETURN..................................................... 3.38%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... .06%*
Ratio of net investment income to average net assets...................... 3.25%*
Decrease reflected in above expense ratio due to undertaking by The Dreyfus Corporation .68%*
Net Assets, end of period (000's omitted)................................. $100,248

* Annualized
</TABLE>
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.
Page 4

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's Money Fund Reporttrademark, Morningstar, Inc. and other industry
publications.

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 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
Page 5

"Investment Considerations and Risks_Investing in New Jersey Municipal
Obligations" below, and "Dividends, Distributions and Taxes."

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, which Rule includes various maturity, quality and
diversification requirements, certain of which are summarized as follows. In
accordance with Rule 2a-7, the New Jersey 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 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 ("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.

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.

The Portfolio also may invest in Taxable Investments of the quality
described under "Appendix--Certain Portfolio Securities--Taxable
Investments."

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 -- Since the Portfolio is
concentrated in securities issued by New Jersey or entities within New
Jersey, an investment in the Portfolio may involve greater
Page 6

risk than investments in certain other types of money market funds. 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 8.4% during 1992. Since then, the
State's unemployment rate fell to an average of 6.4% during 1995. 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 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 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 classification of the New Jersey Portfolio 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, with respect to 75% of its total assets,
to invest not more than 5% of such
Page 7

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 total assets, not 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. If, however, such other investment companies desire
to invest in, or dispose of, the same securities 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, 1996, The Dreyfus Corporation
managed or administered approximately $82 billion in assets for more than 1.7
million investor accounts nationwide.

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., 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
$226 billion in assets as of September 30, 1996, including approximately $85
billion in proprietary mutual fund assets. As of September 30, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $905 billion in assets,
including approximately $60 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 expense ratio of the New Jersey Portfolio and
increasing yield to investors. 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. For the period December 1, 1996 (commencement of operations) through
August 31, 1996, no management fee was paid by the Fund, with respect to the
New Jersey Portfolio, pursuant to an undertaking by The Dreyfus Corporation.

Page 8

The Dreyfus Corporation has agreed that, until June 30, 1998, 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.

In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. See "Portfolio Transactions" in the State
ment of Additional Information.

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, banks or other financial institutions in respect of these services.

Distributor _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.

Transfer and Dividend Disbursing Agent and Custodian _ Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). The Transfer Agent will receive the
$5.00 exchange fee, the $5.00 account closeout fee, the $5.00 wire 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 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." 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.
Page 9

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 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 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
Page 10

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 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 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 calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.

SHAREHOLDER SERVICES
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, 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, by a separate
signed Shareholder Services Form, available by calling 1-800-645-6561, or by
oral request from any of the authorized signatories on the account by calling
1-800-645-6561. If you have established the Telephone Exchange Privilege, you
may telephone exchange instructions (including over The Dreyfus
TouchRegistration Mark automated telephone system) by calling 1-800-221-4060.
If you are calling from overseas, call 1-516-794-5452. 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
Page 11

Privilege, Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital
gain distribution option (except for Dreyfus Dividend Sweep) 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 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 the exchange you must notify the
Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
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. See "Dividends, Distributions and Taxes."
DREYFUS DIVIDEND SWEEP PRIVILEGE -- Dreyfus Dividend Sweep enables you to
invest automatically dividends or dividends and capital gain distributions,
if any, paid by the Portfolio in shares of one of the Fund's other portfolios
or shares of another fund in the Dreyfus Family of Funds of which you are a
shareholder. Shares of the other portfolio or fund will be purchased at the
then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in 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 you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the purchased shares. See
"Shareholder Services" in the Statement of Additional Information. For more
information concerning this Privilege or to request a Dividend Options Form,
please call toll free 1-800-645-6561. You may cancel this Privilege by
mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. To select a new portfolio or fund after
cancellation, you must submit a new Dividend Options Form. Enrollment in or
cancellation of this Privilege is effective three business days following
receipt. This Privilege is available only for existing accounts and may not
be used to open new accounts. Minimum subsequent investments do not apply.
The Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
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 redemp-
Page 12

tions 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.
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 upon notice to shareholders. Shares for which certificates have been
issued are not eligible for the Check Redemption, Wire Redemption, Telephone
Redemption or Dreyfus TELETRANSFER Privilege.

Page 13

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 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.
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
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
Page 14

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
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
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 calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.

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.
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. The New
Jersey Portfolio's earnings for Saturdays, Sundays and holidays are declared
as dividends on the preceding business day. 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. 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 distribu-
Page 15

tions 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
indices 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 indices 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.
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 com-
Page 16

puting 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.
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.
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
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 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 believes that the New Jersey Portfolio has
qualified for the fiscal year ended August 31, 1996 as a "regulated
investment company" under the Code. The New Jersey Portfolio intends to
continue to so qualify 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 earnings 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.
GENERAL INFORMATION

The Fund was incorporated under Maryland law on August 8, 1991, and
commenced operations on December 16, 1991. Prior to December 24, 1992, the
Fund's name was Dreyfus Investors Municipal Money Market Fund, Inc. and
thereafter until October 21, 1994 its name was Dreyfus BASIC Municipal Money
Market Fund, Inc. The Fund is authorized to issue five billion shares of
Page 17

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 Board members 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 Board member 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 Board member by the affirmative
vote of a majority of the Fund's outstanding voting shares. In addition, the
Fund's Board will call a meeting of shareholders for the purpose of electing
Board members if, at any time, less than a majority of the Board members 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 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 18

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 its 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 receivable on a forward commitment or when-issued security are
fixed when the Portfolio enters into the commitment, but the Portfolio does
not make payment until it receives delivery from the counterparty. The
Portfolio will commit 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 permissible liquid assets 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 amount borrowed. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Changes in the credit quality of banks and other financial
institutions that provide such credit or liquidity enhancements to the Fund's
portfolio securities could cause losses to the Fund and affect its share
price. 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,
Page 19

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
prescribed quality standards for banks, or the payment obligation otherwise
will be collateralized by U.S. 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 secu-
Page 20

rities, 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 ("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 21
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Page 22

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Page 23

Basic New Jersey
Municipal Money
Market Portfolio

Prospectus

Registration Mark

Copy Rights 1997 Dreyfus Service Corporation
127p010297
Page 24

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)

JANUARY 2, 1997

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus BASIC Intermediate Municipal Bond Portfolio ("Intermediate Bond
Portfolio"), Dreyfus BASIC Municipal Bond Portfolio ("Bond Portfolio") and
Dreyfus BASIC Municipal Money Market Portfolio ("Money Market Portfolio")
and the Prospectus of Dreyfus BASIC New Jersey Municipal Money Market
Portfolio ("New Jersey Portfolio") (each, a "Portfolio") of Dreyfus BASIC
Municipal Fund, Inc. (the "Fund"), each dated January 2, 1997, 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-18
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . B-20
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . B-21
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . B-22
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . B-25
Determination of Net Asset Value . . . . . . . . . . . . . . . . B-27
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . B-28
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . B-29
Performance Information. . . . . . . . . . . . . . . . . . . . . B-30
Information About the Fund . . . . . . . . . . . . . . . . . . . B-33
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . . . . . B-33
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
Financial Statements and Reports of Independent Auditors
Money Market Portfolio . . . . . . . . . . . . . . . . . . . . B-46 to B-58
New Jersey Portfolio . . . . . . . . . . . . . . . . . . . . . B-59 to B-65
Intermediate Bond Portfolio . . . . . . . . . . . . . . . . . B-66 to B-77
Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . . . B-78 to B-89

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

Municipal Obligations. The average distribution of investments (at
value) in Municipal Obligations by ratings for the fiscal year ended August
31, 1996 and, with respect to the New Jersey Portfolio, for the period
December 1, 1995 to August 31, 1996, in each case computed on a monthly
basis, was as follows:

<TABLE>
<CAPTION>
Fitch or Moody's or Standard &
Investors Investors Poor's Percentage of Value
Service, L.P. Service, Inc. Ratings Group Money Market Intermediate Bond New Jersey
("Fitch") ("Moody's") ("S&P") Portfolio Bond Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>

F1+/F1 MIG 1/VMIG 1, SP-1+/SP-1, 90.9% 2.5% 5.6% 81.7%
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA 3.3% 30.0% 38.4% 2.4%
AA Aa AA - 22.0% 25.5% -
A A A - 23.7% 14.5% -
BBB Baa BBB - 21.8% 11.1% -
BB Ba BB - - 2.0% -
B B B - - - -
Not Rated Not Rated Not Rated 5.8%(1) - 2.9%(2) 15.9%(3)
--------- -------- --------- ---------
100.0% 100.0% 100.0% 100.0%
========= ======== ========= =========
</TABLE>

________________________________________________________
(1) Included in the Not Rated category are securities comprising 5.8% of
the Money Market Portfolio's market value which, while not rated, have
been determined by the Manager to be of comparable quality to
securities in the VMIG1/MIG1 rating category.

(2) Included in the Not Rated category are securities comprising 2.9% of
the Bond Portfolio's market value which, while not rated, have been
determined by the Manager to be of comparable quality to securities
rated: Baa/BBB (2.4%) and B/B (.5%).

(3) Included in the Not Rated category are securities comprising 15.9% of
the New Jersey Portfolio's market value which, while not rated, have
been determined by the Manager to be of comparable quality to
securities in the VMIG1/MIG1 rating category.

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 the Intermediate Bond Portfolio or Bond Portfolio
(collectively, the "Longer Term Portfolios"), 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. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased by
a Portfolio pursuant to Rule 144A under the Securities Act of 1933, as
amended, 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 are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the U.S.
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
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 (in no event longer than seven
days) 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 $1 billion, 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.

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 or decrease the level of risk, or change the character of the risk,
to which its portfolio is exposed in much the same way as such Portfolio can
increase or decrease the level of risk, or change the character of 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., variation 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 permissible liquid assets 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. Each Longer Term Portfolio may purchase and write
(i.e., sell) call or put options with respect to interest rate futures
contracts. 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, or at
a specific date.

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.

Successful use by a Longer Term Portfolio of options will be subject
to the Manager's ability to predict correctly movements in interest rates.
To the extent the Manager's predictions are incorrect, the Portfolio may
incur losses.

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.

Short Selling. (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 permissible
liquid assets, at such a level that the amount deposited in the account plus
the amount deposited with the broker as collateral always equals 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. This section applies only to the Longer Term
Portfolios. 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 Ba by Moody's and BB by S&P or Fitch
(collectively, the "Rating Agencies") and as low as the lowest rating
assigned by the Rating Agencies. Such bonds, though higher yielding, are
characterized by risk. See "Description of the Portfolios--Investment
Considerations and Risks--Lower Rated Bonds" and "Appendix--Certain
Portfolio Securities--Ratings" in the Longer Term Portfolios' Prospectus for
a discussion of certain risks and "Appendix B" for a general description of
Rating Agencies' 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 the Rating Agencies 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.

The credit risk factors pertaining to lower rated securities also
apply to lower rated zero coupon bonds, in which each Longer Term Portfolio
may invest up to 5% of its total assets. 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 8.4% during 1992. Since then, the
State's unemployment rate fell to an average of 6.4% during 1995. 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 Investment Company Act of 1940, as amended (the "1940 Act")) of such
Portfolio's outstanding voting shares. Investment restriction number 11 is
not a fundamental policy and may be changed by a vote of a majority of the
Fund's Board members 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 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 Board
members at any time. None 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

Board members 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 Board member who is deemed to be an "interested
person" of the Fund, as defined in the 1940 Act, is indicated by an
asterisk.

