Dreyfus
BASIC Municipal
Bond Portfolio
SEMIANNUAL REPORT February 29, 2000
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the portfolio are subject to change at any time based on
market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The portfolio could be adversely affected if the computer systems used by
Dreyfus and the portfolio's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. Dreyfus has
taken steps designed to avoid year 2000-related problems in its systems and to
monitor the readiness of other service providers. In addition, issuers of
securities in which the portfolio invests may be adversely affected by year
2000-related problems. This could have an impact on the value of the portfolio's
investments and its share price.
Contents
THE PORTFOLIO
- ------------------------------------------------------------
2 Letter from the President
3 Discussion of Performance
6 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Financial Highlights
18 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Portfolio
Dreyfus BASIC Municipal Bond Portfolio
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus BASIC Municipal
Bond Portfolio, covering the six-month period from September 1, 1999 through
February 29, 2000. Inside, you' ll find valuable information about how the
portfolio was managed during the reporting period, including a discussion with
the portfolio manager, Douglas Gaylor.
The U.S. economy grew strongly over the past six months in an environment
characterized by high levels of consumer spending and low levels of
unemployment. Concerns that inflationary pressures might re-emerge caused the
Federal Reserve Board to raise short-term interest rates twice more during the
reporting period, for a total interest-rate increase of 1.00 percentage point
since late June 1999, before the current reporting period began. Higher interest
rates led to erosion of municipal bond prices.
Municipal bonds were also adversely affected by supply-and-demand
considerations. These technical influences have recently caused the yields of
tax-exempt bonds to rise to very attractive levels compared to the after-tax
yields of taxable bonds of comparable maturity and credit quality. This is
especially true for investors in the higher federal and state income tax
brackets.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus BASIC Municipal Bond Portfolio.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
March 23, 2000
DISCUSSION OF PERFORMANCE
Douglas Gaylor, Portfolio Manager
How did Dreyfus BASIC Municipal Bond Portfolio perform during the period?
For the six-month period ended February 29, 2000, the portfolio achieved a
- -1.54% total return.(1) In comparison, the Lipper General Municipal Debt Funds
category average return was -1.31% for the same period.(2)
We attribute the portfolio' s negative return over the six-month period to a
rising interest-rate environment, which caused most municipal bond prices to
decline. The portfolio' s relative underperformance is primarily the result of
our security selection strategy, which was designed to position the portfolio
for the future by potentially taking advantage of perceived attractive values
created during the municipal market's decline.
What is the portfolio's investment approach?
The portfolio' s goal is a high level of federally tax-exempt income from a
diversified portfolio of municipal bonds. In pursuit of this objective, we
conduct rigorous analysis of each individual bond' s structure. Within the
context of our bond structure analyses, we strive to maximize income and achieve
a competitive total return, which is the combination of income earned and bond
price changes over a period of time.
First, we try to allocate between one-quarter and one-half of the total
portfolio to bonds that we believe have the potential to offer attractive total
returns. We typically look for bonds that are selling at a discount to face
value because they may be temporarily out of favor among investors. Our belief
is that these bonds' prices will rise as they return to favor over time.
We also look for bonds that potentially can provide consistently high current
yields. We often find such opportunities in modest premium bonds. We not only
look for bonds that we expect to provide highly
The Portfolio
DISCUSSION OF PERFORMANCE (CONTINUED)
competitive yields, but we try to ensure that we select bonds that are most
likely to obtain attractive prices if and when we decide to sell them in the
secondary market.
What other factors influenced the portfolio's performance?
The portfolio' s performance was hurt by a difficult investment environment
during the reporting period, which included rising interest rates and a fall-off
in demand from institutional investors.
When the reporting period began, investors had become concerned that strong
economic growth might rekindle long-dormant inflationary pressures. In fact, in
an attempt to forestall a reacceleration of inflation, the Federal Reserve Board
raised short-term interest rates twice more during the reporting period, causing
most bond prices to fall. These interest-rate hikes followed two previous
increases implemented last summer, before the current reporting period began.
Municipal bond prices also fell because of adverse supply-and-demand influences.
