DREYFUS BASIC MUNICIPAL MONEY MARKET FUND INC /MD/, 485BPOS, 1996-04-01

DREYFUS BASIC MUNICIPAL MONEY MARKET FUND INC /MD/
485BPOS, 1996-04-01

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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. 10 [ X ]

and/or

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

Amendment No. 10 [ 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 April 30, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----

If appropriate, check the following box:

this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----

Registrant has registered an indefinite number of shares of its common
stock under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the
fiscal year ended August 31, 1995 was filed on October 25, 1995.

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

Items in Page in the
Portfolio New Jersey Portfolio
Form N-1A Caption Prospectus
_________ _______ ____________________

1 Cover Page Cover

2 Synopsis 3

3 Condensed Financial Information 4

4 General Description of Registrant 4, 17

5 Management of the Fund 7

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

6 Capital Stock and Other Securities 17

7 Purchase of Securities Being Offered 9

8 Redemption or Repurchase 11

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-17
Holders of Securities

16 Investment Advisory and Other B-17
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-20, B-21,
of Securities Being Offered B-25

20 Tax Status B-26

21 Underwriters B-20

22 Calculations of Performance Data B-28

23 Financial Statements B-44

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 APRIL 30, 1996
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.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE NEW JERSEY
PORTFOLIO THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED APRIL 30, 1996, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
Page
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
<TABLE>
<CAPTION>

FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Exchange Fee ............................................................................... $5.00
Account Closeout Fee........................................................................ $5.00
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (after expense reimbursement)............................................... .00%
Other Expenses (after expense reimbursement)................................................ .45%
Total Portfolio Operating Expenses (after expense reimbursement)............................ .45%
EXAMPLE: 1 YEAR 3 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period: $10 $19
</TABLE>

- ---------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF 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 until June 30, 1998, that if in any fiscal year
certain expenses of the NEW JERSEY PORTFOLIO, including the management fee,
exceed .45% of the value of the Portfolio's average net assets for the fiscal
year, the Fund may deduct from the payment to be made to The Dreyfus
Corporation under the Management Agreement, or The Dreyfus Corporation will
bear, such excess expense. The foregoing table does not reflect any other fee
waivers or expense reimbursement arrangements that may be in effect. The
expenses noted above, without reimbursement, would be: Management Fees--.50%;
Other Expenses--.89% and Total Portfolio Operating Expenses--1.39%. 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 table below sets forth certain information covering the Fund's
investment results for the period indicated. 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 February 29, 1996 (unaudited). This
information has been derived from the New Jersey Portfolio's financial
statements.
<TABLE>
<CAPTION>

PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period...................................... $1.00
------
INVESTMENT OPERATIONS:
Investment income-net..................................................... .009
------
DISTRIBUTIONS:
Dividends from investment income-net...................................... (.009)
------
Net asset value, end of period............................................ $1.00
=======
TOTAL INVESTMENT RETURN..................................................... 3.53%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... -
Ratio of net investment income to average net assets...................... 3.37%*
Decrease reflected in above expense ratio due to undertaking by The Dreyfus Corporation 1.39%*
Net Assets, end of period (000's omitted)................................. $38,002
* 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/Donoghue's Money Fund ReportRegistration Mark, 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
Page 5
are not New Jersey Municipal Obligations and therefore may be subject to New
Jersey income taxes. See "Investment Considerations and Risks_Investing in
New Jersey Municipal Obligations" below, and "Dividends, Distributions and
Taxes." The Portfolio also may invest in Taxable Investments of the quality
described under "Appendix_Certain Portfolio Securities_Taxable Investments."
The NEW JERSEY PORTFOLIO seeks to maintain a net asset value of $1.00
per share for purchases and redemptions. To do so, the NEW JERSEY PORTFOLIO
uses the amortized cost method of valuing its securities pursuant to Rule
2a-7 under the 1940 Act, certain requirements of which are summarized as
follows. In accordance with Rule 2a-7, the NEW JERSEY PORTFOLIO will maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase
only instruments having remaining maturities of 13 months or less and invest
only in U.S. dollar denominated securities determined in accordance with
procedures established by the Fund's Board to present minimal credit risks
and which are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated only by
one such organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Fund's Board. The
nationally recognized statistical rating organizations currently rating
instruments of the type the NEW JERSEY PORTFOLIO may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies, Inc. ("S&P"), and Fitch Investors
Service, L.P. ("Fitch") and their rating criteria are described in Appendix B
to the Statement of Additional Information. For further information regarding
the amortized cost method of valuing securities, see "Determination of Net
Asset Value" in the Statement of Additional Information. There can be no
assurance that the NEW JERSEY PORTFOLIO will be able to maintain a stable net
asset value of $1.00 per share.
From time to time, the NEW JERSEY PORTFOLIO may invest more than 25%
of the value of its total assets in industrial development bonds which,
although issued by industrial development authorities, may be backed only by
the assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code of
1986, as amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company may be treated as such a preference item to shareholders. The NEW
JERSEY PORTFOLIO may invest without limitation in such Municipal Obligations
if The Dreyfus Corporation determines that their purchase is consistent with
the Portfolio's investment objective. See "Investment Considerations and
Risks" below.
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of Portfolio shares. Because charges may
apply to redemptions and exchanges of Portfolio shares, the Fund may not be
an appropriate investment for an investor who intends to engage frequently in
such transactions.
Even though interest-bearing securities are investments which promise
a stable stream of income, the prices of such securities are inversely
affected by changes in interest rates and, therefore, are subject to the risk
of market price fluctuations. The values of fixed-income securities also may
be affected by changes in the credit rating or financial condition of the
issuing entities.
INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS -- You should consider
carefully the special risks inherent in the NEW JERSEY PORTFOLIO'S investment
in New Jersey Municipal Obligations. If there
Page 6
should be a default or other financial crisis relating to the State of New
Jersey or an agency or municipality thereof, the market value and
marketability of outstanding New Jersey Municipal Obligations in the
NEW JERSEY PORTFOLIO'S portfolio and interest income to the Portfolio could
be adversely affected. Although New Jersey enjoyed a period of economic
growth with unemployment levels below the national average during the
mid-1980s, the State's economy slowed down well before the onset of the
national recession, which, according to the National Bureau of Economic
Research, began in July 1990. Reflecting the economic downturn, the State's
unemployment rate rose from a low of 3.6% in the first quarter of 1989 to a
recessionary peak of 9.3% during 1992. Since then, the State's unemployment
rate fell to 6.4% during the first ten months of 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 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
Page 7
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 February 29, 1996, The Dreyfus Corporation
managed or administered approximately $85 billion in assets for more than 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Maryland law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) 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
$233 billion in assets as of December 31, 1995, including approximately $81
billion in proprietary mutual fund assets. As of December 31, 1995, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $786 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 overall 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. The Dreyfus Corporation has agreed until June 30, 1998, that if
in any fiscal year the aggregate expenses of the Portfolio, exclusive of
taxes, brokerage, interest on borrowings and (with the prior writ-
Page 8
ten 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 Portfolio 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 Portfolio. See "Portfolio Transactions" in the
Statement 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 One Exchange Place, 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. 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
page 9
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 will
receive the dividend on Portfolio shares declared on that day, if the
telephone order is
Page 10
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 telephoning
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, or by a separate
signed Shareholder Services Form, also available by calling 1-800-645-6561.
If you have established the Telephone Exchange Privilege, you may telephone
exchange instructions by calling 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. See "How to Redeem Shares_Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund in which the exchange is made: Telephone Exchange Privilege,
Check 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.
Page 11
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 redemptions of Fund shares. Any
certificates representing Portfolio shares being redeemed must be submitted
with the redemption request. The value of the shares redeemed may be more or
less than their original cost, depending upon the Portfolio's then-current
net asset value.
Page 12
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. Shares for which certificates have been issued are not eligible for the
Check Redemption, Wire Redemption, 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 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
Page 13
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.
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.
Page 14
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $1,000 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. You
will be charged a $5.00 TELETRANSFER fee for each Dreyfus TELETRANSFER
redemption, which will be deducted from your account and paid to the Transfer
Agent.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-645-6561 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.
Dividends usually are paid on the last calendar day of each month and are
automatically reinvested in additional NEW JERSEY PORTFOLIO shares at net
asset value or, at your option, paid in cash. The NEW JERSEY PORTFOLIO'S
earnings for Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any time
during the month, all dividends to which you are entitled will be paid to you
along with the proceeds of the redemption, after the deduction of any fees.
If you are an omnibus accountholder and indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption, after the deduction of any
fees. Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the NEW JERSEY PORTFOLIO may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. The NEW JERSEY PORTFOLIO will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional NEW
JERSEY PORTFOLIO shares at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors.
Page 15
The NEW JERSEY PORTFOLIO intends to be a "qualified investment fund"
within the meaning of the New Jersey gross income tax. The primary criteria
for constituting a "qualified investment fund" are that (i) the NEW JERSEY
PORTFOLIO is an investment company registered with the Securities and
Exchange Commission which, for the calendar year in which the dividends and
distributions (if any) are paid, has no investments other than
interest-bearing obligations, obligations issued at a discount, and cash and
cash items, including receivables, and financial options, futures and forward
contracts, or other similar financial instruments relating to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto and (ii) at the close of each quarter of the taxable
year, the Fund has not less than 80% of the aggregate principal amount of all
of its investments, excluding financial options, futures and forward
contracts, or other similar financial instruments, related to
interest-bearing obligations, obligations issued at a discount or bond
indexes related thereto, cash and cash items, which cash items shall include
receivables, in New Jersey Municipal Obligations, including obligations of
Puerto Rico, the Virgin Islands and other territories and possessions of the
United States and certain other specified securities exempt from Federal and
New Jersey income taxes. Additionally, a qualified investment fund must
comply with certain continuing reporting requirements.
If the NEW JERSEY PORTFOLIO qualifies as a qualified investment fund
and the Portfolio complies with its reporting obligations, (a) dividends and
distributions by the Fund to a New Jersey resident individual shareholder
will not be subject to New Jersey gross income tax to the extent that the
dividends and distributions are attributable to income earned by the
Portfolio as interest on or gain from New Jersey Municipal Obligations, and
(b) gain from the sale of Portfolio shares by a New Jersey resident
individual shareholder will not be subject to the New Jersey gross income
tax. Shares of the Portfolio are not subject to property taxation by New
Jersey or its political subdivisions. To the extent that you are subject to
state and local taxes outside of New Jersey, dividends and distributions
earned by an investment in the NEW JERSEY PORTFOLIO may represent taxable
income.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the NEW JERSEY PORTFOLIO will not be
subject to Federal income tax. Dividends derived from Taxable Investments,
together with distributions from any net realized short-term securities gains
and all or a portion of any gains realized from the sale or other disposition
of certain market discount bonds, are subject to Federal income tax as
ordinary income, whether or not reinvested in additional Fund shares. No
dividend paid by the NEW JERSEY PORTFOLIO will qualify for the dividends
received deduction allowable to certain U.S. corporations. Distributions from
net realized long-term securities gains of the NEW JERSEY PORTFOLIO generally
are taxable as long-term capital gains for Federal income tax purposes if you
are a citizen or resident of the United States. The Code provides that the
net capital gain of an individual generally will not be subject to Federal
income tax at a rate in excess of 28%. Under the Code, interest on
indebtedness incurred or continued to purchase or carry Fund shares which is
deemed to relate to exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid by the NEW
JERSEY PORTFOLIO may be excluded by shareholders of the Portfolio from their
gross income for Federal income tax purposes, the Portfolio may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a component
of the "adjusted current earnings" preference item for purposes of the
corporate alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to
which a shareholder's Social Security benefits are taxable. If the NEW JERSEY
PORTFOLIO purchases such securities, the
Page 16
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 expects that the NEW JERSEY PORTFOLIO will
qualify as a "regulated investment company" under the Code if such
qualification is in the best interests of its shareholders. Such
qualification relieves the Portfolio of any liability for Federal income
taxes to the extent its 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. On December 24, 1992, the Fund's
name was changed from Dreyfus Investors Municipal Money Market Fund, Inc. to
Dreyfus BASIC Municipal Money Market Fund, Inc. and, on October 21, 1994, to
Dreyfus BASIC Municipal Fund, Inc. The Fund is authorized to issue five
billion shares of Common Stock (with one billion shares allocated to the NEW
JERSEY PORTFOLIO), par value $.001 per share. Each share has one vote.
Page 17
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 that 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 cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the commitments will be established and
maintained at the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- The NEW JERSEY PORTFOLIO may purchase
floating and variable rate demand notes and bonds, which are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding 13 months, in each case upon not more than
30 days' notice. Variable rate demand notes include master demand notes which
are obligations that permit the NEW JERSEY PORTFOLIO to invest fluctuating
amounts, at varying rates of interest, pursuant to direct arrangements
between the Portfolio, as lender, and the borrower. These obligations permit
daily changes in the amount borrowed. Because these obligations are direct
lending arrangements between the lender and borrower, it is not contemplated
that such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the NEW JERSEY PORTFOLIO'S right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the NEW JERSEY PORTFOLIO will meet the quality
criteria established for the purchase of Municipal Obligations.
TAX EXEMPT PARTICIPATION INTERESTS -- The NEW JERSEY PORTFOLIO may purchase
from financial institutions participation interests in Municipal Obligations
(such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the NEW JERSEY PORTFOLIO an
undivided interest in the Municipal Obligation in the proportion that the
Portfolio's participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest, with remaining maturities of 13 months or less. If the
participation interest is unrated, or has been given a rating below that
which otherwise is permissible for pur-
Page 19
chase by the NEW JERSEY PORTFOLIO, the participation interest will be backed
by an irrevocable letter of credit or guarantee of a bank that the Fund's
Board has determined meets the prescribed quality standards for banks set
forth below, or the payment obligation otherwise will be collateralized by
U.S. Government securities. For certain participation interests, the NEW
JERSEY PORTFOLIO will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Portfolio's participation
interest in the Municipal Obligation, plus accrued interest. As to these
instruments, the NEW JERSEY PORTFOLIO intends to exercise its right to demand
payment only upon a default under the terms of the Municipal Obligation, as
needed to provide liquidity to meet redemptions, or to maintain or improve
the quality of its investment portfolio.
TENDER OPTION BONDS -- The NEW JERSEY PORTFOLIO may purchase tender option
bonds. A tender option bond is a Municipal Obligation (generally held
pursuant to a custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing
short-term tax exempt rates, that has been coupled with the agreement of a
third party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the option, at
periodic intervals, to tender their securities to the institution and receive
the face value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference between
the Municipal Obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to trade at par
on the date of such determination. Thus, after payment of this fee, the
security holder effectively holds a demand obligation that bears interest at
the prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the NEW JERSEY PORTFOLIO, will consider on an ongoing basis the
creditworthiness of the issuers of the underlying Municipal Obligations, of
any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on
the underlying Municipal Obligations and for other reasons.
STAND-BY COMMITMENTS -- To the extent consistent with the requirements for a
"qualified investment fund" under the New Jersey gross income tax, the NEW
JERSEY PORTFOLIO may acquire "stand-by commitments" with respect to Municipal
Obligations held in its portfolio. Under a stand-by commitment, the NEW
JERSEY PORTFOLIO obligates a broker, dealer or bank to repurchase, at the
Portfolio's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of
a stand-by commitment therefore is subject to the ability of the seller to
make payment on demand. The NEW JERSEY PORTFOLIO will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. The NEW JERSEY PORTFOLIO
may pay for stand-by commitments if such action is deemed necessary, thus
increasing to a degree the cost of the underlying Municipal Obligation and
similarly decreasing such security's yield to investors.
ILLIQUID SECURITIES -- The NEW JERSEY PORTFOLIO may invest up to 10% of the
value of its net assets in securities as to which a liquid trading market
does not exist, provided such investments are consistent with the Portfolio's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities, the
NEW JERSEY PORTFOLIO is subject to a risk that should the Portfolio desire to
sell them when a
Page 20
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 23
DREYFUS
Basic New Jersey
Municipal Money
Market Portfolio

Prospectus
(LION LOGO)
Registration Mark

Copy Rights 1996 Dreyfus Service Corporation
127p043096

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)
APRIL 30, 1996

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, Dreyfus BASIC
Municipal Bond Portfolio and Dreyfus BASIC Municipal Money Market
Portfolio, dated December 1, 1995, and the Prospectus of Dreyfus BASIC New
Jersey Municipal Money Market Portfolio (each, a "Portfolio") of Dreyfus
BASIC Municipal Fund, Inc. (the "Fund"), dated December 1, 1995 and April
30, 1996, respectively, 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-20
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . B-22
Shareholder Services. . . . . . . . . . . . . . . . . . . . . B-24
Determination of Net Asset Value. . . . . . . . . . . . . . . B-26
Dividends, Distributions and Taxes. . . . . . . . . . . . . . B-27
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . B-29
Performance Information . . . . . . . . . . . . . . . . . . . B-29
Information About the Fund. . . . . . . . . . . . . . . . . . B-32
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . . . B-33
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . B-34
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . . B-37
Financial Statements and Reports of Independent Auditors
Money Market Portfolio. . . . . . . . . . . . . . . . . . . B-45 to B-57
Intermediate Bond Portfolio . . . . . . . . . . . . . . . . B-58 to B-69
Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . B-80 to B-81
New Jersey Portfolio. . . . . . . . . . . . . . . . . . . . B-82 to B-__

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The following information supplements and should be read in
conjunction with the sections in each Portfolio's Prospectus entitled
"Description of the Portfolio(s)" and "Appendix."

Portfolio Securities

The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended August 31, 1995 for each
Portfolio, other than the New Jersey Money Market Portfolio, in each case
computed on a monthly basis, was as follows (as of August 31, 1995, the New
Jersey Portfolio had not commenced operations):
<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
("Fitch") ("Moody's") ("S&P") Portfolio Bond Portfolio Portfolio
<S> <C> <C> <C> <C> <C>

F1+/F1 MIG 1/VMIG 1, SP-1+/SP-1, 87.6% 6.8% 8.0%
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA 3.3% 23.8% 31.4%
AA Aa AA - 23.7% 24.1%
A A A - 23.0% 16.7%
BBB Baa BBB - 22.3% 16.8%
BB Ba BB - 0.4% 2.5%
B B B - - 0.5%
Not Rated Not Rated Not Rated 9.1% - -
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>

Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.

Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal (upon not more than
30 days' notice in the case of the Money Market Portfolio and the New
Jersey Portfolio (collectively, the "Short Term Portfolios") at any time or
at specified intervals, which, in the case of the Short Term Portfolios,
may not exceed 13 months. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.

The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the management fee, as well as other operating expenses,
will have the effect of reducing the yield to investors.

Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The Short Term Portfolios will
seek to minimize these risks by investing only in those lease obligations
that (1) are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the lease obligation was rated
only by one such organization); or (2) if unrated, are purchased
principally from the issuer or domestic banks or other responsible third
parties, in each case only if the seller shall have entered into an
agreement with a Short Term Portfolio providing that the seller or other
responsible third party will either remarket or repurchase the lease
obligation within a short period after demand by such Short Term Portfolio.

The staff of the Securities and Exchange Commission currently considers
certain lease obligations to be illiquid. Determination as to the
liquidity of such securities is made in accordance with guidelines
established by the Fund's Board. Pursuant to such guidelines, the Board
has directed the Manager to monitor carefully the Fund's investment in such
securities with particular regard to (1) the frequency of trades and
quotes for the lease obligation; (2) the number of dealers willing to
purchase or sell the lease obligation and the number of the potential
buyers; (3) the willingness of dealers to undertake to make a market in the
lease obligation; (4) the nature of the marketplace trades, including the
time needed to dispose of the mechanics of transfer; and (5) such other
factors concerning the trading market for the lease obligation as the
Manager may deem relevant. In addition, in evaluating the liquidity and
credit quality of a lease obligation that is unrated, the Fund's Board has
directed the Manager to consider (a) whether the lease can be cancelled;
(b) what assurance there is that the assets represented by the lease can be
sold; (c) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (d) the
likelihood that the municipality will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
the operations of the municipality (e.g., the potential for an "event of
nonappropriation"); (e) the legal recourse in the event of failure to
appropriate; and (f) such other factors concerning credit quality as the
Manager may deem relevant. Accordingly, not more than 15% of the value of
the net assets of a Longer Term Portfolio, or 10% in the case of a Short
Term Portfolio, will be invested in lease obligations that are illiquid and
in other illiquid securities.

Neither Short Term Portfolio will purchase tender option bonds unless
(a) the demand feature applicable thereto is exercisable by such Portfolio
within 13 months of the date of such purchase upon no more than 30 days'
notice and thereafter is exercisable by the Portfolio no less frequently
than annually upon no more than 30 days' notice and (b) at the time of such
purchase, the Manager reasonably expects (i) based upon its assessment of
current and historical interest rate trends, that prevailing short-term tax
exempt rates will not exceed the stated interest rate on the underlying
Municipal Obligations at the time of the next tender fee adjustment and
(ii) that the circumstances which might entitle the grantor of a tender
option to terminate the tender option would not occur prior to the time of
the next tender opportunity. At the time of each tender opportunity, a
Short Term Portfolio will exercise the tender option with respect to any
tender option bonds unless the Manager reasonably expects, (x) based upon
its assessment of current and historical interest rate trends, that
prevailing short-term tax exempt rates will not exceed the stated interest
rate on the underlying Municipal Obligations at the time of the next tender
fee adjustment, and (y) that the circumstances which entitle the grantor of
a tender option to terminate the tender option would not occur prior to the
time of the next tender opportunity. The Short Term Portfolios will
exercise the tender feature with respect to tender option bonds, or
otherwise dispose of its tender option bonds, prior to the time the tender
option is scheduled to expire pursuant to the terms of the agreement under
which the tender option is granted. Each Short Term Portfolio otherwise
will comply with the provisions of Rule 2a-7 in connection with the
purchase of tender option bonds, including, without limitation, the
requisite determination by the Fund's Board that the tender option bonds in
question meet the quality standards described in Rule 2a-7, which, in the
case of a tender option bond subject to a conditional demand feature, would
include a determination that the security has received both the required
short-term and long-term quality rating or is determined to be of
comparable quality. In the event of a default of the Municipal Obligation
underlying a tender option bond, or the termination of the tender option
agreement, the particular Short Term Portfolio would look to the maturity
date of the underlying security for purposes of compliance with Rule 2a-7
and, if its remaining maturity was greater than 13 months, the security
would be sold as soon as would be practicable.

A Longer Term Portfolio will purchase tender option bonds only when
the Fund is satisfied that the custodial and tender option arrangements
will not adversely affect the tax exempt status of the underlying Municipal
Obligations and that payment of any tender fees will not have the effect of
creating taxable income for the Portfolio. Based on the tender option bond
agreement, the Fund expects to be able to value the tender option bond at
par; however, the value of the instrument will be monitored to assure that
it is valued at fair value.

Ratings of Municipal Obligations. If, subsequent to being purchased
by a Short Term Portfolio, (a) an issue of rated Municipal Obligations
ceases to be rated in the highest rating category by at least two rating
organizations (or one rating organization if the instrument was rated by
only one organization), or the Fund's Board determines that it is no longer
of comparable quality; or (b) the Manager becomes aware that any portfolio
security not so highly rated or any unrated security has been given a
rating by any rating organization below the rating organization's second
highest rating category, the Fund's Board will reassess promptly whether
such security presents minimal credit risk and will cause a Short Term
Portfolio to take such action as it determines is in the best interest of a
Short Term Portfolio and its shareholders, provided that the reassessment
required by clause (b) is not required if the portfolio security is
disposed of or matures within five business days of the Manager becoming
aware of the new rating and the Fund's Board is subsequently notified of
the Manager's actions. Subsequent to being purchased by a Longer Term
Portfolio, an issue of rated Municipal Obligations may cease to be rated or
its rating may be reduced below the minimum required for purchase by the
Portfolio. Neither event will require the sale of such Municipal
Obligations by a Longer Term Portfolio, but the Manager will consider such
event in determining whether the Portfolio should continue to hold the
Municipal Obligations.