Board Members 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. He is
Chairman of the Board of Noel Group, Inc., a venture capital company;
and a director of the Muscular Dystrophy Association, HealthPlan
Services Corporation, Belding Heminway Company, Inc., a manufacturer
and marketer of industrial threads, specialty yarns and home
furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals, and automotive and other
hardware, Simmons Outdoor Corporation, and Staffing Resources, Inc.
For more than five years prior to January 1995, 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 52
years old and his address is c/o Noel Group, Inc., 667 Madison Avenue,
25th Floor, New York, New York 10021.

*DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 to December 1994, Mr.
Burke was a Consultant to the Manager, and 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 60 years old and his address is Box 654, Eastham, Massachusetts
02642.

SAMUEL CHASE, Board Member. Since 1982, President of Samuel Chase &
Company, Ltd., an economic consulting firm. He is 64 years old and
his address is 4410 Massachusetts Avenue, N.W., Suite 408, Washington,
D.C. 20016.

GORDON J. DAVIS, Board Member. 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 55 years old and his address is 241
Central Park West, New York, New York 10023.

JONI EVANS, Board Member. Senior Vice President of the William Morris
Agency since September 1993. 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 54 years old and her address is 1325
Avenue of the Americas, New York, New York 10019.

ARNOLD S. HIATT, Board Member. 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 69 years old and his address
is 400 Atlantic Avenue, Boston, Massachusetts 02110.

DAVID J. MAHONEY, Board Member. 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 73 years old and his address is 745 Fifth
Avenue, Suite 700, New York, New York 10151.

BURTON N. WALLACK, Board Member. President and co-owner of Wallack
Management Company, a real estate management company managing real
estate in the New York City area. He is 45 years old and his address
is 18 East 64th Street, New York, New York 10021.

For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board members who are not "interested
persons" of the Fund.

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, 1996, 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, 1995, were as follows:

Total Compensation
From Fund and
Aggregate From Fund Complex
Name of Board Compensation From Paid to Board
Member Fund* Member

Joseph S. DiMartino $ 2,813 $ 448,618 (93)

David W. Burke $ 2,250 $ 253,654 (52)

Samuel Chase $ 2,250 $ 54,250 (13)

Gordon J. Davis $ 2,250 $ 76,575 (24)

Joni Evans $ 2,000 $ 46,750 (13)

Arnold S. Hiatt $ 2,000 $ 50,500 (13)

David J. Mahoney $ 1,750 $ 47,250 (13)

Burton N. Wallack $ 2,250 $ 54,250 (13)
_____________________

* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $282 for all Board members as a group.

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., 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 38 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 31 years old.

DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank and Trust Company. From December 1991
to March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.

RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, he was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company, Inc. He is 40 years old.

MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company, Inc. She is 32 years old.

ELIZABETH A. BACHMAN, Vice President and Assistant Secretary. Assistant
Vice President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.

JOSEPH F. TOWER, III, Vice President and 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.

MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised
or administered by the Manager. From August 1993 to May 1996, he
attended Hofstra University School of Law. Prior to August 1993, he
was employed as an Associate Examiner at the National Association of
Securities Dealers. He is 27 years old.

The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.

The Fund's Board members and officers of the Fund, as a group, owned
less than 1% of each Portfolio's shares outstanding on December 18, 1996.

No person is known by the Fund to holders of record of 5% or more
of a Portfolio's outstanding shares on December 18, 1996:

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. The
Agreement 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 16, 1996 with respect to the New
Jersey Portfolio, and on July 24, 1996 with respect to each 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:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, 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; William T. Sandalls, Jr., Senior
Vice President and Chief Financial Officer; William F. Glavin, Jr., Vice
President--Corporate Development; Mark N. Jacobs, Vice President, General
Counsel and Secretary; Patrice M. Kozlowski, Vice President--Corporate
Communications; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Andrew S. Wasser, Vice President--Information Services; Mary Beth Leibig,
Vice President--Human Resources; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian M. Smerling, 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, Douglas J.
Gaylor, 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 Board meeting subsequent to such
transactions.

The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to each Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.

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 Board members who are
not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of independent
pricing services, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
shareholders' reports and corporate meetings, costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Expenses attributable to a particular 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 year ended August 31, 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 years
ended August 31, 1995 and 1996, the management fees payable by the Fund with
respect to the Money Market Portfolio amounted to $5,219,151 and $4,972,635,
respectively, which amounts were reduced by $4,674,468 and $2,153,580, pursuant
to an undertaking by the Manager, resulting in net fees paid by the Money Market
Portfolio for such fiscal years of $544,683 and $2,819,055, respectively.
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. For the fiscal year ended August
31, 1996, the management fee payable by the Fund with respect to
Intermediate Bond Portfolio and Bond Portfolio, amounted to $267,142 and
$291,587, respectively, which amounts were reduced by $203,943 and $252,220
pursuant to an undertaking by the Manager, resulting in net fees paid by the
Intermediate Bond Portfolio and Bond Portfolio for such fiscal year of
$63,199 and $39,367, respectively. For the period December 1, 1995
(commencement of operations of the New Jersey Portfolio) to August 31, 1996,
no management fee was paid by the Fund with respect to the New Jersey
Portfolio pursuant to an undertaking by the Manager.

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, 1996, $507,804 was chargeable to
the Money Market Portfolio, $32,369 was chargeable to the Intermediate Bond
Portfolio, $65,177 was chargeable to the Bond Portfolio and for the period
December 1, 1995 to August 31, 1996, $5,000 was chargeable to the New Jersey
Portfolio under the Plan.

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,
certain financial 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, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the investor's Fund 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 (which may include non-marketable 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 might 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.

SHAREHOLDER SERVICES

The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"Shareholder Services."

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 (including
over The Dreyfus Touch(R) automated telephone system) 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.

The Fund Exchanges service 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 Fund Exchanges service may be
modified or terminated at any time upon notice to shareholders.

Dreyfus Dividend Sweep. (New Jersey Portfolio only) Dreyfus Dividend
Sweep allows investors to invest automatically their dividends or dividends
and capital gain distributions, if any, from the New Jersey Portfolio in
shares of another fund in the Dreyfus Family of Funds of which the investor
is a shareholder. Shares of other funds purchased pursuant to this
privilege will be purchased on the basis of relative net asset value per
share as follows:

A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.

B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with
a sales load, and the applicable sales load will be deducted.

C. Dividends and distributions paid by a fund which charges a sales
load may be invested in 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 charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.

D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.

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 purchases 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."

Money Market Portfolio. For the seven-day period ended August 31, 1996, the
Money Market Portfolio's yield was 3.18% and effective yield was 3.23%. See
"Management of the Fund" in the Portfolio's Prospectus.

Based upon the highest 1996 Federal income tax rate of 39.6%, the
Money Market Portfolio's tax equivalent yield for the seven-day period ended
August 31, 1996 was 5.26%.

New Jersey Portfolio. For the seven-day period ended August 31, 1996, the
New Jersey Portfolio's yield was 3.20% and effective yield was 3.25%. These
yields reflect the waiver of a portion of the management fee and the
absorption of certain expenses by the Manager, without which the New Jersey
Portfolio's seven-day and effective yield for the period ended August 31,
1996 would have been 2.95% and 2.99%, respectively. See "Management of the
Fund" in the Portfolio's Prospectus.

Based upon the highest combined 1996 Federal and New Jersey income tax
rate of 43.45%, the New Jersey Portfolio's tax equivalent yield for the
seven-day period ended August 31, 1996 was 5.66%. Without the waiver of the
portion of the management fee and absorption of certain expenses then in
effect, the New Jersey Portfolio's tax equivalent yield for the seven-day
period ended August, 1996 would have been 5.22%. These figures reflect a
39.6% Federal income tax rate and a 6.37% New Jersey income tax rate.

Longer Term Portfolios. The Intermediate Bond Portfolio's yield for
the 30-day period ended August 31, 1996 was 5.25%. The Bond Fund's yield
for the 30-day period ended August 31, 1996 was 5.77%. 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, 1996 would have been 4.80% and the Bond Portfolio's yield
for the 30-day period ended August 31, 1996 would have been 5.32%. See
"Management of the Fund" in the Portfolios' Prospectus.

Based upon the highest 1996 Federal income tax rate of 39.6%, the
Intermediate Bond Portfolio's and Bond Portfolio's tax equivalent yield for
the 30-day period ended August 31, 1996 was 8.69% and 9.55%, respectively.
Without the waiver discussed above then in effect, the Intermediate Bond
Portfolio's and Bond Portfolio's tax equivalent yield for the 30-day period
ended August 31, 1996 would have been 7.95% and 8.81%, respectively.

For the one-year period ended August 31, 1996, and for the period May
5, 1994 through August 31, 1996, the average annual total return of the
Intermediate Bond Portfolio was 4.07% and 6.57%, respectively. For the one-
year period ended August 31, 1996, and for the period May 6, 1994 through
August 31, 1996, the average annual total return of the Bond Portfolio was
6.17% and 8.07%, respectively. Without the waiver discussed above then in
effect, returns would have been lower.

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.

For the period May 5, 1994 through August 31, 1996, the total
return of the Intermediate Bond Fund was 15.99%. For the period from
May 6, 1994 through August 31, 1996, the total return for the Bond Portfolio
was 19.73%. Without the waiver discussed above them in effect, returns would
have been lowered.

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.

Computation of Yield. Current yield for a Short Term Portfolio 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. 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 distributions, 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.

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 (except with respect to the New Jersey Portfolio) 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.

From time to time, advertising materials for a Portfolio also may
refer to or discuss then current or past economic conditions, developments,
and/or events, to actual or proposed legislation or 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. In
addition, advertising materials for a Portfolio may, from time to time
include biographical information relating to its portfolio managers and may
refer to, or include commentary by a portfolio manager relating to
investment strategy, asset growth, current or past business, political,
economic or financial conditions and other matters of general interest to
investors.

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 Board members from the separate voting requirements of the Rule.

The Fund sends annual and semi-annual financial statements to
shareholders.

TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN, COUNSEL,
AND INDEPENDENT AUDITORS

Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund'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 it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses. For the period December 1, 1995 (effective date of
transfer agency agreement) through August 31, 1996, the Fund paid the
Transfer Agent, with respect to the Money Market Portfolio, Intermediate
Bond Portfolio, Bond Portfolio and New Jersey Portfolio $40,173, $1,170,
$6,145 and $3,054, respectively.

The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian.

Neither the Transfer Agent nor The Bank of New York 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 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

This Appendix A relates to the New Jersey Portfolio only.

RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS.

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. 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, 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 3,689,800 in 1989 to a low of 3,445,000 in 1992. This loss has been
followed by an employment gain of 176,400 from May 1992 to October 1995, a
recovery of 67% of the jobs lost during the recession. In July 1991, S&P
lowered the State's general obligation bond rating 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 8.4% during 1992. Since then, the unemployment rate fell to an average
of 6.4% during 1995. Despite an increase reported in December 1995, the
annualized unemployment rate remained 6.4% for the fourth quarter of 1995.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Sales and Use Tax collections for Fiscal Year 1996
as $4.310 billion, a 4.3% increase from Fiscal Year 1995 revenue. The
Fiscal Year 1997 estimate of $4.403 billion, is a 2.2% increase from the
Fiscal Year 1996 estimate.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Gross Income Tax collections for Fiscal Year 1996
of $4.547 billion, a 0.2% increase from Fiscal Year 1995 revenue. Included
in the Fiscal Year 1995 revenue 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 (on joint income under $80,000).
The estimate for fiscal year 1997 as shown in the Governor's Fiscal Year
1997 Budget Message of $4.610 billion, is a 1.4% increase from the Fiscal
Year 1996 estimate. Included in the Fiscal Year 1996 forecast is the 10%
reduction of personal income tax rates effective January 1, 1995 and a
further 15% reduction of personal income tax rates effective January 1, 1996
(on joint incomes under $80,000).

