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[LOGO]
BASIC Intermediate
Municipal Bond
Portfolio
Semi-Annual
Report
February 28, 1999
<PAGE>
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The
Dreyfus Corporation and the fund's other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
The Dreyfus Corporation is working to avoid Year 2000-related problems in its
systems and to obtain assurances from other service providers that they are
taking similar steps. In addition, issuers of securities in which the fund
invests may be adversely affected by Year 2000-related problems. This could have
an impact on the value of the fund's investments and its share price.
<PAGE>
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 the six-month period ended February
28, 1999. Your portfolio produced a total return, including share price changes
and dividend income generated, of 2.58%,* and an annualized tax-free
distribution rate per share of 4.49%.**
The Economy
The economy in the period ended February 28, 1999 had several persistent
themes. These included weakness in the world economy, strength in the U.S.
economy, pervasive disinflation and action by central banks to lower interest
rates in many parts of the world.
Weakness in the world economy started in Asia with economic and financial
stresses throughout most of that continent. While China was able to generate
economic expansion by government spending, economic declines occurred in most of
the rest of Asia. The most severe phase occurred when Asian currencies dropped
and short-term interest rates rose. Tentative signs of a bottoming of the crises
in Asia had emerged by the end of your portfolio's fiscal year. However, Latin
America had begun to weaken in the aftermath of Brazilian economic weakness.
Europe was full of optimism about the benefits of currency unification into
the Euro as of year-end 1998. The reality was that economic growth in Europe
began 1998 at a modest pace and showed signs of stagnation by year-end. Even so,
the new European central bank postponed any reduction in interest rates in early
1999, probably because of a desire to build anti-inflationary credibility.
The U.S. economy over the last year grew at an impressively high rate despite
the economic weakness overseas. A major reason for this was that the negative
effects of foreign economic weakness on the traditional industrial sector were
offset by positive effects elsewhere in the economy. Low inflation and low
interest rates stimulated the housing and consumer sectors, while the technology
sector continued to expand.
The Federal Reserve eased monetary policy three times beginning on September
30, 1998, lowering the Federal Funds rate from 5.50% to 4.75%. This was not
because of any shortfall in U.S. economic growth. Rather, it was a response to
the financial stresses that started with the Russian default in the summer of
1998 and culminated in the liquidity crisis of an overleveraged hedge fund in
the September/October period. Despite widespread fears, the U.S. economy never
did slow. Long-term interest rates declined into early October, when fears of
financial crisis, deflation and possible economic recession were at their
greatest. However, long-term rates then drifted higher as the financial stresses
eased and the feared economic slowdown did not materialize.
Market Environment
So far in 1999, the environment for municipal securities has been favorable.
This has led to municipals performing better than their taxable counterparts.
Investors continue to display a desire to add to their holdings of tax-exempt
bonds, while the available supply of new issues to date has slowed considerably
from last year's near record of $284 billion. In the current environment, it is
unlikely that this year's calendar will surpass last year's issuance. The
market's most recent adjustment to higher yields does not seem to have
deterred investor buying. This support for tax-exempt securities is best
illustrated by the municipals performing comparably to their Treasury
counterparts. For much of 1998, the U.S. Treasury market was well-supported in
the wake of global turmoil. Treasury prices were bid sharply higher in the
flight to safety, while municipal yields became increasingly attractive.
Historically, long-term high-grade municipals have yielded 80% to 85% of the
yields available on comparable Treasuries. During the height of last year's
turmoil, the ratio rose to 100%. In recent weeks this ratio
<PAGE>
has fallen below 90%, as the rise in Treasury yields has outpaced that of
municipals. Much of the municipal market's support is directly attributable to
crossover buyers who "cross over" from purchasing taxable bonds to the cheaper
municipals in order to capitalize at a later date when the yield ratios
normalize. Such a reversal could potentially provide a large source of
municipal supply for the market. This potential, coupled with uncertainty
regarding what the Federal Reserve Board's leaning is on the economy's strength
and interest rates, will keep the municipal market on alert.
Portfolio Overview
The portfolio has continued to implement specific investment strategies,
which have enhanced its total return while maintaining a high level of current
income. Over the last six months, the portfolio has maintained a strategy of
purchasing bonds when the market weakens while selling bonds when the market
strengthens. This strategy has served the portfolio well because interest rates
in the municipal market have fluctuated by only 1/2 of 1% (50 basis points)
over the last six months. Municipal interest rates bottomed in early October and
the portfolio took advantage of this by purchasing more defensive type issues.