For a variety of reasons, institutional investors participated less in the
tax-exempt market over the past year, which reduced overall demand and drove
municipal bond prices down significantly. As a result, municipal bonds are
currently offering tax-exempt yields that compare very favorably with the
taxable yields on comparable term U.S. Treasury securities, after adjusting for
taxes. Of course, there can be no guarantee that municipals will continue to
offer competitive relative after-tax yields in the future.
What is the portfolio's current strategy?
We have continued to employ our strategy of selecting out-of-favor bonds that we
believe will provide high levels of current income as well as the potential for
capital appreciation when the investment environment changes and these bonds
return to favor. Indeed, toward the end of the six-month reporting period, the
portfolio began to see positive results from this strategy when previously
out-of-favor bonds participated in a market-wide rally. Municipal bond investors
were evidently encouraged by comments from Federal Reserve Board
Chairman Alan Greenspan, which were interpreted as implying that the nation's
central bank may need only a few additional interest-rate increases to reduce
inflationary pressures.
During the reporting period, new purchases focused primarily on bonds selling at
a deep discount to their face values. While deep-discount bonds potentially can
fall faster than other tax-exempt bonds in declining markets (which can occur
due to interest-rate increases and a variety of other factors), they also
potentially can appreciate faster in rising markets.
In addition, we have continued to maintain the portfolio's average duration -- a
measure of sensitivity to changing interest rates -- toward the long end of its
range. We manage the portfolio's average duration based on where we find the
most attractive values at any point in time. We prefer not to forecast interest
rates, focusing instead on bond structure analysis. Using this approach, we
recently have found the most attractive values in the 10- to 20-year maturity
range, and have structured the portfolio accordingly. Of course, as conditions
change so may the portfolio's maturity structure.
March 23, 2000
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL
TAXES, AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX
(AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Portfolio
February 29, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
<TABLE>
Principal
LONG-TERM MUNICIPAL INVESTMENTS--94.3% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA--1.0%
Alabama Private Colleges and Universities
Facilities Authority, Revenue
(Tuskegee University Project)
5.75%, 9/1/2026 1,460,000 1,358,048
Alabama Water Pollution Control Authority,
Revolving Fund Loan
6.25%, 8/15/2014 (Insured; AMBAC) 750,000 762,757
ARIZONA--.9%
Tempe, GO 4%, 7/1/2016 2,500,000 1,953,975
CALIFORNIA--7.6%
California Community College Financing Authority, LR
4.625%, 10/1/2019 (Insured; MBIA) 4,000,000 3,352,800
Culver City Redevelopment Finance Authority,
Revenue 4.60%, 11/1/2020 (Insured; AMBAC) 3,500,000 2,902,305
Kings River Conservation District,
Pine Flat Power Revenue
4.75%, 1/1/2020 5,250,000 4,464,600
Los Angeles County, COP
(Disney Parking Referendum Project)
4.75%, 3/1/2023 (Insured; AMBAC) 2,000,000 1,671,700
San Mateo County, JT Powers Authority, LR
4.75%, 7/15/2023 2,000,000 1,673,520
Walnut Valley, Unified School District
6.50%, 8/1/2019 (Insured; FGIC) 1,765,000 1,861,228
COLORADO--4.4%
Colorado Springs, Utility Revenue 6.75%, 11/15/2021 500,000 524,870
Denver City and County, Airport Revenue
7%, 11/15/2025 820,000 824,453
Jefferson County, Open Space Sales Tax Revenue
4.625%, 11/01/2016 6,900,000 5,885,631