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Corporation Business Tax collections for Fiscal
Year 1996 of $1,198 million, a 10.4% increase from Fiscal Year 1995 revenue.
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.
The Fiscal Year 1997 forecast as shown in the Governor's Fiscal 1997 Budget
Message of $1.210 billion, represents a 1.0% increase from the Fiscal Year
1996 estimate.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Other Miscellaneous Taxes, Fees and Revenues
collections for Fiscal Year 1996 as $1.514 billion, a decrease from fiscal
year 1995 revenue.

The Fiscal Year 1996 revised estimates anticipate that the Legislature
will enact a Tax Amnesty program. It is estimated that a 90-day tax amnesty
will yield $70 million.

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 $15.439 billion and $16.109
billion for Fiscal 1995 and 1996, respectively. Of the $16.189 billion
appropriated in Fiscal Year 1996 from the General Fund, the Property Tax
Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $6.447 billion (40.0%) is appropriated for
State aid to local governments, $3.746 billion (23.3%) 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), $5.233 billion (32.5%) for Direct State
services, $466.3 million (2.9%) for debt service on State general obligation
bonds and $217.1 million (1.3%) for capital construction.

Should tax 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. The appropriations for
Fiscal Year 1996 and for Fiscal Year 1997 reflect the amounts contained in
the Governor's Fiscal Year 1997 Budget Message.

The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1993 through 1996 in the
amounts of $444.3 million, $119.9 million, $103.6 million and $466.3
million, respectively. The Governor's Fiscal Year 1997 Budget Message for
Fiscal Year 1997 includes an appropriation in the amount of $463.1 million
for principal and interest payments for general obligation bonds.

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.

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.

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.

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.

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.

The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.

The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.

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.

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.

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.

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.

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.

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.

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.

Generally, Moody's provides either a generic rating or a rating with a
numerical modifier of 1 for bonds in each of the generic rating categories
Aa, A, Baa, Ba and B. Moody's also provides numerical modifiers of 2 and 3
in each of these categories for bond issues in the health care, higher
education and other not-for-profit sectors; the modifier 1 indicates that
the issue ranks in the higher end of its generic rating category; the
modifier 2 indicates that the issue is in the mid-range of the generic
category; and the modifier 3 indicates that the issue is in the low end of
the generic 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.

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+.

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.

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.

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.

Bonds rated CC are minimally protected. Default in payment of
interest and/or principal seems probable over time.

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.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31, 1996
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)
3.60% (LOC; Barclays Bank) (a,b)........................................ $ 20,000,000 $ 20,000,000
Phenix City Industrial Development Board, Environmental Improvement Revenue,
VRDN
(Mead Coated Board Project) 3.75%, Series A (LOC; Sumitomo Bank) (a,b).. 6,000,000 6,000,000
CALIFORNIA-10.3%
California Higher Education Loan Authority Inc., Student Loan Revenue, VRDN
3.50%, Series C (LOC; Student Loan Marketing Association) (a,b)......... 10,000,000 10,000,000
California Pollution Control Finance Authority, RRR, Refunding, VRDN
(Ultra Power Malaga) 3.55%, Series A (LOC; Bank of America) (a,b)....... 10,100,000 10,100,000
California Public Capital Improvement Financing Authority, Revenue (Pooled
Project)
3.65%, Series C, 9/16/96 (LOC; National Westminster Bank) (b)........... 10,000,000 10,000,000
California School Cash Reserve Program Authority
4.75%, Series A, 7/2/97 (Insured; MBIA)................................. 17,000,000 17,122,669
City of Los Angeles, TRAN 4.50%, 6/19/97.................................... 18,700,000 18,774,607
State of California, RAN 4.50%, Series A, 6/30/97........................... 16,000,000 16,067,471
COLORADO-2.7%
Colorado Student Obligation Bond Authority, Student Loan Revenue, VRDN
3.45%, 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%, Series A, 1/30/97 (Escrowed in; U.S. Treasury Bills)................ 6,260,000 6,260,000
DELAWARE-.3%
Delaware Health Facilities Authority, Revenue, Pooled Loan Program, VRDN
3.45% (BPA; Morgan Guaranty Trust Co. and Insured; MBIA) (a)............ 2,600,000 2,600,000
DISTRICT OF COLUMBIA-.6%
District of Columbia, VRDN (General Fund Recovery)
3.65%, Series B-1 (LOC; Union Bank of Switzerland) (a,b)................ 5,000,000 5,000,000
FLORIDA-3.6%
Dade County, Water and Sewer Systems Revenue, VRDN
3.35% (LOC; Comerica Bank) (a,b)........................................ 6,000,000 6,000,000
Hillsborough County Industrial Development Authority, PCR, VRDN
(Tampa Electric Co. Project) 3.70% (Corp. Guaranty; Tampa Electric Co.) (a) 4,700,000 4,700,000
Putnam County Development Authority, PCR (Seminole Electric Co-op)
3.55%, Series D, 12/15/96 (Corp. Guaranty; National Rural Utility Co-op) 12,585,000 12,585,000
Saint Lucie County, SWDR, VRDN (Florida Light & Power Co. Project)
3.70% (Corp. Guaranty; Florida Light & Power Co.) (a)................... 5,300,000 5,300,000
GEORGIA-7.0%
Fulton County, TAN 4%, 12/31/96............................................. 28,000,000 28,040,599

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
______________ ____________
GEORGIA (CONTINUED)
Rockdale County Development Authority, Industrial Revenue, VRDN
(Liochem Inc. Project) 4% (LOC; Sanwa Bank) (a,b)....................... $ 8,000,000 $ 8,000,000
Savannah Economic Development Authority, Exempt Facility Revenue, VRDN
(Home Depot Project) 3.65%, Series A (Corp. Guaranty; Home Depot) (a)... 20,000,000 20,000,000
INDIANA-5.1%
Indiana Bond Bank, Advanced Funding, 4.25%, Series A-2, 1/9/97.............. 20,000,000 20,051,621
Indiana Bond Bank Reassessment Assistance Program, 4.50%, Series B, 1/30/97. 13,400,000 13,432,300
Indiana Secondary Market Educational Loans Inc., Education Loan Revenue, VRDN
3.55%, Series B (Insured; AMBAC and LOC; Student Loan Marketing
Association) (a,b).......................................................... 7,000,000 7,000,000
IOWA-2.8%
Iowa School Corporation, Warrant Certificates (School Cash Anticipation
Program)
4.25%, Series B, 1/30/97 (Insured; FSA)................................. 7,425,000 7,450,227
Louisa County, PCR, Refunding, VRDN (Midwest Power System Inc. Project) 3.55% (a) 14,900,000 14,900,000
KANSAS-.6%
Butler County, Solid Waste Disposal Facilities Revenue, VRDN
(Texaco Refining and Marketing) 3.70%, Series A (Corp. Guaranty; Texaco Oil) (a) 5,700,000 5,700,000
KENTUCKY-4.2%
City of Carroll, Collateralized Solid Waste Disposal Facilities Revenue, VRDN
(Utilities Co. Project) 3.65%, Series A (a)............................. 23,700,000 23,700,000
Morgantown, IDR (Sumitomo Electric Wire System)
3.75%, 10/1/96 (LOC; Sumitomo Bank) (b)................................. 10,000,000 10,000,000
LOUISIANA-6.5%
New Orleans Aviation Board, Revenue, VRDN (Passenger Facility Charge
Projects)
4.15% (LOC: Banque Paribas and Canadian Imperial Bank of Commerce) (a,b) 13,400,000 13,400,000
Plaquemines Parish, Environmental Revenue, Refunding, VRDN
(British Petroleum Exploration and Oil) 3.70% (Corp. Guaranty; British
Petroleum) (a).............................................................. 12,200,000 12,200,000
Plaquemines Port, Harbor and Terminal District, Port Facilities Revenue
(International Marine Terminal Project)
3.25%, Series A, 3/17/97 (LOC; Morgan Guaranty Trust Co.) (b)........... 9,875,000 9,875,000
West Baton Rouge Parish Industrial District Number 3, Revenue, VRDN
(Dow Chemical Co. Project)
3.70%, Series A (Corp. Guaranty; Dow Chemical Co.) (a).................. 16,600,000 16,600,000
MICHIGAN-1.1%
Grand Rapids Economic Development Corporation, Revenue, VRDN
(Amway/Grand Plaza Hotel Facility #1) 3.45% (LOC; Old Kent Bank and
Trust) (a,b)................................................................ 4,000,000 4,000,000
Michigan Higher Education Student Loan Authority, Revenue, VRDN
3.45%, Series XII-F (Insured; AMBAC and Liquidity Agreement; Sumitomo Bank) (a) 5,000,000 5,000,000

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ ____________
MINNESOTA-2.0%
Minnesota Higher Education Coordinating Board, Revenue, VRDN
3.70% (LOC; Norwest Bank of Minnesota) (a,b)............................ $ 16,000,000 $ 16,000,000
MISSOURI-1.2%
Missouri Higher Education Loan Authority, Student Loan Revenue, Refunding,
VRDN
3.75%, Series B (Insured; MBIA and SBPA; NMB Post Bank Group) (a)....... 9,500,000 9,500,000
NEBRASKA-1.9%
Nebraska Investment Finance Authority, Single Family Housing Revenue
3.85%, Series C, 5/1/97 (LOC; Federal Farm Credit Bank) (b)............. 15,000,000 15,000,000
NEVADA-2.8%
Washoe County, Water Facility Revenue, VRDN (Sierra Pacific Power Co.
Project)
3.65% (LOC; Union Bank of Switzerland) (a,b)............................ 22,100,000 22,100,000
NEW JERSEY-1.6%
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program) 3.30% (LOC; Union Bank of Switzerland)
(a,b)...................................................... 3,000,000 3,000,000
New Jersey Turnpike Authority, Turnpike Revenue, Refunding, VRDN
3%, Series D (Insured; FGIC and LOC; Societe Generale) (a,b)............ 9,800,000 9,800,000
OHIO-6.5%
Cincinnati City School District Board, BAN 4.40%, 9/20/96................... 17,730,000 17,733,535
Ohio Housing Financing Agency, Mortgage Revenue:
3.40%, Series A-3, 3/3/97 (GIC; American Insurance Group)............... 18,000,000 18,000,000
4%, Series B-3, 8/13/97 (GIC; Trinity Fund Corp.)....................... 13,000,000 13,000,000
Student Loan Funding Corporation, Student Loan Revenue, VRDN
3.45%, Series A-3 (LOC; National Westminster Bank) (a,b)................ 3,400,000 3,400,000
OKLAHOMA-1.3%
Holdenville Industrial Authority, Correctional Facility Revenue, VRDN
3.55% (LOC; First Union National Bank) (a,b)............................ 10,000,000 10,000,000
PENNSYLVANIA-3.4%
Cambria County Hospital Development Authority, HR (Mercy Hospital Johnstown Project)
4.25%, 3/1/97 (LOC; Bank of Tokyo-Mitsubishi) (b)....................... 8,230,000 8,230,000
Delaware Valley Regional Finance Authority, Local Government Revenue, VRDN
3.50%, Series D (LOC; Marine Midland Bank) (a,b)........................ 10,300,000 10,300,000
Pennsylvania Energy Development Authority, Energy Development Revenue, VRDN
(B & W Ebensburg Project) 3.45% (LOC; Swiss Bank Corp.) (a,b)........... 8,500,000 8,500,000
RHODE ISLAND-1.0%
Rhode Island Student Loan Authority, Student Loan Revenue, VRDN
3.50%, Series 1 (LOC; National Westminster Bank) (a,b).................. 8,000,000 8,000,000