Municipal interest rates peaked in early November, late December through early
January, and again in late February. The portfolio was able to take advantage of
these modest interest rate peaks by purchasing bonds which were out of favor and
which we considered undervalued. By constantly analyzing a bond's performance,
the portfolio is able to sell issues which have achieved its price objectives
while purchasing other issues which we perceive are still undervalued. Certain
supply and demand imbalances continue to occur in the municipal market, and they
represent good opportunities to enhance the principal value of the portfolio.
The portfolio's performance has continued to be strong over the last
six-month period ending February 28, 1999. The portfolio produced a total return
of 2.58%, which compares favorably with Lipper's Intermediate Municipal Debt
Funds Category Average of 2.15% over the same period. We will continue to seek
to enhance the portfolio's total return performance by purchasing bonds that are
currently out of favor, and are trading at a substantial discount when compared
to the rest of the municipal market. We will do this while also continuing to
seek to maintain high current income.
Included in this report is a series of detailed statements about your
portfolio's holdings and its financial condition. We hope that you find them
informative. Please know that we appreciate greatly your continued confidence in
the portfolio, and in The Dreyfus Corporation.
Very truly yours,
/s/ Richard J. Moynihan
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
March 18, 1999
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. Income may be subject to state and local taxes, and some
income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
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<TABLE>
<CAPTION>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Investments February 28, 1999 (Unaudited)
Principal
Long-Term Municipal Investments--93.6% Amount Value
- ------------------------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Alabama--1.1%
Alabama Agricultural and Mechanical University, Revenues
6%, 11/1/2006 (Insured; MBIA, Prerefunded 11/1/2005) (a)..................... $ 1,000,000 $ 1,136,900
Arizona--1.6%
Arizona Transportation Board, Highway Revenue, Refunding 5%, 7/1/2010.......... 900,000 950,661
Maricopa County, COP 5.625%, 6/1/2000.......................................... 730,000 740,731
California--3.0%
California Statewide Communities Development Authority, COP, Revenue, Refunding
(Triad Healthcare) Zero Coupon, 8/1/2007
(Insured; California Health Facilities Construction Loan Fund)............... 3,000,000 2,113,170
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue
Zero Coupon, 1/1/2004........................................................ 1,000,000 819,660
Hemet, COP (Capital Projects) 6.50%, 2/1/2003.................................. 200,000 214,576
Colorado--5.7%
Arapahoe County (School District Number 1, Englewood)
4.50%, 12/1/2016 (Insured; FSA).............................................. 1,710,000 1,630,348
Colorado Srpings School District Facilities Corporation, COP
Zero Coupon, 12/15/2008...................................................... 1,000,000 970,580
Denver City and County, Airport Revenue
7.25%, 11/15/2007............................................................ 180,000 199,649
El Paso County (School District Number 2, Harrison)
4.375%, 12/1/2014 (Insured; MBIA)............................................ 1,250,000 1,195,637
Westminster, MFHR, Refunding (Semper Village Apartments)
5.95%, 9/1/2006 (Guaranteed; AXA Reinsurance)................................ 1,830,000 1,936,213
Delaware--.9%
New Castle County 4.625%, 10/1/2015............................................ 1,000,000 976,740
Florida--1.5%
Palm Beach County, Criminal Justice Facilities Revenue
5.90%, 6/1/2008 (Insured; FGIC).............................................. 1,400,000 1,550,598
Hawaii--2.1%
Hawaii 5.80%, 1/1/2005......................................................... 1,000,000 1,088,890
Hawaii Harbor, Capital Improvement Revenue, Refunding
6.20%, 7/1/2008 (Insured; FGIC).............................................. 1,000,000 1,103,490
Illinois--1.1%
Chicago Public Building Commerce, Building Revenue
(Chicago Park District) 5.80%, 1/1/2013 (Insured; FGIC, Prefunded 1/1/2003) (a) 1,000,000 1,090,660
Indiana--1.1%
