File Nos. 33-42162
811-6377
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 17 [ X ]
(Check appropriate box or boxes.)
DREYFUS BASIC MUNICIPAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on January 1, 2001 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
--
Dreyfus BASIC
Municipal Fund, Inc.
Dreyfus BASIC Intermediate Municipal Bond Portfolio
Dreyfus BASIC Municipal Bond Portfolio
Dreyfus BASIC Municipal Money Market Portfolio
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
Three investment choices for income exempt from federal income tax, and one
investment choice for income exempt from federal and New Jersey state income
taxes
PROSPECTUS January 1, 2001
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
THE PORTFOLIOS
-----------------------------------------------------------------
1 Introduction
2 Goal/Approach
6 Main Risks
8 Past Performance
12 Expenses
16 Management
18 Financial Highlights
YOUR INVESTMENT
--------------------------------------------------------------------
22 Account Policies
25 Distributions and Taxes
26 Services for Fund Investors
28 Instructions for Regular Accounts
FOR MORE INFORMATION
-------------------------------------------------------------------------------
INFORMATION ON EACH PORTFOLIO'S RECENT
PERFORMANCE CAN BE FOUND IN ITS CURRENT ANNUAL/SEMIANNUAL REPORT (SEE BACK
COVER)
Each portfolio's investment approach, risks, performance, expenses and related
information
Information for managing your fund account
Where to learn more about this and other Dreyfus funds
<PAGE>
The Portfolios
Dreyfus BASIC Intermediate Municipal Bond Portfolio
------------------
Ticker Symbol: DBIMX
Dreyfus BASIC Municipal Bond Portfolio
------------------
Ticker Symbol: DRMBX
Dreyfus BASIC Municipal Money Market Portfolio
------------------
Ticker Symbol: DBMXX
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
------------------
Ticker Symbol: DBJXX
What these portfolios are -- and aren't
Each portfolio is a mutual fund: a pooled investment that is professionally
managed and gives you the opportunity to participate in financial markets. Each
strives to reach its stated goal, although as with all mutual funds, none of the
portfolios can offer guaranteed results.
An investment in these portfolios is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in these portfolios, but you also have
the potential to make money.
This combined prospectus has been prepared for your convenience so that you can
consider four investment choices in one document. Each portfolio is a separate
entity with a separate investment portfolio. The operations and results of one
portfolio are unrelated to those of each other portfolio.
The portfolios differ in their average maturity, which affects their level of
income and degree of share price fluctuation. The money market portfolios seek
to maintain a stable $1.00 share price. The money market portfolios offer share
price stability for investors looking to protect principal, but have lower
income potential than the bond portfolios. The bond portfolios each offer higher
income and return potential, mainly relative to their average maturities, but
their share prices will fluctuate.
Each portfolio is non-diversified, which means that a relatively high percentage
of its assets may be invested in a limited number of issuers. Therefore, each
portfolio's performance may be more vulnerable to changes in the market value of
a single issuer or a group of issuers.
Introduction
<PAGE 1>
Dreyfus BASIC Municipal Fund, Inc.
GOAL/APPROACH
Dreyfus BASIC Intermediate Municipal Bond Portfolio
THE INTERMEDIATE BOND PORTFOLIO seeks as high a level of current income exempt
from federal income tax as is consistent with the preservation of capital. To
pursue this goal, the portfolio normally invests substantially all of its assets
in municipal bonds that provide income exempt from federal income tax.
The portfolio's dollar-weighted average portfolio maturity ranges between three
and ten years. The portfolio will invest at least 65% of its assets in municipal
bonds with an A or higher credit rating, or the unrated equivalent as determined
by Dreyfus. The remaining 35% of the portfolio may be invested in bonds with a
credit quality lower than A, including bonds of below investment grade credit
quality ("high yield" or "junk" bonds).
Although the portfolio's objective is to generate income exempt from federal
income tax, interest from some of the portfolio's holdings may be subject to the
federal alternative minimum tax. In addition, the portfolio occasionally may
invest in taxable bonds.