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_______________ ____________
TENNESSEE-1.2%
Tennessee Housing Development Agency (Homeowner Program)
3.85%, 5/29/97 (Escrowed in; U.S. Treasury Securities).................. $ 10,000,000 $ 9,985,437
TEXAS-20.5%
Brazos River Authority, PCR, VRDN (Utilities Electric Co.):
3.65%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 15,000,000 15,000,000
Refunding 3.70%, Series C (LOC; Swiss Bank Corp.) (a,b)................. 15,000,000 15,000,000
Brazos River Harbor Navigation District, Harbor Revenue, VRDN
(Dow Chemical Co. Project) 3.70% (Corp. Guaranty; Dow Chemical Co.) (a). 22,300,000 22,300,000
El Paso Industrial Development Authority Inc., IDR, VRDN
(El Paso School District Limited Project) 3.70% (LOC; Chemical Bank) (a,b) 3,600,000 3,600,000
Gulf Coast Industrial Development Authority, VRDN:
Marine Terminal Revenue (Amoco Oil Co. Project)
3.65% (Corp. Guaranty; Amoco Credit Corp.) (a)........................ 34,700,000 34,700,000
SWDR (Citgo Petroleum Corp. Project) 3.70% (LOC; Wachovia Bank of Georgia) (a,b) 9,100,000 9,100,000
Gulf Coast Waste Disposal Authority, PCR, VRDN (Amoco Oil Co. Project) SWDR,
Refunding 3.65% (Corp. Guaranty; Amoco Credit Corp.) (a)................ 10,000,000 10,000,000
North Texas Higher Education Authority Inc., Student Loan Revenue, Refunding,
VRDN
3.55%, 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
3.45%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 26,000,000 26,000,000
Port Development Corporation, IDR, VRDN (Pasadena Terminals Project)
3.75% (LOC; ABN-Amro Bank) (a,b)........................................ 2,420,000 2,420,000
State of Texas, TRAN 4.75%, 8/29/97......................................... 15,000,000 15,114,418
UTAH-4.4%
Intermountain Power Agency, Power Supply:
3.93%, Series E, 6/16/97 (LOC; Morgan Guaranty Trust Co.) (b)........... 10,000,000 10,000,000
3.55%, Series E, 9/16/96 (LOC; Swiss Bank Corp.) (b).................... 10,000,000 10,000,000
CP 3.65%, Series E, 10/17/96 (LOC; Bank of America) (b)................. 10,400,000 10,400,000
Utah Board of Regents, Student Loan Revenue, Refunding, VRDN
3.55%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 5,000,000 5,000,000
VIRGINIA-2.2%
Richmond Industrial Development Authority, VRDN (Cogentrix of Richmond
Project):
Exempt Facility Revenue 4%, Series A (LOC; Banque Paribas) (a,b)........ 3,400,000 3,400,000
Revenue:
4%, Series A (LOC; Banque Paribas) (a,b).............................. 8,300,000 8,300,000
4%, Series B (LOC; Banque Paribas) (a,b).............................. 6,000,000 6,000,000
WISCONSIN-1.0%
State of Wisconsin, Operating Notes 4.50%, 6/16/97.......................... 8,060,000 8,095,502

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ _____________
WYOMING-.9%
Uinta County, PCR (Amoco Standard Oil Co.) 3.98%, Series A, 12/1/96......... $ 7,455,000 $ 7,458,911
_______________ _____________
TOTAL INVESTMENTS (cost $799,793,360)....................................... $799,797,297
============

</TABLE>
<TABLE>
<CAPTION>

SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
BAN Bond Anticipation Notes Insurance Corporation
BPA Bond Purchase Agreement PCR Pollution Control Revenue
CP Commercial Paper RAN Revenue Anticipation Notes
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
FSA Financial Security Assurance SBPA Standby Bond Purchase Agreement
GIC Guaranteed Investment Contract SWDR Solid Waste Disposal Revenue
HR Hospital Revenue TAN Tax Anticipation Notes
IDR Industrial Development Revenue TRAN Tax and Revenue Anticipation Notes
LOC Letter of Credit VRDN Variable Rate Demand Notes
</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) 92.8%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 3.7
Not Rated (f) Not Rated (f) Not Rated (f) 3.5
_________
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. At August 31, 1996, 47.7% of the
Series' 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 Board of Directors to be of comparable
quality to those rated securities in which the Series may invest.

See notes to financial statements.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $799,793,360)-see statement..................................... $799,797,297
Interest receivable..................................................... 5,766,346
Prepaid expenses........................................................ 35,218
___________
805,598,861
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 243,718
Due to Custodian........................................................ 1,066,733
Accrued expenses and other liabilities.................................. 31,379 1,341,830
___________
NET ASSETS ................................................................ $804,257,031
============
REPRESENTED BY:
Paid-in capital......................................................... $804,368,262
Accumulated net realized (loss) on investments.......................... (115,168)
Accumulated gross unrealized appreciation on investments................ 3,937
____________
NET ASSETS at value applicable to 804,368,262 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $804,257,031
============
NET ASSET VALUE, offering and redemption price per share
($804,257,031 / 804,368,262 shares)..................................... $1.00
============

See notes to financial statements.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $37,514,646
EXPENSES:
Management fee-Note 2(a).............................................. $4,972,635
Shareholder servicing costs-Note 2(b)................................. 619,017
Registration fees..................................................... 80,030
Professional fees..................................................... 77,745
Custodian fees........................................................ 77,482
Directors' fees and expenses-Note 2(c)................................ 15,772
Prospectus and shareholders' reports.................................. 12,538
Miscellaneous......................................................... 45,229
___________
TOTAL EXPENSES.................................................... 5,900,448
Less-reduction in management fee due to undertakings-Note 2(a)........ 2,153,580
___________
NET EXPENSES...................................................... 3,746,868
____________
INVESTMENT INCOME-NET............................................. 33,767,778
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 1(b)............................ $ (23,748)
Net unrealized appreciation on investments.............................. 3,937
_____________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (19,811)
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $33,747,967
=============
</TABLE>

See notes to financial statements.
<TABLE>
<CAPTION>

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
------------------------------------------
1995 1996
---------------- --------------------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................. $ 38,916,102 $ 33,767,778
Net realized (loss) on investments................................ (37,281) (23,748)
Net unrealized appreciation on investments for the year........... -- 3,937
____________________ __________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 38,878,821 33,747,967
____________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net............................................. (38,916,102) (33,767,778)
____________________ __________________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold..................................... 1,715,223,924 1,301,637,332
Dividends reinvested.............................................. 36,684,023 31,816,712
Cost of shares redeemed........................................... (1,679,813,715) (1,628,610,840)
____________________ __________________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS 72,094,232 (295,156,796)
____________________ __________________
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 72,056,951 (295,176,607)
NET ASSETS:
Beginning of year................................................. 1,027,376,687 1,099,433,638
____________________ __________________
End of year....................................................... $ 1,099,433,638 $ 804,257,031
===================== ===================

</TABLE>
See notes to financial statements.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated
January 2, 1997.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
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 an open-end management investment
company and operates as a series company currently offering four series,
including Dreyfus BASIC Municipal Money Market Portfolio (the "Series"). The
Series is a non-diversified portfolio. The Series' investment objective is to
provide investors with as high a level of current income exempt from Federal
income tax as is consistent with the preservation of capital and maintenance
of liquidity. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge.
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.
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 per share of $1.00.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(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. Cost of investments represents amortized cost.
(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 $90,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through August 31, 1996, which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, $1,700 of the carryover
expires in fiscal 2001, $2,000 expires in fiscal 2002, $50,300 expires in
fiscal 2003 and $36,000 expires in fiscal 2004.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

At August 31, 1996, 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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the
Series, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series, the Series may deduct from payments to be made
to the Manager, or the Manager will bear the amount of such excess to the
extent required by state law. 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 value of the Series'
average net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from September 1, 1995 through January
31, 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) exceeded specified annual percentages of the Series' average
daily net assets. The Manager has currently undertaken, until such time as it
gives shareholders at least 90 days' notice to the contrary, to reduce the
management fee paid by the Series, to the extent that the Series' aggregate
expenses (exclusive of certain expenses as described above) exceed an annual
rate of .45 of 1% of the value of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to
$2,153,580 during the year ended August 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
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 accounts. During the year ended August 31, 1996,
the Series was charged an aggregate of $507,804 pursuant to the Shareholder
Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $40,173 during the
period ended August 31, 1996.
(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
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, 1996, 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, 1996 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,
1996, 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 & Young, LLP signature logo)

New York, New York
October 3, 1996

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
_____________ _______________
<S> <C> <C>
NEW JERSEY-73.4%
Atlantic County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program) 3.20% (LOC; Midland Bank) (a,b)........ $ 4,000,000 $ 4,000,000
Burlington County, BAN 4.25%, 4/24/97....................................... 3,000,000 3,011,175
Camden County, GO Notes 5.05%, Series A, 2/1/97 (Insured; MBIA)............. 785,000 790,014
City of Fort Lee, TAN 4.25%, 2/7/97......................................... 1,000,000 1,002,194
Galloway Township, BAN 4%, Series B, 3/13/97................................ 2,500,000 2,505,103
Hudson County Improvement Authority, VRDN (Essential Purpose Pooled
Government)
3.50% (LOC; Hong Kong Shanghai Banking Corp.) (a,b)..................... 4,000,000 4,000,000
Middlesex County, BAN 3.90%, 6/25/97........................................ 2,000,000 2,000,147
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program) 3.30% (LOC; Union Bank of Switzerland) (a,b) 2,700,000 2,700,000
New Jersey Economic Development Authority:
Thermal Energy Facilities, Revenue (Thermal Energy Limited Partnership)
3.60%, 12/12/96 (Escrowed in; U.S. Treasury Bills).................... 1,000,000 1,000,000
VRDN:
EDR (Dow Chemical-El Dorado Terminal):
3.25%, Series 1984A (Corp. Guaranty; Dow Chemical Co.) (a)........ 2,200,000 2,200,000
3.25%, Series 1984B (Corp. Guaranty; Dow Chemical Co.) (a)........ 900,000 900,000
Industrial and EDR:
(Merck and Co.) 3.65%, Series A and B (a)......................... 1,700,000 1,700,000
(NUI Corp. Project)
3.35%, Series A (BPA; The Bank of New York and Insured; AMBAC) (a) 3,000,000 3,000,000
New Jersey Health Care Facilities Financing Authority, Revenue, VRDN
(Hospital Capital Asset Financing)
3.20%, Series A (LOC; Chase Manhattan Bank) (a,b)....................... 3,500,000 3,500,000
New Jersey Sports and Exposition Authority, VRDN (State Contract)
3.15%, Series C (Insured; MBIA and Liquidity Agreement; Barclays Bank) (a) 4,600,000 4,600,000
New Jersey Turnpike Authority, Turnpike Revenue, Refunding, VRDN
3%, Series D (LOC; Societe Generale and Insured; FGIC) (a,b)............ 5,200,000 5,200,000
Passaic County, BAN:
4%, 4/4/97.............................................................. 1,666,000 1,669,543
4.25%, 6/25/97.......................................................... 2,489,000 2,495,805
Port Authority of New York and New Jersey:
CP 3.40%, 9/26/96 (Liquidity Agreement; Bank of Nova Scotia)............ 1,010,000 1,010,000
Special Obligation Revenue, VRDN (Versatile Structure Obligation):
3.35%, Series 3 (BPA; Morgan Guaranty Trust Co.) (a).................. 13,400,000 13,400,000
3.40%, Series 2 (BPA; Morgan Guaranty Trust Co.) (a).................. 1,200,000 1,200,000
3.55%, Series 4 (BPA; Landesbank Hessen) (a).......................... 6,000,000 6,000,000