Lakewood, COP 4.75%, 12/1/2012 (Insured; MBIA) 2,240,000 2,017,680
FLORIDA--11.4%
Florida State Board of Education Capital Outlay (Public Education):
4.50%, 6/1/2018 (Insured; MBIA) 1,250,000 1,032,100
4.50%, 6/1/2020(Insured; MBIA) 7,625,000 6,197,447
4.50%, 6/1/2021 3,000,000 2,409,390
4.50%, 6/1/2022 (Insured; FSA) 5,810,000 4,640,621
Florida State Municipal Loan Council Revenue
4.75%, 4/1/2019 (Insured; MBIA). 3,990,000 3,409,256
Miramar, Public Service Tax Revenue
6.15%, 10/1/2024 (Insured; FGIC) 1,000,000 1,008,720
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
Palm Beach County, Solid Waste IDR
(Osceola Power Limited Partnership)
6.85%, 1/1/2014 200,000 (a) 108,000
Polk County Industrial Development Authority, IDR
(IMC Fertilizer)
7.525%, 1/1/2015 5,000,000 5,137,800
GEORGIA--1.4%
Municipal Electric Authority of Georgia (Project One)
4.50%, 1/1/2019 (Insured; MBIA) 3,650,000 2,929,271
HAWAII--.6%
Hawaii, COP (Kapolei State Office Building)
4.80%. 5/1/2012 (Insured; AMBAC) 1,500,000 1,340,820
ILLINOIS--.7%
Illinois Development Finance Authority, Revenue
(Steppenwolf Theatre Company) 5.50%, 10/1/2028 1,500,000 1,342,860
KANSAS--1.3%
Johnson County Union School District No. 512 ( Shawnee Mission)
4.50%, 10/1/2019 2,370,000 1,929,299
Wyandotte County Unified Government,
Utility Systems Revenue
4.75%, 9/1/2018 1,000,000 854,940
KENTUCKY--1.3%
Lexington-Fayette Urban County Government
(County Detention Center)
4.75%, 5/1/2020 1,965,000 1,656,357
Trimble County, PCR (Louisville Gas and Electric Co.)
7.625%, 11/1/2020 1,000,000 1,036,420
LOUISIANA--1.1%
Louisiana Stadium and Expo District,
Hotel Occupancy Tax and Stadium Revenue
4.75%, 7/1/2021 (Insured; FGIC) 2,850,000 2,362,907
MAINE--2.7%
Maine Health and Higher Educational
Facilities Authority, Revenue
4.625%, 7/1/2015 (Insured; MBIA) 3,370,000 2,889,607
Maine Turnpike Authority, Special Obligation
5%, 7/1/2018 (Insured;MBIA) 3,105,000 2,770,188
MARYLAND--1.3%
Maryland State Health and Higher Educational
Facilities Authority, Revenue
(Doctors Community Hospital) 5.50%, 7/1/2024 3,500,000 2,693,075
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--3.6%
Boston 4.25%, 11/1/2018 (Insured; MBIA) 2,840,000 2,233,546
Massachusetts Health and Educational
Facilities Authority, Revenue:
(Mount Auburn Hospital Issue)
6.30%, 8/15/2024 (Insured; MBIA) 750,000 756,015
(University of Massachusetts Memorial Issue)
4.70%, 7/1/2011 (Insured; AMBAC) 1,000,000 899,050
Massachusetts Housing Finance Agency,
SFHR 7.125%, 6/1/2025 465,000 477,323
Massachusetts Industrial Finance Agency, Health Care
Facility Revenue (Metro Health Foundation Inc. Project)
6.75%, 12/1/2027 1,000,000 908,500
Plymouth County, COP (Correctional Facility Project)
4.70%, 4/1/2011 (Insured; AMBAC) 1,570,000 1,443,756
Taunton 4.75%, 5/1/2017 (Insured; FSA) 1,000,000 858,900
MICHIGAN--5.8%
Detroit 5%, 4/1/2014 (Insured; MBIA) 800,000 739,280
Fenton Area Public School 4.70%, 5/1/2013 (Insured; FGIC) 1,865,000 1,660,148
Hazel Park Building Authority (Ice Arena)
4.625%, 4/1/2019 (Insured; AMBAC) 1,600,000 1,330,368
Kalamazoo Hospital Finance Authority, Hospital Facility Revenue
(Burgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) 1,000,000 1,061,630
Michigan Building Authority, Revenue (Facilities Program)
4.75%, 10/15/2021 4,355,000 3,610,382
Michigan Municipal Bond Authority
(Local Government Loan Program)
6.125%, 12/1/2018 (Insured; FGIC) 750,000 761,918
Plymouth-Canton Community School District:
4.75%, 5/1/2021 1,365,000 1,133,987
4.75%, 5/1/2023 (Insured; FSA) 2,320,000 1,912,770
MINNESOTA--1.4%
Minnesota Housing Finance Agency, SFHR 6.90%, 7/1/2022 205,000 209,805
Minneapolis and Saint Paul Housing and
Redevelopment Authority, Health Care System Revenue
(Healthspan) 4.75%, 11/15/2018 (Insured; AMBAC) 3,300,000 2,805,000
MISSISSIPPI--2.0%