Concepts to understand
INVESTMENT GRADE BONDS: independent rating organizations analyze and evaluate a
bond issuer's credit history and ability to repay debts. Based on their
assessment, they assign letter grades that reflect the issuer's
creditworthiness. AAA or Aaa represents the highest credit rating, AA/Aa the
second highest, and so on down to D, for bonds in default (the inability to make
timely interest or principal payments). Bonds rated BBB or Baa and above are
considered investment grade.
AVERAGE MATURITY: an average of the stated maturities of the bonds held in a
portfolio, based on their dollar-weighted proportions in the portfolio.
<PAGE 2>
Dreyfus BASIC Municipal Bond Portfolio
THE BOND PORTFOLIO seeks as high a level of current income exempt from federal
income tax as is consistent with the preservation of capital. To pursue this
goal, the portfolio normally invests substantially all of its assets in
municipal bonds that provide income exempt from federal income tax.
The portfolio's dollar-weighted average portfolio maturity normally exceeds ten
years, but the portfolio may invest without regard to maturity. The portfolio
will invest at least 65% of its assets in municipal bonds with an A or higher
credit rating, or the unrated equivalent as determined by Dreyfus. The remaining
35% of the portfolio may be invested in bonds with a credit quality lower than
A, including high yield municipal bonds.
Although the portfolio's objective is to generate income exempt from federal
income tax, interest from some of the portfolio's holdings may be subject to the
federal alternative minimum tax. In addition, the portfolio occasionally may
invest in taxable bonds.
Concepts to understand
MUNICIPAL BONDS: debt securities that provide income free from federal income
taxes, and state income taxes if the investor lives in the issuing state.
Municipal bonds are typically of two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or highway
tolls
DURATION: an indication of an investment's "interest rate risk," or how
sensitive a bond or mutual fund portfolio may be to changes in interest rates.
Generally speaking, the longer a fund's duration, the more it is likely to react
to interest rate fluctuations and the greater its long-term risk/return
potential.
The Portfolios
<PAGE 3>
GOAL/APPROACH (CONTINUED)
Dreyfus BASIC Municipal Money Market Portfolio
THE MONEY MARKET PORTFOLIO seeks as high a level of current income exempt from
federal income tax as is consistent with the preservation of capital and the
maintenance of liquidity. As a money market fund, the portfolio is subject to
maturity, quality and diversification requirements designed to help it maintain
a stable share price.
To pursue this goal, the portfolio normally invests substantially all of its net
assets in short-term, high quality municipal obligations that provide income
exempt from federal income tax.
Although the portfolio's objective is to generate income exempt from federal
income taxes, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the portfolio occasionally may invest in
taxable obligations and/or municipal obligations that pay income exempt only
from federal income tax.
Concepts to understand
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner.
An issuer with the highest credit rating has a very strong degree of certainty
(or safety) with respect to making all payments. An issuer with the
second-highest credit rating still has a strong capacity to make all payments,
although the degree of safety is somewhat less.
Generally, each money market portfolio is required to invest at least 95% of its
assets in the securities of issuers with the highest credit rating or the
unrated equivalent as determined by Dreyfus, with the remainder invested in
securities with the second-highest credit rating.
<PAGE 4>
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
THE NEW JERSEY MONEY MARKET PORTFOLIO seeks as high a level of current income
exempt from federal and New Jersey state income taxes as is consistent with the
preservation of capital and the maintenance of liquidity. As a money market
fund, the portfolio is subject to maturity, quality and diversification
requirements designed to help it maintain a stable share price.
To pursue this goal, the portfolio normally invests substantially all of its net
assets in short-term, high quality municipal obligations that provide income
exempt from federal and New Jersey state income taxes. When the portfolio
manager believes that acceptable New Jersey municipal obligations are
unavailable for investment, the portfolio may invest temporarily in municipal
obligations that provide income subject to New Jersey state income tax, but not
federal income tax.
