DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus BASIC
Intermediate Municipal Bond Portfolio for its semi-annual reporting period
ended February 28, 1997. Your Fund produced a total return, including bond
price changes and interest income, of 4.96%* and an annualized tax-free
distribution rate per share of 5.23%.**
ECONOMIC REVIEW
With the economy nearing the end of its sixth year of expansion,
inflation still remains quiescent despite the robust rate of new job creation
and low unemployment. Because of the relatively tight market, the potential
inflationary consequences of increased wage demands have been of growing
concern to Federal Reserve Board Chairman Alan Greenspan and other members of
the Federal Open Market Committee (FOMC, the policy-making arm of the Federal
Reserve Board). In recent testimony to the Senate Banking Committee, Chairman
Greenspan spoke very directly about the possibility of the FOMC raising
interest rates, despite the absence of any clear sign of accelerating
inflation. The Federal Reserve last changed its interest rate policy on
January 31, 1996 when it reduced both the Federal Funds target rate and its
discount rate. Since then, the economy has continued to advance.
Gains in worker productivity along with job security worries have been
keeping wage increases modest and noninflationary. Yet there are signs that
this wage restraint may be ending. Recent data suggests a tightening in the
labor market. Growing numbers of workers appear willing to quit current jobs,
more confident now that there are better positions available elsewhere. In
reaction to this, companies could be under pressure to raise compensation
levels. With this in mind, the recent comment by Chairman Greenspan warrants
attention: "Given the lags with which monetary policy affects the economy,
however, we cannot rule out a situation in which a preemptive policy
tightening may become appropriate before any sign of actual inflation becomes
evident." The lack of price pressure was particularly apparent in the fourth
quarter increase in the GDP price deflator, the government's broadest measure
of inflation: its 1.4% annual pace was the lowest rate of increase in 30
years.
With such low inflation accompanying the strong growth in new jobs,
consumer optimism remains high. The Research Board's Index of Consumer
Confidence reported that popular opinion about the state of the economy
reached a 27-year high in February. Since consumers account for two thirds of
economic activity, their collective attitude is an important indicator of
future economic momentum. Yet, despite this high level of consumer optimism,
retail sales growth remained modest, although signs of strengthening are
appearing.
While it is possible that a retrenchment in consumer spending could
result in an economic slowdown without a change in Federal Reserve monetary
policy, it is likely that the continued strong growth in new jobs and the low
unemployment rate will lead to labor shortages that could trigger
inflationary wage increases. We take Chairman Greenspan at his word and are
mindful of the possibility of a preemptive tightening in monetary policy.
MARKET ENVIRONMENT
As interest rates continued to decline through November, 1996, long-term
municipals remained fully priced compared to comparable term U.S. Treasury
bonds, and that relationship continues now, even with interest rates moving
higher. A low supply of municipals balanced with modest demand has helped to
support the tax exempt markets. Supplies have been especially tight in some
high income tax states, further pushing up prices for municipal bonds issued
within these states.
Since November, interest rates have begun to rise. If interest rates
continue in that trend, supply should moderate and demand would increase.
This would help support the municipal market even if the FOMC decided to
raise short-term
interest rates in March. If this occurred, interest rates generally would
probably rise but municipal rates should not go up less than Treasuries due
to continued supply and demand imbalances.
THE PORTFOLIO
Since last we wrote to you in September 1996, the Fund has continued to
implement specific investment strategies which have enhanced its total return
while maintaining a high level of current income. For the rest of 1996, the
Fund maintained a defensive posture, due to a low interest rate environment.
During this time, premium bonds were purchased which emphasize current income
and have a better ability to protect the principal price of the Fund in a
declining market. As interest rates began to rise in 1997, these types of
bonds performed extremely well. The Fund reversed strategies by early 1997,
and began to slowly purchase bonds which sell at a substantial discount when
compared to the rest of the municipal market and represent a good opportunity
to enhance the value of the Fund. If interest rates continue to rise, the
Fund would become more constructive and begin selling select premiums to
again purchase discounts.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
March 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** Distribution rate per share is based upon dividends per share paid
from net investment income during the period (annualized), divided by the net
asset value per share at the end of the period, adjusted for any capital gain
distributions.