Mississippi (Capital Improvements)
4.50%, 11/1/2017 (Insured; FGIC) 5,000,000 4,125,150
MISSOURI--2.2%
Cape Girardeau County Industrial Development Authority, MFHR
(Cape La Croix) 6.40%, 6/20/2031 1,245,000 1,268,916
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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MISSOURI (CONTINUED)
Missouri State Environmental Improvement
and Energy Resource Authority,
Water Pollution Control Revenue
(State Revolving Funds Program) 4.50%, 1/1/2017 3,965,000 3,312,004
NEVADA--1.9%
Clark County IDR (Nevada Power Co. Project):
7.20%, 10/1/2022 250,000 261,060
5.60%, 10/1/2030 2,000,000 1,634,720
5.90%, 10/1/2030 2,500,000 2,143,750
NEW HAMPSHIRE--.8%
New Hampshire Higher Educational and
Health Facilities Authority, HR
(Androscoggin Valley Hospital) 5.75%, 11/1/2017 1,525,000 1,360,864
New Hampshire Housing Finance Authority 6.85%, 7/1/2014 215,000 219,504
NEW JERSEY--4.5%
New Jersey GO, 4.75%, 8/1/2015 7,000,000 6,208,090
New Jersey Housing and Mortgage Finance Agency,
Home Buyer Revenue
6.70%, 4/1/2016 (Insured; MBIA) 500,000 517,685
New Jersey Transportation Trust Fund Authority
(Transportation System) 4.50%, 6/15/2019 (Insured; FSA) 1,965,000 1,610,141
New Jersey Turnpike Authority, Turnpike Revenue
6.50%, 1/1/2016 1,000,000 1,066,320
NEW YORK--1.8%
Long Island Power Authority, Electric System General Revenue
4.625%, 4/1/2016 (Insured; MBIA) 3,395,000 2,890,775
New York City Transitional Finance Authority
(Future Secured Tax)
4.75%, 11/15/2016 (Insured; FGIC) 1,000,000 867,720
NORTH DAKOTA--1.5%
North Dakota State Municipal Bond Bank
(State Revolving Fund Program) 4.625%, 10/1/2019 3,920,000 3,221,260
OHIO--1.0%
Hamilton County, Hospital Facilities Revenue
(Bethesda Hospital) 6.25%, 1/1/2012 1,000,000 1,022,670
Lorain, Hospital Improvement Revenue
(Lakeland Community Hospital, Inc.)
6.50%, 11/15/2012 1,000,000 1,060,790
OREGON--.5%
Oregon Housing and Community Services Department,
SFMR (Mortgage Program)
6.45%, 7/1/2026 905,000 925,462
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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PENNSYLVANIA--19.2%
Allegheny County Hospital Development Authority, Revenue:
(Health System--Catholic Health East)
4.875%, 11/15/2015 (Insured; AMBAC) 950,000 826,842
(Health System--University of Pennsylvania Medical Center)
4.75%, 12/15/2016 (Insured; AMBAC). 6,000,000 5,074,500
Bulter Area School District 4.75%, 10/1/2022 4,000,000 3,297,720
Delaware County, Pennsylvania Authority
Health Systems, Revenue
(Catholic Health East) 4.875%, 11/15/2015
(Insured; AMBAC) 1,550,000 1,349,058
Dauphin County General Authority, Office and
Packaging Revenue (Riverfront Office)
6%, 1/1/2025 2,000,000 1,766,860
Harrisburg Authority, Office and Packaging Revenue
6%, 5/1/2019 1,000,000 910,410
Montgomery County Higher Education and Health Authority,
Revenue ( Philadelphia Geriatric Center)
7.25%, 12/1/2027 1,625,000 1,523,844
Northhampton County Industrial Development Authority, PCR
(Bethlehem Steel) 7.55%, 6/1/2017 250,000 253,528
Pennsylvania, COP 5%, 7/1/2015 (Insured; AMBAC) 1,470,000 1,310,931
Pennsylvania Economic Development Financing Authority
RRR (Northampton Generating) 6.50%, 1/1/2013 3,000,000 2,952,330
Pennsylvania Housing Finance Agency,
Single Family Mortgage 6.75%, 4/1/2016 2,700,000 2,734,641
Philadelphia, Gas Works Revenue:
5%, 7/1/2018 (Insured; FSA) 3,440,000 3,044,538
6.37%, 7/1/2026 (Insured; CMAC) 2,685,000 2,735,048
Philadelphia Higher Educational Facilities Authority, Revenue
(State System Higher Education)
5%, 6/15/2019 (Insured; AMBAC) 3,000,000 2,645,490
Philadelphia Hospitals and Higher Education
Facilities Authority, HR
(Temple University Hospital) 6.625%, 11/15/2023 7,925,000 7,225,619
Washington County Industrial Development Authority,
PCR (West Penn Power Co.)