Although the portfolio's objective is to generate income exempt from federal and
New Jersey state income taxes, interest from some of the portfolio's holdings
may be subject to the federal alternative minimum tax. In addition, the
portfolio temporarily may invest in taxable obligations. At times, the portfolio
also may occasionally invest in municipal obligations that provide income free
from federal income tax but not New Jersey state income tax.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or
less
* buy individual securities that have remaining maturities of 13 months or
less
* invest only in high quality, dollar-denominated obligations
The Portfolios
<PAGE 5>
MAIN RISKS
Dreyfus BASIC Intermediate Municipal Bond Portfolio and Dreyfus BASIC Municipal
Bond Portfolio
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow a portfolio to invest for higher yields, the most
immediate effect is usually a drop in bond prices, and therefore in a
portfolio's share price as well. As a result, the value of your investment in
either bond portfolio could go up and down, which means that you could lose
money. The Bond Portfolio will generally have a longer average effective
duration than the Intermediate Bond Portfolio and therefore its share price will
be more sensitive to interest rate movements.
Other risk factors could have an effect on a portfolio's performance:
* if an issuer defaults on a bond, or there is a
credit downgrade on the bond, the bond's value, and the portfolio's share
price, could fall
* if the municipal bond market becomes less liquid,
typically when there are many more sellers than buyers for municipal
securities, the value of such securities, particularly those purchased at
discounted prices, and the portfolio's share price, may fall dramatically
Other potential risks
The Intermediate Bond Portfolio and Bond Portfolio, at times, may invest in
certain derivatives, such as futures and options, that may produce taxable
income, and in inverse floaters. Derivatives are used primarily to hedge the
portfolio or for daily liquidity. They also may be used to increase returns.
However, these practices may lower returns or increase volatility. Derivatives
can be illiquid and highly sensitive to changes in their underlying security,
interest rate or index. A small investment in certain derivatives could have a
potentially large impact on a portfolio's performance.
<PAGE 6>
Dreyfus BASIC Municipal Money Market Portfolio and Dreyfus BASIC New Jersey
Municipal Money Market Portfolio
Each portfolio's yield will fluctuate as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
An investment in either portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although each
portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in a portfolio.
While each portfolio has maintained a constant share price since inception and
will continue to try to do so, the following factors could reduce a portfolio's
income level and/or share price:
* interest rates could rise sharply, causing a
portfolio's share price to drop
* any of a portfolio's holdings could have its credit
rating downgraded or could default
The New Jersey Money Market Portfolio is subject to certain additional risks:
* New Jersey's economy and revenues underlying its municipal obligations
may decline
* the portfolio's securities may be more sensitive to risks that are
specific to investing primarily in a single state
The Portfolios
<PAGE 7>
PAST PERFORMANCE
Dreyfus BASIC Intermediate Municipal Bond Portfolio
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Lehman Brothers 10-Year Municipal Bond Index, an unmanaged total
return intermediate-term municipal bond performance benchmark. Of course, past
performance is no guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit A]
BEST QUARTER: Q1 '95 +5.16%
WORST QUARTER: Q2 '99 -2.01%
THE PORTFOLIO'S YEAR-TO-DATE TOTAL RETURN AS OF 9/30/00 WAS 6.58%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Since
inception
1 Year 5 Years (5/4/94)
--------------------------------------------------------------------------------------------
PORTFOLIO -2.46% 6.20% 5.63%
LEHMAN BROTHERS
10-YEAR MUNICIPAL
BOND INDEX -1.25% 7.12% 6.13%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON
4/30/94 IS USED AS THE BEGINNING VALUE ON 5/4/94.
</TABLE>
<PAGE 8>
Dreyfus BASIC Municipal Bond Portfolio
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table compares the portfolio's average annual total return to
that of the Lehman Brothers Municipal Bond Index, an unmanaged total return
municipal bond performance benchmark. Of course, past performance is no
guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit B]
BEST QUARTER: Q1 '95 +7.85%
WORST QUARTER: Q1 '96 -2.46%
THE PORTFOLIO'S YEAR-TO-DATE TOTAL RETURN AS OF 9/30/00 WAS 8.14%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Since
inception
1 Year 5 Years (5/6/94)
--------------------------------------------------------------------------------------------
PORTFOLIO -5.71% 6.85% 6.11%
LEHMAN BROTHERS
MUNICIPAL
BOND INDEX 2.06% 6.91% 5.98%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON
4/30/94 IS USED AS THE BEGINNING VALUE ON 5/6/94.