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ _______________
NEW JERSEY (CONTINUED)

Washington Township Board of Education, Notes (Gloucester County School)
5%, Series 1986, 2/1/97 (Insured; MBIA)................................. $ 1,600,000 $ 1,610,829
Woodbridge Township, BAN 3.96%, 8/1/97...................................... 3,000,000 3,000,523
U.S. RELATED-26.6%
Commonwealth of Puerto Rico Government Development Bank:
CP:
3.40%, 9/13/96........................................................ 3,500,000 3,500,000
3.35%, 9/18/96........................................................ 7,000,000 7,000,000
3.55%, 10/10/96....................................................... 8,000,000 8,000,000
Refunding, VRDN 3.10% (LOC; Credit Suisse) (a,b)........................ 4,300,000 4,300,000
Puerto Rico Industrial Medical and Environmental Pollution Control Facility Authority,
Revenue (Reynolds Medal Co. Project)
3.80%, 9/1/97 (Liquidity Agreement; ABN Amro Bank)...................... 3,500,000 3,501,680
____________
TOTAL INVESTMENTS (cost $98,797,013)........................................ $98,797,013
=============

</TABLE>

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation GO General Obligation
BAN Bond Anticipation Notes LOC Letter of Credit
BPA Bond Purchase Agreement MBIA Municipal Bond Investors Assurance
CP Commercial Paper Insurance Corporation
EDR Economic Development Revenue TAN Tax Anticipation Notes
FGIC Financial Guaranty Insurance Company VRDN Variable Rate Demand Notes

</TABLE>

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) 84.9%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 1.7
Not Rated (f) Not Rated (f) Not Rated (f) 13.4
__________
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. At August 31, 1996, 23.6% of the
Series' net assets are backed by letters of credit issued by domestic
banks and foreign banks.
(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 Board of Directors to be of comparable
quality to those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $ 98,797,013
Cash.................................................................... 4,572,466
Interest receivable..................................................... 453,140
Prepaid expenses........................................................ 3,188
________________
103,825,807
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 15,282
Payable for investment securities purchased............................. 3,501,680
Accrued expenses........................................................ 61,094 3,578,056
__________________
NET ASSETS at value, represented by paid-in capital, applicable to 100,247,751
shares outstanding (1 billion shares of $.001 par value Common Stock authorized) $100,247,751
=================

NET ASSET VALUE, offering and redemption price per share
($100,247,751 / 100,247,751 shares)....................................... $1.00
=================
STATEMENT OF OPERATIONS
from December 1, 1995 (commencement of operations) to August 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 1,310,658
EXPENSES:
Management fee-Note 2(a).............................................. $ 197,262
Registration fees..................................................... 34,863
Auditing fees......................................................... 25,000
Shareholder servicing costs-Note 2(b)................................. 12,203
Legal fees............................................................ 9,000
Prospectus and shareholders' reports.................................. 8,415
Custodian fees........................................................ 5,286
Directors' fees and expenses-Note 2(c)................................ 566
Miscellaneous......................................................... 2,481
_________________
TOTAL EXPENSES.................................................. 295,076
Less-expense reimbursement from Manager due to undertakings-Note 2(a). 270,079
_________________
NET EXPENSES.................................................... 24,997
_______________
INVESTMENT INCOME-NET, representing net increase in net assets
resulting from operations............................................... $ 1,285,661
=================

See notes to financial statements.

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
from December 1, 1995 (commencement of operations) to August 31, 1996
OPERATIONS;
Investment income-net, representing net increase in net assets
resulting from operations............................................................. $ 1,285,661
_______________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................................... (1,285,661)
_______________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................................... 129,477,481
Dividends reinvested.................................................................... 1,250,908
Cost of shares redeemed................................................................. (30,480,638)
_______________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................................ 100,247,751
_______________
TOTAL INCREASE IN NET ASSETS...................................................... 100,247,751
NET ASSETS:
Beginning of period..................................................................... --
_______________
End of period........................................................................... $100,247,751
=================

</TABLE>

See notes to financial statements.

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus
dated January 2, 1997.

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
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 an open-end management investment
company and operates as a series company currently offering four series,
including Dreyfus BASIC New Jersey Municipal Money Market Portfolio (the
"Series") which commenced operations on December 1, 1995. The Series is a
non-diversified portfolio. The Series' investment objective is to provide
investors with as high a level of current income exempt from Federal and New
Jersey income tax as is consistent with the preservation of capital and
maintenance of liquidity. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge.
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.
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 per share of $1.00.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(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. Cost of investments represents amortized cost.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to 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.

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

At August 31, 1996, 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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the
Series, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series, the Series may deduct from payments to be made
to the Manager, or the Manager will bear the amount of such excess to the
extent required by state law. 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 value of the Series'
average net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from December 1, 1995 through June 30,
1996 to reimburse all fees and expenses of the Series, and thereafter, had
undertaken through October 24, 1996 to reduce the management fee 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 Manager has currently undertaken
from October 25, 1996 through December 31, 1996 to reduce the management fee
paid by the Series, to the extent that the Series' aggregate expenses
(exclusive of certain expenses as described above) exceed an annual rate of
.30 of 1% of the value of the Series' average daily net assets. The expense
reimbursement, pursuant to the undertakings, amounted to $270,079 during the
period ended August 31, 1996.
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 value of the Series' average daily
net assets.
(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 accounts. During the period ended August 31, 1996,
the Series was charged an aggregate of $5,000 pursuant to the Shareholder
Services Plan.
The Series compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary
of the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Series. Such
compensation amounted to $3,054 during the period ended August 31, 1996.
(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 NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC New Jersey Municipal
Money Market Portfolio (one of the Series constituting Dreyfus BASIC
Municipal Fund, Inc.) as of August 31, 1996, and the related statements of
operations and changes in net assets and financial highlights for the period
from December 1, 1995 (commencement of operations) to August 31, 1996. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1996 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC New Jersey Municipal Money Market Portfolio at
August 31, 1996, and the results of its operations, the changes in its net
assets and the financial highlights for the period from December 1, 1995 to
August 31, 1996, in conformity with generally accepted accounting principles.

(Ernst & Young LLP}

New York, New York
October 3, 1996

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.9% AMOUNT VALUE
_______ ______
<S> <C> <C>
ALABAMA-2.4%
Alabama Agricultural and Mechanical University, Revenues
6%, 11/1/2006 (Insured; MBIA)........................................... $ 1,000,000 $ 1,066,150
ARIZONA-4.4%
Arizona Transportation Board, Highway Revenue, Refunding 5%, 7/1/2010....... 1,000,000 957,060
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 1,017,980
CALIFORNIA-4.8%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2004................................................... 1,000,000 643,970
Hemet, COP (Capital Projects) 6.50%, 2/1/2003............................... 200,000 192,888
Los Angeles City, COP, Refunding (Real Property Acquisition Program)
5.75%, 8/1/2004......................................................... 1,000,000 984,370
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998......................................................... 185,000 186,306
7.50%, 6/1/1999......................................................... 110,000 110,844
COLORADO-2.2%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 770,715
7.25%, 11/15/2007....................................................... 200,000 214,414
FLORIDA-3.3%
Palm Beach County, Criminal Justice Facilities Revenue
5.90%, 6/1/2008 (Insured; FGIC)......................................... 1,400,000 1,461,362
HAWAII-4.5%
Hawaii:
4.40%, 11/1/2004........................................................ 1,000,000 956,280
5.80%, 1/1/2005......................................................... 1,000,000 1,051,340
ILLINOIS-.5%
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Economic
Development Project) 6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.). 200,000 210,762
INDIANA-2.4%
Indiana Transportation Finance Authority, Airport Facilities LR
(United Air) 6.25%, 11/1/2003........................................... 1,000,000 1,063,310
KENTUCKY-2.4%
Kentucky Turnpike Authority, EDR, Refunding (Revitalization Projects)
5.80%, 1/1/2004......................................................... 1,000,000 1,048,740
MARYLAND-9.5%
Baltimore, Consolidated Public Improvement, Refunding
7.25%, 10/15/2005 (Insured; FGIC)....................................... 1,000,000 1,156,420

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
MARYLAND (CONTINUED)
Maryland, State and Local Facilities Loan 4.25%, 2/15/2005.................. $ 1,000,000 $ 937,910
Northeast Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery Project) 6%, 7/1/2006.............. 1,000,000 1,013,240
Prince Georges County, HR (Dimensions Health Corp.)
7%, 7/1/2022 (Prerefunded 7/1/2002) (a)................................. 1,000,000 1,126,720
MASSACHUSETTS-3.0%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 253,565
University of Massachusetts Building Authority, Revenue, Refunding
6.50%, 5/1/2006......................................................... 1,000,000 1,102,920
MICHIGAN-2.4%
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health System)
7.10%, 10/1/2002........................................................ 1,000,000 1,059,240
NEW JERSEY-5.5%
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,120,960
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................ 1,290,000 1,339,820
NEW YORK-11.4%
New York City 7.50%, 2/1/2004............................................... 1,130,000 1,239,440
New York State Dormitory Authority, Court Facilities LR 6%, 5/15/2003....... 100,000 103,557
New York State Housing Corp., Revenue, Refunding 6%, 11/1/2003.............. 1,500,000 1,579,170
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 660,201
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge):
6%, 4/1/2002.......................................................... 500,000 519,640
5.75%, 4/1/2006....................................................... 1,000,000 1,001,400
NORTH CAROLINA-2.4%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding
7%, 1/1/2008............................................................ 1,000,000 1,077,870
OHIO-1.2%
Cuyahoga County, HR (Meridia Health System) 6.20%, 8/15/2005................ 505,000 538,178
PENNSYLVANIA-11.9%
Fayette County Hospital Authority, HR, Refunding (Uniontown Hospital)
5.70%, 6/15/2010 (Insured; Connie Lee).................................. 1,595,000 1,552,701
Pennsylvania Convention Center Authority, Revenue, Refunding
6.25%, 9/1/2004......................................................... 200,000 207,250