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<CAPTION>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Principal
Long-Term Municipal Investments_94.8% Amount Value
_____________ ____________
<S> <C> <C>
ALABAMA_1.7%
Alabama Agricultural and Mechanical University, Revenues
6%, 11/1/2006 (Insured; MBIA)............................................. $ 1,000,000 $ 1,085,880
ARIZONA_3.1%
Arizona Transportation Board, Highway Revenue, Refunding 5%, 7/1/2010....... 1,000,000 986,060
Maricopa County, COP 5.625%, 6/1/2000....................................... 1,000,000 1,025,440
CALIFORNIA_3.4%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2004..................................................... 1,000,000 687,150
Hemet, COP (Capital Projects) 6.50%, 2/1/2003............................... 200,000 205,112
Los Angeles City, COP, Refunding (Real Property Acquisition Program)
5.75%, 8/1/2004........................................................... 1,000,000 1,026,660
Watsonville Mammoth Lakes, COP:
7.25%, 6/1/1998........................................................... 185,000 186,489
7.50%, 6/1/1999........................................................... 110,000 110,956
COLORADO_4.5%
Denver City and County, Airport Revenue:
6.80%, 11/15/1997......................................................... 750,000 764,550
7.25%, 11/15/2007......................................................... 200,000 217,458
Westminster, MFHR, Refunding (Semper Village Apartments)
5.95%, 9/1/2006 (Guaranteed; AXA Reinsurance)............................. 1,830,000 1,896,008
FLORIDA_2.3%
Palm Beach County, Criminal Justice Facilities Revenue
5.90%, 6/1/2008 (Insured; FGIC)........................................... 1,400,000 1,496,950
HAWAII_3.3%
Hawaii 5.80%, 1/1/2005...................................................... 1,000,000 1,067,530
Hawaii Harbor, Capital Improvement Revenue, Refunding
6.20%, 7/1/2008 (Insured; FGIC)........................................... 1,000,000 1,079,120
IDAHO_2.3%
Idaho Housing Agency, SFMR, Refunding 6.125%, 7/1/2012 (Insured; AMBAC)..... 1,500,000 1,518,630
ILLINOIS_1.6%
Chicago Public Building Commerce, Building Revenue
(Chicago Park District) 5.80%, 1/1/2013 (Insured; FGIC)................... 1,000,000 1,019,900
INDIANA_1.7%
Indiana Transportation Finance Authority, Airport Facilities LR
(United Air) 6.25%, 11/1/2003............................................. 1,000,000 1,072,460
KENTUCKY_1.6%
Kentucky Turnpike Authority, EDR, Refunding (Revitalization Projects)
5.80%, 1/1/2004........................................................... 1,000,000 1,060,530
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ ____________
MARYLAND_1.8%
Baltimore, Consolidated Public Improvement, Refunding
7.25%, 10/15/2005 (Insured; FGIC)......................................... $ 1,000,000 $ 1,172,000
MASSACHUSETTS_2.1%
Massachusetts Health and Educational Facilities Authority, Revenue
(Sisters Providence Health Systems) 6.20%, 11/15/2002..................... 250,000 258,753
University of Massachusetts Building Authority, Revenue, Refunding
6.50%, 5/1/2006........................................................... 1,000,000 1,118,980
MICHIGAN_3.4%
Greater Detroit Resource Recovery Authority, Revenue, Refunding
6.25%, 12/13/2008......................................................... 1,000,000 1,100,410
Michigan Hospital Finance Authority, HR, Refunding (Genesys Health System)
7.10%, 10/1/2002.......................................................... 1,000,000 1,077,450
NEW JERSEY_3.9%
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA).............................................. 1,000,000 1,126,540
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................ 1,290,000 1,365,401
NEW YORK_6.0%
New York City 7.50%, 2/1/2004............................................... 1,130,000 1,257,882
New York State Housing Corp., Revenue, Refunding 6%, 11/1/2003.............. 1,500,000 1,584,120
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 5.75%, 4/1/2006................................ 1,000,000 1,032,810
NORTH CAROLINA_1.7%
North Carolina Eastern Municipal Power Agency, Power System Revenue, Refunding
7%, 1/1/2008.............................................................. 1,000,000 1,112,530
OHIO_.8%
Cuyahoga County, HR (Meridia Health System) 6.20%, 8/15/2005................ 505,000 546,178