</TABLE>
The Portfolios
<PAGE 9>
PAST PERFORMANCE (CONTINUED)
Dreyfus BASIC Municipal Money Market Portfolio
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table shows the portfolio's average annual total return over
time. Of course, past performance is no guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit C]
BEST QUARTER: Q2 '95 +1.04%
WORST QUARTER: Q1 '94 +0.58%
THE PORTFOLIO'S YEAR-TO-DATE TOTAL RETURN AS OF 9/30/00 WAS 2.75%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year 5 Years (12/16/91)
--------------------------------------------------------
2.92% 3.33% 3.18%
For the portfolio's current yield, call toll-free: 1-800-645-6561.
<PAGE 10>
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
The bar chart and table below show some of the risks of investing in the
portfolio. The bar chart shows the changes in the portfolio's performance from
year to year. The table shows the portfolio's average annual total return over
time. Of course, past performance is no guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
[Exhibit D]
BEST QUARTER: Q2 '96 +0.86%
WORST QUARTER: Q1 '99 +0.58%
THE PORTFOLIO'S YEAR-TO-DATE TOTAL RETURN AS OF 9/30/00
WAS 2.62%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
Since inception
1 Year (12/1/95)
--------------------------------------------------------
2.70% 3.03%
For the portfolio's current yield, call toll-free: 1-800-645-6561.
The Portfolios
<PAGE 11>
EXPENSES
Dreyfus BASIC Intermediate Municipal Bond Portfolio
As an investor, you pay certain fees and expenses in connection with the
portfolio, which are described in the following table. Shareholder transaction
fees are paid from your account. Annual portfolio operating expenses are paid
out of fund assets, so their effect is included in the share price. The
portfolio has no sales charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
CHARGED IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000 AT THE TIME OF THE TRANSACTION
Exchange fee $5.00
Account closeout fee* $5.00
Wire and TeleTransfer redemption fee $5.00
Checkwriting charge $2.00
--------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Shareholder services fee 0.08%
Other expenses 0.11%
-------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 0.79%
Fee waiver and/or expense reimbursement (0.34%)
-------------------------------------------------------
NET OPERATING EXPENSES** 0.45%
**UNLESS BY EXCHANGE OR WIRE FOR WHICH A CHARGE APPLIES.
**THE DREYFUS CORPORATION HAS AGREED TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME
THE EXPENSES OF THE PORTFOLIO SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES DO
NOT EXCEED 0.45%. DREYFUS MAY TERMINATE THIS AGREEMENT UPON AT LEAST 90 DAYS'
PRIOR NOTICE TO INVESTORS, BUT HAS COMMITTED NOT TO DO SO AT LEAST THROUGH
JANUARY 1, 2002.
----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------------------------------------------------------
$46 $218 $405 $946
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only. Net
operating expenses are used in the one-year figure and
the first year of the other figures.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the portfolio and assisting
in all aspects of the portfolio's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the portfolio's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
SHAREHOLDER TRANSACTION FEE: fees paid from your account and retained by the
portfolio to help keep operating expenses lower.
<PAGE 12>
Dreyfus BASIC Municipal Bond Portfolio
As an investor, you pay certain fees and expenses in connection with the
portfolio, which are described in the following table. Shareholder transaction
fees are paid from your account. Annual portfolio operating expenses are paid
out of fund assets, so their effect is included in the share price. The
portfolio has no sales charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
CHARGED IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000 AT THE TIME OF THE TRANSACTION
Exchange fee $5.00
Account closeout fee* $5.00
Wire and TeleTransfer redemption fee $5.00
Checkwriting charge $2.00
--------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Shareholder services fee 0.09%
Other expenses 0.09%
-------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 0.78%
Fee waiver and/or expense reimbursement (0.33%)
-------------------------------------------------------
NET OPERATING EXPENSES** 0.45%
**UNLESS BY EXCHANGE OR WIRE FOR WHICH A CHARGE APPLIES.
**THE DREYFUS CORPORATION HAS AGREED TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME
THE EXPENSES OF THE PORTFOLIO SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES DO
NOT EXCEED 0.45%. DREYFUS MAY TERMINATE THIS AGREEMENT UPON AT LEAST 90 DAYS'
PRIOR NOTICE TO INVESTORS, BUT HAS COMMITTED NOT TO DO SO AT LEAST THROUGH
JANUARY 1, 2002.