6.05%, 4/1/2014 (Insured; AMBAC) 2,500,000 2,562,725
RHODE ISLAND--.1%
Rhode Island Housing and Mortgage Finance Corp.
(Homeownership Opportunity)
6.50%, 4/1/2027 200,000 203,386
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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SOUTH CAROLINA--1.7%
Charleston County, Revenue (Alliance Health Services)
4.60%, 8/15/2011 (Insured; FSA) 2,000,000 1,780,200
Florence County, HR (McLeod Regional Medical Center Project)
4.90%, 11/1/2014 (Insured; MBIA) 2,000,000 1,779,480
TENNESSEE--1.1%
Maury County Industrial Development Board,
PCR (Saturn Corp. Project)
6.50%, 9/1/2024 1,000,000 997,560
Sullivan County Industrial Board, Revenue 6.35%, 7/20/2027 1,000,000 1,010,460
Tennessee Housing Development Agency,
Mortgage Finance 6.90%, 7/1/2025 250,000 255,488
TEXAS--6.8%
Alliance Airport Authority, Special Facilities Revenue
(American Airlines Inc., Project) 7.50%, 12/1/2029 500,000 508,460
Brazos River Authority, Revenue
(Houston Industries Inc. Project) 5.125%, 5/1/2019 1,750,000 1,557,973
Crosby Independent School District
(Permanent School Fund Guaranteed)
Zero Coupon, 2/15/2017 1,655,000 593,367
Frisco Independent School District
(Permanent School Fund Guaranteed)
4.625%, 8/15/2022 3,745,000 3,023,301
Irving Independent School District
(Permanent School Fund Guaranteed)
5%, 5/15/2021 1,800,000 1,568,430
Lamar Consolidated Independent School District
(Permanent School Fund Guaranteed)
5%, 2/15/2017 1,500,000 1,348,320
Mesquite Health Facilities Development
(Christian Retirement Facility)
6.40%, 2/15/2020 1,500,000 1,363,590
Northside Independent School District
(Permanent School Fund Guaranteed)
4.75%, 8/15/2024 4,000,000 3,259,400
Spring Independent School District
(Permanent School Fund Guaranteed) .
4.50%, 8/15/2020 1,365,000 1,094,621
VIRGINIA--1.4%
Virginia Beach Development Authority,
Health Care Facilities Revenue
(Sentara Health System) 4.75%, 11/1/2021 2,000,000 1,616,860
The Portfolio
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
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VIRGINIA (CONTINUED)
Virginia Housing Development Authority
(Commonwealth Mortgage)
5.25%, 7/1/2023 1,500,000 1,320,270
WASHINGTON--.7%
Seatac Local Option Transportation, Tax Revenue:
6.50%, 12/1/2013 (Insured; MBIA) 45,000 48,017
Tacoma, Conservation Systems Project Revenue
(Tacoma Public Utilities Division)
6.60%, 1/1/2015 1,000,000 1,048,460
Washington, Public Power Supply System,
(Nuclear Project No. 2) Revenue
6.25%, 7/1/2012 315,000 324,900
WEST VIRGINIA--.5%
Pleasants County, PCR (West Penn Power Co.)