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
PENNSYLVANIA (CONTINUED)
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue, Refunding
6.80%, 12/1/2000 (Insured; FGIC)........................................ $ 2,000,000 $ 2,141,720
Pittsburgh Water and Sewer Authority, Water and Sewer Systems Revenue,
Refunding
5%, 9/1/2010 (Insured; FGIC)............................................ 1,500,000 1,401,705
TEXAS-10.9%
Brazos Higher Education Authority, Student Loan Revenue, Refunding
6.20%, 12/1/2002........................................................ 200,000 210,322
Irving Hospital Authority, HR (Irving Healthcare Systems) 5.70%, 7/1/2008... 1,675,000 1,686,407
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC).................................. 1,000,000 727,260
San Antonio, Water Revenue, Refunding 6.30%, 5/15/2004 (Insured; FGIC)...... 1,000,000 1,081,200
Waco 6%, 2/1/2004 (Insured; FGIC)........................................... 1,070,000 1,135,259
VIRGINIA-5.3%
Brunswick County Industrial Development Authority, Correctional Facility LR
5.55%, 7/1/2008 (Insured; MBIA)......................................... 1,325,000 1,333,467
Virginia Housing Development Authority, Commonwealth Mortgage
5.75%, 1/1/2001......................................................... 1,000,000 1,025,310
WASHINGTON-4.8%
Snohomish County Public Utility District Number 1, Electric Revenue
6.60%, 1/1/2002 (Insured; FGIC)......................................... 1,000,000 1,079,380
Washington, Refunding 6.625%, 9/1/2006...................................... 1,000,000 1,071,400
WISCONSIN-2.3%
Wisconsin, Transportation Revenue 5.40%, 7/1/2004........................... 1,000,000 1,019,710
WYOMING-1.4%
Wyoming Farm Loan Board, Capital Facilities Revenue
Zero Coupon, 10/1/2004.................................................. 1,000,000 644,350
______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $43,333,037).................... $44,084,183
======
SHORT-TERM MUNICIPAL INVESTMENTS-1.1%
MASSACHUSETTS;
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN
(Capital Assets Program) 3.15%, 1/1/2035 (Insured; MBIA) (b) (cost $500,000) $ 500,000 $ 500,000
======
TOTAL INVESTMENTS-100.0% (cost $43,833,037)................................. $44,584,183
======

</TABLE>

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO

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 Insurance Corporation
FGIC Financial Guaranty Insurance Company VRDN Variable Rate Demand Notes
HR Hospital Revenue
</TABLE>

SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ------- ------- ---------------- -------------------
<S> <C> <S> <C>
AAA Aaa AAA 39.6%
AA Aa AA 22.1
A A A 19.3
BBB Baa BBB 17.9
F-1+ & F-1 MIG1, VMIG1 & P1 SP1 & A1 1.1
____
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 prime rates or an index of market interest rates.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.

See notes to financial statements.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C>
ASSETS:
Investments in securities, at value
(cost $43,833,037)-see statement....................................................... $44,584,183
Cash..................................................................................... 1,407,445
Interest receivable...................................................................... 598,067
Prepaid expenses......................................................................... 16,555
Due from The Dreyfus Corporation and affiliates.......................................... 7,819
______
46,614,069
LIABILITIES;
Accrued expenses and other liabilities................................................... 16,269
______
NET ASSETS ....................................................................... $46,597,800
======
REPRESENTED BY:
Paid-in capital.......................................................................... $45,763,014
Accumulated undistributed investment income-net.......................................... 6,855
Accumulated undistributed net realized gain on investments............................... 76,785
Accumulated net unrealized appreciation on investments-Note 3............................ 751,146
______
NET ASSETS at value applicable to 3,633,323 shares outstanding
(500 million shares of $.001 par value Common Stock authorized).......................... $46,597,800
======
NET ASSET VALUE, offering and redemption price per share
($46,597,800 / 3,633,323 shares)......................................................... $12.83
======
</TABLE>

See notes to financial statements.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $2,411,177
EXPENSES:
Management fee-Note 2(a).............................................. $ 267,142
Shareholder servicing costs-Note 2(b)................................. 43,000
Registration fees..................................................... 23,553
Auditing fees......................................................... 17,398
Custodian fees........................................................ 5,431
Prospectus and shareholders' reports.................................. 5,249
Directors' fees and expenses-Note 2(c)................................ 703
Legal fees............................................................ 219
Miscellaneous......................................................... 16,538
_____
TOTAL EXPENSES.................................................... 379,233
Less-reduction in management fee due to undertakings-Note 2(a)........ 203,943
_____
NET EXPENSES...................................................... 175,290
_____
INVESTMENT INCOME-NET............................................. 2,235,887
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $ 288,324
Net unrealized (depreciation) on investments............................ (735,467)
_____
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (447,143)
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,788,744
=====

See notes to financial statements.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
________________________________
1995 1996
_______ _______
OPERATIONS:
Investment income-net................................................... $ 1,983,679 $ 2,235,887
Net realized gain (loss) on investments................................. (210,183) 288,324
Net unrealized appreciation (depreciation) on investments for the year.. 1,232,381 (735,467)
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 3,005,877 1,788,744
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (1,983,679) (2,229,032)
______ ______
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 34,818,737 19,466,226
Dividends reinvested.................................................... 1,446,819 1,721,467
Cost of shares redeemed................................................. (22,408,065) (17,304,524)
______ ______
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 13,857,491 3,883,169
______ ______
TOTAL INCREASE IN NET ASSETS...................................... 14,879,689 3,442,881
NET ASSETS:
Beginning of year....................................................... 28,275,230 43,154,919
______ ______
End of year (including undistributed investment income-net;
$6,855 on August 31, 1996)............................................ $ 43,154,919 $ 46,597,800
====== ======
SHARES SHARES
______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,793,004 1,499,256
Shares issued for dividends reinvested.................................. 115,064 132,850
Shares redeemed......................................................... (1,811,044) (1,331,127)
______ ______
NET INCREASE IN SHARES OUTSTANDING.................................... 1,097,024 300,979
====== ======

</TABLE>
See notes to financial statements.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated
January 2, 1997.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
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 an open-end management investment
company and operates as a series company currently offering four series,
including the Dreyfus BASIC Intermediate Municipal Bond Portfolio (the
"Series"). The Series is a non-diversified portfolio. The Series' investment
objective is to provide investors with as high a level of current income
exempt from Federal income tax as is consistent with the preservation of
capital. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. Premier
Mutual Fund Services, Inc. acts as the distributor of the Fund's shares,
which are sold to the public without a sales charge.
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.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(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 INTERMEDIATE MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (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 real
ized 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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the
Series, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series, the Series may deduct from payments to be made
to the Manager, or the Manager will bear the amount of such excess to the
extent required by state law. 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 value of the Series'
average net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from September 1, 1995 through July 18,
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 value of the Series' average
daily net assets. The Manager has currently undertaken from July 19, 1996
through December 31, 1996 to reimburse all fees and expenses of the Series
(exclusive of certain expenses as described above). The reduction in
management fee pursuant to the undertakings, amounted to $203,943 during the
year ended August 31, 1996.
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 value of the Series' average daily
net assets.
(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 accounts. During the year ended August 31, 1996,
the Series was charged an aggregate of $32,369 pursuant to the Shareholder
Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $1,170 during the
period ended August 31, 1996.
(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 INTERMEDIATE MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended August 31, 1996
amounted to $26,704,542 and $23,451,332, respectively.
At August 31, 1996, accumulated net unrealized appreciation on
investments was $751,146, consisting of $887,972 gross unrealized
appreciation and $136,826 gross unrealized depreciation.
At August 31, 1996, 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
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, 1996, 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, 1996 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 Intermediate Municipal Bond Portfolio at August 31,
1996, 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 3, 1996

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-94.4% AMOUNT VALUE
__________ __________
<S> <C> <C>
ALABAMA-4.7%
Alabama Private Colleges and Universities Facilities Authority, Revenue
(Tuskegee University Project) 5.75%, 9/1/2026........................... $ 2,000,000 $1,902,840
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... 750,000 773,932
ARIZONA-1.6%
Tuscon, GO 4.90%, 7/1/2013 (a).............................................. 1,000,000 920,670
CALIFORNIA-6.5%
Sacramento Sanitation District Financing Authority, Revenue, Refunding
5.125%, 12/1/2013....................................................... 2,000,000 1,830,400
Walnut Valley, Unified School District 6.50%, 8/1/2019 (Insured; FGIC)...... 1,765,000 1,889,944
COLORADO-2.7%
Colorado Springs, Utility Revenue, Refunding 6.75%, 11/15/2021.............. 500,000 542,210
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 1,000,000 1,021,440
CONNECTICUT-1.9%
Connecticut Health and Educational Facilities Authority, Revenue (Capital Asset Issue)
6.875%, 1/1/2010 (Insured; MBIA)........................................ 1,000,000 1,093,050
FLORIDA-5.4%
Gainesville, Utilities System Revenue 6.50%, 10/1/2022 (Prerefunded; 10/1/2002) (b) 1,000,000 1,107,380
Jacksonville Electric Authority, Revenue, Refunding (Saint John's River)
5.25%, 10/1/2021........................................................ 1,000,000 909,930
Lakeland, Hospital System Revenue (Lakeland Regional Medical Center)
5.25%, 11/15/2025 (Insured; MBIA)....................................... 1,000,000 911,830
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 177,660
GEORGIA-.9%
Burke County Development Authority, PCR (Georgia Power Co.-Plant Vogtle)
6.375%, 8/1/2024........................................................ 500,000 506,520
ILLINOIS-2.7%
Cicero, Tax Increment Revenue, Refunding 6.50%, 12/1/2014 (a)............... 500,000 537,310
Robbins, RRR (Robbins Resource Recovery Partners) 9.25%, 10/15/2016......... 1,000,000 997,500
KENTUCKY-1.9%
Trimble County, PCR (Louisville Gas and Electric Co.) 7.625%, 11/1/2020..... 1,000,000 1,094,060
LOUISIANA-.9%
West Feliciana Parish, PCR, Refunding (Gulf States Utilities Co. Project) 8%, 12/1/2024 500,000 531,865

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ _________
MARYLAND-.4%
Maryland Community Development Administration, Department of Housing and
Community Development Revenue (Single Family Program) 6.75%, 4/1/2026... $ 250,000 $ 256,900
MASSACHUSETTS-3.9%
Massachusetts Health and Educational Facilities Authority, Revenue:
(Mt. Auburn Hospital Issue) 6.30%, 8/15/2024 (Insured; MBIA)............ 750,000 774,892
(Williams College Issue) 5.50%, 7/1/2026................................ 1,025,000 971,116
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 519,960
MICHIGAN-7.2%
Kalamazoo Hospital Finance Authority, Hospital Facility Revenue, Refunding
(Burgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) (a)............ 1,000,000 1,061,380
Lowell Area Schools, Refunding Zero Coupon, 5/1/2016 (Insured; FGIC)........ 1,675,000 517,659
Michigan Building Authority, Revenue, Refunding 5.30%, 10/1/2016
(Insured; AMBAC) (a).................................................... 1,000,000 929,320
Michigan Municipal Bond Authority, Revenue (Local Government Loan Program)
6.125%, 12/1/2018 (Insured; FGIC)....................................... 750,000 768,270
Michigan Public Power Agency, Revenue, Refunding (Belle River Project)
5%, 1/1/2019............................................................ 1,000,000 883,920
MINNESOTA-.4%
Minnesota Housing Finance Agency, SFHR 6.90%, 7/1/2022...................... 250,000 258,477
MISSISSIPPI-1.8%
Claiborne County, PCR, Refunding (System Energy Resources, Inc.) 7.30%, 5/1/2025 1,000,000 1,031,200
NEVADA-.4%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 260,485
NEW HAMPSHIRE-.4%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 259,013
NEW JERSEY-2.8%
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.70%, 4/1/2016 (Insured; MBIA)......................................... 500,000 524,620
New Jersey Turnpike Authority, Turnpike Revenue, Refunding 6.50%, 1/1/2016.. 1,000,000 1,063,180
NEW YORK-3.0%
Battery Park City Authority, Revenue, Refunding 5.25%, 11/1/2017............ 1,000,000 895,800
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 523,910
New York State Energy, Research and Development Authority, Electric Facilities Revenue
(Long Island Lighting) 7.15%, 9/1/2019.................................. 300,000 301,053