To the extent the ratings by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or
their rating systems, the Fund will attempt to use comparable ratings as
standards for Portfolio investments in accordance with the investment
policies contained in the Prospectus and this Statement of Additional
Information. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities and
the creditworthiness of the issuers of such securities.

Illiquid Securities. 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 one billion dollars
or primary government securities dealers reporting to the Federal Reserve
Bank of New York, with respect to securities of the type in which the
Portfolio may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. Repurchase agreements could involve risks in the event
of a default or insolvency of the other party to the agreement, including
possible delays or restrictions upon the Portfolio ability to dispose of
the underlying securities.

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 cash or high quality money market instruments in connection with
its commodities transactions in an amount generally equal to the value of
the underlying commodity. The segregation of such assets will have the
effect of limiting such Portfolio's ability otherwise to invest those
assets.

Specific Futures Transactions. Each Longer Term Portfolio may
purchase and sell interest rate futures contracts. An interest rate future
obligates the Portfolio to purchase or sell an amount of a specific debt
security at a future date at a specific price.

Options--In General. (Longer Term Portfolios only) Each Longer Term
Portfolio may purchase and write (i.e., sell) call or put options with
respect to 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.

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. These conditions may be subject to
future modification.

Short Sales. (Longer Term Portfolios only). Until the Portfolio
replaces a borrowed security in connection with a short sale, the Portfolio
will: (a) maintain daily a segregated account, containing cash or U.S.
Government securities, at such a level that 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. (Longer Term Portfolios only) Lower rated bonds
as described herein are not eligible investments for the Short Term
Portfolios. Each Longer Term Portfolio is permitted to invest in
securities rated 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" of this Statement of Additional Information
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, on balance, 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 9.3% during
1992. Since then, the State's unemployment rate fell to 6.4% during the
first ten months of 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 a non-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 relevant Prospectus
for the Portfolio.

2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Portfolio's
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time
the borrowing is made. While borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments.

3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes.

4. Sell securities short or purchase securities on margin.

5. Underwrite the securities of other issuers, except that the
Portfolio may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available.

6. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Portfolio from investing in Municipal
Obligations secured by real estate or interests therein.

7. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Prospectus for the Portfolio.

8. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

9. Invest in companies for the purpose of exercising control.

10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.

11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of its net assets would be so invested.

Intermediate Bond Portfolio, Bond Portfolio and New Jersey Portfolio.
Each Longer Term Portfolio and the New Jersey Portfolio has adopted
investment restrictions numbered 1 through 7 as fundamental policies, which
cannot be changed, as to a Portfolio, without approval by the holders of a
majority (as defined in the 1940 Act) of such Portfolio's outstanding
voting shares. Investment restrictions numbered 8 through 13 are not
fundamental policies and may be changed by vote of a majority of the Fund's
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. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to December
31, 1994, he was a director of Mellon Bank Corporation. He is
Chairman of the Board of Noel Group, Inc., a venture capital company;
a trustee of Bucknell University; and a director of the Muscular
Dystrophy Association, HealthPlan Services Corporation, Belding
Heminway Company, Inc., 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, and Staffing Resources,
Inc. He is 52 years old and his address is 200 Park Avenue, New York,
New York 10166.

*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 August 1995, 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 int he management of
national television news, as Vice President and Executive Vice
President of ABC News, and subsequently as President of CBS News. He
is 59 years old and his address is 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 54 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 50 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 68 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 72 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.

The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year
ended August 31, 1995, and by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for
the year ended December 31, 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 $ 1,153 $ 448,618 (93)

David W. Burke $ 2,250 $ 253,654 (51)

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

Gordon J. Davis $ 922 $ 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 $387 for all Board members as a group.

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 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.

FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was manager of the High Performance Fabric Division of
Springs Industries Inc. He is 34 years old.

ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 31 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, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 32 years old.

JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, was Assistant
Vice President in the Mutual Fund Accounting Department of the
Manager. He is 60 years old.

MARGARET M. PARDO, Assistant Secretary. Legal Assistant with the
Distributor and an officer of other investment companies advised or
administered by the Manager. From June 1992 to April 1995, she was a
Medical Coordination Officer of ORBIS International. Prior to June
1992, she worked as Program Coordinator at Physicians World
Communications Group. She is 27 years old.

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

Board members and officers of the Fund, as a group, owned less than 1%
of each Portfolio's shares outstanding on March 11, 1996.

The following persons are known by the Fund to be the holders of
record of 5% or more of a Portfolio's outstanding shares on March 11, 1996:
(1) New Jersey Portfolio - Richard A. Francavilla, 5 Rittenhouse Rd.,
Frenchtown, NJ 08825-4144 (7.51%); (2) Intermediate Bond Portfolio - Laurel
Schwartz, c/o Bert Distelburger, 700 Fairfield Ave., Stamford, CT 06902-7526
(5.36%); (3) Bond Portfolio - Edgar Wachenheim III, c/o Central National-
Gottesman, Inc., 3 Manhattanville Rd., Purchase, NY 10577-2116 (5.22%).

MANAGEMENT AGREEMENT

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

The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994, with the Fund. As to
each Portfolio, the Agreement is subject to annual approval by (i) the
Fund's Board or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Portfolio, provided that in either
event the continuance also is approved by a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Fund
or the Manager, by vote cast in person at a meeting called for the purpose
of voting on such approval. The Agreement was approved by shareholders of
each Portfolio (other than the New Jersey Portfolio) on August 2, 1994. It
was last approved by the Fund's Board, including a majority of the Board
members who are not "interested persons" of any party to the Agreement, at
a meeting held on October 11, 1995 with respect to the New Jersey
Portfolio, and on July 26, 1995 with respect to reach other Portfolio. As
to each Portfolio, the Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of such
Portfolio's shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically, as to the relevant Portfolio,
in the event of its assignment (as defined in the 1940 Act).

The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President, Chief
Operating Officer and a director; Stephen E. Canter, Vice Chairman, Chief
Investment Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Diane M. Coffey, Vice President-Corporate
Communications; Elie M. Genadry, Vice President-Institutional Sales;
William F. Glavin, Jr., Vice President-Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President-Human Resources; Jeffrey N. Nachman, Vice President-Mutual
Fund Accounting; Andrew S. Wasser, Vice President-Information Systems;
Maurice Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and
Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene
and Julian 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 meeting subsequent to such
transactions.

All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
loan commitment fees, interest and distributions paid on securities sold
short, brokerage fees and commissions, if any, fees of 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 years ended August 31, 1993
and 1994, no management fee was paid by the Fund with respect to the Money
Market Portfolio pursuant to undertakings by the Manager. For the fiscal
year ended August 31, 1995, the management fee payable by the Fund with
respect to the Money Market Portfolio amounted to $5,219,151 which fee was
reduced by $4,674,468 pursuant to an undertaking by the Manager, resulting
in a net fee of $544,683 paid by the Money Market Portfolio. For the
periods May 5 and May 6, 1994 (commencement of operations of the
Intermediate Bond Portfolio and Bond Portfolio, respectively) through
August 31, 1994, and for the fiscal year ended August 31, 1995, no
management fee was paid by the Fund with respect to either Longer Term
Portfolio, pursuant to separate undertakings by the Manager.

As to each Portfolio, the Manager has agreed that if in any fiscal
year the aggregate expenses of such Portfolio, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of
the necessary state securities commissions) extraordinary expenses, but
including the management fee, exceed the expense limitation of any state
having jurisdiction over the Fund, the Fund may deduct from the payment to
be made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.

The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's net assets increases.

SHAREHOLDER SERVICES PLAN

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

The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund, with respect to each Portfolio, reimburses Dreyfus
Service Corporation for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries and providing reports and other
information, and services related to the maintenance of shareholder
accounts.

A quarterly report of the amounts expended under the Plan, with
respect to each Portfolio, and the purposes for which such expenditures
were incurred, must be made to the Fund's Board for their review. In
addition, the Plan provides that material amendments of the Plan must be
approved by the Fund's Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Plan is subject to annual approval by such vote of the
Board members cast in person at a meeting called for the purpose of voting
on the Plan. The Plan is terminable at any time with respect to each
Portfolio by vote of a majority of the Board members who are not
"interested persons" and have no direct or indirect financial interest in
the operation of the Plan.

For the fiscal year ended August 31, 1995, $427,604 was chargeable to
the Money Market Portfolio, $16,178 was chargeable to the Intermediate Bond
Portfolio, and $22,555 was chargeable to the Bond Portfolio under the Plan.

PURCHASE OF SHARES

The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled "How
to Buy Shares."

The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Dreyfus
Family of Funds and for certain other investment companies. In some
states, banks or other institutions effecting transactions in Portfolio
shares may be required to register as dealers pursuant to state law.

Using Federal Funds. The following information is applicable to the
Short Term Portfolios only. Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), or the Fund may
attempt to notify the investor upon receipt of checks drawn on banks that
are not members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means
of transmitting the money. If the investor is a customer of a securities
dealer, bank or other financial institution and his order to purchase
shares of a Short Term Portfolio is paid for other than in Federal Funds,
the securities dealer, bank or other financial institution acting on behalf
of its customer, will complete the conversion into, or itself advance,
Federal Funds generally on the business day following receipt of the
customer order. The order is effective only when so converted and received
by the Transfer Agent. An order for the purchase of shares of a Short Term
Portfolio placed by an investor with sufficient Federal Funds or cash
balance in his brokerage account with a securities dealer, bank or other
financial institution will become effective on the day that the order,
including Federal Funds, is received by the Transfer Agent.

Transactions Through Securities Dealers. Portfolio shares may be
purchased and redeemed through securities dealers which may charge a
nominal transaction fee for such services. Some dealers will place
Portfolio shares in an account with their firm. Dealers also may require
that the customer not take physical delivery of stock certificates; the
customer not request redemption checks to be issued in the customer's name;
fractional shares not be purchased; monthly income distributions be taken
in cash; or other conditions.

There is no sales charge by the Fund or the Distributor, although
securities dealers, banks and other institutions may make reasonable
charges to investors for their services. The services provided and the
applicable fees are established by each dealer or other institution acting
independently of the Fund. The Fund has been given to understand that
these fees may be charged for customer services, including, but not limited
to, same-day investment of client funds; same-day access to client funds;
advice to customers about the status of their accounts, yield currently
being paid or income earned to date; provision of periodic account
statements showing security and money market positions; other services
available from the dealer, bank or other institution; and assistance with
inquiries related to their investment. Any such fees will be deducted
monthly from the investor's account, which on smaller accounts could
constitute a substantial portion of distributions. Small, inactive,
long-term accounts involving monthly service charges may not be in the best
interest of investors. Investors should be aware that they may purchase
Portfolio shares directly from the Fund without imposition of any
maintenance or service charges, other than those already described herein.

Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 P.M., New York
time, on any business day that the Transfer Agent and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 P.M., New York time, on any business day
the Transfer Agent and the New York Stock Exchange are open for business,
or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New
York Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of Portfolio shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Account Application or Shareholder Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Shares--Dreyfus TeleTransfer Privilege."

Reopening an Account. An investor may reopen an account with a
minimum investment of $10,000 without filing a new Account Application
during the calendar year the account is closed or during the following
calendar year, provided the information on the old Account Application is
still applicable.

REDEMPTION OF SHARES

The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled "How
to Redeem Shares."

Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the 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 would be
incurred.

Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.

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 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. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from a Fund 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 sales and redemptions at $1.00.

Such procedures include review of each Short Term Portfolio's portfolio
holdings by the Fund's Board at such intervals as it deems appropriate, to
determine whether such Portfolio's net asset value calculated by using
available market quotations or market equivalents deviates from $1.00 per
share based on amortized cost. Market quotations and market equivalents
used in such review are obtained from an independent pricing service (the
"Service") approved by the Fund's Board. The Service values each Short
Term Portfolio's investments based on methods which include consideration
of: yields or prices of municipal bonds of comparable quality, coupon,
maturity and type; indications of values from dealers; and general market
conditions. The Service also may employ electronic data processing
techniques and/or a matrix system to determine valuations.

The extent of any deviation between a Short Term Portfolio's net asset
value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Fund's
Board. If such deviation exceeds 1/2 of 1%, the Fund's Board will consider
what actions, if any, will be initiated. In the event the Fund's Board
determines that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, it has agreed
to take such corrective action as it regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market equivalents.

Valuation of Portfolio Securities. The information contained in this
section is applicable to each Longer Term Portfolio only. The investments
of each Longer Term Portfolio are valued each business day by an
independent pricing service (the "Service") approved by the Fund's Board of
Directors. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a
majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration of:

yields or prices of municipal bonds of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. The Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Portfolio's officers under the general supervision of
the Fund's Board. Expenses and fees, including the management fee (reduced
by the expense limitation, if any), are accrued daily and are taken into
account for the purpose of determining the net asset value of Portfolio
shares.

New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information supplements and should be read in
conjunction with the section in each Portfolio's Prospectus entitled
"Dividends, Distributions and Taxes."

In the case of a Short Term Portfolio's shares redeemed in connection
with any exchange or redemption fees, a shareholder will recognize a
capital loss in the amount of the fee paid. In the case of Longer Term
Portfolio's shares redeemed in connection with any exchange or redemption
fees, such fees will either decrease a capital gain or increase a capital
loss realized in such disposition. In general, such loss will be treated
as a short-term capital loss if the shares were held for one year or less,
or, in the case of shares held for greater than one year, a long-term
capital loss.

The Internal Revenue Code of 1986, as amended (the "Code"), provides
that if a shareholder has not held his Fund shares for more than six months
(or such shorter time as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be
disallowed to the extent of the exempt-interest dividend received.

Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.

Under Section 1256 of the Code, gain or loss realized by the Longer
Term Portfolio from certain financial futures and options transactions will
be treated as 60% long-term capital gain or loss and 40% short-term capital
gain or loss. Gain or loss will arise upon exercise or lapse of such
futures and options as well as from closing transactions. In addition,
such futures and options remaining unexercised at the end of a Longer Term
Portfolio's taxable year will be treated as sold for their fair market
value, resulting in additional gain or loss to a Longer Term Portfolio
characterized in the manner described above.

Offsetting positions held by a Longer Term Portfolio involving certain
futures and options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section
1256. As such, all or a portion of any short or long-term capital gain
from certain "straddle" transactions may be recharacterized to ordinary
income.

If a Longer Term Portfolio were treated as entering into "straddles"
by reason of its engaging in certain futures or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options transactions comprising a part of such "straddles" were governed by
Section 1256 of the Code. The Portfolio may make one or more elections
with respect to "mixed straddles." Depending on which election is made, if
any, the results to the Portfolio may differ. If no election is made, to
the extent the "straddle" rules apply to positions established by the
Portfolio, losses realized by the Portfolio will be deferred to the extent
of unrealized gain in any offsetting positions. Moreover, as a result of
the "straddle" and "conversion transaction" rules, short-term capital
losses on "straddle" positions may be recharacterized as long-term capital
losses and long-term capital gains may be recharacterized to short-term
capital gains or ordinary income.

Investment by the Longer Term Portfolio in securities issued at a
discount or providing for deferred interest or for payment of interest in
the form of additional obligations could, under special tax rules, affect
the amount, timing and character of distributions to shareholders. For
example, a Longer Term Portfolio could be required to take into account
annually a portion of the discount (or deemed discount) at which such
securities were issued and to distribute such portion in order to maintain
its qualifications as a regulated investment company. In that case, the
Portfolio may have to dispose of securities which it might otherwise have
continued to hold in order to generate cash to satisfy these distribution
requirements.

PORTFOLIO TRANSACTIONS

Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by a Portfolio for such purchases
and sales, although the
price paid usually includes an undisclosed compensation to the dealer
acting as agent. The prices paid to underwriters of newly-issued
securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by any Portfolio to date.

Transactions are allocated to various dealers by a Portfolio's
portfolio managers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to supplement
its own research and analysis with the views and information of other
securities firms.

Research services furnished by brokers through which a Portfolio
effects securities transactions may be used by the Manager in advising
other funds it advises and, conversely, research services furnished to the
Manager by brokers in connection with other funds the Manager advises may
be used by the Manager in advising a Portfolio. Although it is not
possible to place a dollar value on these services, it is the opinion of
the Manager that the receipt and study of such services should not reduce
the overall expenses of its research department.

PERFORMANCE INFORMATION

The following information supplements and should be read in
conjunction with the section in the New Jersey Portfolio's Prospectus
entitled "Yield Information" or in each other Portfolio's Prospectus
entitled "Performance Information."

New Jersey Portfolio. For the seven-day period ended February 29,
1996, the New Jersey Portfolio's yield was 3.21% and effective yield was
3.27%. These yields reflect the waiver of the management fee and the
absorption of expenses by the Manager, without which the New Jersey
Portfolio's seven-day and effective yield for the period ended February 29,
1996 would have been 2.76% and 2.80%, 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 February 29, 1996 was 5.68%. Without the waiver of
the management fee and absorption of expenses then in effect, the New
Jersey Portfolio's tax equivalent yield for the seven-day period ended
February 26, 1996 would have been 4.88%. These figures reflect a 39.6%
Federal income tax rate and a 6.37% New Jersey income tax rate.

Money Market Portfolio. For the seven-day period ended August 31,
1995, the Money Market Portfolio's yield was 3.77% and effective yield was
3.84%. These yields reflect the waiver of a portion of the management fee
by the Manager, without which the Money Market Portfolio's seven-day yield
and effective yield for the period ended August 31, 1995 would have been
3.53% and 3.59%, respectively. See "Management of the Fund" in the
Portfolio's Prospectus.

Based upon the highest 1995 Federal income tax rate of 39.6%, the
Money Market Portfolio's tax equivalent yield for the seven-day period
ended August 31, 1995 was 6.24%. Without the waiver of a portion of the
management fee then in effect, the Money Market Portfolio's tax equivalent
yield for the seven-day period ended August 31, 1995 would have been 5.84%.

Short Term Portfolios. Yield is computed in accordance with a
standardized method which involves determining the net change in the value
of a hypothetical pre-existing Fund account having a balance of one share
at the beginning of a seven calendar day period for which yield is to be
quoted, dividing the net change by the value of the account at the
beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Portfolio's average
account size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding 1 to
the base period return (calculated as described above), raising that sum to
a power equal to 365 divided by 7, and subtracting 1 from the result.

Longer Term Portfolios. The Intermediate Bond Portfolio's yield for
the 30-day period ended August 31, 1995 was 4.84%. The Bond Fund's yield
for the 30-day period ended August 31, 1995 was 5.80%. These yields
reflect the waiver of the management fee and absorption of expenses by the
Manager, without which the Intermediate Bond Portfolio's yield for the 30-
day period ended August 31, 1995 would have been 4.79% and the Bond
Portfolio's yield for the 30-day period ended August 31, 1995 would have
been 5.75%. See "Management of the Fund" in the relevant Portfolios'
Prospectus. Current yield for a Longer Term Portfolio is computed pursuant
to a formula which operates as follows: the amount of the Portfolio's
expenses accrued for a 30-day period (net of reimbursements) is subtracted
from the amount of the dividends and interest earned (computed in
accordance with regulatory requirements) by it during the period. That
result is then divided by the product of: (a) the average daily number of
shares outstanding during the period that were entitled to receive
dividends, and (b) the net asset value per share on the last day of the
period less any undistributed earned income per share reasonably expected
to be declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result
by 2.

Based upon a 1995 Federal income tax rate of 39.6%, the Intermediate
Bond Portfolio's tax equivalent yield for the 30-day period ended August
31, 1995 was 8.01% and the Bond Portfolio's tax equivalent yield for the
30-day period ended August 31, 1995 was 9.60%. Without the waiver
discussed above then in effect, the Intermediate Bond Portfolio's tax
equivalent yield for the 30-day period ended August 31, 1995 would have
been 7.93% and the Bond Portfolio's tax equivalent yield for the 30-day
period ended August 31, 1995 would have been 9.52%.

Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result.

The Intermediate Bond Portfolio's total return for the period May 5,
1994 (commencement of operations) to August 31, 1995 was 11.46%. The Bond
Portfolio's total return for the period May 6, 1994 (commencement of
operations) to August 31, 1995 was 12.78%. Without the waiver discussed
above then in effect, returns would have been lower. Total return is
calculated by subtracting the amount of the Portfolio's net asset value per
share at the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the reinvestment of
dividends and distributions during the period), and dividing the result by
the net asset value per share at the beginning of the period.

All Portfolios. Tax equivalent yield is computed by dividing that
portion of the yield or effective yield (calculated as described above)
which is tax exempt by 1 minus a stated tax rate and adding the quotient to
that portion, if any, of the yield of the Portfolio that is not tax exempt.

The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The
tax equivalent figure, however, does not include the potential effect of
any state or local (including, but not limited to, county, district or
city) taxes, including applicable surcharges. In addition, there may be
pending legislation which could affect such stated tax rate or yields.
Each investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.

Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the
type and quality of the instruments in the portfolio, portfolio maturity
and operating expenses. An investor's principal in a Portfolio is not
guaranteed. See "Determination of Net Asset Value" for a discussion of the
manner in which a Portfolio's price per share is determined.

From time to time, a Portfolio may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not indicative of the
Portfolio's past or future performance.

Advertising materials for a Portfolio also may refer to or discuss
then current or past economic conditions, developments, and/or events,
including those relating to actual or proposed legislation. From time to
time, advertising materials for a Portfolio also may refer to statistical
or other information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company Institute.

From time to time, advertising materials for a Portfolio may refer to
Morningstar, Inc. ratings and related analysis supporting the ratings. 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. 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

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 6.4% during
the first ten months 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.

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major ratings categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.

Municipal Note Ratings

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.

Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.

A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.

Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.

MIG 1/VMIG 1

This description denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2

This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

Commercial Paper Rating

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation and well established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Fitch

Municipal Bond Ratings

The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.

AAA

Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

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.