Indiana Transportation Finance Authority, Airport Facilities LR
(United Air) 6.25%, 11/1/2003................................................ 1,000,000 1,091,530
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Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Investments (continued) February 28, 1999 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ --------------
Maryland--2.7%
Northeast Waste Disposal Authority, RRR
(Baltimore Resco Retrofit Project) 4.75%, 1/1/2012........................... $ 2,910,000 $ 2,811,496
Massachusetts--3.2%
Massachusetts Health and Educational Facilities Authority, Revenue
(Caregroup) 4.50%, 7/1/2014 (Insured; MBIA).................................. 2,240,000 2,159,226
University of Massachusetts Building Authority, Revenue, Refunding
6.50%, 5/1/2006.............................................................. 1,000,000 1,151,600
Michigan--3.0%
Greater Detroit Resource Recovery Authority, Revenue, Refunding
6.25%, 12/13/2008 (Insured; AMBAC)........................................... 1,000,000 1,160,140
Michigan Hospital Finance Authority, HR, Refunding:
(Genesys Health System) 7.10%, 10/1/2002..................................... 860,000 942,053
(Holland Community Hospital) 5.25%, 1/1/2010................................. 1,000,000 1,036,260
Missouri--2.3%
North Kansas City, HR 4.50%, 11/15/2015 (Insured; AMBAC)....................... 1,325,000 1,259,810
Missouri Regional Convention and Sports Complex Authority
(Convention and Sports Project) 5.50%, 8/15/2013 (Insured; MBIA)............. 1,100,000 1,176,208
New Jersey--2.4%
New Jersey Economic Development Authority, Market Transition Facility Revenue
7%, 7/1/2003 (Insured; MBIA)................................................. 1,000,000 1,125,980
New Jersey Turnpike Authority, Turnpike Revenue 6%, 1/1/2005................... 1,290,000 1,376,701
New York--6.8%
New York Dormitory Authority, Secured Hospital Revenues
(Interfaith Medical Center) 5.375%, 2/15/2011................................ 4,120,000 4,361,597
New York State Housing Corp., Revenue, Refunding 6%, 11/1/2003................. 1,500,000 1,603,680
New York State Thruway Authority, Service Contract Revenue
(Local Highway and Bridge) 5.75%, 4/1/2006................................... 1,000,000 1,091,990
North Carolina--2.9%
Charlotte, COP, Refunding (Convention Facility Project)
5.25%, 12/1/2013 (Insured; AMBAC)............................................ 1,750,000 1,830,360
North Carolina Eastern Municipal Power Agency, Power System Revenue, Refunding
7%, 1/1/2008................................................................. 1,000,000 1,153,100
Ohio--2.4%
Cuyahoga County, HR (Meridia Health System) 6.20%, 8/15/2005................... 505,000 570,993
South--Western City School District, Franklin and Pickway County
4.75%, 12/1/2019 (Insured; AMBAC)............................................ 2,000,000 1,934,460
Pennsylvania--19.3%
Beaver County, Refunding 5%, 10/1/2012 (Insured; MBIA)......................... 950,000 975,669
Berks County Municipal Authority, Revenue, Refunding
(Phoebe--Devitt Homes Project) 5.50%, 5/15/2011............................... 1,000,000 997,360
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Investments (continued) February 28, 1999 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
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Pennsylvania (continued)
Butler County Hospital Authority, Health Center Revenue, Refunding
(St. Francis Health Care Project) 6%, 5/1/2008............................... $ 1,860,000 $ 2,044,884
Harrisburg Authority, Office and Parking Revenue 5.50%, 5/1/2005............... 650,000 653,491
Harrisburg Redevelopment Authority, Revenue Zero Coupon, 11/1/2017 (Insured; FSA) 2,750,000 1,069,503
Hempfield School District, Refunding (Lancaster County)
5.30%, 10/15/2014 (Insured; FGIC)............................................ 1,000,000 1,040,340
Pennsylvania, COP, Refunding 5.40%, 7/1/2008 (Insured; AMBAC).................. 5,000,000 5,177,350
Pennsylvania Convention Center Authority, Revenue, Refunding
6.25%, 9/1/2004.............................................................. 200,000 213,862
Pennsylvania Higher Educational Facilities Authority,
University Health Services Revenue, Refunding 5.35%, 1/1/2008................ 3,000,000 3,169,860
Pennsylvania Finance Authority, Revenue, Refunding
(Municipal Capital Improvements Program) 6.60%, 11/1/2009.................... 1,000,000 1,110,630