--------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------
$46 $216 $401 $935
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only. Net
operating expenses are used in the one-year figure and
the first year of the other figures.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the portfolio and assisting
in all aspects of the portfolio's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the portfolio's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
SHAREHOLDER TRANSACTION FEE: fees paid from your account and retained by the
portfolio to help keep operating expenses lower.
The Portfolios
<PAGE 13>
EXPENSES (CONTINUED)
Dreyfus BASIC Municipal Money Market Portfolio
As an investor, you pay certain fees and expenses in connection with the
portfolio, which are described in the following table. Shareholder transaction
fees are paid from your account. Annual portfolio operating expenses are paid
out of fund assets, so their effect is included in the share price. The
portfolio has no sales charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
CHARGED IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000 AT THE TIME OF THE TRANSACTION
Exchange fee $5.00
Account closeout fee* $5.00
Wire and TeleTransfer redemption fee $5.00
Checkwriting charge $2.00
--------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.05%
Other expenses 0.05%
--------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 0.60%
Fee waiver and/or expense reimbursement (0.15%)
--------------------------------------------------------
NET OPERATING EXPENSES** 0.45%
**UNLESS BY EXCHANGE OR WIRE FOR WHICH A CHARGE APPLIES.
**THE DREYFUS CORPORATION HAS AGREED TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME
THE EXPENSES OF THE PORTFOLIO SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES DO
NOT EXCEED 0.45%. DREYFUS MAY TERMINATE THIS AGREEMENT UPON AT LEAST 90 DAYS'
PRIOR NOTICE TO INVESTORS, BUT HAS COMMITTED NOT TO DO SO AT LEAST THROUGH
JANUARY 1, 2002.
--------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------------
$46 $177 $320 $736
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only. Net
operating expenses are used in the one-year figure and
the first year of the other figures.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the portfolio and assisting
in all aspects of the portfolio's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the portfolio's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
SHAREHOLDER TRANSACTION FEE: fees paid from your account and retained by the
portfolio to help keep operating expenses lower.
<PAGE 14>
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
As an investor, you pay certain fees and expenses in connection with the
portfolio, which are described in the following table. Shareholder transaction
fees are paid from your account. Annual portfolio operating expenses are paid
out of fund assets, so their effect is included in the share price. The
portfolio has no sales charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
CHARGED IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000 AT THE TIME OF THE TRANSACTION
Exchange fee $5.00
Account closeout fee* $5.00
Wire and TeleTransfer redemption fee $5.00
Checkwriting charge $2.00
--------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.06%
Other expenses 0.07%
-------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES 0.63%
Fee waiver and/or expense reimbursement (0.18%)
-------------------------------------------------------
NET OPERATING EXPENSES** 0.45%
**UNLESS BY EXCHANGE OR WIRE FOR WHICH A CHARGE APPLIES.
**THE DREYFUS CORPORATION HAS AGREED TO WAIVE RECEIPT OF ITS FEES AND/OR ASSUME
THE EXPENSES OF THE PORTFOLIO SO THAT TOTAL ANNUAL FUND OPERATING EXPENSES DO
NOT EXCEED 0.45%. DREYFUS MAY TERMINATE THIS AGREEMENT UPON AT LEAST 90 DAYS'
PRIOR NOTICE TO INVESTORS, BUT HAS COMMITTED NOT TO DO SO AT LEAST THROUGH
JANUARY 1, 2002.
--------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------------------------------
$46 $184 $333 $769
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only. Net
operating expenses are used in the one-year figure and
the first year of the other figures.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the portfolio and assisting
in all aspects of the portfolio's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the portfolio's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the portfolio for miscellaneous items such as
transfer agency, custody, professional and registration fees.