<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS--100.0% AMOUNT VALUE
---------------- ----------------
<S> <C> <C>
ALABAMA--3.3%
Alabama Industrial Development Authority, SWDR, VRDN (Pine City Fiber Co.
Project)
3.75% (LOC; Barclays Bank) (a,b)........................................ $ 20,000,000 $ 20,000,000
City of Phenix Industrial Development Board, EIR, VRDN (Mead Coated Board
Project)
3.65%, Series A (LOC; Sumitomo Bank) (a,b).............................. 16,400,000 16,400,000
CALIFORNIA--7.0%
California Higher Education Loan Authority Inc., Student Loan Revenue, VRDN
3.65%, Series C (LOC; Student Loan Marketing Association) (a,b)......... 10,000,000 10,000,000
California Public Capital Improvement Financing Authority, Revenue (Pooled
Project)
3.70%, Series C, 9/15/95 (LOC; National Westminster Bank) (b)........... 10,000,000 10,000,000
California School Cash Reserve Program Authority
4.75%, Series A, 7/3/96 (LOC; Industrial Bank of Japan) (b)............. 30,000,000 30,241,606
South Coast Local Education Agency, Partnership Pooled, TRAN
5%, Series A, 8/14/96................................................... 15,000,000 15,068,218
Vista Community Development Commission, BAN, Refunding
4.50%, 11/1/95 (LOC; Sumitomo Trust and Banking Co.) (b)................ 10,000,000 10,000,000
COLORADO--2.4%
Colorado Student Obligation Bond Authority, Student Loan Revenue, VRDN
3.55%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 15,000,000 15,000,000
Denver Urban Renewal Authority, Tax Increment Revenue
(Downtown Denver Renewal)
4.20%, Series A, 2/15/96 (Escrowed in; U.S. Treasury Bills)............. 11,640,000 11,640,000
DELAWARE--1.4%
Delaware Economic Development Authority, Gas Facilities Revenue, VRDN
(DelMarva Power and Light)
3.75% (Corp. Guaranty; DelMarva Power and Light) (a).................... 12,000,000 12,000,000
Delaware Health Facilities Authority, Revenue, Pooled Loan Program, VRDN
3.50% (BPA; Morgan Guaranty Trust Co. and Insured; MBIA) (a)............ 3,800,000 3,800,000
DISTRICT OF COLUMBIA--2.8%
District of Columbia, VRDN (General Fund Recovery):
4.30%, Series B (LOC; Union Bank of Switzerland) (a,b).................. 6,900,000 6,900,000
4.30%, Series B-2 (LOC; Westdeutsche Landesbank) (a,b).................. 19,000,000 19,000,000
4.30%, Series B-3 (LOC; Landesbank Hessen) (a,b)........................ 5,000,000 5,000,000
FLORIDA--.6%
Putnam County Development Authority, PCR (Seminole Electric Co-op)
3.40%, Series D, 12/15/95 (Corp. Guaranty; National Rural Utility Co-op) 7,000,000 7,000,000
GEORGIA--1.8%
Savannah Economic Development Authority, Exempt Facility Revenue, VRDN
(Home Depot Project) 3.90%, Series A (Corp. Guaranty; Home Depot) (a)... 20,000,000 20,000,000

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
---------------- ----------------

IDAHO--.9%
State of Idaho, TAN 4.50%, 6/27/96.......................................... $ 10,000,000 $ 10,055,294
ILLINOIS--1.8%
City of Fulton, Solid Waste Disposal Facility, Revenue (C&E Fulton Project)
4.35%, Series A, 9/7/95 (Escrowed in; U.S. Treasury Bills).............. 20,000,000 20,000,000
INDIANA--.7%
Indiana Secondary Market Educational Loans Inc., Education Loan Revenue, VRDN
3.75%, Series B
(Insured; AMBAC and LOC; Student Loan Marketing Association) (a,b)...... 7,000,000 7,000,000
IOWA--3.9%
Iowa Finance Authority, SWDR, VRDN (Cedar River Paper Co. Project)
3.55%, Series A (LOC; Swiss Bank Corp.) (a,b)........................... 11,100,000 11,100,000
Iowa School Corp., Warrant Certificates:
5.75%, Series B, 2/1/96 (Insured; Capital Guaranty)..................... 6,000,000 6,017,958
4.75%, Series A, 6/28/96 (Insured; Capital Guaranty).................... 10,000,000 10,071,220
Louisa County, PCR, Refunding, VRDN (Midwest Power System Inc. Project) 3.60% (a) 14,900,000 14,900,000
KANSAS--.5%
Butler County, Solid Waste Disposal Facilities Revenue, VRDN
(Texaco Refining and Marketing)
3.80%, Series A (Corp. Guaranty; Texaco Oil) (a)........................ 5,700,000 5,700,000
KENTUCKY--7.6%
City of Carroll, Collateralized Solid Waste Disposal Facilities Revenue, VRDN
(Utilities Co. Project) 3.75%, Series A (a)............................. 9,700,000 9,700,000
Daviss County, Solid Waste Disposal Facilities Revenue, VRDN (Scott Paper Co.
Project):
3.75%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 42,200,000 42,200,000
3.80%, Series B (LOC; ABN-Amro Bank) (a,b).............................. 21,500,000 21,500,000
Morgantown, IDR (Sumitomo Electric Wire System)
4.65%, 10/2/95 (LOC; Sumitomo Bank) (b)................................. 10,000,000 10,000,000
LOUISIANA--5.4%
New Orleans Aviation Board, Revenue, VRDN (Passenger Facility Charge
Projects)
3.90% (LOC: Banque Paribas and Canadian Imperial Bank of Commerce) (a,b) 15,000,000 15,000,000
Plaquemines Parish, Environmental Revenue, Refunding, VRDN
(British Petroleum Exploration and Oil)
3.80% (Corp. Guaranty; British Petroleum) (a)........................... 8,000,000 8,000,000
Plaquemines Port, Harbor and Terminal District, Port Facilities Revenue
(International Marine Terminal Project)
4.50%, Series A, 3/15/96 (LOC; Morgan Guaranty Trust Co.) (b)........... 9,275,000 9,275,000
Saint Charles Parish, PCR, VRDN (Shell Oil Co. Norco Project)
3.75% (Corp. Guaranty; Shell Oil Co.) (a)............................... 26,300,000 26,300,000

MARYLAND--.6%
Frederick, Improvement Bonds, VRDN 3.95% (LOC; Fuji Bank) (a,b)............. $ 2,000,000 $ 2,000,000
Maryland Energy Financing Administration, LOR, VRDN (Baltimore First Project)
3.65% (LOC; Credit Suisse) (a,b)........................................ 4,200,000 4,200,000
MICHIGAN--6.9%
City of Detroit School District (Wayne County) 4.50%, 5/1/96................ 12,000,000 12,050,338
Grand Rapids Economic Development Corporation, Revenue, VRDN
(Amway/Grand Plaza Hotel Facility #1) 3.65% (LOC; Old Kent Bank and Trust) (a,b) 4,000,000 4,000,000
Michigan Building Authority, CP
3.80%, 9/25/95 (LOC; Canadian Imperial Bank of Commerce) (b)............ 18,285,000 18,285,000
Michigan Higher Education Student Loan Authority, Revenue, VRDN
3.55%, Series XII-F (Insured; AMBAC and Liquidity Agreement; Sumitomo Bank) (a) 5,000,000 5,000,000
State of Michigan, GO Notes 5%, 9/29/95..................................... 35,000,000 35,021,884
MINNESOTA--1.6%
Minnesota Higher Education Coordinating Board, Revenue, VRDN
3.80% (LOC; Norwest Bank of Minnesota) (a,b)............................ 17,000,000 17,000,000
MISSOURI--3.0%
Missouri Higher Education Loan Authority, Student Loan Revenue, Refunding,
VRDN
3.85%, Series B (Insured; MBIA and SBPA; NMB Post Bank Group) (a)....... 9,500,000 9,500,000
Missouri Housing Development Commission, SFMR, VRDN
(Homeowner Loan) 4%, Series B (GIC; FGIC Trinity Funding Corp.) (a)..... 23,245,000 23,245,000
MONTANA--.5%
Montana Board of Investment, RRR, VRDN (Colstrip Project)
3.75% (LOC; Fuji Bank) (a,b)............................................ 5,600,000 5,600,000
NEW JERSEY--3.3%
Hudson County, BAN 4.55%, 10/11/95.......................................... 11,100,000 11,101,737
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program) 3.35% (LOC; Union Bank of Switzerland) (a,b) 8,000,000 8,000,000
New Jersey Housing Mortgage Finance Agency, Revenue
4.20%, Series 1, 9/29/95 (GIC; Bayerische Landesbank)................... 7,415,000 7,415,000
Somerset County, BAN 4.23%, 10/27/95........................................ 10,103,000 10,103,812
NEW MEXICO--.9%
New Mexico Educational Assistance Foundation, Student Loan Revenue, VRDN
3.60%, Series B (Insured; AMBAC and SBPA; International Bank of Nederland) (a) 9,400,000 9,400,000
NORTH CAROLINA--.1%
Craven County, PCR, VRDN (Craven Wood Energy)
3.75%, Series A (LOC; Mitsubishi Bank) (a,b)............................ 1,100,000 1,100,000

OHIO--4.8%
Cincinnati City School District Board, BAN 4.65%, 9/22/95................... $ 17,730,000 $ 17,734,896
Greene County, Certificates of Indebtedness, BAN 4.25%, Series B, 7/18/96... 23,580,000 23,669,586
Ohio Water Development Authority, PCR (Edison Project)
4.25%, Series B, 9/1/95 (LOC; Barclays Bank) (b)........................ 7,500,000 7,500,000
Student Loan Funding Corporation, Student Loan Revenue, VRDN
3.60%, Series A-3 (LOC; National Westminster Bank) (a,b)................ 3,400,000 3,400,000
OKLAHOMA--.9%
Holdenville Industrial Authority, Correctional Facility Revenue, VRDN
3.65% (LOC; First Union National Bank) (a,b)............................ 10,000,000 10,000,000
OREGON--2.1%
Klamoth Falls, Electric Revenue, (Salt Caves Hydroelectric)
4.40%, Series A, 5/1/96 (Escrowed in; US Treasury Bills)................ 21,045,000 21,045,000
State of Oregon, EDR, VRDN (Toyo Tanso USA)
4.075%, Series CXLVII (LOC; Bank of Tokyo) (a,b)........................ 2,000,000 2,000,000
PENNSYLVANIA--2.9%
Cambria County Hospital Development Authority, HR (Mercy Hospital Johnstown
Project)
5%, 3/1/96 (LOC; Bank of Tokyo) (b)..................................... 8,440,000 8,440,000
Cambria County Industrial Development Authority, RRR, VRDN (Cambria Cogen
Project)
3.70%, Series V2 (LOC; Fuji Bank) (a,b)................................. 15,700,000 15,700,000
Emmaus General Authority, Local Government Revenue, VRDN
3.90%, Series F4 (LOC; HongKong Shanghai Banking Corp.) (a,b)........... 7,900,000 7,900,000
RHODE ISLAND--.7%
Rhode Island Housing and Mortgage Financing Corporation,
Homeownership Opportunity, VRDN
3.65%, Series 1 (LOC; National Westminster Bank) (a,b).................. 8,000,000 8,000,000
SOUTH CAROLINA--.7%
South Carolina Job Economic Development Authority, EDR, VRDN (Wellman Inc.
Project)
3.85% (LOC; Wachovia Bank and Trust Co.) (a,b).......................... 8,000,000 8,000,000
SOUTH DAKOTA--1.8%
South Dakota Housing Development Authority, Homeownership Mortgage
4.95%, Series H 12/13/95 (Escrowed in; U.S. Treasury Bills)............. 20,000,000 20,000,000
TENNESSEE--2.0%
City of Memphis, VRDN 3.95%, Series B (LOC; Sanwa Bank) (a,b)............... 1,000,000 1,000,000
Metropolitan Government Nashville and Davidson County Health and Education
Facilities Board, Revenue (Vanderbilt University) 5.03%, Series A, 1/15/96 20,250,000 20,250,000

TEXAS--22.2%
Brazos River Authority, PCR, VRDN (Utilities Electric Co.):
3.65%, Series C (LOC; Swiss Bank Corp.) (a,b)........................... $ 15,000,000 $ 15,000,000
3.75%, Series A (LOC; Morgan Guaranty Trust Co.) (a,b).................. 15,000,000 15,000,000
3.80% (LOC; Union Bank of Switzerland) (a,b)............................ 53,355,000 53,355,000
Brazos River Harbor Navigation District, Harbor Revenue, VRDN
(Dow Chemical Co. Project):
3.80% (Corp. Guaranty; Dow Chemical Co.) (a).......................... 22,300,000 22,300,000
3.80%, Series A (Corp. Guaranty; Dow Chemical Co.) (a)................ 4,100,000 4,100,000
El Paso Industrial Development Authority Inc., IDR, VRDN
(El Paso School District Limited Project) 3.95% (LOC; Chemical Bank) (a,b) 4,000,000 4,000,000
Grapevine Industrial Development Corporation, Airport Revenue (Singer Co.
Project)
4.75%, Series A, 4/1/96 (LOC; Bank of Montreal) (b)..................... 5,100,000 5,100,000
Greater East Texas Higher Education Authority Inc., Student Loan Revenue, VRDN
(Senior Lien) 3.80%, Series B (LOC; Student Loan Marketing Association) (a,b) .3,000,000 3,000,000
Gulf Coast Industrial Development Authority, VRDN:
Marine Terminal Revenue (Amoco Oil Co. Project)
3.75% (Corp. Guaranty; Amoco Credit Corp.) (a)........................ 28,600,000 28,600,000
SWDR (Citgo Petroleum Corp. Project)
3.80% (LOC; Wachovia Bank of Georgia) (a,b)........................... 9,100,000 9,100,000
Gulf Coast Waste Disposal Authority, PCR, VRDN (Amoco Oil Co. Project):
3.75% (Corp. Guaranty; Amoco Credit Corp.) (a).......................... 27,400,000 27,400,000
SWDR, Refunding 3.65% (Corp. Guaranty; Amoco Credit Corp.) (a).......... 28,000,000 28,000,000
North Texas Higher Education Authority Inc., Student Loan Revenue, Refunding,
VRDN
3.75%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 10,500,000 10,500,000
Panhandle Plains Higher Education Authority Inc., Student Loan Revenue, VRDN
3.55%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 15,000,000 15,000,000
Port Development Corp., IDR, VRDN (Pasadena Terminals Project)
3.95%, Series C (LOC; ABN-Amro Bank) (a,b).............................. 2,420,000 2,420,000
UTAH--1.4%
Intermountain Power Agency, Power Supply, CP
3.80%, Series E, 10/20/95 (Liquidity Facility; Industrial Bank of Japan) 10,400,000 10,400,000
Utah Board of Regents, Student Loan Revenue, Refunding, VRDN
3.75%, Series A (LOC; Student Loan Marketing Association) (a,b)......... 5,000,000 5,000,000
VIRGINIA--3.5%
Campbell County Industrial Development Authority, Exempt Facility Revenue,
VRDN
(Hadson Power Project) 3.85%, Series 12-A (LOC; Barclays Bank) (a,b).... 5,100,000 5,100,000
Hopewell Industrial Development Authority, Exempt Facility Revenue, VRDN
(Hadson Power Project) 3.85%, Series 13-A (LOC; Credit Suisse) (a,b).... 5,700,000 5,700,000

VIRGINIA (CONTINUED)
Richmond Industrial Development Authority, VRDN:
Exempt Facility Revenue (Cogentrix) 3.90%, Series B (LOC; Banque Paribas) (a,b) $ 3,400,000 $ 3,400,000
Revenue (Cogentrix of Richmond Project):
3.90%, Series A (LOC; Banque Paribas) (a,b)........................... 8,300,000 8,300,000
3.90%, Series B (LOC; Banque Paribas) (a,b)........................... 6,000,000 6,000,000
Virginia Housing Development Authority, Commonwealth Mortgage
3.45%, Series A, 9/12/95................................................ 10,000,000 10,000,000
-------------
TOTAL INVESTMENTS (cost $1,093,306,549)..................................... $1,093,306,549
==============

</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOR Limited Obligation Revenue
BAN Bond Anticipation Notes MBIA Municipal Bond Investors Asssurance
BPA Bond Purchase Agreement Insurance Corporation
CP Commercial Paper PCR Pollution Control Revenue
EDR Economic Development Revenue RRR Resources Recovery Revenue
EIR Environment Improvement Revenue SBPA Standby Bond Purchase Agreement
FGIC Financial Guaranty Insurance Company SFMR Single Family Mortgage Revenue
GIC Guaranteed Investment Contract SWDR Solid Waste Disposal Revenue
GO General Obligation TAN Tax Anticipation Notes
HR Hospital Revenue TRAN Tax and Revenue Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ---------- --------------------- ------------------------
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 87.5%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 4.2
Not Rated (f) Not Rated (f) Not Rated (f) 8.3
-------
100.0%
=======

NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At August 31, 1995, 50.6% of the
Fund's net assets are backed by letters of credit issued by domestic
banks, foreign banks and government agencies.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) P1 and A1 are the highest ratings assigned tax exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(e) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $1,093,306,549
Interest receivable..................................................... 8,391,698
Prepaid expenses........................................................ 77,462
--------------
1,101,775,709
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 105,181
Due to Custodian........................................................ 2,084,097
Accrued expenses and other liabilities.................................. 152,793 2,342,071
------------- -----------
NET ASSETS.................................................................. $1,099,433,638
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,099,525,058
Accumulated net realized (loss) on investments.......................... (91,420)
--------------
NET ASSETS at value applicable to 1,099,525,058 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $1,099,433,638
==============
NET ASSET VALUE, offering and redemption price per share
($1,099,433,638 / 1,099,525,058 shares)................................. $1.00
=====
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 40,340,102
EXPENSES:
Management fee-Note 2(a).............................................. $5,219,151
Shareholder servicing costs-Note 2(b)................................. 556,233
Registration fees..................................................... 96,612
Custodian fees........................................................ 86,449
Professional fees..................................................... 71,047
Prospectus and shareholders' reports.................................. 17,048
Directors' fees and expenses-Note 2(c)................................ 14,641
Miscellaneous......................................................... 37,287
----------
6,098,468
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 4,674,468
----------
TOTAL EXPENSES.................................................. 1,424,000
-------------
INVESTMENT INCOME--NET...................................................... 38,916,102
NET REALIZED (LOSS) ON INVESTMENTS.......................................... (37,281)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 38,878,821
=============
See notes to financial statements.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-------------------------------------
1994 1995
----------------- -----------------
OPERATIONS:
Investment income-net................................................ $ 21,978,331 $ 38,916,102
Net realized (loss) on investments................................... (51,388) (37,281)
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 21,926,943 38,878,821
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................ (21,978,331) (38,916,102)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................ 1,656,500,822 1,715,223,924
Dividends reinvested................................................. 20,702,803 36,684,023
Cost of shares redeemed.............................................. .(1,335,315,577) (1,679,813,715)
--------------- ---------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............. 341,888,048 72,094,232
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................................... 341,836,660 72,056,951
NET ASSETS:
Beginning of year.................................................... 685,540,027 1,027,376,687
--------------- ---------------
End of year.......................................................... $ 1,027,376,687 $ 1,099,433,638
--------------- ==============

See notes to financial statements.
</TABLE>
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated December 1, 1995.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Municipal Money Market
Portfolio (the "Series"). Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales charge. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Municipal Money Market Portfolio.
It is the Series' policy to maintain a continuous net asset value per
share of $1.00; the Series has adopted certain investment, portfolio
valuation and dividend and distribution policies to enable it to do so. There
is no assurance, however, that the Series will be able to maintain a stable
net asset value of $1.00.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Series' investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and original issue discounts on investments, is
earned from settlement date and recognized on the accrual basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has an unused capital loss carryover of approximately $54,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $1,700 of the carryover
expires in fiscal 2001, $2,000 expires in fiscal 2002 and $50,300 expires in
fiscal 2003.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

At August 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through October 5, 1994 to waive receipt of the management
fee payable to it by the Series, and thereafter, had undertaken through
August 31, 1995 to reduce the management fee paid by the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The Manager has currently undertaken through December 31,
1995 to reduce the management fee paid by the Series, to the extent that the
Series' aggregate annual expenses (excluding certain expenses as described
above) exceed an annual rate of .35 of 1% of the average daily value of the
Series' net assets. The reduction in management fee pursuant to the
undertakings, amounted to $4,674,468 for the year ended August 31, 1995.
In addition, the Manager has undertaken through June 30, 1996 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the Series' average daily net assets, for certain allocated expenses of
providing personal services and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and pro
viding reports and other information, and services related to the maintenance
of shareholder accounts. During the year ended August 31, 1995, the Series
was charged an aggregate of $427,604 pursuant to the Shareholder Services
Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.

DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL MONEY MARKET FUND)--SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Money
Market Portfolio (one of the Series constituting Dreyfus BASIC Municipal
Fund, Inc.) as of August 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Money Market Portfolio at August 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]

New York, New York
October 4, 1995

<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA-1.8%
Alabama Water Pollution Control Authority, Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC)....................................... $ 750,000 $ 762,240
COLORADO-3.8%
Colorado Springs, Utility Revenue, Refunding 6.75%, 11/15/2021.............. 500,000 539,845
Denver City and County, Airport Revenue 7%, 11/15/2025...................... 1,000,000 1,017,920
FLORIDA-4.9%
Florida Board of Education, Capital Outlay (Public Education) 6.625%, 6/1/2017 750,000 798,667
Gainesville Utilities System Revenue 6.50%, 10/1/2022....................... 1,000,000 1,049,540
Palm Beach County, Solid Waste IDR (Osceola Power Limited Partnership)
6.85%, 1/1/2014......................................................... 200,000 199,354
GEORGIA-1.2%
Burke County Development Authority, PCR (Georgia Power Co.-Plant Vogtle)
6.375%, 8/1/2024........................................................ 500,000 503,995
ILLINOIS-4.5%
Chicago State University, Auxiliary Facilities System, Revenue
6.10%, 12/1/2017 (Insured; MBIA)........................................ 250,000 251,385
Cicero, Tax Increment Revenue, Refunding 6.50%, 12/1/2014 (a)............... 500,000 524,350
Robbins, RRR (Robbins Resource Recovery Partners) 9.25%, 10/15/2016......... 1,000,000 1,100,420
KENTUCKY-2.8%
Jefferson County, PCR (Louisville Gas and Electric Co. Project)
5.625%, 8/15/2019 (Guaranteed; Louisville Gas and Electric Co.)......... 1,000,000 966,170
Kenton County Airport Board, Airport Revenue, Special Facilities
(Delta Airlines Project) 7.50%, 2/1/2012................................ 200,000 210,938
LOUISIANA-1.3%
West Feliciana Parish, PCR, Refunding (Gulf States Utilities Co. Project)
8%, 12/1/2024........................................................... 500,000 528,130
MARYLAND-.6%
Maryland Community Development Administration, Department of
Housing and Community Development Revenue (Single Family Program)
6.75%, 4/1/2026......................................................... 250,000 257,020
MASSACHUSETTS-4.3%
Massachussetts Bay Transportation Authority, Transportation System Revenue
6.10%, 3/1/2023......................................................... 500,000 502,960
Massachusetts Health and Educational Facilities Authority, Revenue
(Mt. Auburn Hospital Issue) 6.30%, 8/15/2024 (Insured; MBIA)............ 750,000 764,827
Massachusetts Housing Finance Agency, SFHR 7.125%, 6/1/2025................. 500,000 522,910