6.15%, 5/1/2015 (Insured; AMBAC) 1,000,000 1,027,570
WYOMING--.1%
Sweetwater County, SWDR (FMC Corp. Project)
7%, 6/1/2024 200,000 200,450
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $212,788,026) 197,666,551
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SHORT-TERM MUNICIPAL INVESTMENTS--3.3%
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ALABAMA--.9%
Stevenson Industrial Development Board, EIR, VRDN
(Mead Corp. Project)
3.90% (LOC; Bank Austria AG) 1,900,000 (b) 1,900,000
INDIANA--1.4%
Indianapolis, RRR, VRDN (Ogden Martin Systems)
3.90% (LOC; Westdeutsche Landesbank Girozentrale) 2,000,000 (b) 2,000,000
Princeton, PCR, VRDN (PSI Energy Inc. Project)
3.80% (LOC; Morgan Guaranty and Trust ) 1,000,000 (b) 1,000,000
LOUISIANA--1.0%
Plaquemines Parish, Environmental Revenue, VRDN
(BP Exploration and Oil) 3.95% 2,100,000 (b) 2,100,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $7,000,000) 7,000,000
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TOTAL INVESTMENTS (cost $219,788,026) 97.6% 204,666,551
CASH AND RECEIVABLES (NET) 2.4% 5,068,687
NET ASSETS 100.0% 209,735,238
Summary of Abbreviations
AMBAC American Municipal Bond LOC Letter of Credit
Assurance Corporation LR Lease Revenue
CMAC Capital Market Assurance Corporation MBIA Municipal Bond Investors
COP Certificate of Participation Assurance Insurance Corporation
EIR Environment Improvement Revenue MFHR Multi-Family Housing Revenue
FGIC Federal Guaranty PCR Pollution Control Revenue
Investment Company RRR Resources Recovery Revenue
FSA Financial Security Assurance SFHR Single Family Housing Revenue
GO General Obligation SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 59.4
AA Aa AA 19.6
A A A 2.8
BBB Baa BBB 12.1
F1 MIG1/P1 SP1/A1 3.4
Not Rated (c) Not Rated (c) Not Rated (c) 2.7
100.0
(A) NON-INCOME PRODUCING SECURITY; INTEREST PAYMENTS IN DEFAULT.
(B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE-SUBJECT TO PERIODIC
CHANGE.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE
SECURITIES IN WHICH THE PORTFOLIO MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 219,788,026 204,666,551
Cash 1,326,396
Interest receivable 3,044,431
Receivable for investment securities sold 743,573
Prepaid expenses 20,715
209,801,666
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 43,690
Payable for shares of Common Stock redeemed 10
Accrued expenses 22,728
66,428
- --------------------------------------------------------------------------------
NET ASSETS ($) 209,735,238
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 229,608,412
Accumulated net realized gain (loss) on investments (4,751,699)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (15,121,475)
- --------------------------------------------------------------------------------
NET ASSETS ($) 209,735,238
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(500 million shares of $.001 par value Common Stock authorized) 16,841,504
NET ASSET VALUE, offering and redemption price per share ($) 12.45
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 6,522,983
EXPENSES:
Management fee--Note 3(a) 687,621
Shareholder servicing costs--Note 3(b) 126,413
Registration fees 17,733
Professional fees 15,190
Custodian fees 14,348
Prospectus and shareholders' reports 10,717
Directors' fees and expenses--Note 3(c) 2,781
Loan commitment fees--Note 2 1,439
Miscellaneous 10,293
TOTAL EXPENSES 886,535
Less--reduction in management fee due to
undertaking--Note 3(a) (369,381)
NET EXPENSES 517,154
INVESTMENT INCOME--NET 6,005,829
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (3,518,256)
Net unrealized appreciation (depreciation) on investments (6,590,674)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (10,108,930)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,103,101)
SEE NOTES TO FINANCIAL STATEMENTS.
The Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 29, 2000 Year Ended
(Unaudited) August 31, 1999
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OPERATIONS ($):
Investment income--net 6,005,829 10,931,567
Net realized gain (loss) on investments (3,518,256) (314,074)
Net unrealized appreciation (depreciation)
on investments (6,590,674) (16,411,327)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (4,103,101) (5,793,834)
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (6,005,829) (10,931,567)
Net realized gain on investments (3,776) (2,472,375)
TOTAL DIVIDENDS (6,009,605) (13,403,942)
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CAPITAL STOCK TRANSACTIONS ($):
Net proceeds from shares sold 42,877,433 150,648,882
Dividends reinvested 3,921,228 9,582,880
Cost of shares redeemed (73,811,334) (84,130,784)
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL STOCK TRANSACTIONS (27,012,673) 76,100,978
TOTAL INCREASE (DECREASE) IN NET ASSETS (37,125,379) 56,903,202
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 246,860,617 189,957,415
END OF PERIOD 209,735,238 246,860,617
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CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 3,411,029 10,921,658
Shares issued for dividends reinvested 312,608 698,197
Shares redeemed (5,899,948) (6,160,143)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (2,176,311) 5,459,712
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the portfolio would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been derived from the
portfolio's financial statements.
<TABLE>
Six Months Ended
February 29, 2000 Year Ended August 31,
----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 12.98 14.01 13.60 13.03 13.01 12.76
Investment Operations:
Investment income--net .33 .66 .69 .74 .73 .76
Net realized and unrealized
gain (loss) on investments (.53) (.86) .60 .66 .06 .25
Total from Investment
Operations (.20) (.20) 1.29 1.40 .79 1.01
Distributions:
Dividends from investment
income--net (.33) (.66) (.69) (.74) (.72) (.76)
Dividends from net realized
gain on investments (.00)(a) (.17) (.19) (.09) (.05) --
Total Distributions (.33) (.83) (.88) (.83) (.77) (.76)
Net asset value, end of period 12.45 12.98 14.01 13.60 13.03 13.01
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (3.09)(b) (1.63) 9.78 11.03 6.17 8.30
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .45(b) .45 .45 .26 .39 .20
Ratio of net investment income
to average net assets 5.23(b) 4.79 4.97 5.50 5.52 5.99
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation .32(b) .31 .36 .58 .52 .77
Portfolio Turnover Rate 38.77(c) 87.54 43.39 101.27 59.23 58.91
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 209,735 246,861 189,957 114,268 56,449 42,913
(A) AMOUNT REPRESENTS LESS THAN $.01.
(B) ANNUALIZED.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC Municipal Bond Portfolio (the "portfolio" ) is a separate
non-diversified series of Dreyfus BASIC Municipal Fund, Inc. (the "fund") 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 portfolio. The portfolio' 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 portfolio' s
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Financial Corporation. Premier
Mutual Fund Services, Inc. is the distributor of the portfolio'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 funds are allocated
among them on a pro rata basis.
The portfolio' 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 portfolio received net earnings credits of $3,430 during the
period ended February 29, 2000 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 portfolio 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 portfolio 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 that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of the portfolio not
to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the portfolio to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the
The Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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 portfolio participates with other Dreyfus-managed funds in a $500 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the portfolio has agreed to pay commitment fees on its pro rata
portion of the Facility. Interest is charged to the portfolio at rates based on
prevailing market rates in effect at the time of the borrowings. During the
period ended February 29, 2000, the portfolio 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 portfolio'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 portfolio, to the extent that the
portfolio' s aggregate expenses, 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 portfolio's average daily net assets. The
reduction in management fee, pursuant to the undertaking, amounted to $369,381
during the period ended February 29, 2000.
(B) Under the Shareholder Services Plan, the portfolio 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 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. During the
period ended February 29, 2000, the portfolio was charged $85,918 pursuant to
the Shareholder Services Plan.
The portfolio 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 portfolio. During the
period ended February 29, 2000, the portfolio was charged $26,764 pursuant to
the transfer agency agreement.
(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 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended February 29, 2000, amounted to
$86,212,610 and $119,104,900, respectively.
At February 29, 2000, accumulated net unrealized depreciation on investments was
$15,121,475, consisting of $444,870 gross unrealized appreciation and
$15,566,345 gross unrealized depreciation.
At February 29, 2000, 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 5--Subsequent Event:
At a meeting of the fund's Board of Directors held on January 19, 2000, the
Board approved the termination of the portfolio's Distribution Agreement with
Premier Mutual Fund Services Inc., and approved a new Distribution Agreement
with Dreyfus Service Corporation. The new Distribution Agreement with Dreyfus
Service Corporation became effective on March 22, 2000.
The Portfolio
For More Information
Dreyfus BASIC Municipal Bond Portfolio
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request
to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 125SA002