Philadelphia, Water and Wastewater Revenue, Refunding
5.75%, 6/15/2013 (Insured; MBIA)............................................. 1,000,000 1,079,770
Philadelphia Hospitals and Higher Education Facilities Authority, Revenue
(Northwestern Corp.) 6.50%, 6/1/2004 (Prerefunded 6/1/2003) (a).............. 1,280,000 1,428,083
Philadelphia School District, Refunding 5.375%, 7/1/2005 (Insured; AMBAC)...... 1,000,000 1,072,590
Rhode Island--1.0%
Rhode Island, Consolidated Capital Development Loan
5.95%, 8/1/2013 (Insured; MBIA).............................................. 1,000,000 1,078,080
Texas--6.9%
Brazos Higher Education Authority, Student Loan Revenue, Refunding
6.20%, 12/1/2002............................................................. 180,000 193,345
Houston Airport System, Special Facilities Revenue (Automated People Mover)
5.375%, 7/15/2009 (Insured; FSA, Guaranteed; Continental Airline, Inc.)...... 1,385,000 1,474,277
Irving Hospital Authority, HR (Irving Healthcare Systems)
5.70%, 7/1/2008 (Insured; FSA)............................................... 1,675,000 1,796,739
Lower Colorado River Authority, Revenue, Refunding
Zero Coupon, 1/1/2003 (Insured; AMBAC)....................................... 1,000,000 862,240
Mesquite Health Facilities Development Corporation
Retirement Facilities Revenue, Refunding (Christian Retirement Facility):
5.70%, 2/15/2002........................................................... 285,000 295,847
5.80%, 2/15/2003........................................................... 315,000 330,545
San Antonio, Water Revenue:
6.30%, 5/15/2004 (Insured; FGIC, Escrowed to Maturity)....................... 100,000 111,653
6.30%, 5/15/2004 (Insured; FGIC)............................................. 900,000 982,170
Waco 6%, 2/1/2004 (Insured; FGIC).............................................. 1,070,000 1,171,126
Utah--1.6%
Salt Lake County Municipal Building Authority, LR
6.15%, 10/1/2010 (Insured; MBIA)............................................. 1,450,000 1,609,573
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
- --------------------------------------------------------------------------------
Statement of Investments (continued) February 28, 1999 (Unaudited)
Principal
Long-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ --------------
Virginia--2.4%
Brunswick County Industrial Development Authority, Correctional Facility LR
5.55%, 7/1/2008 (Insured; MBIA).............................................. $ 1,325,000 $ 1,453,432
Virginia Housing Development Authority, Commonwealth Mortgage
5.75%, 1/1/2001.............................................................. 1,000,000 1,027,300
Washington--2.3%
Snohomish County Public Utility District Number 1, Electric Revenue
6.60%, 1/1/2002 (Insured; FGIC).............................................. 1,000,000 1,069,630
Washington Health Care Facilities Authority, Revenue, Refunding
(Gray Harbor Community Hospital) 5.75%, 7/1/2010 (Insured; Asset Guaranty)... 1,180,000 1,278,683
West Virginia--1.0%
West Virginia Public Energy Authority, Energy Revenue (Morgantown Associates Project)
5.05%, 7/1/2008 (LOC; Swiss Bank Corp.)...................................... 1,000,000 1,035,290
Wisconsin--3.3%
Kenosha Zero Coupon, 10/15/2008 (Insured; MBIA)................................ 2,000,000 1,296,440
Wisconsin:
5.20%, 5/1/2013.............................................................. 1,000,000 1,040,050
Transportation Revenue 5.40%, 7/1/2004....................................... 1,000,000 1,046,430
Wyoming--.8%
Wyoming Farm Loan Board, Capital Facilities Revenue
Zero Coupon, 10/1/2004....................................................... 1,000,000 796,350
U.S. Related--11.2%
Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue:
5.40%, 7/1/2006.............................................................. 3,000,000 3,178,020
5.40%, 7/1/2006 (Insured; FSA)............................................... 8,000,000 8,476,080
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TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $93,178,065)....................... $ 97,192,379
============
Short-Term Municipal Investments--7.2%
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Indiana--1.0%
Indianapolis, RRR, VRDN (Ogden Martin Systems)
3.10% (LOC; Swiss Bank Corp.) (b)............................................ $ 1,000,000 $ 1,000,000
Iowa--1.0%
Iowa Finance Authority, SWDR, VRDN (Cedar River Paper Co.)