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------

MICHIGAN-5.5%
Kalamazoo Hospital Finance Authority, Hospital Facility Revenue, Refunding
(Burgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) (a)............ $ 1,000,000 $ 1,048,570
Lowell Area Schools, Refunding Zero Coupon, 5/1/2016 (Insured; FGIC)........ 1,675,000 483,824
Michigan Municipal Bond Authority, Revenue (Local Government Loan Program)
6.125%, 12/1/2018 (Insured; FGIC)....................................... 750,000 761,798
MINNESOTA-.6%
Minnesota Housing Finance Agency, SFHR 6.90%, 7/1/2022...................... 250,000 260,465
MISSISSIPPI-2.5%
Claiborne County, PCR, Refunding (System Energy Resources, Inc.) 7.30%, 5/1/2025 1,000,000 1,030,080
NEVADA-3.0%
Clark County, IDR, Refunding (Nevada Power Co. Project) 7.20%, 10/1/2022.... 250,000 259,070
Washoe County School District 5.75%, 6/1/2012 (Insured; MBIA)............... 1,000,000 992,470
NEW HAMPSHIRE-.6%
New Hampshire Housing Finance Authority 6.85%, 7/1/2014..................... 250,000 261,448
NEW JERSEY-3.9%
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.70%, 4/1/2016 (Insured; MBIA)......................................... 500,000 530,500
New Jersey Turnpike Authority, Turnpike Revenue, Refunding 6.50%, 1/1/2016.. 1,000,000 1,081,590
NEW YORK-7.9%
New York City Industrial Development Agency, Special Facility Revenue
(American Airlines, Inc. Project) 6.90%, 8/1/2024....................... 500,000 517,400
New York State Dormitory Authority, Revenue, Refunding
(State University Educational Facilities) 6%, 5/15/2107................. 500,000 485,780
New York State Energy Research and Development Authority:
Electric Facilities Revenue (Long Island Lighting) 7.15%, 9/1/2019...... 300,000 304,047
Facilities Revenue, Refunding (Con Edison Co.) 6.10%, 8/15/2020......... 1,000,000 1,001,560
New York State Local Government Assistance Corp. 6%, 4/1/2024............... 1,000,000 990,490
NORTH CAROLINA-.7%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding 7%, 1/1/2008.................................................. 250,000 267,035
OHIO-9.0%
Lorain, Hospital Improvement Revenue, Refunding (Lakeland Community Hospital,
Inc.)
6.50%, 11/15/2012....................................................... 1,000,000 1,017,870
Ohio, GO, College Savings Revenue Zero Coupon, 8/1/2013..................... 1,000,000 364,680
Ohio Air Quality Development Authority, Revenue (Columbus and Southern Ohio)
6.375%, 12/1/2020 (Insured; FGIC)....................................... 505,000 526,235

OHIO (CONTINUED)
Ohio Building Authority (State Facilities-Juvenile Correctional Projects)
6.60%, 10/1/2014 (Insured; AMBAC)....................................... $ 750,000 $ 806,130
Ohio Water Development Authority, Revenue (Fresh Water Series)
5.90%, 12/1/2015 (Insured; AMBAC)....................................... 1,000,000 1,013,430
OREGON-2.4%
Oregon Housing and Community Services Department, Mortgage Revenue
(Single Family Mortgage Program) 6.45%, 7/1/2026........................ 1,000,000 1,012,270
PENNSYLVANIA-10.3%
Northhampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017....................................... 250,000 257,750
Pennsylvania Convention Center Authority, Revenue, Refunding 6.75%, 9/1/2019 1,000,000 1,030,520
Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue
(MacMillan Limited Partnership Project) 7.60%, 12/1/2020................ 500,000 541,485
Pennsylvania Higher Educational Facilities Authority, College and University
Revenue
(Duquesne University Project) 6.35%, 1/15/2017 (Insured; MBIA).......... 500,000 512,030
Pennsylvania Intergovernmental Cooperative Authority, Special Tax Revenue
(City of Philadelphia-Funding Program) 5.75%, 6/15/2015 (Insured; MBIA). 1,000,000 984,810
Philadelphia Hospitals and Higher Education Facilities Authority, HR,
Refunding
(Children's Hospital-Philadelphia) 5.375%, 2/15/2014.................... 1,000,000 932,890
RHODE ISLAND-.5%
Rhode Island Housing and Mortgage Finance Corp. (Homeownership Opportunity)
6.50%, 4/1/2027......................................................... 200,000 202,582
SOUTH CAROLINA-3.4%
South Carolina Public Service Authority, Revenue, Refunding
5.50%, 7/1/2021 (Insured; MBIA, LOC; Societe Generale) (b).............. 1,500,000 1,411,365
TENNESSEE-3.1%
Maury County Industrial Development Board, PCR, Refunding (Saturn Corp.
Project)
6.50%, 9/1/2024 (Guaranteed; General Motors Corp.)...................... 1,000,000 1,021,260
Tennessee Housing Development Agency, Mortgage Finance 6.90%, 7/1/2025...... 250,000 259,828
TEXAS-7.4%
Alliance Airport Authority, Special Facilities Revenue
(American Airlines, Inc. Project) 7.50%, 12/1/2029...................... 500,000 525,815
Austin, Airport Systems Revenue 6.125%,11/15/2025 (Insured; MBIA) (c)....... 1,250,000 1,249,000
Bexar County Health Facilities Development Corp., HR, Refunding
(Baptist Memorial Hospital Systems Project) 6.90%, 8/15/2014 (Insured; MBIA) 750,000 813,007

TEXAS (CONTINUED)
Tarrant County Health Facilities Development Corp., Health System Revenue
(Harris Methodist Health System) 6%, 9/1/2024........................... $ 500,000 $ 485,305
VIRGINIA-6.8%
Loudon County Sanitation Authority, Water and Sewer Revenue, Refunding
6.25%, 1/1/2016 (Insured; FGIC)......................................... 1,000,000 1,026,540
Richmond, Public Improvement, Refunding 6.25%, 1/15/2018.................... 500,000 503,175
Virginia Public Building Authority, Building Revenue 6.25%, 8/1/2014........ 750,000 780,660
Virginia Transportation Board, Transportation Contract Revenue
(Northern Virginia Transportation District Program) 6.25%, 5/15/2012.... 500,000 524,310
WASHINGTON-4.3%
Seatac, Local Option Transportation, Tax Revenue 6.50%, 12/1/2013 (Insured; MBIA) 500,000 526,700
Washington Public Power Supply System, Nuclear Project #2, Revenue,
Refunding 6.25%, 7/1/2012............................................... 1,250,000 1,254,063
WEST VIRGINIA-2.4%
Braxton County, SWDR (Weyerhauser Co. Project) 6.50%, 4/1/2025.............. 1,000,000 1,012,100
WYOMING-.5%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 200,000 205,596
---------
TOTAL MUNICIPAL INVESTMENTS (cost $40,170,911).............................. $41,578,204
===========

</TABLE>
<TABLE>
<CAPTION>

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1

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

</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
STANDARD PERCENTAGE
FITCH (D) OR MOODY'S OR & POOR'S OF VALUE
- --------- ------- -------- ---------
AAA Aaa AAA 36.1%
AA Aa AA 24.6
A A A 19.6
BBB Baa BBB 13.5
BB Ba BB 2.5
Not Rated (e) Not Rated (e) Not Rated (e) 3.7
-------
100.0%
=======

NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(b) Secured by letters of credit.
(c) Purchased on a delayed delivery basis.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those securities in which the Fund may invest.

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $40,170,911)-see statement...................................... $41,578,204
Cash.................................................................... 694,913
Receivable for investment securities sold............................... 1,200,003
Interest receivable..................................................... 651,105
Prepaid expenses........................................................ 44,352
---------
44,168,577
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 4,983
Payable for investment securities purchased............................. 1,209,571
Accrued expenses and other liabilities.................................. 41,221 1,255,775
---------- ---------
NET ASSETS.................................................................. $42,912,802
===========
REPRESENTED BY:
Paid-in capital......................................................... $41,605,296
Accumulated net realized (loss) on investments.......................... (99,787)
Accumulated net unrealized appreciation on investments-Note 3........... 1,407,293
----------
NET ASSETS at value, applicable to 3,297,790 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $42,912,802
===========
NET ASSET VALUE, offering and redemption price per share
($42,912,802 / 3,297,790 shares)........................................ $13.01
======
STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 1,868,124
EXPENSES:
Management fee-Note 2(a).............................................. $ 181,126
Shareholder servicing costs-Note 2(b)................................. 33,783
Registration fees..................................................... 30,488
Professional fees..................................................... 15,377
Organization expenses................................................. 10,767
Custodian fees........................................................ 5,207
Prospectus and shareholders' reports.................................. 2,827
Directors' fees and expenses-Note 2(c)................................ 488
Miscellaneous......................................................... 10,963
-------
291,026
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 231,158
--------
TOTAL EXPENSES.................................................. 59,868
-------
INVESTMENT INCOME-NET........................................... 1,808,256
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (99,705)
Net unrealized appreciation on investments.............................. 1,328,736
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,229,031

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,037,287
===========

See notes to financial statements.

</TABLE>
<TABLE>
<CAPTION>

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
--------------------------------
1994* 1995
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 128,111 $ 1,808,256
Net realized gain (loss) on investments................................. 1,875 (99,705)
Net unrealized appreciation on investments for the year................. 78,557 1,328,736
--------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 208,543 3,037,287
--------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................... (128,111) (1,808,256)
Net realized gain on investments........................................ --- (1,957)
--------------- -------------
TOTAL DIVIDENDS....................................................... (128,111) (1,810,213)
--------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 19,178,689 55,483,278
Dividends reinvested.................................................... 81,312 1,288,981
Cost of shares redeemed................................................. (4,006,334) (30,420,630)
--------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 15,253,667 26,351,629
--------------- -------------
TOTAL INCREASE IN NET ASSETS...................................... 15,334,099 27,578,703
NET ASSETS:
Beginning of year....................................................... --- 15,334,099
--------------- -------------
End of year............................................................. $15,334,099 $ 42,912,802
=============== =============

SHARES SHARES
--------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,509,942 4,426,159
Shares issued for dividends reinvested.................................. 6,385 101,534
Shares redeemed......................................................... (315,038) (2,431,192)
--------------- -------------
NET INCREASE IN SHARES OUTSTANDING.................................... 1,201,289 2,096,501
=============== =============
* From May 6, 1994 (commencement of operations) to August 31, 1994.

See notes to financial statements.
</TABLE>

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Prospectus dated December 1, 1995.

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Municipal Bond Portfolio
(the "Series"). Premier Mutual Fund Services, Inc. (the "Distributor") acts
as the distributor of the Fund's shares, which are sold to the public without
a sales charge. The Distributor, located at One Exchange Place, Boston,
Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution
Services, Inc., a provider of mutual fund administration services, which in
turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company
of which is Boston Institutional Group, Inc. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Municipal Bond Portfolio.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has unused capital loss carryover of approximately $83,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through March 31, 1995 to reimburse all fees and expenses
of the Series, and thereafter, through August 31, 1995 to reduce the
management fee and reimburse such excess expenses paid by the Series, to the
extent that the Series' aggregate expenses (exclusive of certain expenses as
described above) exceeded specified annual percentages of the Series' average
daily net assets. The expense reimbursement, pursuant to the undertakings,
amounted to $231,158 for the year ended August 31, 1995.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the Series' average daily net assets, for certain allocated expenses of
providing personal servicing and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and pro
viding reports and other information, and services related to the maintenance
of shareholder
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

accounts. During the year ended August 31, 1995, the Series was charged an
aggregate of $22,555 pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $85,290,723 and $60,328,292, respectively, for the year ended
August 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1995, accumulated net unrealized appreciation on
investments was $1,407,293, consisting of $1,440,460 gross unrealized
appreciation and $33,167 gross unrealized depreciation.
At August 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC MUNICIPAL BOND FUND)-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Municipal Bond
Portfolio (one of the Series constituting Dreyfus BASIC Municipal Fund, Inc.)
as of August 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Municipal Bond Portfolio at August 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst and Young LLP signature logo]

New York, New York
October 4, 1995

<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-95.6% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ALABAMA-2.5%
Alabama Agricultural and Mechanical University, Revenues
6%, 11/1/2006 (Insured; MBIA) (a)....................................... $ 1,000,000 $ 1,076,700
ARIZONA-2.4%
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 1,018,010
CALIFORNIA-5.3%
Foothill Transit Zone 5.35%, 5/1/2003....................................... 200,000 192,086
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2004................................................... 1,000,000 584,800
Hemet, COP 6.50%, 2/1/2003.................................................. 200,000 198,020
Los Angeles City, COP, Refunding (Real Property Acquisition Program)
5.75%, 8/1/2004......................................................... 1,000,000 1,014,560
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998......................................................... 185,000 184,957
7.50%, 6/1/1999......................................................... 110,000 109,973
COLORADO-2.3%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997....................................................... 750,000 783,682
7.25%, 11/15/2007....................................................... 200,000 213,524
GEORGIA-2.7%
Georgia 6.80%, 8/1/2004..................................................... 1,000,000 1,152,260
HAWAII-2.5%
Hawaii 5.80%, 1/1/2005...................................................... 1,000,000 1,065,150
ILLINOIS-2.2%
Du Page County, Revenue (Stormwater Project)
6.50%, 1/1/2012 (Prerefunded 1/1/2002) (b).............................. 500,000 559,140
Hoffman Estates, Tax Increment Revenue (Hoffman Estates Development Project)
6.60%, 5/15/2002 (Guaranteed; Sears Roebuck & Co.)...................... 200,000 206,076
Illinois Educational Facilities Authority, Revenue, Refunding
(Illinois Institute of Technology) 6%, 12/1/2004........................ 200,000 199,136
INDIANA-3.0%
Franklin, EDR, Refunding (Hoover Universal, Inc. Project)
6.10%, 12/1/2004 (Guaranteed; Johnson Controls, Inc.)................... 200,000 207,706
Indiana Transportation Finance Authority, Airport Facilities, LR
(United Air) 6.25%, 11/1/2003........................................... 1,000,000 1,067,680

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------

KENTUCKY-2.4%
Kentucky Turnpike Authority, EDR, Refunding (Revitalization Projects)
5.80%, 1/1/2004......................................................... $ 1,000,000 $ 1,057,390
MARYLAND-2.7%
Prince George County, HR (Dimensions Health Corp.)
7%, 7/1/2022 (Prerefunded 7/1/2002) (b)................................. 1,000,000 1,152,340
MASSACHUSETTS-3.1%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002................... 250,000 248,398
University of Massachusetts Building Authority, Revenue, Refunding
6.50%, 5/1/2006......................................................... 1,000,000 1,114,860
MICHIGAN-5.0%
Detroit 7.25%, 4/1/2009 (Prerefunded 4/1/1999) (b).......................... 1,000,000 1,112,700
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health System)
7.10%, 10/1/2002........................................................ 1,000,000 1,058,510
MINNESOTA-1.8%
Washington County Housing and Redevelopment Authority, Jail Facility Revenue
7%, 2/1/2012 (Insured; MBIA, Prerefunded 2/1/2002) (b).................. 685,000 774,399
MISSOURI-5.3%
Liberty Industrial Development Authority, IDR, Refunding (Kmart Corp.
Project)
6.80%, 11/1/2004........................................................ 1,175,000 1,211,178
Missouri Board of Public Buildings, Refunding (State Office Building)
6.30%, 12/1/2006........................................................ 1,000,000 1,063,980
MONTANA-2.6%
Montana Higher Education Student Assistance Corp., Student Loan Revenue
5.95%, 12/1/2004........................................................ 1,100,000 1,131,383
NEW JERSEY-9.7%
New Jersey 5.90%, 8/1/2002.................................................. 1,000,000 1,079,910
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)............................................ 1,000,000 1,147,770
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................ 1,290,000 1,369,709
Ocean County 7.50%, 10/15/2001.............................................. 500,000 579,165
NEW YORK-5.5%
New York City 6.25%, 8/1/2003............................................... 100,000 102,499
New York State Dormitory Authority, Court Facilities, LR 6%, 5/15/2003...... 100,000 103,795
New York State Housing Finance Agency, Service Contract Obligation Revenue
6%, 9/15/2005........................................................... 655,000 663,351

NEW YORK (CONTINUED)
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge):
6%, 4/1/2002.......................................................... $ 500,000 $ 520,335
5.75%, 4/1/2006 (c)................................................... 1,000,000 998,370
NORTH CAROLINA-4.8%
North Carolina Eastern Municipal Power Agency, Power Systems Revenue,
Refunding:
6%, 1/1/2005............................................................ 1,000,000 1,004,150
7%, 1/1/2008............................................................ 1,000,000 1,068,140
OHIO-1.2%
Cuyahoga County, HR (Meridia Health System) 6.20%, 8/15/2005................ 505,000 535,381
PENNSYLVANIA-7.1%
Pennsylvania, Refunding 6.75%, 1/1/2005 (Prerefunded 1/1/2001) (b).......... 500,000 558,440
Pennsylvania Convention Center Authority, Revenue, Refunding
6.25%, 9/1/2004......................................................... 200,000 207,802
Philadelphia, Water and Wastewater Revenue, Refunding
5.50%, 6/15/2006 (Insured; AMBAC)....................................... 1,000,000 1,034,470
Schuylkill County Industrial Development Authority, RRR, Refunding
(Schuylkill Energy Research, Inc.) 6.50%, 1/1/2010...................... 1,250,000 1,262,963
TEXAS-7.1%
Brazos Higher Education Authority, Student Loan Revenue, Refunding
6.20%, 12/1/2002........................................................ 200,000 211,932
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC).................................. 1,000,000 704,190
San Antonio, Water Revenue, Refunding 6.30%, 5/15/2004 (Insured; FGIC)...... 1,000,000 1,095,060
Texas Veterans Housing Assistance Fund 6.20%, 6/1/2004...................... 1,000,000 1,046,580
VIRGINIA-2.4%
Virginia Housing Development Authority, Commonwealth Mortgage
5.75%, 1/1/2001......................................................... 1,000,000 1,028,060
WASHINGTON-6.3%
King County School District (Shoreline) 5.85%, 7/1/2004..................... 500,000 531,845
Snohomish County Public Utility District Number 1, Electric Revenue
6.60%, 1/1/2002 (Insured; FGIC)......................................... 1,000,000 1,098,360
Washington, Refunding 6.625%, 9/1/2006...................................... 1,000,000 1,085,910

WISCONSIN-4.3%
Wisconsin:
Clean Water Revenue 6.75%, 6/1/2008 (Prerefunded 6/1/2001) (b)........ $ 750,000 $ 844,163
Transportation Revenue 5.40%, 7/1/2004.................................. 1,000,000 1,029,250
WYOMING-1.4%
Wyoming Farm Loan Board, Capital Facilities Revenue
Zero Coupon, 10/1/2004.................................................. 1,000,000 618,500
--------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $39,802,085).................... $41,288,698
==========
SHORT-TERM MUNICIPAL INVESTMENTS-4.4%
MICHIGAN-3.0%
Grand Rapids, Water Supply System Revenue, Refunding, VRDN
3.35% (LOC; Societe Generale) (d,e)..................................... $ 1,300,000 $ 1,300,000
OHIO-1.4%
Montgomery County, IDR, VRDN (Modern Industrial Plastics Project)
4.075% (LOC; Industrial Bank of Japan) (d,e)............................ 600,000 600,000
--------

TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,900,000).................... $ 1,900,000
==========
TOTAL INVESTMENTS-100.0%
(cost $41,702,085)...................................................... $43,188,698
==========

</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LR Lease Revenue
EDR Economic Development Revenue MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
HR Hospital Revenue RRR Resources Recovery Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (F) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- --------------------
AAA Aaa AAA 24.4%
AA Aa AA 23.1
A A A 23.1
BBB Baa BBB 25.0
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 4.4
-------
100.0%
======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(b) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(c) Purchased on a delayed delivery basis.
(d) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(e) Secured by letters of credit.
(f) Fitch currently provides creditworthiness information for a limited
number of investments.

See notes to financial statements.
</TABLE>

<TABLE>
<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $41,702,085)-see statement...................................... $43,188,698
Cash.................................................................... 389,710
Interest receivable..................................................... 573,773
Prepaid expenses........................................................ 31,320
==========
44,183,501
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 2,175
Payable for investment securities purchased............................. 992,772
Accrued expenses and other liabilities.................................. 33,635 1,028,582
----------- ----------
NET ASSETS ................................................................ $43,154,919
============
REPRESENTED BY:
Paid-in capital......................................................... $41,879,845
Accumulated net realized (loss) on investments.......................... (211,539)
Accumulated net unrealized appreciation on investments-Note 3........... 1,486,613
-------------
NET ASSETS at value applicable to 3,332,344 shares outstanding
(500 million shares of $.001 par value Common Stock authorized)......... $43,154,919
==========
NET ASSET VALUE, offering and redemption price per share
($43,154,919 / 3,332,344 shares)........................................ $12.95
=======

STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 2,023,908
EXPENSES:
Management fee-Note 2(a).............................................. $ 218,523
Registration fees..................................................... 42,172
Shareholder servicing costs-Note 2(b)................................. 32,793
Professional fees..................................................... 15,046
Custodian fees........................................................ 5,040
Organization expenses................................................. 4,712
Prospectus and shareholders' reports.................................. 3,927
Directors' fees and expenses-Note 2(c)................................ 496
Miscellaneous......................................................... 11,051
--------
333,760
Less-expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 293,531
--------
TOTAL EXPENSES.................................................. 40,229
------
INVESTMENT INCOME-NET........................................... 1,983,679
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $ (210,183)
Net unrealized appreciation on investments.............................. 1,232,381
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,022,198
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,005,877
==========

See notes to financial statements.

</TABLE>

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED AUGUST 31,
-------------------------------
1994* 1995
-------------------------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 234,613 $ 1,983,679
Net realized (loss) on investments...................................... (1,356) (210,183)
Net unrealized appreciation on investments for the year................. 254,232 1,232,381
---------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 487,489 3,005,877
---------- ---------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (234,613) (1,983,679)
---------- ---------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 32,982,409 34,818,737
Dividends reinvested.................................................... 166,946 1,446,819
Cost of shares redeemed................................................. (5,127,001) (22,408,065)
---------- ---------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 28,022,354 13,857,491
---------- ---------
TOTAL INCREASE IN NET ASSETS...................................... 8,275,230 14,879,689
NET ASSETS:
Beginning of year....................................................... --- 28,275,230
---------- ---------
End of year............................................................. $28,275,230 $43,154,919
=========== ===========

SHARES SHARES
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,629,336 2,793,004
Shares issued for dividends reinvested.................................. 13,222 115,064
Shares redeemed......................................................... (407,238) (1,811,044)
---------- ---------
NET INCREASE IN SHARES OUTSTANDING.................................... 2,235,320 1,097,024
=========== ===========
* From May 5, 1994 (commencement of operations) to August 31, 1994.

See notes to financial statements.
</TABLE>

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated December 1, 1995.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering three series, including the Dreyfus BASIC Intermediate Municipal
Bond Portfolio (the "Series"). Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales charge. The Distributor, located at One Exchange
Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc.,
the parent company of which is Boston Institutional Group, Inc. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
On October 19, 1994, the Fund's Directors approved a change of the Fund's
name, effective October 28, 1994, from "Dreyfus BASIC Municipal Money Market
Fund, Inc." to "Dreyfus BASIC Municipal Fund, Inc." and the Series was
renamed Dreyfus BASIC Intermediate Municipal Bond Portfolio.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Directors. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the trade date.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
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.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
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 realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Series has an unused capital loss carryover of approximately $23,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to August 31, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through August 31, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $1,300 of the carryover
expires in fiscal 2002 and $21,700 of the carryover expires in fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of certain expenses as described above) exceed 21\2% of the first
$30 million, 2% of the next $70 million and 11\2% of the excess over $100
million of the average value of the Series' net assets in accordance with
California "blue sky" regulations. However, the Manager had undertaken from
September 1, 1994 through March 31, 1995 to reimburse all fees and expenses
of the Series, and thereafter, had undertaken through August 31, 1995 to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The expense reimbursement, pursuant to
the undertakings, amounted to $293,531 for the year ended August 31, 1995.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by the Series, to the extent that the Series'
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the average daily value of the Series'
net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Series' Shareholder Services Plan, the Series
reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of the
Manager, an amount not to exceed an annual rate of .25 of 1% of the value of
the Series' average daily net assets, for certain allocated expenses of
providing personal services and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. During the year ended August 31, 1995,
the Series was charged an aggregate of $16,178 pursuant to the Shareholder
Services Plan.