PENNSYLVANIA_16.1%
Fayette County Hospital Authority, HR, Refunding (Uniontown Hospital)
5.70%, 6/15/2010 (Insured; Connie Lee).................................... 1,595,000 1,600,391
Pennsylvania, COP 5.40%, 7/1/2008 (Insured; AMBAC).......................... 5,000,000 5,083,200
Pennsylvania Convention Center Authority, Revenue, Refunding
6.25%, 9/1/2004........................................................... 200,000 211,390
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue, Refunding
6.80%, 12/1/2000 (Insured; FGIC).......................................... 2,000,000 2,145,100
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corporation) 6.50%, 6/1/2004................................ 1,280,000 1,337,715
TENNESSEE_3.1%
Franklin Industrial Development Board, MFHR, Refunding
(Landings Apartment Project) 5.75%, 4/1/2010.............................. 2,000,000 2,009,960
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ _____________
TEXAS_8.6%
Brazos Higher Education Authority, Student Loan Revenue, Refunding
6.20%, 12/1/2002.......................................................... $ 200,000 $ 211,452
Irving Hospital Authority, HR (Irving Healthcare Systems) 5.70%, 7/1/2008... 1,675,000 1,727,762
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC).................................... 1,000,000 764,500
Mesquite Health Facilities Development Corportion
Retirement Facilities Revenue, Refunding (Christian Retirement Facility):
5.70%, 2/15/2002........................................................ 285,000 287,377
5.80%, 2/15/2003........................................................ 315,000 318,068
San Antonio, Water Revenue, Refunding 6.30%, 5/15/2004 (Insured; FGIC)...... 1,000,000 1,089,080
Waco 6%, 2/1/2004 (Insured; FGIC)........................................... 1,070,000 1,148,431
UTAH_2.4%
Salt Lake County Municipal Building Authority, LR
6.15%, 10/1/2010 (Insured; MBIA).......................................... 1,450,000 1,542,423
VIRGINIA_3.7%
Brunswick County Industrial Development Authority, Correctional Facility LR
5.55%, 7/1/2008 (Insured; MBIA)........................................... 1,325,000 1,377,973
Virginia Housing Development Authority, Commonwealth Mortgage
5.75%, 1/1/2001........................................................... 1,000,000 1,031,660
WASHINGTON_5.2%
Snohomish County Public Utility District Number 1, Electric Revenue
6.60%, 1/1/2002 (Insured; FGIC)........................................... 1,000,000 1,087,930
Washington, Refunding 6.625%, 9/1/2006...................................... 1,000,000 1,078,110
Washington Health Care Facilities Authority, Revenue, Refunding
(Gray Harbor Community Hospital) 5.75%, 7/1/2010 (Insured; Asset Guaranty) 1,180,000 1,193,629
WISCONSIN_1.6%
Wisconsin, Transportation Revenue 5.40%, 7/1/2004........................... 1,000,000 1,031,950
WYOMING_1.1%
Wyoming Farm Loan Board, Capital Facilities Revenue
Zero Coupon, 10/1/2004.................................................... 1,000,000 687,860
U.S. RELATED_7.8%
Puerto Rico Commonwealth Highway and Transportatin Authority, Highway Revenue
5.40%, 7/1/2006........................................................... 5,000,000 5,029,550
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $59,701,564).................... $61,255,448
==============
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS_5.2% AMOUNT VALUE
_____________ _____________
MINNESOTA_2.9%
Golden Valley, Industrial Development Revenue, Refunding, VRDN
(Graco Inc., Project) 3.55% (LOC; Fuji Bank Limited) (a,b)................ $ 1,880,000 $ 1,880,000
U.S. RELATED_2.3%
Puerto Rico Electric Power Authority, Power Revenue 3.34% (Insured; FSA) (c) 1,500,000 1,500,000
_____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,380,000).................... $ 3,380,000
==============
TOTAL INVESTMENTS_100.0% (cost $63,081,564)................................ $64,635,448
==============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue Insurance Corporation
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ _______ __________________ ___________________
<S> <C> <C> <C>
AAA Aaa AAA 47.8%
AA Aa AA 16.3
A A A 19.4
BBB Baa BBB 13.6
F-1+ & F-1 MIG1, VMIG1 & P1 SP1 & A1 2.9
____
100.0%
========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon prime rates or an index of market interest rates.