SHAREHOLDER TRANSACTION FEE: fees paid from your account and retained by the
portfolio to help keep operating expenses lower.
The Portfolios
<PAGE 15>
MANAGEMENT
The investment adviser for each portfolio is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$149 billion in over 190 mutual fund portfolios. For the past fiscal year,
Dreyfus BASIC Intermediate Municipal Bond Portfolio, Dreyfus BASIC Municipal
Bond Portfolio, Dreyfus BASIC Municipal Money Market Portfolio and Dreyfus BASIC
New Jersey Municipal Money Market Portfolio each paid Dreyfus a management fee
at the annual rate of 0.26%, 0.27%, 0.35% and 0.32%, respectively, of the
portfolio's average daily net assets.
Dreyfus is the primary mutual fund business of Mellon Financial Corporation, a
global financial services company with approximately $2.8 trillion of assets
under management, administration or custody, including approximately $540
billion under management. Mellon provides wealth management, global investment
services and a comprehensive array of banking services for individuals,
businesses and institutions. Mellon is headquartered in Pittsburgh,
Pennsylvania.
Portfolio manager
Douglas J. Gaylor has been the primary portfolio manager of Dreyfus BASIC
Intermediate Municipal Bond Portfolio and Dreyfus BASIC Municipal Bond Portfolio
since he joined The Dreyfus Corporation in January 1996. From 1993 to the time
he joined Dreyfus, Mr. Gaylor was a municipal portfolio manager at PNC Bank.
<PAGE 16>
The fund, Dreyfus and Dreyfus Service Corporation (the fund's distributor) each
has adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
the fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
The Portfolios
<PAGE 17>
FINANCIAL HIGHLIGHTS
The following tables describe each portfolio's performance for the fiscal
periods indicated. "Total return" shows how much your investment in a portfolio
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young, LLP, whose report for each portfolio,
along with each portfolio's financial statements, is included in the portfolio's
annual report.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Dreyfus BASIC Intermediate Municipal Bond Portfolio
YEAR ENDED AUGUST 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.88 13.56 13.25 12.83 12.95
Investment operations:
Investment income -- net .62 .61 .63 .66 .65
Net realized and unrealized
gain (loss) on investments .17 (.58) .47 .45 (.12)
Total from investment operations .79 .03 1.10 1.11 .53
Distributions:
Dividends from investment
income -- net (.62) (.61) (.63) (.66) (.65)
Dividends from net realized
gain on investments (.01) (.10) (.16) (.03) --
Total distributions (.63) (.71) (.79) (.69) (.65)
Net asset value, end of period 13.04 12.88 13.56 13.25 12.83
Total return (%) 6.36 .11 8.51 8.95 4.07
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets (%) .45 .45 .45 .24 .39
Ratio of net investment income
to average net assets (%) 4.86 4.55 4.68 5.07 5.01
Decrease reflected in above
expense ratios due to
actions by Dreyfus (%) .34 .33 .36 .56 .46
Portfolio turnover rate (%) 40.46 60.65 15.38 64.65 54.99
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 99,313 110,344 92,661 66,372 46,598
<PAGE 18>
Dreyfus BASIC Municipal Bond Portfolio
YEAR ENDED AUGUST 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 12.98 14.01 13.60 13.03 13.01
Investment operations:
Investment income -- net .66 .66 .69 .74 .73
Net realized and unrealized
gain (loss) on investments .13 (.86) .60 .66 .06
Total from investment operations .79 (.20) 1.29 1.40 .79
Distributions:
Dividends from investment
income -- net (.66) (.66) (.69) (.74) (.72)
Dividends from net realized
gain on investments (.00)* (.17) (.19) (.09) (.05)
Total distributions (.66) (.83) (.88) (.83) (.77)
Net asset value, end of period 13.11 12.98 14.01 13.60 13.03
Total return (%) 6.41 (1.63) 9.78 11.03 6.17
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets (%) .45 .45 .45 .26 .39
Ratio of net investment income
to average net assets (%) 5.22 4.79 4.97 5.50 5.52
Decrease reflected in above
expense ratios due to
actions by Dreyfus (%) .33 .31 .36 .58 .52
Portfolio turnover rate (%) 58.05 87.54 43.39 101.27 59.23
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 227,010 246,861 189,957 114,268 56,449
* AMOUNT REPRESENTS LESS THAN $.01 PER SHARE.