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
NOTES TO FINANCIAL STATEMENTS (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
amounted to $53,538,493 and $38,645,332, respectively, for the year ended
August 31, 1995, and consisted entirely of long-term and short-term municipal
investments.
At August 31, 1995, accumulated net unrealized appreciation on
investments was $1,486,613, consisting of $1,487,686 gross unrealized
appreciation and $1,073 gross unrealized depreciation.
At August 31, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
(FORMERLY DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND FUND)-SEE NOTE 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC Intermediate
Municipal Bond Portfolio (one of the Series constituting Dreyfus BASIC
Municipal Fund, Inc.) as of August 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC Intermediate Municipal Bond Portfolio at August 31,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for the each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]

New York, New York
October 4, 1995

<TABLE>
<CAPTION>
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
_________ _________
<S> <C> <C>
NEW JERSEY-86.1%
Atlantic County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program)
3% (LOC; Midland Bank) (a,b)............................................ $ 1,700,000 $1,700,000
Camden County, GO Notes 5.05%, Series A, 2/1/97 (Insured; MBIA)............. 785,000 796,045
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program)
2.85% (LOC; Union Bank of Switzerland) (a,b)............................ 3,500,000 3,500,000
New Jersey Economic Development Authority:
Thermal Energy Facilities, Revenue (Thermal Energy Limited Partnership)
3.70%, 4/30/96 (Escrowed in; U.S. Securities)......................... 1,000,000 1,000,000
VRDN:
EDR:
(Black Horse Pike Limited Project) 3.75% (a)...................... 1,700,000 1,700,000
(Dow Chemical-El Dorado Terminal):
2.95%, Series A (Corp. Guaranty; Dow Chemical Co.) (a).......... 800,000 800,000
2.95%, Series B (Corp. Guaranty; Dow Chemical Co.) (a).......... 900,000 900,000
Industrial and EDR:
(Marriot Corp. Project) 2.90% (LOC; National Westminster Bank) (a,b) 1,700,000 1,700,000
(Merck and Co.) 3.50%, Series A and B (a)......................... 1,700,000 1,700,000
New Jersey Health Care Facilities Financing Authority, Revenue, VRDN
(Hospital Capital Asset Financing)
3%, Series A (LOC; Chemical Bank) (a,b)................................. 1,500,000 1,500,000
New Jersey Sports and Exposition Authority, VRDN (State Contract)
3.10%, Series C (Insured; MBIA and LOC; Industrial Bank of Japan) (a,b). 3,600,000 3,600,000
New Jersey Turnpike Authority, Turnpike Revenue, Refunding, VRDN
2.80%, Series D (BPA; Societe Generale and Insured; FGIC) (a)........... 4,200,000 4,200,000
North Brunswick Township, TAN 4%, 8/6/96.................................... 2,000,000 2,005,103
Port Authority of New York and New Jersey:
CP 3.50%, 3/8/96 (LOC; Bank of Nova Scotia) (b)......................... 1,300,000 1,300,000
Special Obligation Revenue, VRDN (Versatile Structure Obligation)
2.95%, Series 2 (BPA; Morgan Guaranty Trust Co.) (a).................. 400,000 400,000
Salem County Industrial Pollution Control Financing Authority, Revenue, CP
(Philadelphia Electric Co.)
3.50%, Series A, 4/10/96 (LOC; Toronto-Dominion Bank) (b)............... 800,000 800,000
Washington Township Board of Education, Notes (Gloucester County School)
5%, Series 1986, 2/1/97 (Insured; MBIA)................................. 1,600,000 1,623,852

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996 (UNAUDITED)
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_________ _________
U.S. RELATED-13.9%
Commonwealth of Puerto Rico Government Development Bank:
CP:
3.15%, 4/9/96......................................................... $ 1,000,000 $ 1,000,000
3.10%, 4/11/96........................................................ 2,000,000 2,000,000
Refunding, VRDN 2.80% (LOC; Credit Suisse) (a,b)........................ 1,700,000 1,700,000
___________
TOTAL INVESTMENTS (cost $33,925,000)........................................ $33,925,000
===========
</TABLE>
<TABLE>
<CAPTION>

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

</TABLE>
<TABLE>
<CAPTION>

SUMMARY OF COMBINED RATINGS
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _________ __________________ ____________________
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 84.1%
Not Rated (e) Not Rated (e) Not Rated (e) 15.9
_______
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 February 29, 1996, 41.6% of the
Fund's net assets are backed by letters of credit issued by domestic
banks, foreign banks and brokerage firms.
(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) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Directors to be of
comparable quality to those rated securities in which the Fund may
invest.

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

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)............................................ $33,925,000
Cash..................................................................................... 3,898,848
Interest receivable...................................................................... 190,228
Prepaid expenses......................................................................... 13
Due from The Dreyfus Corporation......................................................... 21,293
__________
38,035,382
LIABILITIES;
Accrued expenses......................................................................... 33,718
__________
NET ASSETS at value, represented by paid-in capital, applicable to
38,001,664 outstanding shares of Common Stock, equivalent to
$1.00 per share (1 billion shares of $.001 par value authorized)......................... $38,001,664
============
STATEMENT OF OPERATIONS
from December 1, 1995 (commencement of operations) to February 29, 1996 (Unaudited)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 154,942
EXPENSES:
Management fee-Note 2(a).............................................. $22,965
Registration fees..................................................... 13,104
Auditing fees......................................................... 8,333
Prospectus and shareholders' reports.................................. 6,370
Shareholder servicing costs-Note 2(b)................................. 3,712
Legal fees............................................................ 3,000
Directors' fees and expenses-Note 2(c)................................ 2,079
Custodian fees........................................................ 1,005
Miscellaneous......................................................... 887
___-____
TOTAL EXPENSES.................................................. 61,455
Less-expense reimbursement from Management due to
undertaking-Note 2(a)............................................. 61,455
___-____
NET EXPENSES.................................................... _
__________
INVESTMENT INCOME-NET, representing net increase in net assets
resulting from operations............................................... $154,942
==========

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

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
from December 1, 1995 (commencement of operations) to February 29, 1996 (Unaudited)
<S> <C> <C>
OPERATIONS;
Investment income-net.................................................................... $ 154,942
_________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................................... (154,942)
_________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold............................................................ 49,123,367
Dividends reinvested..................................................................... 148,296
Cost of shares redeemed.................................................................. (11,269,999)
_________
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................................. 38,001,664
_________
TOTAL INCREASE IN NET ASSETS....................................................... 38,001,664
NET ASSETS:
Beginning of period...................................................................... _-
_________
End of period............................................................................ $ 38,001,664
=============
</TABLE>

FINANCIAL HIGHLIGHTS (UNAUDITED)

Reference is made to page 4 of the Prospectus dated April 30, 1996.

DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Municipal Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering four series, including Dreyfus BASIC New Jersey Municipal Money
Market Portfolio (the "Series") which commenced operations on December 1,
1995. The Series' investment objective is to provide investors 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 Dreyfus Corporation ("Manager") serves as the Series' investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge.
The 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 of $1.00.
(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 investment 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, 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, if any, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to qualify as a
regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Internal Revenue Code, and to
make distributions of income and net realized capital gain sufficient to
relieve it from substantially all Federal income and excise taxes.
At February 29, 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 NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is payable at the annual rate of .50 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
expense limitation applicable to the Series presently requires reimbursement
of expenses in any full fiscal year that such expenses (exclusive of certain
expenses as described above) exceed 21\2% of the first $30 million, 2% of the
next $70 million and 11\2 % of the excess over $100 million of the average
value of the Series' net assets in accordance with California "blue sky"
regulations. However, the Manager has undertaken from December 1, 1995
through June 30, 1996 or until such time as the net assets of the Series
exceed $500 million regardless of whether they remain at that level, to
reimburse all fees and expenses of the Series. The expense reimbursement,
pursuant to the undertaking, amounted to $61,455 for the period from December
1, 1995 through February 29, 1996.
In addition, the Manager has undertaken through June 30, 1998 to reduce
the management fee paid by, or reimburse such excess expenses of, 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
average daily value of the Series' net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
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 $280 for the period from December 1, 1995 through
February 29, 1996.
(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 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 December 1, 1995 through February 29, 1996, $3,000 was
chargeable to the Series pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.

DREYFUS BASIC MUNICIPAL FUND, INC.

PART C. OTHER INFORMATION
_________________________

Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________

(a) Financial Statements:

Included in Part A of the Registration Statement:

Financial Highlights--for the period December 1, 1995
(commencement of operations) to February 29, 1996, for
the New Jersey Portfolio only.

Included in Part B of the Registration Statement:

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

Statement of Investments--as of August 31, 1995.

Statement of Assets and Liabilities--as of August 31,
1995.

Statement of Operations--for the year ended August 31,
1995.

Statement of Changes in Net Assets--Money Market
Portfolio for the years ended August 31, 1994 and August
31, 1995. Intermediate Bond Portfolio and Bond
Portfolio. For the periods May 5 and 6, 1994
(commencement of operations, respectively) to August 31,
1994 and the year ended August 31, 1995.

Notes to Financial Statements

Reports of Ernst & Young LLP, Independent Auditors,
dated October 4, 1995.

Notes to Financial Statements

The New Jersey Portfolio Only -

Statement of Investments--as of February 29, 1996
(Unaudited).

Statement of Assets and Liabilities--as of February 29,
1996 (Unaudited).

Statement of Operations--from December 1, 1995
(commencement of operations) to February 29, 1996
(Unaudited).

Statement of Changes in Net Assets--from December 1,
1995 (commencement of operations) to February 29, 1996
(Unaudited).

Notes to Financial Statements (Unaudited).

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.

Articles of Amendment dated October 28, 1994.

Articles Supplementary dated October 1995.

(2) By-Laws to be filed by Amendment.

(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.

(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.

(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.

Schedule of Computation of Performance Data as to the New Jersey
Portfolio.

(17) Financial Data Schedule for the New Jersey Portfolio.

Other Exhibits
______________

(a) Power of Attorney for Joseph S. DiMartino is
incorporated by reference to the Other Exhibits section
of Post-Effective Amendment No. 8 to the Registration
Statement, filed on September 15, 1995. Powers of
Attorney for David W. Burke, Samuel Chase, Joni Evans,
Arnold S. Hiatt, David J. Mahoney and Burton N. Wallack,
Directors; and for Marie E. Connolly, President and
Treasurer of the Fund are incorporated by reference to
the Other Exhibits section of Post-Effective Amendment
No. 7 to the Registration Statement, filed on December
16, 1994.

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

(b) Certificate of Assistant Secretary is incorporated by
reference to the Other Exhibits section of Post-
Effective Amendment No. 7 to the Registration Statement,
filed on December 16, 1994.

Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________

Not Applicable

Item 26. Number of Holders of Securities.
_______ ________________________________

(1) (2)
Number of Record
Title of Class Holders as of March 11, 1996
______________ _______________________________

Common Stock Money Market Portfolio - 5,908
(Par value $.001) Intermediate Bond Portfolio - 536
Bond Portfolio - 553
New Jersey Portfolio - 214

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 hereto 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 hereto
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.

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 1st day of April 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, 4/1/96
- --------------------------- Principal Executive,
Marie E. Connolly (Accounting and Financial Officer)

/s/David W. Burke* Board Member 4/1/96
- ---------------------------
David W. Burke

/s/Samuel Chase* Board Member 4/1/96
- ---------------------------
Samuel Chase

/s/Joseph S. DiMartino* Board Member 4/1/96
- ---------------------------
Joseph S. DiMartino

/s/Joni Evans* Board Member 4/1/96
- ---------------------------
Joni Evans

/s/Gordon J. Davis Board Member 4/1/96
- ---------------------------
Gordon J. Davis

/s/Arnold S. Hiatt* Board Member 4/1/96
- ---------------------------
Arnold S. Hiatt

/s/David J. Mahoney* Board Member 4/1/96
- ---------------------------
David J. Mahoney

/s/Burton N. Wallack* Board Member 4/1/96
- ---------------------------
Burton N. Wallack

*BY: /s/Eric B. Fischman
---------------------------
Eric B. Fischman,
Attorney-in-Fact

DREYFUS BASIC MUNICIPAL FUND, INC.

EXHIBIT INDEX

EXHIBIT NO.

(1) Articles of Incorporation
Articles of Amendment
Articles Supplementary

(8)(a) Custody Agreement

(10) Opinion of Counsel

(17) Financial Data Schedule for
the New Jersey Portfolio

EXHIBIT 1

ARTICLES OF INCORPORATION

DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC.

FIRST: The undersigned, David Stephens, whose address
is Seven Hanover Square, New York, New York 10004-2594, being at
least eighteen years of age, hereby forms a corporation under
the Maryland General Corporation Law.

SECOND: The name of the corporation (hereinafter
called the "corporation") is Dreyfus Basic Municipal Money
Market Fund, Inc.

THIRD: The corporation is formed for the following
purpose or purposes:

(a) to conduct, operate and carry on the
business of an investment company;

(b) to subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and
with securities of every nature, kind, character, type
and form, including without limitation of the
generality of the foregoing, all types of stocks,
shares, futures contracts, bonds, debentures, notes,
bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest,
certificates of interest, certificates of
participation, certificates, interests,
evidences of ownership, guarantees, warrants, options
or evidences of indebtedness issued or created by or
guaranteed as to principal and interest by any state
or local government or any agency or instrumentality
thereof, by the United States Government or any
agency, instrumentality, territory, district or
possession thereof, by any foreign government or any
agency, instrumentality, territory, district or
possession thereof, by any corporation organized under
the laws of any state, the United States or any
territory or possession thereof or under the laws of
any foreign country, bank certificates of deposit,
bank time deposits, bankers' acceptances and
commercial paper; to pay for the same in cash or by
the issue of stock, including treasury stock, bonds or
notes of the corporation or otherwise; and to exercise
any and all rights, powers and privileges of ownership
or interest in respect of any and all such investments
of every kind and description, including without
limitation, the right to consent and otherwise act
with respect thereto, with power to designate one or
more persons, firms, associations or corporations to
exercise any of said rights, powers and privileges in
respect of any said instruments;

(c) to borrow money or otherwise obtain credit
and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the
corporation;

(d) to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue,
dispose of, transfer, and otherwise deal in, shares of
stock of the corporation, including shares of stock of
the corporation in fractional denominations, and to
apply to any such repurchase, redemption, retirement,
cancellation or acquisition of shares of stock of the
corporation any funds or property of the corporation
whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the
State of Maryland;

(e) to conduct its business, promote its
purposes and carry on its operations in any and all of
its branches and maintain offices both within and
without the State of Maryland, in any States of the
United States of America, in the District of Columbia
and in any other parts of the world; and

(f) to do all and everything necessary,
suitable, convenient, or proper for the conduct,
promotion and attainment of any of the businesses and
purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in
or carried on by a corporation incorporated or
organized under the Maryland General Corporation Law,
and to have and exercise all of the powers conferred
by the laws of the State of Maryland upon corporations
incorporated or organized under the Maryland General
Corporation Law.

The foregoing provisions of this Article THIRD shall
be construed both as purposes and powers and each as an
independent purpose and power. The foregoing enumeration of
specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the
corporation, and the purposes and powers herein specified shall,
except when otherwise provided in this Article THIRD, be in no
wise limited or restricted by reference to, or inference from,
the terms of any provision of this or any other Article of these
Articles of Incorporation; provided, that the corporation shall
not conduct any business, promote any purpose, or exercise any
power or privilege within or without the State of Maryland
which, under the laws thereof, the corporation may not lawfully
conduct, promote, or exercise.

FOURTH: The post office address of the principal
office of the corporation within the State of Maryland, and of
the resident agent of the corporation within the State of
Maryland, is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.

FIFTH: (1) The total number of shares of stock which
the corporation has authority to issue is three billion
(3,000,000,000) shares of Common Stock, all of which are of a
par value of one tenth of one cent ($.001) each.

(2) The aggregate par value of all the authorized
shares of stock is three million dollars ($3,000,000.00).

(3) The Board of Directors of the corporation is
authorized, from time to time, to fix the price or the minimum
price or the consideration or minimum consideration for, and to
issue, the shares of stock of the corporation.

(4) The Board of Directors of the corporation is
authorized, from time to time, to classify or to reclassify, as
the case may be, any unissued shares of stock of the
corporation.

(5) Subject to the power of the Board of Directors to
reclassify unissued shares, the shares of each class of stock of
the corporation shall have the following preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption:

(i) All consideration received by the
corporation for the issuance or sale of shares
together with all income, earnings, profits and
proceeds thereof, shall irrevocably belong to such
class for all purposes, subject only to the rights of
creditors, and are herein referred to as "assets
belonging to" such class. The assets belonging to a
class may be invested with the assets belonging to one
or more other classes in a common investment
portfolio. If the assets belonging to
more than one class are invested in a common
investment portfolio, the income and expenses of the
investment portfolio shall be allocated among the
classes in accordance with the number of shares
outstanding of each class or as otherwise determined
by the Board of Directors.

(ii) The assets belonging to such class shall
be charged with the liabilities of the corporation in
respect of such class and with such class' share of
the general liabilities of the corporation, in the
latter case in proportion that the net asset value of
such class bears to the net asset value of all
classes. The determination of the Board of Directors
shall be conclusive as to the allocation of
liabilities, including accrued expenses and reserves,
to a class.

(iii) Dividends or distributions on shares of
each class, whether payable in stock or cash, shall be
paid only out of earnings, surplus or other assets
belonging to such class.

(iv) In the event of the liquidation or
dissolution of the corporation, stockholders of each
class shall be entitled to receive, as a class, out of
the assets of the corporation available for
distribution to stockholders, the assets belonging to
such class and the assets so distributable to the
stockholders of such class shall be distributed among
such stockholders in proportion to the number of
shares of such class held by them.

(v) On each matter submitted to a vote of the
stockholders, each holder of a share of stock shall be
entitled to one vote for each share standing in his
name on the books of the corporation irrespective of
the class thereof. All holders of shares of stock
shall vote as a single class except with respect to
any matter which affects only one or more classes of
stock, in which case only the holders of shares of the
class or classes affected shall be entitled to vote.

Except as provided above, all provisions of the Articles of
Incorporation relating to stock of the corporation shall apply
to shares of, and to the holders of, all classes of stock.

(6) Notwithstanding any provisions of the Maryland
General Corporation Law requiring a greater proportion than a
majority of the votes of stockholders entitled to be cast in
order to take or authorize any action, any such action may be
taken or authorized upon the concurrence of a majority of the
aggregate number of votes entitled to be cast thereon.

(7) The presence in person or by proxy of the holders
of one-third of the shares of stock of the corporation entitled
to vote (without regard to class) shall constitute a quorum at
any meeting of the stockholders, except with respect to any
matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or
more classes of stock, in which case the presence in person or
by proxy of the holders of one-third of the shares of stock of
each class required to vote as a class on the matter shall
constitute a quorum.

(8) The corporation may issue shares of stock in
fractional denominations to the same extent as its whole shares,
and shares in fractional denominations shall be shares of stock
having proportionately to the respective fractions represented
thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends
and distributions and the right to participate upon liquidation
of the corporation, but excluding the right to receive a stock
certificate evidencing a fractional share.

(9) No holder of any shares of any class of the
corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any shares of any class which the
corporation proposes to issue, or any rights or options which
the corporation proposes to issue or to grant for the purchase
of shares of any class or for the purchase of any shares, bonds,
securities, or obligations of the corporation which are
convertible into or exchangeable for, or which carry any rights
to subscribe for, purchase, or otherwise acquire shares of any
class of the corporation; and any and all of such shares, bonds,
securities or obligations of the corporation, whether now or
hereafter authorized or created, may be issued, or may be
reissued or transferred if the same have been reacquired and
have treasury status, and any and all of such rights and options
may be granted by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in
its discretion may determine, without first offering the same,
or any thereof, to any said holder.

SIXTH: (1) The number of directors of the
corporation, until such number shall be increased or decreased
pursuant to the by-laws of the corporation, is one. The number
of directors shall never be less than the minimum number
prescribed by the Maryland General Corporation Law.

(2) The name of the person who shall act as director
of the corporation until the first annual meeting or until his
successor or successors are duly chosen and qualify is as
follows:

Mark N. Jacobs

(3) The initial by-laws of the corporation shall be
adopted by the directors at their organizational meeting or by
their informal written action, as the case may be. Thereafter,
the power to make, alter, and repeal the by-laws of the
corporation shall be vested in the Board of Directors of the
corporation.

(4) Any determination made in good faith by or
pursuant to the direction of the Board of Directors, as to: the
amount of the assets, debts, obligations, or liabilities of the
corporation; the amount of any reserves or charges set up and
the propriety thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged); the value of any
investment or fair value of any other asset of the corporation;
the amount of net investment income; the number of shares of
stock outstanding; the estimated expense in connection with
purchases or redemptions of the corporation's stock; the ability
to liquidate investments in orderly fashion; the extent to which
it is practicable to deliver a cross-section of the portfolio of
the corporation in payment for any such shares, or as to any
other matters relating to the issue, sale, purchase, redemption
and/or other acquisition or disposition of investments or shares
of the corporation, or the determination of the net asset value
of shares of the corporation shall be final and conclusive, and
shall be binding upon the corporation and all holders of its
shares, past, present and future, and shares of the
corporation are issued and sold on the condition and
understanding that any and all such determinations shall be
binding as aforesaid.

SEVENTH: (1) To the fullest extent that limitations
on the liability of directors and officers are permitted by the
Maryland General Corporation Law, no director or officer of the
corporation shall have any liability to the corporation or its
stockholders for damages. This limitation on liability applies
to events occurring at the time a person serves as a director or
officer of the corporation whether or not such person is a
director or officer at the time of any proceeding in which
liability is asserted.

(2) The corporation shall indemnify and advance
expenses to its currently acting and its former directors to the
fullest extent that indemnification of directors is permitted by
the Maryland General Corporation Law. The corporation shall
indemnify and advance expenses to its officers to the same
extent as its directors and to such further extent as is
consistent with law. The board of directors may, through a by-
law, resolution or agreement, make further provisions for
indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation
Law.

(3) No provision of this Article SEVENTH shall be
effective to protect or purport to protect any director or
officer of the corporation against any liability to the
corporation or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office.

(4) References to the Maryland General Corporation
Law in this Article SEVENTH are to the law as from time to time
amended. No amendment to the Articles of Incorporation of the
corporation shall affect any right of any person under this
Article SEVENTH based on any event, omission or proceeding prior
to such amendment.

EIGHTH: Any holder of shares of stock of the
corporation may require the corporation to redeem and the
corporation shall be obligated to redeem at the option of such
holder all or any part of the shares of the corporation owned by
said holder, at the redemption price, pursuant to the method,
upon the terms and subject to the conditions hereinafter set
forth:

(a) The redemption price per share shall be the
net asset value per share determined at such time or
times as the Board of Directors of the corporation
shall designate in accordance with any provision of
the Investment Company Act of 1940, any rule or
regulation thereunder or exemption or exception
therefrom, or any rule or regulation made or adopted
by any securities association registered under the
Securities Exchange Act
of 1934.

(b) Net asset value per share of a class shall
be determined by dividing:

(i) The total value of the assets of
such class determined as provided in Subsec-
tion (c) below less, to the extent
determined by or pursuant to the direction
of the Board of Directors, all debts,
obligations and liabilities of such class
(which debts, obligations and liabilities
shall include, without limitation of the
generality of the foregoing, any and all
debts, obligations, liabilities, or claims,
of any and every kind
and nature, fixed, accrued and otherwise,
including the estimated accrued expenses of
management and supervision, administration
and distribution and any reserves or charges
for any or all of the foregoing, whether for
taxes, expenses or otherwise) but excluding
such class' liability upon its shares and
its surplus, by

(ii) The total number of shares of
such class outstanding.