(b) Secured by letter of credit.
(c) Inverse floater security_the interest rate is subject to change
periodically.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
COST VALUE
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $63,081,564 $64,635,448
Cash....................................... 408,294
Interest receivable........................ 822,734
Prepaid expenses........................... 21,270
Due from The Dreyfus Corporation and affiliates 849
_____________
65,888,595
LIABILITIES: Accrued expenses and other liabilities..... 31,963
_____________
NET ASSETS.................................................................. $65,856,632
==============
REPRESENTED BY: Paid-in capital............................ $63,989,159
Accumulated net realized gain (loss) on investments 313,589
Accumulated net unrealized appreciation (depreciation)
..... on investments_Note 4 1,553,884
_____________
NET ASSETS.................................................................. $65,856,632
==============
SHARES OUTSTANDING
(500 MILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............. 5,036,419
NET ASSET VALUE, offering and redemption price per share.................... $13.08
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $1,417,496
EXPENSES: Management fee_Note 3(a).................. $ 160,194
Shareholder servicing costs_Note 3(b)...... 24,893
Registration fees.......................... 21,622
Auditing fees.............................. 6,147
Prospectus and shareholders' reports....... 4,344
Custodian fees............................. 3,388
Organization expense....................... 2,345
Directors' fees and expenses_Note 3(c)..... 606
Legal fees................................. 104
Miscellaneous.............................. 5,388
___________
TOTAL EXPENSES....................... 229,031
Less_reimbursement from Manager due to
undertakings_Note 3(a)................. (218,157)
___________
NET EXPENSES......................... 10,874
____________
INVESTMENT INCOME_NET...................................................... 1,406,622
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 353,637
Net unrealized appreciation (depreciation) on investments 802,738
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,156,375
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,562,997
==============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
________________ _________________
OPERATIONS:
Investment income_net.............................................. $ 1,406,622 $ 2,235,887
Net realized gain (loss) on investments............................. 353,637 288,324
Net unrealized appreciation (depreciation) on investments........... 802,738 (735,467)
______________ ______________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... 2,562,997 1,788,744
______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.............................................. (1,413,477) (2,229,032)
Net realized gain on investments.................................... (116,833) ___
______________ ______________
TOTAL DIVIDENDS................................................... (1,530,310) (2,229,032)
______________ ______________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................................... 38,218,648 19,466,226
Dividends reinvested................................................ 1,181,128 1,721,467
Cost of shares redeemed............................................. (21,173,631) (17,304,524)
______________ ______________
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS. 18,226,145 3,883,169
______________ ______________
TOTAL INCREASE (DECREASE) IN NET ASSETS....................... 19,258,832 3,442,881
NET ASSETS:
Beginning of Period................................................. 46,597,800 43,154,919
______________ ______________
End of Period....................................................... $ 65,856,632 $ 46,597,800
============== ===============
UNDISTRIBUTED INVESTMENT INCOME_NET.................................... ___ $ 6,855
______________ ______________
SHARES SHARES
______________ ______________
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 2,937,465 1,499,256
Shares issued for dividends reinvested.............................. 90,554 132,850
Shares redeemed..................................................... (1,624,923) (1,331,127)
______________ ______________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING..................... 1,403,096 300,979
============== ===============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1997 YEAR ENDED AUGUST 31,
_______________________________________________
PER SHARE DATA: (UNAUDITED) 1996 1995 1994(1)
________________ _________ _________ _________
<S> <C> <C> <C> <C>
Net asset value, beginning of period......... $12.83 $12.95 $12.65 $12.50
_________ _________ _________ _________
INVESTMENT OPERATIONS:
Investment income_net........................ .34 .65 .68 .24
Net realized and unrealized gain (loss)
on investments........................ .28 (.12) .30 .15
_________ _________ _________ _________
TOTAL FROM INVESTMENT OPERATIONS......... .62 .53 .98 .39