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
NORTH CAROLINA-.5%
North Carolina Eastern Municipal Power Agency, Power System Revenue, Refunding
7%, 1/1/2008............................................................ $ 250,000 $ 269,467
OHIO-5.9%
Hamilton County, Hospital Facilities Revenue, Refunding (Bethesda Hospital)
6.25%, 1/1/2012......................................................... 1,000,000 1,009,910
Lorain, Hospital Improvement Revenue, Refunding (Lakeland Community Hospital, Inc.)
6.50%, 11/15/2012....................................................... 1,000,000 1,020,560
Ohio Air Quality Development Authority, Revenue (Columbus and Southern Ohio)
6.375%, 12/1/2020 (Insured; FGIC)....................................... 505,000 531,038
Ohio Building Authority (State Facilities-Juvenile Correctional Projects)
6.60%, 10/1/2014 (Insured; AMBAC)....................................... 750,000 814,178
OREGON-1.8%
Oregon Housing and Community Services Department, Mortgage Revenue
(Single Family Mortgage Program) 6.45%, 7/1/2026........................ 1,000,000 1,014,680
PENNSYLVANIA-13.6%
Bethlehem Water Authority, Revenue, Refunding 5.20%, 11/15/2021............. 1,000,000 912,930
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 257,870
Pennsylvania Convention Center Authority, Revenue, Refunding 6.75%, 9/1/2019 1,000,000 1,063,140
Pennsylvania Economic Development Financing Authority, Exempt Facilities Revenue
(MacMillan Limited Partnership Project) 7.60%, 12/1/2020................ 500,000 549,760
Pennsylvania Higher Educational Facilities Authority, College and University Revenue
(Duquesne University Project) 6.35%, 1/15/2017 (Insured; MBIA) (a)...... 500,000 517,745
Philadelphia Hospitals and Higher Educational Facilities Authority, HR
(Temple University Hospital) 6.625%, 11/15/2023......................... 2,225,000 2,249,141
Potter County Hospital Authority, Revenue, Refunding (Charles Cole Memorial Hospital)
5.95%, 8/1/2016........................................................ 2,000,000 1,928,740
Westmoreland Municipal Authority, Municipal Service Revenue
Zero Coupon, 7/1/2015 (Insured; FGIC)................................... 1,000,000 327,790
RHODE ISLAND-.3%
Rhode Island Housing and Mortgage Finance Corp. (Homeownership Opportunity)
6.50%, 4/1/2027......................................................... 200,000 203,884
TENNESSEE-2.3%
Maury County Industrial Development Board, PCR, Refunding (Saturn Corp. Project)
6.50%, 9/1/2024 (Guaranteed; General Motors Corp.)...................... 1,000,000 1,032,420
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 259,545

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
TEXAS-7.3%
Allen, Independent School District Building 5.20%, 2/15/2021................ $ 1,000,000 $ 917,800
Alliance Airport Authority, Special Facilities Revenue (American Airlines, Inc. Project)
7.50%, 12/1/2029........................................................ 500,000 529,305
Bexar County Health Facilities Development Corp., HR, Refunding
(Baptist Memorial Hospital Systems Project) 6.90%, 8/15/2014 (Insured; MBIA) 750,000 827,940
Coppell, Independent School District, Refunding 5.375%, 8/15/2020 (c)....... 2,000,000 1,888,900
VIRGINIA-6.0%
Augusta County Service Authority, Water and Sewer Revenue
5%, 11/1/2024 (Insured; MBIA)........................................... 1,000,000 888,910
Fairfax County Redevelopment and Housing Authority, Mortgage Revenue, Refunding
(Housing for the Elderly) 6.10%, 9/1/2026............................... 1,000,000 986,450
Virginia Transportation Board, Transportation Contract Revenue
(Northern Virginia Transportation District Program) 6.375%, 5/15/2020... 1,500,000 1,560,120
WASHINGTON-5.0%
Seatac, Local Option Transportation, Tax Revenue 6.50%, 12/1/2013 (Insured; MBIA) 500,000 537,140
Tacoma Conservation Systems Project Revenue (Tacoma Public Utilities Division)
6.60%, 1/1/2015......................................................... 1,000,000 1,051,180
Washington Public Power Supply System, Nuclear Project #2 Revenue, Refunding
6.25%, 7/1/2012......................................................... 1,250,000 1,257,938
WEST VIRGINIA-1.8%
Braxton County, SWDR (Weyerhaeuser Co. Project) 6.50%, 4/1/2025............. 1,000,000 1,033,160
WYOMING-.4%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 209,022
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $53,416,995).................... $54,200,359
==============
SHORT-TERM MUNICIPAL INVESTMENTS-5.6%
NEW YORK-3.0%
New York Energy, Research and Development Authority, PCR
(Niagara Mohawk Power Corp.,) VRDN
3% (LOC; Mitsubishi Trust and Banking Corp.) (d,e)...................... $ 1,700,000 $ 1,700,000
U.S. RELATED-2.6%
Puerto Rico Commonwealth, Government Development Bank, Refunding, VRDN
3% (LOC; Credit Suisse) (d,e)........................................... 1,500,000 1,500,000
____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,200,000).................... $3,200,000
==============
TOTAL MUNICIPAL INVESTMENTS-100.0% (cost $56,616,995)....................... $57,400,359
==============
</TABLE>

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation PCR Pollution Control Revenue
FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue
GO General Obligation SFHR Single Family Housing Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance
Insurance Corporation

</TABLE>

SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ ___________ ________________ _____________________
<S> <C> <S> <C>
AAA Aaa AAA 34.6%
AA Aa AA 32.1
A A A 10.8
BBB Baa BBB 13.0
BB Ba BB 1.4
F-1, F-1+ VMIG1, MIG1, P1 SP1, A1 5.6
Not Rated (g) Not Rated (g) Not Rated (g) 2.5
______
100.0%
========
</TABLE>

NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a when-issued 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 when-issued 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.
(g) 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 Series may invest.

See notes to financial statements.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $56,616,995)-see statement...................................... $57,400,359
Cash.................................................................... 87,889
Interest receivable..................................................... 852,294
Prepaid expenses........................................................ 35,157
Due from The Dreyfus Corporation and affiliates......................... 11,220
__________
58,386,919
LIABILITIES:
Payable for investment securities purchased............................. $1,924,336
Accrued expenses and other liabilities.................................. 14,026 1,938,362
_________ _________
NET ASSETS ................................................................ $56,448,557
============
REPRESENTED BY:
Paid-in capital......................................................... $55,281,304
Accumulated undistributed investment income-net......................... 9,051
Accumulated undistributed net realized gain on investments.............. 374,838
Accumulated net unrealized appreciation on investments-Note 3........... 783,364
__________
NET ASSETS at value applicable to 4,331,459 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $56,448,557
============
NET ASSET VALUE, offering and redemption price per share
($56,448,557 / 4,331,459 shares)........................................ $13.03
=======

See notes to financial statements.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $2,874,167
EXPENSES:
Management fee-Note 2(a).............................................. $ 291,587
Shareholder servicing costs-Note 2(b)................................. 79,912
Registration fees..................................................... 24,001
Auditing fees......................................................... 15,466
Organization expenses................................................. 9,846
Custodian fees........................................................ 6,124
Prospectus and shareholders' reports.................................. 1,839
Directors' fees and expenses-Note 2(c)................................ 767
Legal fees............................................................ 437
Miscellaneous......................................................... 11,842
_______
TOTAL EXPENSES.................................................... 441,821
Less-reduction in management fee due to undertakings-Note 2(a)........ 252,220
_______
NET EXPENSES...................................................... 189,601
_________
INVESTMENT INCOME-NET............................................. 2,684,566
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized gain on investments........................................ $ 643,570
Net unrealized (depreciation) on investments............................ (623,929)
_______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 19,641
_________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,704,207
============

See notes to financial statements.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
______________________________
1995 1996
____________ ____________
OPERATIONS:
Investment income-net................................................... $ 1,808,256 $ 2,684,566
Net realized gain (loss) on investments................................. (99,705) 643,570
Net unrealized appreciation (depreciation) on investments for the year.. 1,328,736 (623,929)
____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 3,037,287 2,704,207
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (1,808,256) (2,675,515)
Net realized gain on investments........................................ (1,957) (168,945)
____________ ____________
TOTAL DIVIDENDS....................................................... (1,810,213) (2,844,460)
____________ ____________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 55,483,278 34,791,121
Dividends reinvested.................................................... 1,288,981 2,065,204
Cost of shares redeemed................................................. (30,420,630) (23,180,317)
____________ ____________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 26,351,629 13,676,008
____________ ____________
TOTAL INCREASE IN NET ASSETS...................................... 27,578,703 13,535,755
NET ASSETS:
Beginning of year....................................................... 15,334,099 42,912,802
____________ ____________
End of year (including undistributed investment income-net of $9,051 in 1996) $ 42,912,802 $ 56,448,557
============ =============
SHARES SHARES
____________ ____________
CAPITAL STOCK TRANSACTIONS:
Shares sold............................................................. 4,426,159 2,647,461
Shares issued for dividends reinvested.................................. 101,534 156,826
Shares redeemed......................................................... (2,431,192) (1,770,618)
____________ ____________
NET INCREASE IN SHARES OUTSTANDING.................................... 2,096,501 1,033,669
============ =============

See notes to financial statements.
</TABLE>

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated
January 2, 1997.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
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 an open-end management investment
company and operates as a series company currently offering four series,
including Dreyfus BASIC Municipal Bond Portfolio (the "Series"). The Series
is a non-diversified portfolio. The Series' investment objective is to
provide investors with as high a level of current income exempt from Federal
income tax as is consistent with the preservation of capital. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services,
Inc. acts as the distributor of the Fund's shares, which are sold to the
public without a sales charge.
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.
The Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
(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
NOTES TO FINANCIAL STATEMENTS (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 real
ized 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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the
Series, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series, the Series may deduct from payments to be made
to the Manager, or the Manager will bear the amount of such excess to the
extent required by state law. 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 value of the Series'
average net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from September 1, 1995 through July 18,
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 value of the Series' average
daily net assets. The Manager has currently undertaken from July 19, 1996
through December 31, 1996 to reimburse all fees and expenses of the Series
(exclusive of certain expenses as described above). The reduction in
management fee, pursuant to the undertakings, amounted to $252,220 during the
year ended August 31, 1996.
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 value of the Series' average daily
net assets.
(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 accounts. During the year ended August 31, 1996,
the Series was charged an aggregate of $65,177 pursuant to the Shareholder
Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $6,145 during the
period ended August 31, 1996.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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,
excluding short-term securities, during the year ended August 31, 1996
amounted to $39,935,280 and $27,338,372, respectively.
At August 31, 1996, accumulated net unrealized appreciation on
investments was $783,364, consisting of $1,169,374 gross unrealized
appreciation and $386,010 gross unrealized depreciation.
At August 31, 1996, 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
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, 1996, 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, 1996 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, 1996, 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 & Young signature logo]

New York, New York
October 3, 1996

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--with respect to the Money Market
Portfolio for the period December 16, 1991
(commencement of operations) to August 31, 1992 and
for each of the four years in the period ended August
31, 1996; with respect to the Intermediate Bond
Portfolio and Bond Portfolio for the periods May 5 and
6, 1994 (commencement of operations) to August 31,
1994, and for each of the two years ended in the
period August 31, 1996, respectively; and with respect
to the New Jersey Portfolio for the period December 1,
1995 (commencement of operations) to August 31, 1996.

Included in Part B of the Registration Statement:

The Money Market Portfolio, Intermediate Bond
Portfolio, Bond Portfolio and New Jersey Portfolio.

Statement of Investments--as of August 31, 1996.

Statement of Assets and Liabilities--as of August 31,
1996.