The Board of Directors is empowered, in its
absolute discretion, to establish other methods for
determining such net asset value whenever such other
methods are deemed by it to be necessary in order to
enable the corporation to comply with, or are deemed
by it to be desirable provided they are not
inconsistent with, any provision of the Investment
Company Act of 1940 or any rule or regulation
thereunder.

(c) In determining for the purposes of these
Articles of Incorporation the total value of the
assets of the corporation at any time, investments and
any other assets of the corporation shall be valued in
such manner as may be determined from time to time by
the Board of Directors.

(d) Payment of the redemption price by the
corporation may be made either in cash or in
securities or other assets at the time owned by the
corporation or partly in cash and partly in securities
or other assets at the time owned by the corporation.
The value of any part of such payment to be made in
securities or other assets of the corporation shall be
the value employed in determining the redemption
price. Payment of the redemption price shall be made
on or before the seventh day following the day on
which the shares are properly presented for redemption
hereunder, except that delivery of any securities
included in any such payment shall be made as promptly
as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made.

The corporation, pursuant to resolution of the
Board of Directors, may deduct from the payment made
for any shares redeemed a liquidating charge not in
excess of five percent (5%) of the redemption price of
the shares so redeemed, and the Board of Directors may
alter or suspend any such liquidating charge from time
to time.

(e) Redemption of shares of stock by the
corporation is conditional upon the corporation having
funds or property legally available therefor.

(f) The corporation, either directly or through
an agent, may repurchase its shares, out of funds
legally available therefor, upon such terms and
conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the
owner at a price not exceeding the net asset value per
share as determined by the corporation at such time or
times as the Board of Directors of the corporation
shall designate, less a charge not to exceed five
percent (5%) of such net asset value, if and as fixed
by resolution of the Board of Directors of the
corporation from time to time, and take all other
steps deemed necessary or advisable in connection
therewith.

(g) The corporation, pursuant to resolution of
the Board of Directors, may cause the redemption, upon
the terms set forth in such resolution and in
subsections (a) through (e) and subsection (h) of this
Article EIGHTH, of shares of stock owned by
stockholders whose shares have an aggregate net asset
value of ten thousand dollars or less or such other
amount as may be fixed from time to time by the Board
of Directors. Notwithstanding any other provision of
this Article EIGHTH, if certificates representing such
shares have been issued, the redemption price need not
be paid by the corporation until such certificates are
presented in proper form for transfer to the
corporation or the agent of the corporation appointed
for such purpose; however, the redemption shall be
effective, in accordance with the resolution of the
Board of Directors, regardless of whether or not such
presentation has been made.

(h) The obligations set forth in this Article
EIGHTH may be suspended or postponed as may be
permissible under the Investment Company Act of 1940
and the rules and regulations thereunder.

(i) The Board of Directors may establish other
terms and conditions and procedures for redemption,
including requirements as to delivery of certificates
evidencing shares, if issued.

NINTH: All persons who shall acquire stock or other
securities of the corporation shall acquire the same subject to
the provisions of the corporation's Charter, as from time to
time amended.

TENTH: From time to time any of the provisions of the
Charter of the corporation may be amended, altered or repealed,
including amendments which alter the contract rights of any
class of stock outstanding, and other provisions authorized by
the Maryland General Corporation Law at the time in force may be
added or inserted in the manner and at the time prescribed by
said Law, and all rights at any time conferred upon the
stockholders of the corporation by its Charter are granted
subject to the provisions of this Article.

IN WITNESS WHEREOF, I have adopted and signed these
Articles of Incorporation and do hereby acknowledge that the
adoption and signing are my act.

Dated: August 7, 1991

David Stephens, Incorporator

ARTICLES OF AMENDMENT

FIRST: The charter of the Corporation is hereby
amended by striking Article SECOND of the Articles of
Incorporation and inserting in lieu thereof the following:
"SECOND: The name of the corporation
(hereinafter called the 'corporation') is
Dreyfus Savers Municipal Money Market Fund,
Inc."

The Vice President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the
matters and facts set forth in these Articles with respect to
the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and
that this statement is made under the penalties of perjury.

IN WITNESS WHEREOF, Dreyfus Basic Municipal Money Market
Fund, Inc. has caused this instrument to be filed in its name
and on its behalf by its Vice President, Mark N. Jacobs, and
witnessed by its Assistant Secretary, Christine Pavalos, on the
12th day of August, 1991.

DREYFUS BASIC MUNICIPAL MONEY
MARKET FUND, INC.

BY: /s/ Mark N. Jacobs
Mark N. Jacobs,
Vice President

ATTEST:

/s/ Christine Pavalos
Christine Pavalos,
Assistant Secretary

ARTICLES OF AMENDMENT

DREYFUS SAVERS MUNICIPAL MONEY MARKET FUND, INC., a
Maryland corporation having its principal place of business in
Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

SECOND: The Board of Directors of the Corporation
approved the foregoing amendment to the charter as set forth in
Article FIRST hereto, and declared that said amendment was
advisable. The Corporation has no stockholders.
The Vice President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the
matters and facts set forth in these Articles with respect to
the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and
that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Savers Municipal Money
Market Fund, Inc. has caused this instrument to be filed in its
name and on its behalf by its Vice President, Daniel C. Maclean,
and witnessed by its Assistant Secretary, Christine Pavalos, on
the 2nd day of December, 1991.

DREYFUS SAVERS MUNICIPAL MONEY
MARKET FUND, INC.

BY:/s/Daniel C. Maclean
Daniel C. Maclean,
Vice President

ATTEST:

/s/Christine Pavalos
Christine Pavalos,
Assistant Secretary

ARTICLES OF AMENDMENT

DREYFUS INVESTORS MUNICIPAL MONEY MARKET FUND, INC., a
Maryland corporation having its principal place of business in
Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

SECOND: The Board of Directors of the Corporation
approved the foregoing amendment to the charter as set forth in
Article FIRST hereto, and declared that said amendment was
advisable. The Corporation's stockholders approved said
amendment at a meeting held on December 15, 1992.
The Vice President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief the
matters and facts set forth in these Articles with respect to
the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and
that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus Investors Municipal Money
Market Fund, Inc. has caused this instrument to be filed in its
name and on its behalf by its Vice President, Daniel C. Maclean,
and witnessed by its Assistant Secretary, Christine Pavalos, on
the 16th of December, 1992.

DREYFUS INVESTORS MUNICIPAL
MONEY MARKET FUND, INC.

BY:
Daniel C. Maclean, Vice President

ATTEST:

Christine Pavalos,
Assistant Secretary

ARTICLES OF AMENDMENT

DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC., a
Maryland corporation having its principal place of business in
Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby
amended by striking Article SECOND of the Articles of
Incorporation and inserting in lieu thereof the following:
"SECOND: The name of the corporation
(hereinafter called the 'corporation') is
Dreyfus BASIC Municipal Fund, Inc."

SECOND: The Charter of the Corporation is hereby
amended further to provide that (i) the designation of generic
shares of Common Stock of the Corporation (marketed as shares of
"Dreyfus BASIC Municipal Money Market Fund") be changed to
Dreyfus BASIC Municipal Money Market Portfolio, (ii) the
designation of Dreyfus BASIC Municipal Bond Fund shares of
Common Stock of the Corporation be changed to Dreyfus BASIC
Municipal Bond Portfolio and (iii) the designation of Dreyfus
BASIC Intermediate Municipal Bond Fund shares of Common Stock of
the Corporation be changed to Dreyfus BASIC Intermediate
Municipal Bond Portfolio.
THIRD: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
FOURTH: These Articles of Amendment were approved by at
least a majority of the entire Board of Directors of the
Corporation and are limited to changes expressly permitted by
Section 2-605 of subtitle 6 of Title 2 of the Maryland General
Corporation Law to be made without the affirmative vote of the
stockholders of the Corporation.
The President acknowledges these Articles of Amendment
to be the corporate act of the Corporation and states that to
the best of her knowledge, information and belief the matters
and facts set forth in these Articles with respect to the
authorization and approval of the amendment of the Corporation's
charter are true in all material respects, and that this
statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Dreyfus BASIC Municipal Money
Market Fund, Inc. has caused this instrument to be filed in its
name and on its behalf by its Vice President, Eric B. Fischman,
and witnessed by its Assistant Secretary, Ruth D. Leibert, on
the 19th day of October, 1994.

DREYFUS BASIC MUNICIPAL MONEY MARKET
FUND, INC.

By:
Eric B. Fischman, Vice President

WITNESS:

Ruth D. Leibert,
Assistant Secretary

ARTICLES SUPPLEMENTARY

DREYFUS BASIC MUNICIPAL MONEY MARKET FUND, INC., a
Maryland corporation having its principal office in the State of
Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:

FIRST: The aggregate number of shares of Common Stock
that the Corporation has authority to issue is increased by one
billion (1,000,000,000) shares, of which five hundred million
(500,000,000) shares shall be classified as shares of the
Dreyfus BASIC Intermediate Municipal Bond Fund and five hundred
million (500,000,000) shares shall be classified as shares of
the Dreyfus BASIC Municipal Bond Fund.

SECOND: The Dreyfus BASIC Intermediate Municipal Bond
Fund shares and the Dreyfus BASIC Municipal Bond Fund shares as
so classified by the Corporation's Board of Directors shall have
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption set forth in paragraph (5) of
Article FIFTH of the Corporation's Articles of Incorporation and
shall be subject to all provisions of the Articles of
Incorporation relating to stock of the Corporation generally.

THIRD: Immediately before the increase in the
aggregate number of shares as set forth in Article FIRST hereto,
the Corporation was authorized to issue three billion
(3,000,000,000) shares of Common Stock, all of which were of a
par value of one tenth of one cent ($.001) per share having an
aggregate par value of three million dollars ($3,000,000), all
of which shares were generic shares of Common Stock of the
Corporation.

FOURTH: As hereby increased and classified, the total
number of shares of stock which the Corporation has authority to
issue is four billion (4,000,000,000) shares of Common Stock,
all of which are of a par value of one tenth of one cent ($.001)
per share having an aggregate par value of four million dollars
($4,000,000), of which three billion (3,000,000,000) shares
(marketed as shares of "Dreyfus BASIC Municipal Money Market
Fund") are generic shares of Common Stock of the Corporation,
five hundred million (500,000,000) shares are classified as
shares of the Dreyfus BASIC Intermediate Municipal Bond Fund and
five hundred million (500,000,000) shares are classified as
shares of the Dreyfus BASIC Municipal Bond Fund.

FIFTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended.

SIXTH: The Board of Directors of the Corporation
increased the total number of shares of Common Stock the
Corporation has authority to issue pursuant to Section 2-105(c)
of the Maryland General Corporation Law and classified the
increased shares pursuant to authority provided in the
Corporation's charter.

IN WITNESS WHEREOF, Dreyfus BASIC Municipal Money
Market Fund, Inc. has caused these Articles Supplementary to be
signed and filed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on February
23, 1994.

DREYFUS BASIC MUNICIPAL MONEY
MARKET FUND, INC.

By:___________________________
Daniel C. Maclean,
Vice President

Witness:

Christine Pavalos,
Assistant Secretary

ARTICLES SUPPLEMENTARY

DREYFUS BASIC MUNICIPAL FUND, INC., a Maryland
corporation having its principal office in the State of Maryland
at 32 South Street, Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation that:
FIRST: The aggregate number of shares of Common Stock
that the Corporation has authority to issue is increased by one
billion (1,000,000,000) shares, all of which shall be classified
as shares of Dreyfus BASIC New Jersey Municipal Money Market
Portfolio.

SECOND: The shares of Common Stock of Dreyfus BASIC
New Jersey Municipal Money Market Portfolio classified hereby
shall have the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption as set
forth in Article FIFTH, Section (5) of the Corporation's
Charter, and shall be subject to all provisions of the
Corporation's Charter relating to stock of Corporation
generally.

THIRD: Immediately before the increase in the
aggregate number of shares as set forth in Article FIRST hereof,
the Corporation was authorized to issue four billion
(4,000,000,000) shares of stock, of which three billion
(3,000,000,000) shares are shares of Dreyfus BASIC Municipal
Money Market Portfolio, five hundred million (500,000,000)
shares are shares of Dreyfus BASIC Intermediate Municipal Bond
Portfolio and five hundred million (500,000,000) shares are
shares of Dreyfus BASIC Municipal Bond Portfolio, all having a
par value of one tenth of one cent ($.001) each, and an
aggregate par value of four million dollars ($4,000,000).

FOURTH: As hereby increased and classified, the total
number of shares of stock which the Corporation has authority to
issue is five billion (5,000,000,000) shares, all of which are
shares of Common Stock, with a par value of one-tenth of one
cent ($.001) per share, having an aggregate par value of five
million dollars ($5,000,000), of which three billion
(3,000,000,000) shares are classified as shares of Dreyfus BASIC
Municipal Money Market Portfolio, five hundred million
(500,000,000) shares are classified as shares of Dreyfus BASIC
Intermediate Municipal Bond Portfolio, five hundred million
(500,000,000) shares are classified as shares of Dreyfus BASIC
Municipal Bond Portfolio and one billion (1,000,000,000) shares
are classified as shares of Dreyfus BASIC New Jersey Municipal
Money Market Portfolio.

FIFTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended.

SIXTH: The Board of Directors of the Corporation
increased the total number of shares of capital stock that the
Corporation has authority to issue pursuant to Section 2-105(c)
of the Maryland General Corporation Law and classified the
increased shares pursuant to authority provided in the
Corporation's Charter.

The undersigned Vice President acknowledges these
Articles Supplementary to be the corporate act of the
Corporation and states that to the best of his knowledge,
information and belief, the matters and facts with respect to
authorization and approval set forth in these Articles are true
in all material respects and that this statement is made under
penalties of perjury.
IN WITNESS WHEREOF, Dreyfus BASIC Municipal Fund, Inc.
has caused these Articles Supplementary to be signed in its name
and on its behalf by its Vice President and witnessed by its
Assistant Secretary on October , 1995.

DREYFUS BASIC MUNICIPAL FUND, INC.

By:

Eric B. Fischman, Vice
President

Witness:

Ruth D. Leibert,
Assistant Secretary

CUSTODY AGREEMENT

Custody Agreement made as of August 28, 1991, as
amended October 11, 1995, between DREYFUS BASIC MUNICIPAL FUND, INC., a
corporation organized and existing under the laws of the State
of Maryland, having its principal office and place of business at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a
New York corporation authorized to do a banking business, having
its principal office and place of business at 110 Washington
Street, New York, New York 10286 (hereinafter called the
"Custodian").

W I T N E S S E T H :

that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian agree as follows:

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the
following meanings:

1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not
any such person is an Officer or employee of the Fund, duly
authorized by the Directors of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.

2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds
held in the Fund's custody account(s) at The Bank of New York, or its
successors, as of the close of such day or, if such day is not a
business day, the close of the preceding business day.

3. "Bankruptcy" shall mean with respect to a party
such party's making a general assignment, arrangement or composition
with or for the benefit of its creditors, or instituting or
having instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or the entry of an order for relief
under the Federal bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or if a petition is presented for the winding
up or liquidation of the party or a resolution is passed for its
winding up or liquidation, or it seeks, or becomes subject to,
the appointment of an administrator, receiver, trustee, custodian or
other similar official for it or for all or substantially all of
its assets or its taking any action in furtherance of, or
indicating its consent to approval of, or acquiescence in, any
of the foregoing.

4. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and Federal agency
securities, its successor or successors and its nominee or
nominees.

5. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts and Futures Contract Options entitling the holder,
upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified
underlying Securities.

6. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by any two
Officers of the Fund.

7. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and
a member of a national securities exchange qualified to act as a
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.

8. "Collateral Account" shall mean a segregated
account so denominated and pledged to the Custodian as security for, and
in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in para-
graph 8 of Article V herein, or (b) any receipt described in
Article V or VIII herein.

9. "Consumer Price Index" shall mean the U.S.
Consumer Price Index, all items and all urban consumers, U.S. city
average l982-84 equals 100, as first published without seasonal
adjustment by the Bureau of Labor Statistics, the Department of Labor,
without regard to subsequent revisions or corrections by such
Bureau.

10. "Covered Call Option" shall mean an exchange
traded option entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the
writer thereof the specified Securities (excluding Futures
Contracts) which are owned by the writer thereof and subject to
appropriate restrictions.

11. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the
Securities and Exchange Commission, its successor or successors and its
nominee or nominees, provided the Custodian has received a
certified copy of a resolution of the Fund's Directors
specifically approving deposits in DTC. The term "Depository"
shall further mean and include any other person authorized to
act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of the Fund's
Directors specifically approving deposits therein by the
Custodian.

12. "Earnings Credit" shall mean for any given day
during a calendar year the product of (a) the Federal Funds Rate
for such date minus .25%, and (b) 82% of the Available Balance.

13. "Federal Funds" shall mean immediately available
same day funds.

14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal Reserve Statistical Release H.15 (519) and
applicable to such day and each succeeding day which is not a
business day.

15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.

16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.

17. "Futures Contract Option" shall mean an option
with respect to a Futures Contract.

18. "Margin Account" shall mean a segregated account
in the name of a broker, dealer, futures commission merchant or
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant or Clearing Member,
or otherwise, in accordance with an agreement between the Fund, the
Custodian and a broker, dealer, futures commission merchant or
Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund
may from time to time determine. Securities held in the Book-Entry
System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry on its books and records.

19. "Merger" shall mean with respect to a party, the
consolidation or amalgamation with, merger into, or transfer of
all or substantially all of such party's assets to, another
entity, where such party is not the surviving entity.

20. "Money Market Security" shall be deemed to
include, without limitation, debt obligations issued or guaranteed as to
principal and interest by the government of the United States or
agencies or instrumentalities thereof, commercial paper,
certificates of deposit and bankers' acceptances, repurchase and
reverse repurchase agreements with respect to the same and bank
time deposits, where the purchase and sale of such securities
ordinarily requires settlement in Federal funds on the same date
as such purchase or sale.

21. "O.C.C." shall mean Options Clearing Corporation,
a clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.

22. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer or
any other person or persons duly authorized by the Directors of
the Fund to execute any Certificate, instruction, notice or
other instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.

23. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.

24. "Oral Instructions" shall mean verbal
instructions actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person.

25. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the holder,
upon timely exercise and tender of the specified underlying
Securities, to sell such Securities to the writer thereof for the exercise
price.

26. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
to repurchase such Securities at a described or specified date
and price.

27. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public
authorities (including, without limitation, general obligation bonds,
revenue bonds and industrial bonds and industrial development bonds),
bonds, debentures, notes, mortgages or other obligations, and
any certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe for the same, or
evidencing or representing any other rights or interest therein,
or any property or assets.

28. "Segregated Security Account" shall mean an
account maintained under the terms of this Agreement as a segregated
account, by recordation or otherwise, within the custody account
in which certain Securities and/or other assets of the Fund
shall be deposited and withdrawn from time to time in accordance with
Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.

29. "Series" shall mean the Series of the Fund
specified on Appendix D hereto, or, where the context requires
each such Series.

30. "Shares" shall mean the shares of Common Stock of
any Series of the Fund, each of which is allocated to a
particular Series.

31. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take
or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
stock index at the close of the last business day of the
contract and the price at which the futures contract is originally
struck.

32. "Stock Index Option" shall mean an exchange
traded option entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference between
the exercise price and the value of the index on the date of
exercise.

33. "Written Instructions" shall mean written
communications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.

ARTICLE II

APPOINTMENT OF CUSTODIAN

1. The Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any
time owned by the Fund during the period of this Agreement,
except that (a) if the Custodian fails to provide for the custody of
any of the Fund's Securities and moneys located or to be located
outside the United States in a manner satisfactory to the Fund,
the Fund shall be permitted to arrange for the custody of such
Securities and moneys located or to be located outside the
United States other than through the Custodian at rates to be
negotiated and borne by the Fund and (b) if the Custodian fails to continue
any existing sub-custodial or similar arrangements on
substantially the same terms as exist on the date of this
Agreement, the Fund shall be permitted to arrange for such or
similar services other than through the Custodian at rates to be
negotiated and borne by the Fund. The Custodian shall not
charge the Fund for any such terminated services after the date of such
termination.

2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.

ARTICLE III

CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys owned
by any Series, including cash received for the issuance of such
Series' shares, at any time during the period of this Agreement
and shall specify the Series to which the same are to be
specifically allocated. The Custodian will not be responsible
for such Securities and such moneys until actually received by it.
The Custodian will be entitled to reverse any credits made on a
Series' behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the
Custodian a certified resolution of the Directors of the Fund
approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry
System all Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of Securities
collateral. Prior to a deposit of Securities of a Series in the
Depository, the Fund shall deliver to the Custodian a certified
resolution of the Directors of the Fund approving, authorizing
and instructing the Custodian on a continuous and on-going basis
until instructed to the contrary by a Certificate actually received by
the Custodian to deposit in the Depository all Securities
eligible for deposit therein and to utilize the Depository to the extent
possible in connection with its performance hereunder,
including, without limitation, in connection with settlements of purchases
and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Securities and moneys of such
Series deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only assets held
by the Custodian for customers, including, but not limited to,
accounts in which the Custodian acts in a fiduciary or
representative capacity. Prior to the Custodian's accepting,
utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options as provided in this
Agreement, the Custodian shall have received a certified
resolution of the Fund's Board of Directors approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate actually
received by the Custodian, to accept, utilize and act in
accordance with such confirmations as provided in this
Agreement.

2. The Custodian shall credit to a separate account
in the name of the Fund for each Series all moneys received by it
for the account of the Fund, with respect to such Series. Money
credited to the separate account for a Series shall be disbursed
by the Custodian only:

(a) In payment for Securities purchased, as provided
in Article IV hereof;

(b) In payment of dividends or distributions, as
provided in Article XI hereof;

(d) In payment for Shares redeemed by it, as provided
in Article XII hereof;

(e) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made, the
Series account from which payment is to be made and the purpose
for which payment is to be made; or

(f) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian, as provided in
Article XV hereof.

3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of each Series
during said day. Where Securities are transferred to the
account of a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in
a fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account
on the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the
Fund with a detailed statement of the Securities and moneys held
for each Series under this Agreement.

4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held for a Series,
which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held
by the Custodian in that form; all other Securities held for a
Series may be registered in the name of such Series, in the name of any
duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the
Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository, any Securities which it
may hold for the account of a Series and which may from time to
time be registered in the name of such Series. The Custodian
shall hold all such Securities which are not held in the Book-
Entry System or in the Depository in a separate account in the
name of such Series physically segregated at all times from
those of any other person or persons.

5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry System
or the Depository with respect to Securities therein deposited,
shall with respect to all Securities held for each Series in
accordance with this Agreement:

(a) Collect all income due or payable and, in any
event, if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last 90 days, the Custodian will
provide a conditional payment of income within 60 days from the date the
Custodian received such notice, unless the Custodian reasonably
concludes that such income was not due or payable to the Fund,
provided that the Custodian may reverse any such conditional
payment upon its reasonably concluding that all or any portion
of such income was not due or payable, and provided further that
the Custodian shall not be liable for failing to collect on a timely
basis the full amount of income due or payable in respect of a
"floating rate instrument" or "variable rate instrument" (as
such terms are defined under Rule 2a-7 under the Investment Company
Act of l940, as amended) if it has acted in good faith, without
negligence or willful misconduct.