_________ _________ _________ _________
DISTRIBUTIONS:
Dividends from investment income_net........ (.34) (.65) (.68) (.24)
Dividends from net realized gain on investments..... (.03) -- -- --
_________ _________ _________ _________
TOTAL DISTRIBUTIONS............................. (.37) (.65) (.68) (.24)
_________ _________ _________ _________
Net asset value, end of period.................. $13.08 $12.83 $12.95 $12.65
========= ========= ========= =========
TOTAL INVESTMENT RETURN........................ 10.00%(2) 4.07% 8.09% 3.11%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets....... .04%(2) .39% .11% --
Ratio of net investment income
to average net assets....................... 5.24%(2) 5.01% 5.45% 5.53%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager............. .81%(2) .46% .81% 1.54%(2)
Portfolio Turnover Rate...................... 17.03%(3) 54.99% 34.12% 41.15%(3)
Net Assets, end of period (000's Omitted).......... $65,857 $46,598 $43,155 $28,275
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
(2) Annualized.
(3) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Intermediate Municipal Bond Portfolio (the "Fund") is a
series of Dreyfus BASIC Municipal Fund, Inc. (the "Company") which 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 the Fund. The Fund's
investment objective is to provide investors with as high a level of current
income exempt from Federal income tax as is consistent with the preservation
of capital. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. is the distributor of the Fund's shares,
which are sold to the public without a sales charge.
The Company accounts separately for the assets, liabilities and
operations of each fund. Expenses directly attributable to each fund are
charged to that fund's operations; expenses which are applicable to all funds
are allocated among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: The Fund's 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 Fund 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 Fund 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.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can
distribute tax exempt dividends, by complying with the applicable provisions
of the Internal Revenue Code, and to make distributions of income and net
realized capital gain sufficient to relieve it from substantially all Federal
income and excise taxes.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a redemption
credit facility to be utilized for temporary or emergency purposes, including
the financing of redemptions. In connection therewith, the Fund has agreed to
pay commitment fees on the committed portion of this redemption credit
facility. Interest is charged to the Fund at rates based on prevailing market
rates in effect at the time of borrowings. For the period ended February 28,
1997, the Fund did not borrow under the line of credit.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .60 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager had undertaken
from September 1, 1996 through December 31, 1996 to reimburse all fees and
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and extraordinary expenses, and thereafter, had undertaken through February
28, 1997, to reduce the management fee paid by the Fund, to the extent that
the Fund's aggregate annual expenses (exclusive of certain expenses as
described above) exceeded specified annual percentages of the value of the
Fund's average daily net assets. The expense reimbursement, pursuant to the
undertakings, amounted to $218,157 during the period ended February 28, 1997.
In addition, the Manager has currently undertaken through June 30, 1998,
to reduce the management fee paid by the Fund, to the extent that the Fund's
aggregate annual expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the value of the Fund's average daily
net assets.
(B) Under the Shareholder Services Plan, the Fund 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 Fund'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 Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended February 28, 1997, the Fund was charged an aggregate
of $17,000 pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $4,257 during the period ended February 28, 1997.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Company an annual fee of $1,000 and an attendance fee of
$250 per meeting. The Chairman of the Board receives an additional 25% of
such compensation.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1997
amounted to $24,783,840 and $8,751,660, respectively.
At February 28, 1997, accumulated net unrealized appreciation on
investments was $1,553,884, consisting of $1,582,419 gross unrealized
appreciation and $28,535 gross unrealized depreciation.
At February 28, 1997, 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 lion "d" logo]
Registration Mark
DREYFUS BASIC INTERMEDIATE
MUNICIPAL BOND PORTFOLIO
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 126SA972
[Dreyfus logo]
Registration Mark
BASIC Intermediate
Municipal Bond
Portfolio
Semi-Annual
Report
February 28, 1997