3.25% (LOC; Swiss Bank Corp.) (c)............................................ 1,000,000 1,000,000
Florida--1.0%
Manatee County, PCR, Refunding, VRDN
(Florida Power & Light Co. Project) 2.90% (b)................................ 1,000,000 1,000,000
Michigan--.9%
Midland County Economic Development Corp. EDR, VRDN
(Dow Chemical Co. Project) 3.10% (b)......................................... 1,000,000 1,000,000
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Investments (continued) February 28, 1999 (Unaudited)
Principal
Short-Term Municipal Investments (continued) Amount Value
- ------------------------------------------------------------------------------- ------------ --------------
Minnesota--2.4%
Cohasset, Revenue, Refunding, VRDN
(Minnesota Power & Light Co. Project) 2.90% (LOC; Abn Amro Bank N.V.) (b).... $ 2,500,000 $ 2,500,000
New York--.9%
New York State Environmental Facilities Corp., RRR, VRDN
(OFS Equity Huntington Project) 3.05% (LOC; Union Bank of Switzerland) (b)... 1,000,000 1,000,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $7,500,000)....................... $ 7,500,000
TOTAL INVESTMENTS (cost $100,678,065).......................................... 100.8% $104,692,379
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (.8%) $ (788,786)
====== ============
NET ASSETS..................................................................... 100.0% $103,903,593
====== ============
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
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<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
EDR Economic Development Revenue MFHR Multi-Family Housing Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resource Recovery Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
LR Lease Revenue
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fitch (d) or Moody's or Standard & Poor's Percentage of Value
- --------- ------- ----------------- -------------------
AAA Aaa AAA 46.8%
AA Aa AA 14.3
A A A 23.7
BBB Baa BBB 6.4
F-1+ & F-1 MIG1, VMIG1, & P1 SP1 & A1 7.2
Not Rated (c) Not Rated (c) Not Rated (c) 1.6
-------
100.0%
=======
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------------------------------------
(a) Bonds which are prerefunded are collateralized by U.S. Government securities
which are held in escrow and are used to pay principal and interest on the
municipal issue and to retire the bonds in full at the earliest refunding
date.
(b) Securities payable on demand. The interest rate, which is subject to change,
is based upon bank prime rates or an index of market interest rates.
(c) Securities which, while not rated by Fitch, Moody's and Standard & Poor's
have been determined by the Manager to be of comparable quality to those rated
securities in which the Fund may invest.
</FN>
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Assets and Liabilities February 28, 1999 (Unaudited)
Cost Value
------------- --------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $100,678,065 $104,692,379
Cash............................................. 1,355,670
Interest receivable.............................. 982,306
Receivable for shares of Common Stock subscribed. 50,000
Prepaid expenses................................. 22,307
------------
107,102,662
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 22,599
Payable for investment securities purchased...... 3,154,917
Accrued expenses and other liabilities........... 21,553
------------
3,199,069
------------
NET ASSETS..................................................................... $103,903,593
============
REPRESENTED BY: Paid--in capital................................. $ 99,646,490
Accumulated undistributed investment income--net. 25,436
Accumulated net realized gain (loss) on investments 217,353
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b)...................... 4,014,314
------------
NET ASSETS..................................................................... $103,903,593
============
SHARES OUTSTANDING
(500 million shares of $.001 par value Common Stock authorized)................ 7,688,064
NET ASSET VALUE, offering and redemption price per share....................... $13.51
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
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Statement of Operations Six Months Ended February 28, 1999 (Unaudited)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income.................................. $2,322,457
EXPENSES: Management fee--Note 3(a)........................ $ 281,429
Shareholder servicing costs--Note 3(b)........... 44,438
Registration fees................................ 12,920
Auditing fees.................................... 10,615
Custodian fees................................... 5,425
Prospectus and shareholders' reports............. 3,839
Legal fees....................................... 940
Directors' fees and expenses--Note 3(c).......... 673
Loan commitment fees--Note 2..................... 198
Miscellaneous.................................... 7,839
---------
Total Expenses................................. 368,316
Less-reduction in management fee due to
undertaking--Note 3(a)......................... (157,047)
---------
Net Expenses................................... 211,269
----------
INVESTMENT INCOME--NET.......................................................... 2,111,188
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.......... $ 595,087
Net unrealized appreciation (depreciation) on investments (311,186)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS......................... 283,901
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $2,395,089
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
Six Months Ended
February 28, 1999 Year Ended
(Unaudited) August 31, 1998
----------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 2,111,188 $ 3,659,685
Net realized gain (loss) on investments............................. 595,087 317,699
Net unrealized appreciation (depreciation) on investments........... (311,186) 2,451,973
------------ -----------
Net Increase (Decrease) in Net Assets Resulting from Operations... 2,395,089 6,429,357
------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net............................................... (2,085,752) (3,677,127)
Net realized gain on investments.................................... (664,088) (822,083)
------------ -----------
Total Dividends................................................... (2,749,840) (4,499,210)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................................... 20,610,924 36,124,077
Dividends reinvested................................................ 2,209,032 3,570,034
Cost of shares redeemed............................................. (11,222,276) (15,335,815)
------------ -----------
Increase (Decrease) in Net Assets from Capital Stock Transactions. 11,597,680 24,358,296
------------ -----------
Total Increase (Decrease) in Net Assets......................... 11,242,929 26,288,443
NET ASSETS:
Beginning of Period................................................. 92,660,664 66,372,221
------------ -----------
End of Period....................................................... $103,903,593 $92,660,664
============ ===========
Undistributed investment income--net................................... $ 25,436 --
------------ -----------
Shares Shares
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 1,518,625 2,702,923
Shares issued for dividends reinvested.............................. 162,617 267,346
Shares redeemed..................................................... (824,440) (1,148,735)
------------ -----------
Net Increase (Decrease) in Shares Outstanding..................... 856,802 1,821,534
============ ===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
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.