Statement of Operations--with respect to the Money
Market Portfolio, Intermediate Bond Portfolio and Bond
Portfolio only for the year ended August 31, 1996;
and New Jersey Portfolio only for the period December
1, 1995 (commencement of operations) to August 31,
1996.

Statement of Changes in Net Assets--With respect to
the Money Market Portfolio, Intermediate Bond
Portfolio and Bond Portfolio for the years ended
August 31, 1995 and August 31, 1996; and with respect
to the New Jersey Portfolio for the period December 1,
1995 (commencement of operations) to August 31, 1996.

Notes to Financial Statements

Reports of Ernst & Young LLP, Independent Auditors,
dated October 3, 1996.

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 are incorporated by reference to Exhibit (1) of Post-
Effective Amendment No. 10 to the Registration Statement, filed on
April 1, 1996.

Articles of Amendment dated October 28, 1994 are incorporated by
reference to Exhibit (1) of Post-Effective Amendment No. 10 to the
Registration Statement, filed on April 1, 1996.

(2) By-Laws dated August 8, 1991, as amended January 8, 1992 are
incorporated by reference to Exhibit (2) of Post-Effective
Amendment No. 11 to the Registration Statement, filed on April 29,
1996.

(5) Management Agreement dated August 24, 1994, as amended October 11,
1995 is incorporated by reference to Exhibit (5) of Post-Effective
Amendment No. 9 to the Registration Statement, filed on December
29, 1995.

(6) Distribution Agreement dated August 24, 1994, as amended October
11, 1995 is incorporated by reference to Exhibit (6) of Post-
Effective Amendment No. 9 to the Registration Statement, filed on
December 29, 1995.

(8)(a) Custody Agreement is incorporated by reference to Exhibit (8)(a)
of Post-Effective Amendment No. 10 to the Registration Statement,
filed on April 1, 1996.

(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 is incorporated by reference to Exhibit (9) of
Post-Effective Amendment No. 9 to the Registration Statement,
filed on December 29, 1995.

(10) Opinion and Consent of Stroock & Stroock & Lavan is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 10 to
the Registration Statement, filed on April 1, 1996.

(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.

Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________

Schedule of Computation of Performance Data as to the New Jersey
Portfolio is incorporated by reference to Exhibit (16) of Post-
Effective Amendment No. 10 to the Registration Statement, filed on
April 1, 1996.

Other Exhibits
______________

(a) Power of Attorney of Trustees.

(b) Power of Attorney of Officer

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 December 18, 1996
______________ _______________________________

Common Stock Money Market Portfolio 5,165
(Par value $.001) Intermediate Bond Portfolio 570
Bond Portfolio 732
New Jersey Portfolio 572

Item 27. Indemnification
_______ _______________

Reference is made to Article Seventh of the Registrant's Amended
Articles of Incorporation, dated August 7, 1991, as amended on
October 19, 1994, filed as Exhibit (1) of Post-Effective Amendment
No. 10 to the Registration Statement on Form N-1A on April 1, 1996
and the laws of the State of Maryland. The application of these
provisions is limited by Article VIII of the Registrant's By-Laws
filed as Exhibit (2) of Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A on April 29, 1996 and by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted Board members, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.

Reference is also made to the Distribution Agreement incorporated
by reference to Exhibit 24(b)(6) of Post-Effective Amendment No. 9
to the Registration Statement on Form N-1A, filed on November 29,
1995.

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, is a
registered broker-dealer. 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:
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 None
Director

JULIAN M. SMERLING None
Director

W. KEITH SMITH Chairman and Chief Executive Officer:
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, Chief Mellon Bank Corporation****;
Executive Officer, The Boston Company*****;
Chief Operating Deputy Director:
Officer and a Mellon Trust****;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****;
President:
Boston Safe Deposit and Trust
Company*****

STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive
and a Director Officer:
Kleinwort Benson Investment Management
Americas Inc.*

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:
Dreyfus America Fund
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 and Trust
Company*****;

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*;
Chairman and Director:
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, Rhode Island 02903
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

WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund
Vice President and Director:
The Dreyfus Consumer Credit
Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.

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

MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit
Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*

PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications

MARY BETH LEIBIG None
Vice President-
Human Resources

JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903

ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services

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.

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 Funds, 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 GNMA Fund
7) Dreyfus BASIC Money Market 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 Cash Management
13) Dreyfus Cash Management Plus, Inc.
14) Dreyfus Connecticut Intermediate Municipal Bond Fund
15) Dreyfus Connecticut Municipal Money Market Fund, Inc.
16) Dreyfus Florida Intermediate Municipal Bond Fund
17) Dreyfus Florida Municipal Money Market Fund
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Income Funds
27) Dreyfus Institutional Money Market Fund
28) Dreyfus Institutional Short Term Treasury Fund
29) Dreyfus Insured Municipal Bond Fund, Inc.
30) Dreyfus Intermediate Municipal Bond Fund, Inc.
31) Dreyfus International Funds, Inc.
32) Dreyfus Investment Grade Bond Funds, Inc.
33) The Dreyfus/Laurel Funds, Inc.
34) The Dreyfus/Laurel Funds Trust
35) The Dreyfus/Laurel Tax-Free Municipal Funds
36) Dreyfus LifeTime Portfolios, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus MidCap Index Fund
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus 100% U.S. Treasury Intermediate Term Fund
56) Dreyfus 100% U.S. Treasury Long Term Fund
57) Dreyfus 100% U.S. Treasury Money Market Fund
58) Dreyfus 100% U.S. Treasury Short Term Fund
59) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
60) Dreyfus Pennsylvania Municipal Money Market Fund
61) Dreyfus S&P 500 Index Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) The Dreyfus Socially Responsible Growth Fund, Inc.
65) Dreyfus Stock Index Fund, Inc.
66) Dreyfus Tax Exempt Cash Management
67) The Dreyfus Third Century Fund, Inc.
68) Dreyfus Treasury Cash Management
69) Dreyfus Treasury Prime Cash Management
70) Dreyfus Variable Investment Fund
71) Dreyfus Worldwide Dollar Money Market Fund, Inc.
72) General California Municipal Bond Fund, Inc.
73) General California Municipal Money Market Fund
74) General Government Securities Money Market Fund, Inc.
75) General Money Market Fund, Inc.
76) General Municipal Bond Fund, Inc.
77) General Municipal Money Market Fund, Inc.
78) General New York Municipal Bond Fund, Inc.
79) General New York Municipal Money Market Fund
80) Premier Insured Municipal Bond Fund
81) Premier California Municipal Bond Fund
82) Premier Equity Funds, Inc.
83) Premier Global Investing, Inc.
84) Premier GNMA Fund
85) Premier Growth Fund, Inc.
86) Premier Municipal Bond Fund
87) Premier New York Municipal Bond Fund
88) Premier State Municipal Bond Fund
89) Premier Strategic Growth Fund
90) Premier Value 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
Executive Officer and Compliance Treasurer
Officer

Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer

John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary

Roy M. Moura+ First Vice President None

Dale F. Lampe+ Vice President None

Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer

Paul Prescott+ Vice President None

Elizabeth A. Bachman++ Assistant Vice President Vice President
and Assistant
Secretary

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. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671

4. 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 Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares 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 23rd day of December 1996.

DREYFUS BASIC MUNICIPAL FUND, INC.

BY: /s/Marie E. Connolly*
-----------------------------------
Marie E. Connolly, PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, 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 and Treasurer, 12/23/96
- --------------------------- Principal Executive,
Marie E. Connolly Accounting and Financial Officer)

/s/David W. Burke* Board Member 12/23/96
- ---------------------------
David W. Burke

/s/Samuel Chase* Board Member 12/23/96
- ---------------------------
Samuel Chase

/s/Joseph S. DiMartino* Board Member 12/23/96
- ---------------------------
Joseph S. DiMartino

/s/Joni Evans* Board Member 12/23/96
- ---------------------------
Joni Evans

/s/Gordon J. Davis Board Member 12/23/96
- ---------------------------
Gordon J. Davis

/s/Arnold S. Hiatt* Board Member 12/23/96
- ---------------------------
Arnold S. Hiatt

/s/David J. Mahoney* Board Member 12/23/96
- ---------------------------
David J. Mahoney

/s/Burton N. Wallack* Board Member 12/23/96
- ---------------------------
Burton N. Wallack

*BY:
---------------------------
Elizabeth A. Bachman,
Attorney-in-Fact

EXHIBIT INDEX

Exhibits

(11) Consent of Independent Auditors

(17) Financial Data Schedule

Other Exhibits

(a) Power of Attorney of Trustees

(b) Power of Attorney of Officer

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our reports
dated October 3, 1996 on Dreyfus BASIC Municipal Fund, Inc. (comprising the
Dreyfus BASIC Municipal Money Market Portfolio, Dreyfus BASIC Intermediate
Municipal Bond Portfolio, Dreyfus BASIC Municipal Bond Portfolio and Dreyfus
BASIC New Jersey Municipal Money Market Portfolio), in this Registration
Statement (Form N-1A No. 33-42162) of Dreyfus BASIC Municipal Fund, Inc.

ERNST & YOUNG LLP

New York, New York
December 30, 1996

POWER OF ATTORNEY

The undersigned hereby constitute and appoint Elizabeth A. Bachman, Marie
E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier and each
of them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all amendments
to the Registration Statement of Dreyfus BASIC Municipal Fund, Inc. (including
post-effective amendments and amendments thereto), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

_______________________________________
October 16, 1996
/s/David W. Burke
David W. Burke

/s/Samuel Chase
Samuel Chase

/s/Gordon J. Davis
Gordon J. Davis

/s/Joseph S. DiMartino
Joseph S. DiMartino

/s/Joni Evans
Joni Evans

/s/Arnold S. Hiatt
Arnold S. Hiatt

/s/David J. Mahoney
David J. Mahoney

/s/Burton Wallack
Burton Wallack

POWER OF ATTORNEY

The undersigned hereby constitute and appoint Elizabeth A. Bachman,
Richard W. Ingram Mark A. Karpe and John E. Pelletier and each of them, with
full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all amendments
to the Registration Statement of Dreyfus BASIC Municipal Fund, Inc. (the
"Fund") (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

December 18, 1996.

_________________________________
Marie E. Connolly, President

DREYFUS BASIC MUNICIPAL FUND, INC.

Certificate of Assistant Secretary

The undersigned, Elizabeth A. Bachman, Assistant Secretary of Dreyfus
BASIC Municipal Fund, Inc. (the "Fund:), hereby certifies that set forth below
is a copy of the resolution adopted by the Fund's Board authorizing the
signing by Elizabeth A. Bachman, Marie E. Connolly, Richard W. Ingram, Mark A.
Karpe and John E. Pelletier on behalf of the proper officers of the Fund
pursuant to a power of attorney.

RESOLVED, that the Registration Statement and any and
all amendments and supplements thereto, may be signed by any one of Elizabeth
A. Bachman, Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E.
Pelletier as the attorney-in-fact for the proper officers of the Fund, with
full power of substitution and resubstitution; and that the appointment of
each of such persons as such attorney-in-fact hereby is authorized and
approved; and that such attorneys-in-fact, and each of them, shall have full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection with such Registration Statement and
any and all amendments and supplements thereto, as fully to all intents and
purposes as the officer, for whom he or she is acting as attorney-in-fact,
might or could do in person.

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
Seal of the Fund on December 18, 1996.

_________________________________
Elizabeth A. Bachman
Assistant Secretary

(SEAL)

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<NET-INVESTMENT-INCOME> 2236
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<NET-CHANGE-FROM-OPS> 1789
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</TABLE>