(b) Present for payment and collect the amount
payable upon such Securities which are called, but only if either (i)
the Custodian receives a written notice of such call, or (ii) notice
of such call appears in one or more of the publications listed
in Appendix C annexed hereto, which may be amended at any time by
the Custodian upon five business days' prior notification to the
Fund;

(d) Surrender Securities in temporary form for
definitive Securities;

(e) Execute, as Custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or
hereafter in effect; and

(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited, for
the account of each Series all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.

6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry System
or the Depository, shall:

(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents,
authorizations, and any other instruments whereby the authority of the Fund as
owner of any Securities may be exercised;

(b) Deliver any Securities held for the Series in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;

(c) Deliver any Securities held for the Series to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to evidence such
delivery;

(d) Make such transfers or exchanges of the assets of
the Series and take such other steps as shall be stated in said
order to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and

(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph 5(b) of
this Article which may be called as specified in the Certificate.

7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, Option or Futures Contract Option until after it shall
have determined, or shall have received a Certificate from the
Fund stating, that any such instruments or certificates are
available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f) of
the Investment Company Act of 1940, as amended, in connection with
the purchase, sale, settlement, closing out or writing of Futures
Contracts, Options or Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing, settlement
or closing out upon its receipt from a broker, dealer or futures
commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by
brokers, dealers, or futures commission merchants with respect
to such Futures Contracts, Options or Futures Contract Options, as
the case may be, confirming that such Security is held by such
broker, dealer or futures commission merchant, in book-entry
form or otherwise, in the name of the Custodian (or any nominee of
the Custodian) as custodian for the Fund, provided, however, that
payments to or deliveries from the Margin Account shall be made
in accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are
available, the Custodian shall, notwithstanding any provision in
this Agreement to the contrary, make payment for any Futures
Contract, Option or Futures Contract Option for which such
instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such
certificate, and deliver any Futures Contract, Option or Futures Contract
Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment
therefor. Any such instrument or certificate delivered to the
Custodian shall be held by the Custodian hereunder in accordance
with, and subject to, the provisions of this Agreement.

ARTICLE IV

PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS,
FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS

1. Promptly after each purchase of Securities by the
Fund, other than a purchase of any Option, Futures Contract,
Futures Contract Option or Reverse Repurchase Agreement, the
Fund shall deliver to the Custodian (i) with respect to each purchase
of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such purchase:
(a) the Series to which the Securities purchased are to be
specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the
person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the name of
the broker to which payment is to be made. The Custodian shall,
upon receipt of Securities purchased by or for such Series, pay
out of the moneys held for the account of such Series the total
amount payable to the person from whom, or the broker through
whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.

2. Promptly after each sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures
Contract Option or Reverse Repurchase Agreement, the Fund shall
deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions,
specifying with respect to each such sale: (a) the Series to which such
Securities sold were specifically allocated; (b) the name of the
issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest, if any; (d) the
date of sale; (e) the sale price per unit; (f) the total amount
payable to such Series upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the name of
the clearing broker, if any; and (h) the name of the broker to whom
the Securities are to be delivered. The Custodian shall deliver
the Securities upon receipt of the total amount payable to the
Fund for the account of such Series upon such sale, provided
that the same conforms to the total amount payable as set forth in
such Certificate, Oral Instructions or Written Instructions. Subject
to the foregoing, the Custodian may accept payment in such form
as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing
among dealers in Securities.

ARTICLE V

OPTIONS

1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the
Series to which the Option purchased is to be specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer
and the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased;
(d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the total amount payable by the
Fund for the account of such Series in connection with such purchase;
(h) the name of the Clearing Member through which such Option
was purchased; and (i) the name of the broker to whom payment is to
be made. The Custodian shall pay, upon receipt of a Clearing
Member's statement confirming the purchase of such Option held
by such Clearing Member for the account of the Custodian (or any
duly appointed and registered nominee of the Custodian) as custodian
for the Fund, out of moneys held for the account of such Series,
the total amount payable upon such purchase to the Clearing
Member through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such
Certificate.

2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to each such
sale: (a) the Series to which the Option sold was specifically
allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index Options
sold; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund for the
account of such Series upon such sale; and (h) the name of the
Clearing Member through which the sale was made. The Custodian
shall consent to the delivery of the Option sold by the Clearing
Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such
Option against payment to the Custodian of the total amount payable to
the Fund for the account of such Series, provided that the same
conforms to the total amount payable as set forth in such
Certificate.

3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying
with respect to such Call Option: (a) the Series to which the Call
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which
such Call Option was exercised. The Custodian shall, upon
receipt of the Securities underlying the Call Option which was
exercised, pay out of the moneys held for the account of such Series the
total amount payable to the Clearing Member through whom the
Call Option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.

4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which the Put
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund for the account of such Series upon such
exercise; and (g) the name of the Clearing Member through which
such Put Option was exercised. The Custodian shall, upon
receipt of the amount payable upon the exercise of the Put Option,
deliver or direct the Depository to deliver the Securities, provided the
same conforms to the amount payable to the Fund for the account
of such Series as set forth in such Certificate.

5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series to
which the Stock Index Option exercised was specifically allocated;
(b) the type of Stock Index Option (put or call); (c) the number
of Options being exercised; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise price;
(g) the total amount to be received by the Fund for the account
of such Series in connection with such exercise; and (h) the
Clearing Member from which such payment is to be received.

6. Whenever the Fund writes a Covered Call Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series to which the Covered Call Option written is to be
specifically allocated; (b) the name of the issuer and the title
and number of shares for which the Covered Call Option was
written and which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund for
the account of such Series; (f) the date such Covered Call Option
was written; and (g) the name of the Clearing Member through which
the premium is to be received. The Custodian shall deliver or cause
to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call Option,
such receipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call Options and shall
impose, or direct the Depository to impose, upon the underlying
Securities specified in the Certificate such restrictions as may
be required by such receipts. Notwithstanding the foregoing,
the Custodian has the right, upon prior written notification to the
Fund, at any time to refuse to issue any receipts for Securities
in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.

7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such Covered
Call Option and specifying: (a) the Series to which the Covered Call
Option exercised was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Covered
Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable
to the Fund for the account of such Series upon such delivery.
Upon the return and/or cancellation of any receipts delivered
pursuant to paragraph 6 of this Article, the Custodian shall
deliver, or direct the Depository to deliver, the underlying
Securities as specified in the Certificate for the amount to be
received as set forth in such Certificate.

8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series to which the
Put Option written is to be specifically allocated; (b) the name of
the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by
the Fund for the account of such Series; (f) the date such Put
Option is written; (g) the name of the Clearing Member through
which the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash,
and/or the amount and kind of Securities, if any, to be
deposited in the Segregated Security Account; and (i) the amount of cash
and/or the amount and kind of Securities to be deposited into
the Collateral Account. The Custodian shall, after making the
deposits into the Collateral Account specified in the
Certificate, issue a Put Option guarantee letter substantially in the form
utilized by the Custodian on the date hereof, and deliver the
same to the Clearing Member specified in the Certificate against
receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no
obligation to issue any Put Option guarantee letter or similar
document if it is unable to make any of the representations
contained therein.

9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which the Put Option exercised was specifically
allocated; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from
which the underlying Securities are to be received; (d) the
total amount payable by the Fund upon such delivery; (e) the amount of
cash and/or the amount and kind of Securities to be withdrawn
from the Collateral Account; and (f) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the
Segregated Security Account. Upon the return and/or
cancellation of any Put Option guarantee letter or similar document issued by
the Custodian in connection with such Put Option, the Custodian
shall pay out of the moneys held for the account of such Series
the total amount payable to the Clearing Member specified in the
Certificate as set forth in such Certificate, and shall make the
withdrawals specified in such Certificate.

10. Whenever the Fund writes a Stock Index Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which the Stock Index Option written is to be
specifically allocated; (b) whether such Stock Index Option is a
put or a call; (c) the number of Options written; (d) the stock
index to which such Option relates; (e) the expiration date;
(f) the exercise price; (g) the Clearing Member through which
such Option was written; (h) the premium to be received by the Fund
for the account of such Series; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Segregated Security Account; (j) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Collateral Account; and (k) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in a Margin
Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into
the Segregated Security Account specified in the Certificate, and
either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Stock Index Options
and make the deposits into the Collateral Account specified in
the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.

11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series to which the Stock Index Option exercised was
specifically allocated; (b) such information as may be necessary
to identify the Stock Index Option being exercised; (c) the
Clearing Member through which such Stock Index Option is being
exercised; (d) the total amount payable upon such exercise, and
whether such amount is to be paid by or to the Fund for the
account of such Series; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Segregated Security
Account and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article,
the Custodian shall pay to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.

12. Whenever the Fund purchases any Option identical
to a previously written Option described in paragraphs 6, 8 or 10
of this Article in a transaction expressly designated as a "Closing
Purchase Transaction" in order to liquidate its position as a
writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to the Option
being purchased: (a) the Series to which the Option purchased
is to be specifically allocated; (b) that the transaction is a
Closing Purchase Transaction; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the
case of a Stock Index Option, the stock index to which such Option
relates and the number of Options held; (d) the exercise price;
(e) the premium to be paid by the Fund for the account of such
Series; (f) the expiration date; (g) the type of Option (put or
call); (h) the date of such purchase; (i) the name of the
Clearing Member to which the premium is to be paid; and (j) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account, a specified Margin
Account or the Segregated Security Account. Upon the Custodian's
payment of the premium and the return and/or cancellation of any receipt
issued pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the Option being liquidated through the Closing
Purchase Transaction, the Custodian shall remove, or direct the
Depository to remove, the previously imposed restrictions on the
Securities underlying the Call Option.

13. Upon the expiration or exercise of, or
consummation of a Closing Purchase Transaction with respect to, any Option
purchased or written by the Fund and described in this Article,
the Custodian shall delete such Option from the statements
delivered to the Fund for the account of a Series pursuant to
paragraph 3 of Article III herein, and upon the return and/or
cancellation of any receipts issued by the Custodian, shall make
such withdrawals from the Collateral Account, the Margin Account
and/or the Segregated Security Account as may be specified in a
Certificate received in connection with such expiration,
exercise, or consummation.

ARTICLE VI

FUTURES CONTRACTS

1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract (or with
respect to any number of identical Futures Contract(s)): (a) the Series
to which the Futures Contract entered into is to be specifically
allocated; (b) the category of Futures Contract (the name of the
underlying stock index or financial instrument); (c) the number
of identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures Contract(s); (e) the date the
Futures Contract(s) was (were) entered into and the maturity
date; (f) whether the Fund is buying (going long) or selling (going
short) on such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in
the Segregated Security Account; (h) the name of the broker, dealer
or futures commission merchant through which the Futures Contract
was entered into; and (i) the amount of fee or commission, if any,
to be paid and the name of the broker, dealer or futures commission
merchant to whom such amount is to be paid. The Custodian shall
make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment of the fee or commission, if
any, specified in the Certificate and deposit in the Segregated
Security Account the amount of cash and/or the amount and kind
of Securities specified in said Certificate.

2. (a) Any variation margin payment or similar
payment required to be made by the Fund for the account of a Series to a
broker, dealer or futures commission merchant with respect to an
outstanding Futures Contract shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

(b) Any variation margin payment or similar
payment from a broker, dealer or futures commission merchant to the Fund
with respect to an outstanding Futures Contract shall be
received and dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series to which the
Futures Contract retained is to be specifically allocated; (b)
the Futures Contract; (c) with respect to a Stock Index Futures
Contract, the total cash settlement amount to be paid or
received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (d) the
broker, dealer or futures commission merchant to or from which payment
or delivery is to be made or received; and (e) the amount of cash
and/or Securities to be withdrawn from the Segregated Security
Account. The Custodian shall make the payment or delivery
specified in the Certificate and delete such Futures Contract
from the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.

4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the Series to which the offsetting Futures
Contract is to be specifically allocated; (b) the items of
information required in a Certificate described in paragraph 1
of this Article, and (c) the Futures Contract being offset. The
Custodian shall make payment of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract
being offset from the statements delivered to the Fund for the account
of such Series pursuant to paragraph 3 of Article III herein,
and make such withdrawals from the Segregated Security Account as
may be specified in such Certificate. The withdrawals, if any, to
be made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

ARTICLE VII

FUTURES CONTRACT OPTIONS

1. Promptly after the purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
Option: (a) the Series to which the Futures Contract Option
purchased is to be specifically allocated; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option
purchased; (d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the amount of premium to be paid by
the Fund for the account of such Series upon such purchase; (h)
the name of the broker or futures commission merchant through
which such option was purchased; and (i) the name of the broker
or futures commission merchant to whom payment is to be made. The
Custodian shall pay the total amount to be paid upon such
purchase to the broker or futures commission merchant through whom the
purchase was made, provided that the same conforms to the amount
set forth in such Certificate.

2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) the Series to
which the Futures Contract Option sold was specifically
allocated; (b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the date of sale; (e) the sale price; (f)
the date of settlement; (g) the total amount payable to the Fund for
the account of such Series upon such sale; and (h) the name of
the broker or futures commission merchant through which the sale was
made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund for the
account of such Series, provided the same conforms to the total amount
payable as set forth in such Certificate.

3. Whenever a Futures Contract Option purchased by
the Fund pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which the Futures Contract Option exercised
was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission merchant
through which the Futures Contract Option is exercised; (f) the net
total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund for the account of such Series; and (h) the
amount of cash and/or the amount and kind of Securities to be
deposited in the Segregated Security Account. The Custodian
shall make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.

4. Whenever the Fund writes a Futures Contract
Option, the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a)
the Series to which the Futures Contract Option written is to be
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date;
(e) the exercise price; (f) the premium to be received by the
Fund for the account of such Series; (g) the name of the broker or
futures commission merchant through which the premium is to be
received; and (h) the amount of cash and/or the amount and kind
of Securities, if any, to be deposited in the Segregated Security
Account. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits into the
Segregated Security Account, if any, as specified in the
Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.

5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which the Futures Contract Option exercised was specifically
allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract
Option; (d) the name of the broker or futures commission
merchant through which such Futures Contract Option was exercised; (e)
the net total amount, if any, payable to the Fund for the account of
such Series upon such exercise; (f) the net total amount, if
any, payable by the Fund for the account of such Series upon such
exercise; and (g) the amount of cash and/or the amount and kind
of Securities to be deposited in the Segregated Security Account.
The Custodian shall, upon its receipt of the net total amount
payable to the Fund for the account of such Series, if any,
specified in such Certificate make the payments, if any, and the
deposits, if any, into the Segregated Security Account as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.

6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which the Futures Contract Option exercised was
specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying such
Futures Contract Option; (d) the name of the broker or futures
commission merchant through which such Futures Contract Option
is exercised; (e) the net total amount, if any, payable to the Fund
for the account of such Series upon such exercise; (f) the net
total amount, if any, payable by the Fund for the account of
such Series upon such exercise; and (g) the amount and kind of
Securities and/or cash to be withdrawn from or deposited in the
Segregated Security Account, if any. The Custodian shall, upon
its receipt of the net total amount payable to the Fund for the
account of such Series, if any, specified in the Certificate,
make the payments, if any, and the deposits, if any, into the
Segregated Security Account as specified in the Certificate.
The deposits to and/or withdrawals from the Margin Account, if any,
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as
a writer of such Futures Contract Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect
to the Futures Contract Option being purchased: (a) the Series to
which the Futures Contract Option purchased is to be
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the exercise price; (e) the premium to be
paid by the Fund for the account of such Series; (f) the
expiration date; (g) the name of the broker or futures
commission merchant to which the premium is to be paid; and (h) the amount
of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Segregated Security Account. The Custodian
shall effect the withdrawals from the Segregated Security
Account specified in the Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

8. Upon the expiration or exercise of, or
consummation of a closing transaction with respect to, any Futures Contract
Option written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein, and (b) make such withdrawals
from, and/or, in the case of an exercise, such deposits into, the
Segregated Security Account as may be specified in a
Certificate. The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.

9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.

ARTICLE VIII

SHORT SALES

1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the
Series to which the short sale is to be specifically allocated; (b) the
name of the issuer and the title of the Security; (c) the number
of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e)
the sale price per unit; (f) the total amount credited to the
Fund for the account of such Series upon such sales, if any; (g) the
amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h)
the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Segregated Security Account; and (i)
the name of the broker through which such short sale was made. The
Custodian shall upon its receipt of a statement from such broker
confirming such sale and that the total amount credited to the
Fund upon such sale, if any, as specified in the Certificate is
held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the
Segregated Security Account specified in the Certificate.

2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing-out:
(a) the Series to which the short sale being closed-out was
specifically allocated; (b) the name of the issuer and the title
of the Security; (c) the number of shares or the principal
amount, and accrued interest or dividends, if any, required to effect
such closing-out to be delivered to the broker; (d) the dates of the
closing-out and settlement; (e) the purchase price per unit; (f)
the net total amount payable to the Fund for the account of such
Series upon such closing-out; (g) the net total amount payable
to the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the Segregated
Security Account; and (j) the name of the broker through which
the Fund is effecting such closing-out. The Custodian shall, upon
receipt of the net total amount payable to the Fund for the
account of such Series upon such closing-out and the return
and/or cancellation of the receipts, if any, issued by the custodian
with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Series to the broker the net total
amount payable to the broker, and make the withdrawals from the
Margin Account and the Segregated Security Account, as the same
are specified in the Certificate.

ARTICLE IX

REVERSE REPURCHASE AGREEMENTS

1. Promptly after the Fund, on behalf of a Series,
enters into a Reverse Repurchase Agreement with respect to
Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate or in the event
such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions
specifying: (a) the Series to which the Reverse Repurchase Agreement is to
be specifically allocated; (b) the total amount payable to the Fund
for the account of such Series in connection with such Reverse
Repurchase Agreement; (c) the broker or dealer through or with
which the Reverse Repurchase Agreement is entered; (d) the
amount and kind of Securities to be delivered by the Fund to such
broker or dealer; (e) the date of such Reverse Repurchase Agreement;
and (f) the amount of cash and/or the amount and kind of Securities,
if any, to be deposited in a Segregated Security Account in
connection with such Reverse Repurchase Agreement. The
Custodian shall, upon receipt of the total amount payable to the Fund
specified in the Certificate, Oral Instructions or Written
Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Segregated Security Account, specified
in such Certificate, Oral Instructions or Written Instructions.

2. Upon the termination of a Reverse Repurchase
Agreement described in paragraph 1 of this Article, the Fund
shall promptly deliver a Certificate or, in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate,
Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Series to which the Reverse Repurchase
Agreement terminated was specifically allocated; (b) the Reverse
Repurchase Agreement being terminated; (c) the total amount
payable by the Fund for the account of such Series in connection
with such termination; (d) the amount and kind of Securities to
be received by the Fund for the account of such Series in
connection with such termination; (e) the date of termination; (f) the name
of the broker or dealer with or through which the Reverse
Repurchase Agreement is to be terminated; and (g) the amount of
cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon
receipt of the amount and kind of Securities to be received by
the Fund specified in the Certificate, Oral Instructions or Written
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written
Instructions.

ARTICLE X

CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS

1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Segregated Security Account
as specified in a Certificate received by the Custodian. Such
Certificate shall specify the amount of cash and/or the amount
and kind of Securities to be deposited in, or withdrawn from, the
Segregated Security Account. In the event that the Fund fails
to specify in a Certificate the designated Series, the name of the
issuer, the title and the number of shares or the principal
amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the
Custodian shall be under no obligation to make any such deposit
or withdrawal and shall so notify the Fund.

2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.

3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.

4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, the Custodian may enforce its
lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the
Custodian. In the event the Custodian should realize on any such property
net proceeds which are less than the Custodian's obligations under
any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund
within the scope of Article XIII herein.

5. On each business day, the Custodian shall furnish
the Fund with respect to each Series a statement with respect to
each Margin Account in which money or Securities are held
specifying as of the close of business on the previous business
day: (a) the name of the Margin Account; (b) the amount and
kind of Securities held therein; and (c) the amount of money held
therein. The Custodian shall make available upon request to any
broker, dealer or futures commission merchant specified in the
name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.

6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account, the Custodian shall furnish the Fund with a
statement with respect to such Collateral Account specifying the
amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding
the delivery to the Fund of such statement, the Fund shall furnish
to the Custodian a Certificate or Written Instructions specifying
the then market value of the securities described in such statement.

In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put
Option, guarantee letter or similar document, the Fund shall
promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to
eliminate such deficiency.

ARTICLE XI

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. For each Series, the Fund shall furnish to the
Custodian a copy of the resolution of the Directors, certified
by the Secretary or any Assistant Secretary, either (i) setting
forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the
total amount payable to the Dividend Agent of the Fund on the payment
date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the
amount payable per share to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the
payment date.

Upon the payment date specified in such resolution,
Oral Instructions, Written Instructions or Certificate, as the
case may be, the Custodian shall pay out of the moneys held for
the account of the Series the total amount payable to the
Dividend Agent of the Fund.

ARTICLE XII

SALE AND REDEMPTION OF SHARES OF COMMON STOCK

1. Whenever the Fund shall sell any Series' Shares,
the Fund shall deliver to the Custodian a Certificate duly
specifying:

(a) The number of Shares sold, trade date, and price;
and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.

2. Upon receipt of such money from the Transfer
Agent, the Custodian shall credit such money to the account of such
Series.

3. Upon issuance of any Series' Shares in accordance
with the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such Series, all
original issue or other taxes required to be paid by the Fund
for the account of such Series in connection with such issuance upon
the receipt of a Certificate specifying the amount to be paid.

4. Except as provided hereinafter, whenever the Fund
shall hereafter redeem any Series' Shares, the Fund shall
furnish to the Custodian a Certificate specifying:

(a) The number of Shares redeemed; and

(b) The amount to be paid for the Shares redeemed.

5. Upon receipt from the Transfer Agent of an advice
setting forth the number of a Series' Shares received by the
Transfer Agent for redemption and that such Shares are valid and
in good form for redemption, the Custodian shall make payment to
the Transfer Agent out of the moneys held for the account of
such Series of the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.

6. Notwithstanding the above provisions regarding the
redemption of any of Series' Shares, whenever a Series' Shares
are redeemed pursuant to any check redemption privilege which may
from time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its agent setting forth that the
redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of
such check redemption privilege out of the money held in the
account of the Fund for such purposes.

ARTICLE XIII

OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian should in its sole discretion
advance funds on behalf of a Series which results in an
overdraft because the moneys held by the Custodian for the account of such
Series shall be insufficient to pay the total amount payable
upon a purchase of Securities as set forth in a Certificate or Oral
Instructions issued pursuant to Article IV, or which results in
an overdraft in the account for such Series for some other reason,
or if a Series is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article XIII), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to such Series payable on demand
and shall bear interest from the date incurred at a rate per
annum (based on a 360-day year for the actual number of days involved)
equal to the Federal Funds Rate plus l/2%, such rate to be
adjusted on the effective date of any change in such Federal
Funds Rate but in no event to be less than 6% per annum, except that
any overdraft resulting from an error by the Custodian shall bear no
interest. Any such overdraft or indebtedness shall be reduced
by an amount equal to the total of all amounts due such Series
which have not been collected by the Custodian on behalf of such
Series when due because of the failure of the Custodian to make timely
demand or presentment for payment. In addition, the Fund hereby
agrees that the Custodian shall have a continuing lien and
security interest in and to any property at any time held by it
for the benefit of such Series or in which such Series may have
an interest which is then in the Custodian's possession or control
or in possession or control of any third party acting in the
Custodian's behalf. The Fund authorizes the Custodian, in its
sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any
balance of account standing to such Series' credit on the
Custodian's books. For purposes of this Section 1 of
Article XIII, "overdraft" shall mean a negative Available
Balance.