Six Months Ended
February 28, 1999 Year Ended August 31,
-------------------------------------------
PER SHARE DATA: (Unaudited) 1998 1997 1996 1995 1994(1)
---------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $13.56 $13.25 $12.83 $12.95 $12.65 $12.50
------ ------ ------ ------ ------ ------
Investment Operations:
Investment income--net..................... .30 .63 .66 .65 .68 .24
Net realized and unrealized gain (loss)
on investments.......................... .05 .47 .45 (.12) .30 .15
------ ------ ------ ------ ------ ------
Total from Investment Operations........... .35 1.10 1.11 .53 .98 .39
------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net...... (.30) (.63) (.66) (.65) (.68) (.24)
Dividends from net realized gain on investments (.10) (.16) (.03) -- -- --
------ ------ ------ ------ ------ ------
Total Distributions........................ (.40) (.79) (.69) (.65) (.68) (.24)
------ ------ ------ ------ ------ ------
Net asset value, end of period............. $13.51 $13.56 $13.25 $12.83 $12.95 $12.65
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN....................... 5.20%(2) 8.51% 8.95% 4.07% 8.09% 3.11%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.... .45%(2) .45% .24% .39% .11% --
Ratio of net investment income
to average net assets................... 4.50%(2) 4.68% 5.07% 5.01% 5.45% 5.53%(3)
Decrease reflected in above expense ratios
due to undertakings by the Manager...... 33%(2) .36% .56% .46% .81%(2) 1.54%(3)
Portfolio Turnover Rate.................... 30.59%(3) 15.38% 64.65% 54.99% 34.12%(3) 41.15%(2)
Net Assets, end of period (000's Omitted).. $103,904 $92,661 $66,372 $46,598 $43,155 $28,275
<FN>
- ---------------------
(1) From May 5, 1994 (commencement of operations) to August 31, 1994.
(2) Annualized.
(3) Not annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
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
separate non-diversified series of Dreyfus BASIC Municipal Fund, Inc. (the
"Company") which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an 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 (the "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: Investments in securities (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. Under the terms of the custody
agreement, the Fund received net earnings credits of $4,106 during the period
ended February 28, 1999 based on available cash balances left on deposit. Income
earned under this arrangement is included in interest income.
(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 of 1986, as
amended (the "Code"). To the extent *18 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 Fund to continue to qualify
as a regulated investment company, which can distribute tax exempt dividends, by
complying with the applicable provisions of the Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
<PAGE>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 2--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("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 its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended
February 28, 1999, the Fund did not borrow under the Facility.
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 has undertaken, until such
time as it gives shareholders at least 90 days' notice to the contrary, to
reduce the management fee paid by the Fund, to the extent that the Fund's
aggregate expense, exclusive of taxes, brokerage, interest on borrowings,
commitment fees and extraordinary expenses, exceed an annual rate of .45 of 1%
of the value of the Fund's average daily net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $157,047 during the period ended
February 28, 1999.
(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 the 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, 1999, the Fund was charged $33,953 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. During the period
ended February 28, 1999, the fund was charged $6,534 pursuant to the transfer
agency agreement.
(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.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended February 28, 1999
amounted to $36,704.153 and $27,777,461, respectively.
At February 28, 1999, accumulated appreciation on investments was $4,014,314,
consisting of $4,072,118 gross unrealized appreciation and $57,804 gross
unrealized depreciation.
At February 28, 1999, 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).
<PAGE>
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. 126SA992