2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows money for
investment or for temporary or emergency purposes using
Securities in a Series' portfolio as collateral for such borrowings, a
notice or undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the Series to which the
borrowing relates; (b) the name of the bank; (c) the amount and
terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (d) the time and date, if known, on
which the loan is to be entered into; (e) the date on which the loan
becomes due and payable; (f) the total amount payable to the
Fund for the account of such Series on the borrowing date; (g) the
market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities;
and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940 and
the Fund's prospectus. The Custodian shall deliver on the borrowing
date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any
transaction described in this paragraph. The Fund shall cause
all Securities released from collateral status to be returned
directly to the Custodian, and the Custodian shall receive from time to
time such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in a Certificate the
Series, the name of the issuer, the title and number of shares or the
principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under
any obligation to deliver any Securities.

ARTICLE

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. If the Fund is permitted by the terms of its
Articles of Incorporation and as disclosed in its most recent
and currently effective prospectus to lend the portfolio Securities
of a Series, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan: (a) the
Series to which the Securities to be loaned are specifically
allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount
loaned; (d) the date of loan and delivery; (e) the total amount
to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the premium, if any,
separately identified; and (f) the name of the broker, dealer or
financial institution to which the loan was made. The Custodian
shall deliver the Securities thus designated to the broker,
dealer or financial institution to which the loan was made upon receipt
of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection
with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's
check payable to the order of the Fund or the Custodian drawn on New
York Clearing House funds and may deliver Securities in
accordance with the customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the Securities to be returned are specifically
allocated; (b) the name of the issuer and the title of the
Securities to be returned; (c) the number of shares or the
principal amount to be returned; (d) the date of termination;
(e) the total amount to be delivered by the Custodian (including the
cash collateral for such Securities minus any offsetting credits
as described in said Certificate); and (f) the name of the
broker, dealer or financial institution from which the Securities will
be returned. The Custodian shall receive all Securities returned
from the broker, dealer, or financial institution to which such
Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Series specified in the
Certificate, the total amount payable upon such return of
Securities as set forth in the Certificate.

ARTICLE XV

CONCERNING THE CUSTODIAN

1. Except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or
damage, including counsel fees, resulting from its action or omission to
act or otherwise, either hereunder or under any Margin Account
Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with
respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and opinion
of counsel to the Fund or of its own counsel, at the expense of the
Fund, and shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or
willful misconduct on the part of the Custodian or any of its
employees or agents.

2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:

(a) The validity of the issue of any Securities
purchased, sold or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;

(b) The legality of the issue or sale of any of the
Fund's Shares, or the sufficiency of the amount to be received
therefor;

(d) The legality of the declaration or payment of any
dividend by the Fund;

(e) The legality of any borrowing by the Fund using
Securities as collateral;

(f) The legality of any loan of portfolio Securities
pursuant to Article XIV of this Agreement, nor shall the
Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan
of portfolio Securities of the Fund is adequate collateral for the
Fund against any loss it might sustain as a result of such loan.

The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or
notify the Fund that the amount of such cash collateral held by
it for the Fund is sufficient collateral for the Fund, but such
duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to
see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article
XIV of this Agreement makes payment to it of any dividends or
interest which are payable to or for the account of the applicable Series
of the Fund during the period of such loan or at the termination
of such loan, provided, however, that the Custodian shall
promptly notify the Fund in the event that such dividends or interest are
not paid and received when due; or

(g) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Segregated
Security Account or Collateral Account in connection with transactions by
the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer, futures commission
merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may
be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by
the Custodian from any broker, dealer, futures commission
merchant or Clearing Member is the amount the Fund is entitled to
receive, or to notify the Fund of the Custodian's receipt or non-receipt
of any such payment; provided however that the Custodian, upon the
Fund's written request, shall, as Custodian, demand from any
broker, dealer, futures commission merchant or Clearing Member
identified by the Fund the payment of any variation margin
payment or similar payment that the Fund asserts it is entitled to
receive pursuant to the terms of a Margin Account Agreement or otherwise
from such broker, dealer, futures commission merchant or
Clearing Member.

3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by
any check, draft or other instrument for the payment of money,
received by it on behalf of the Fund until the Custodian
actually receives and collects such money directly or by the final
crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.

The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls,
conversions, exchange, offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in
the Depository which may mature or be redeemed, retired, called or
otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities held in the
Depository, the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian
shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by
the Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be required.

5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.

6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.

7. The Custodian may appoint one or more banking
institutions as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited to, banking
institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon terms and conditions
approved in the Certificate, which shall, if requested by the
Custodian, be accompanied by an approving resolution of the
Fund's Board of Directors adopted in accordance with Rule 17f-5 under
the Investment Company Act of 1940, as amended. Notwithstanding
anything to the contrary contained in this Agreement, the
Custodian shall hold harmless and indemnify the Fund from and
against any losses, actions, claims, demands, expenses and
proceedings, including counsel fees, that occur as a result of
any act or omission of any Foreign Sub-Custodian or Depository with
respect to the safekeeping of moneys and securities of the Fund.

8. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of its
Articles of Incorporation.

9. (a) The Custodian shall be entitled to receive
and the Fund agrees to pay to the Custodian all reasonable out-of-
pocket expenses and such compensation and fees as are specified
on Schedule A hereto. The Custodian shall not deem amounts payable
in respect of foreign custodial services to be out-of-pocket
expenses, it being the parties' intention that all fees for such
services shall be as set forth on Schedule B hereto and shall be
provided for the term of this Agreement without any automatic or
unilateral increase. The Custodian shall have the right to
unilaterally increase the figures on Schedule A on or after
March 1, 1994 and on or after each succeeding March 1 thereafter
by an amount equal to 50% of the increase in the Consumer Price
Index for the calendar year ending on the December 31
immediately preceding the calendar year in which such March 1 occurs,
provided, however, that during each such annual period
commencing on a March 1, the aggregate increase during such period shall
not be in excess of 10%. Any increase by the Custodian shall be
specified in a written notice delivered to the Fund at least
thirty days prior to the effective date of the increase. The
Custodian may charge such compensation and any expenses incurred
by the Custodian in the performance of its duties pursuant to
such agreement against any money held by it for the account of the
Fund. The Custodian shall also be entitled to charge against
any money held by it for the account of the Fund the amount of any
loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions
of this Agreement. The expenses which the Custodian may charge
against the account of the Fund include, but are not limited to,
the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of
the Fund.

(b) The Fund shall receive a credit for each
calendar month against such compensation and fees of the
Custodian as may be payable by the Fund with respect to such calendar
month in an amount equal to the aggregate of its Earnings Credit for
such calendar month. In no event may any Earnings Credits be
carried forward to any fiscal year other than the fiscal year in
which it was earned, or, unless permitted by applicable law,
transferred to, or utilized by, any other person or entity,
provided that any such transferred Earnings Credit can be used
only to offset compensation and fees of the Custodian for
services rendered to such transferee and cannot be used to pay the
Custodian's out-of-pocket expenses. For purposes of this sub-
section (b), the Fund is permitted to transfer Earnings Credits
only to The Dreyfus Corporation, its affiliates and/or any
investment company now or in the future sponsored by The Dreyfus
Corporation or any of its affiliates or for which The Dreyfus
Corporation or any of its affiliates acts as the sole investment
adviser or as the principal distributor. For purposes of this
sub-section (b), a fiscal year shall mean the twelve-month period
commencing on the effective date of this Agreement and on each
anniversary thereof.

10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or XI hereof. The Fund
agrees to forward to the Custodian a Certificate or facsimile
thereof, confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof is
received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such
Oral Instructions or Written Instructions are given to the Custodian.

The Fund agrees that the fact that such confirming instructions
are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the
transactions hereby authorized by the Fund. The Fund agrees that the
Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions, provided such instructions reasonably appear to
have been received from an Authorized Person.

11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.

12. The books and records pertaining to the Fund
which are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940, as amended,
and other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business
hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the
Fund or the Fund's authorized representative at the Fund's
expense.

13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository,
or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.

14. The Fund agrees to indemnify the Custodian
against and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees, howsoever
arising or incurred because of or in connection with the
Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article XII as part of any check redemption privilege
program of the Fund, except for any such liability, claim, loss and
demand arising out of the Custodian's own negligence or willful
misconduct.

15. Subject to the foregoing provisions of this
Agreement, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance with the
customs prevailing from time to time among brokers or dealers in
such Securities.

16. The Custodian shall have no duties or responsi-
bilities whatsoever except such duties and responsibilities as
are specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.

ARTICLE XVI

TERMINATION

1. (a) Any termination may be effected only by the
terminating party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than two hundred seventy (270) days after the date of giving of
such notice.

(b) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under this Agreement and such breach has remained uncured for a
period of thirty days after the Custodian's receipt from the
Fund of written notice specifying such breach.

(c) Either party, immediately upon written
notice to the other party, may terminate this Agreement upon the Merger
or Bankruptcy of the other party.

(d) The Fund may at any time terminate this
Agreement if the Custodian has materially breached its
obligations under the "Amendment to Transfer Agency Agreements" dated August
18, 1989 and has not cured such breach as promptly as
practicable and in any event within seven days of its receipt of written
notice of such breach, provided that the Custodian shall not be
permitted to cure any such material breach arising from the
willful misconduct of the Custodian.

In the event notice of termination is given by the
Fund, it shall be accompanied by a copy of a resolution of the
Directors of the Fund, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating
a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event notice of
termination is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of
a resolution of its Directors, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth
in such notice, this Agreement shall terminate and the Custodian
shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and
held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall
then be entitled.

2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall, upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be its own
custodian, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book-Entry System, in any
Depository or by a Clearing Member which cannot be delivered to
the Fund, to hold such Securities hereunder in accordance with
this Agreement.

ARTICLE XVII

MISCELLANEOUS

1. Annexed hereto as Appendix A is a Certificate
setting forth the names of the present Authorized Persons. The
Fund agrees to furnish to the Custodian a new Certificate in
similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Certificate.

2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund setting forth the
names of the present Officers of the Fund. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event
any such present Officer ceases to be an Officer of the Fund, or
in the event that other or additional Officers are elected or
appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set
forth in the last delivered Certificate.

3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 110
Washington Street, 13th Floor, New York, New York 10286, or at
such other place as the Custodian may from time to time
designate in writing.

4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund, shall be sufficiently given if addressed to the Fund and mailed
or delivered to it at its offices at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or at such other place as the
Fund may from time to time designate in writing.

5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Directors of the Fund.

6. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its Board of
Directors.

7. This Agreement shall be construed in accordance
with the laws of the State of New York.

8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective Officers, thereunto
duly authorized, as of the day and year first above written.

DREYFUS BASIC MUNICIPAL FUND, INC.

By:

Attest:

THE BANK OF NEW YORK

By:

Attest:

Appendix
A

DREYFUS BASIC MUNICIPAL FUND, INC.

AUTHORIZED SIGNATORIES:
CASH ACCOUNT AND/OR CUSTODIAN ACCOUNT
FOR PORTFOLIO SECURITIES TRANSACTIONS

Group I Group II

Frank Greene, Phyllis Paul R. Casti, Jr.
Meiner, Paul R. Casti, Jr., Jeffrey N. Nachman Thomas J.Durante
Thomas J. Durante, Jean Philip Toia James M. Windels
Farley, Gregory S. Gruber, Lawrence Kash Paul T. Molloy
Paul T. Molloy, Jeffrey N. Joseph I. Connolly Jean Farley
Nachman, James M. Windels, Gregory S. Gruber
Anna Mancini and Mary
Kate Macchia

Cash Account

1. Fees payable to The Bank of New York pursuant to written
agreement with the Fund for services rendered in its
capacity as Custodian or agent of the Fund, or to First Data
Investor Services Group, Inc. in its capacity as a permitted
subcontractor or agent of the Fund pursuant to an agreement
with Dreyfus Transfer, Inc., the Fund's Transfer Agent:

Two (2) signatures required, one of which must be from
Group II, except that no individual shall be
authorized to sign more than once.

2. Other expenses of the Fund, $5,000 and under:

Any combination of two (2) signatures from either
Group I or Group II, or both such Groups, except that no
individual shall be authorized to sign more than once.

3. Other expenses of the Fund, over $5,000 but not over
$25,000:

Two (2) signatures required, one of which must be from
Group II, except that no individual shall be
authorized to sign more than once.

4. Other expenses of the Fund, over $25,000:

Two (2) signatures required, one from Group I or Group
II, including any one of the following: Paul R. Casti, Jr.,
James M. Windels, Jeffrey N. Nachman, Joseph I.
Connolly or Philip Toia, except that no individual shall be
authorized to sign more than once.

Custodian Account for Portfolio Securities Transactions

Two (2) signatures required from any of the following:

Joseph I. Connolly, Philip Toia, Paul R. Casti,
Jr., Thomas J. Durante, Jean Farley, Gregory S.
Gruber, Paul T. Molloy, Jeffrey N. Nachman, James M.
Windels, Mary Kate Macchia, Robert Salviolo, Katya
Jiminez, Paul Goerke, Christine O'Hara and Anna Mancini.

DREYFUS BASIC MUNICIPAL FUND, INC.
CUSTODY AGREEMENT
APPENDIX B

The undersigned Officers of the Fund do hereby certify
that the following individuals, whose specimen signatures are on
file with The Bank of New York, have been duly elected or
appointed by the Fund's Board to the position set forth opposite their
names and have qualified therefor:

Name Position

Richard J. Moynihan President and Investment
Officer

A. Paul Disdier Vice President and Investment
Officer

Karen M. Hand Vice President and Investment
Officer

Stephen C. Kris Vice President and Investment
Officer

Jill C. Shaffro Vice President and Investment
Officer

L. Lawrence Troutman Vice President and Investment
Officer

Samuel J. Weinstock Vice President and Investment
Officer

Monica S. Wieboldt Vice President and Investment
Officer

Daniel C. Maclean Vice President

Jeffrey N. Nachman Vice President and Treasurer

Paul T. Molloy Controller

Mark N. Jacobs Secretary

Robert I. Frenkel Assistant Secretary

Christine Pavalos Assistant Secretary

Title: Title:
CUSTODY AGREEMENT

APPENDIX C

The following are designated publications for purposes
of paragraph 5(b) of Article III:

The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal

CUSTODY AGREEMENT

APPENDIX D

Name of Series

Dreyfus BASIC Municipal Money Market Portfolio
Dreyfus BASIC Intermediate Municipal Bond Portfolio
Dreyfus BASIC Municipal Bond Portfolio
Dreyfus BASIC New Jersey Municipal Money Market Portfolio

Schedule A

The fees payable to the Custodian with respect to
securities held in domestic custody are annexed hereto.
DREYFUS BASIC MUNICIPAL FUND, INC.

Dreyfus BASIC Municipal Money Market Portfolio
Dreyfus BASIC New Jersey Municipal Money Market Portfolio

Domestic Custody Fees

Basic Fee: 1/100 of 1% per annum of the total market value
of domestic securities held.

Custodial Transactions:

$13.00 per transaction for each receipt and
delivery of book entry securities through DTC/FRB.

$15.00 per transaction for PTC Settlements.

$10.00 per transaction for PTC Paydowns.

$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing
options (preparation of depository or escrow receipts)
and initial futures transactions.

$5.00 for futures variation margin maintenance.

$200.00 for collection of interest on securities
held in "street name."

DREYFUS BASIC MUNICIPAL FUND, INC.

Dreyfus BASIC Intermediate Municipal Bond Portfolio
Dreyfus BASIC Municipal Bond Portfolio

Domestic Custody Fees

Basic Fee: 1/100 of 1% per annum of the first $500 million,
and 1/200 of 1% of the excess over $500 million per
annum of the total market value of domestic securities
held.

Custodial Transactions:

$8.00 per transaction for each receipt and
delivery of book entry securities through DTC/FRB.

$20.00 per transaction for physical settlements,
municipal sub-custodian settlements, writing
options (preparation of depository or escrow receipts)
and initial futures transactions.

$5.00 for futures variation margin maintenance.

Schedule B

The fees payable to the Custodian with respect to
securities held in foreign custody are as set forth in a letter
dated January 13, 1995 from Jerome P. Isoldi of The Bank of New
York to Frederick C. Dey, a copy of which is attached hereto.

THE BANK OF NEW YORK
90 Washington Street
New York, New York 10286

January 13, 1995

Mr. Frederick C. Dey
Assistant Treasurer
200 Park Avenue
New York, New York 10166

Re: Global Custody Fees

Dear Fred:

This letter is an update of my September 21, 1993
global custody fee schedule letter addressed to Mr. Jeffrey Nachman for
the Dreyfus Family of Funds.

Safekeeping charges and transaction fees will be
applied per country, as indicated in the attached schedule.

Warmest regards.

Sincerely,

Jerome P. Isoldi
Senior Vice President

JPI/nd
Enclosure

GLOBAL CUSTODY FEE PROPOSAL

THE DREYFUS FAMILY OF FUNDS

AUSTRALIA MEXICO (BONDS)
CANADA NETHERLANDS
FRANCE NEW ZEALAND
GERMANY SWEDEN
IRELAND SWITZERLAND
JAPAN

SAFEKEEPING FEE

12 b.p. PER ANNUM ON FIRST 250MM MARKET VALUE OF ASSETS
10 b.p. PER ANNUM ON NEXT 500MM
8 b.p. PER ANNUM ON EXCESS

TRANSACTION FEE

$50 FOR EACH TRANSACTION

CEDEL

SAFEKEEPING FEE

5 b.p. PER ANNUM ON MARKET VALUE OF ASSETS HELD

TRANSACTION FEE

$25 FOR EACH TRANSACTION
GLOBAL CUSTODY FEE PROPOSAL

THE DREYFUS FAMILY OF FUNDS

SAFEKEEPING TRANSACTIONS

ARGENTINA 30 b.p. $ 75

AUSTRIA 8 b.p. 60

BANGLADESH 40 b.p. 170

BELGIUM 8 b.p. 75

BRAZIL * 45 b.p. 75

CHILE 35 b.p. 90

CHINA 25 b.p. 50

COLUMBIA 45 b.p. 125

CZECH REPUBLIC 50 b.p. 55

DENMARK 15 b.p. 75

FINLAND 10 b.p. 75

GREECE
Bond 25 b.p. 30
Equity 50 b.p. 450

HONG KONG 15 b.p. 100

HUNGARY 5 b.p. 75

INDIA 45 b.p. 125

INDONESIA 15 b.p. 75

ISRAEL 65 b.p. 45

ITALY 18 b.p. 75

KOREA 12.5 b.p. 25

LUXEMBOURG 6.5 b.p. 75

MALAYSIA 15 b.p. 100

MEXICO (EQUITIES) 25 b.p. 60

NORWAY 25 b.p. 125

PAKISTAN 40 b.p. 150

PERU 65 b.p. 175

PHILIPPINES 12.5 b.p. 150

POLAND 50 b.p. 150

PORTUGAL 25 b.p. 220

SINGAPORE 15 b.p. 150

SOUTH AFRICA 12.5 b.p. 150

SPAIN 8 b.p. 50

SRI LANKA 20 b.p. 60

TAIWAN 15 b.p. 150

THAILAND 18 b.p. 95

TURKEY 25 b.p. 60

UNITED KINGDOM 8 b.p. 50

URUGUAY ** 55 b.p. 75

VENEZUELA 45 b.p. 75

* Includes Local Administrator.

** $4,000 Per Year, Per Account.

OUT-OF-POCKET EXPENSES

TELEX, TELEPHONE, SECURITIES REGISTRATION, ETC., ARE IN ADDITION
TO THE ABOVE.

EXHIBIT 10

December 10, 1991

Dreyfus Investors Municipal Money Market Fund, Inc.
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144

Gentlemen:

We have acted as counsel to Dreyfus Investors Municipal Money
Market Fund, Inc. (the "Fund") in connection with the
preparation of a Registration Statement on Form N-1A,
Registration No. 33-42162 (the "Registration Statement"),
covering shares of common stock (the "Shares") of the Fund.

We have examined copies of the Articles of Incorporation and By-
Laws of the Fund, the Registration Statement and such other
documents, records, papers, statutes and authorities as we
deemed necessary to form a basis for the opinion hereinafter
expressed.

In our examination of such material, we have assumed the
genuineness of all signatures and the conformity to original
documents of all copies submitted to us. As to various
questions of fact material to such opinion, we have relied upon
statements and certificates of officers and representatives of
the Fund and others.

Attorneys involved in the preparation of this opinion are
admitted only to the bar of the State of New York. As to
various questions arising under the laws of the State of
Maryland, we have relied on the opinion of Messrs. Venable,
Baetjer and Howard, a copy of which is attached hereto.
Qualifications set forth in their opinion are deemed
incorporated herein.

Based upon the foregoing, we are of the opinion that the Shares
of the Fund to be issued in accordance with the terms of the
offering as set forth in the Prospectus included as part of the
Registration Statement, when so issued and paid for, will
constitute validly authorized and issued Shares, fully paid and
nonassessable.

We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by
or on behalf of the Fund or any distributor or dealer in
connection with the registration and qualification of the Fund
or its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.

Very truly yours,

STROOCK & STROOCK & LAVAN

[LETTERHEAD OF VENABLE, BAETJER AND HOWARD]

December 10, 1991

Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004

Re: Dreyfus Investors Municipal Money Market Fund, Inc.

Ladies and Gentlemen:

We have acted as special Maryland counsel for Dreyfus
Investors Municipal Money Market Fund, Inc., a Maryland
corporation (the "Fund"), in connection with the organization of
the Fund and the issuance of shares of its Common Stock.

As Maryland counsel for the Fund, we are familiar with
its Charter and Bylaws. We have examined the prospectus
included in its Registration Statement on Form N-1A,
substantially in the form in which it is to become effective
(the "Prospectus"), and have examined and relied upon such
corporate records of the Fund and other documents and
certificates as to factual matters as we have deemed necessary
to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all
signatures and the conformity with originals of all documents
submitted to us as copies.

Based on such examination, we are of the opinion and
so advise you that:

1. The Fund is duly organized and validly existing
as a corporation in good standing under the laws
of the State of Maryland.

2. The 100,000 shares of presently issued and
outstanding Common Stock of the Fund have been
validly and legally issued and are fully paid and
nonassessable.

3. The shares of Common Stock of the Fund to be
offered for sale pursuant to the Prospectus are
duly authorized and, when sold, issued and paid
for as contemplated by the Prospectus, will have
been validly and legally issued and will be fully
paid and nonassessable.

This letter expresses our opinion as to the Maryland
General Corporation Law governing matters such as due
organization and the authorization and issuance of stock, but it
does not extend to the securities or "Blue Sky" laws of
Maryland, to federal securities laws or to other laws.

You may rely upon our foregoing opinion in rendering
your opinion to the Fund which is to be filed as an exhibit to
the Registration Statement. We consent to the filing of this
opinion as an exhibit to the Registration Statement.

Very truly yours,

VENABLE, BAETJER AND HOWARD

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Transfer
and Dividend Disbursing Agent, Custodian, Counsel and Independent Auditors"
and to the use of our reports dated October 4, 1995 on Dreyfus BASIC
Municipal Fund, Inc. (formerly Dreyfus BASIC Municipal Money Market Fund)
(comprising the Dreyfus BASIC Money Market Portfolio, Dreyfus BASIC
Intermediate Municipal Bond Portfolio and Dreyfus BASIC Municipal Bond
Portfolio), in this Registration Statement (Form N-1A 811-6377) of Dreyfus
BASIC Municipal Fund, Inc.

ERNST & YOUNG LLP

New York, New York
March 29, 1996

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