The Portfolios
<PAGE 19>
FINANCIAL HIGHLIGHTS (CONTINUED)
Dreyfus BASIC Municipal Money Market Portfolio
YEAR ENDED AUGUST 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income -- net .034 .029 .033 .033 .034
Distributions:
Dividends from investment
income -- net (.034) (.029) (.033) (.033) (.034)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 3.47 2.90 3.31 3.31 3.42
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets (%) .45 .45 .45 .45 .38
Ratio of net investment income
to average net assets (%) 3.39 2.86 3.26 3.26 3.40
Decrease reflected in above
expense ratios due to
actions by Dreyfus (%) .15 .15 .17 .15 .22
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 490,964 609,532 615,469 683,562 804,257
<PAGE 20>
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
YEAR ENDED AUGUST 31,
2000 1999 1998 1997 1996(1)
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income -- net .033 .026 .030 .031 .025
Distributions:
Dividends from investment
income -- net (.033) (.026) (.030) (.031) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 3.32 2.62 3.01 3.17 3.38(2)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets (%) .45 .45 .45 .36 .06(2)
Ratio of net investment income
to average net assets (%) 3.27 2.59 2.97 3.12 3.25(2)
Decrease reflected in above
expense ratios due to
actions by Dreyfus (%) .18 .20 .19 .27 .68(2)
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 122,340 111,946 118,622 136,553 100,248
(1) FROM DECEMBER 1, 1995 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1996.
(2) ANNUALIZED.
</TABLE>
The Portfolios
<PAGE 21>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in a portfolio. Your price for portfolio
shares is the net asset value per share (NAV), which is generally calculated at
12:00 noon Eastern time for the Money Market Portfolio and New Jersey Money
Market Portfolio, and at the close of trading on the New York Stock Exchange
(usually 4:00 p.m. Eastern time) for the Intermediate Bond Portfolio and the
Bond Portfolio, every day the exchange is open. Your order will be priced at the
next NAV calculated after your order is accepted by the fund's transfer agent or
other authorized entity. The Money Market Portfolio and New Jersey Money Market
Portfolio use the amortized cost method of valuing securities. Investments for
the Bond and Intermediate Bond portfolios are valued primarily on the basis of
information furnished by an independent pricing service approved and supervised
by the fund's board. Because the portfolios seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified plans.
--------------------------------------------------------
Minimum investments
Initial Additional
--------------------------------------------------------
REGULAR ACCOUNTS $25,000 $1,000 (INCLUDING
FOR
TELETRANSFER
INVESTMENTS)
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): a portfolio's share price on a given day. A portfolio's
NAV is calculated by dividing the value of its net assets by the number of
existing shares.
AMORTIZED COST: a method of valuing a money market fund's securities, which does
not take into account unrealized gains or losses. As a result, portfolio
securities are valued at their acquisition cost, adjusted over time based on the
discounts or premiums reflected in their purchase price. This method of
valuation is designed to permit each portfolio to maintain a stable NAV.
<PAGE 22>
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV calculated after your order is accepted by the fund's transfer agent or
other authorized entity. Any certificates representing portfolio shares being
sold must be returned with your redemption request. Your order will be processed
promptly and you will generally receive the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK against shares recently purchased by check or
TeleTransfer, please note that:
* if you send a written request to sell such shares,
the portfolio may delay sending the proceeds (or selling the shares in the
case of the Money Market Portfolio and the New Jersey Money Market Portfolio)
for up to eight business days following the purchase of those shares
* the portfolio will not honor redemption checks, or
process wire, telephone or TeleTransfer redemption requests, for up to eight
business days following the purchase of those shares
--------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
--------------------------------------------------------
CHECK NO MINIMUM $250,000 PER DAY
WIRE $5,000 $500,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $1,000 $500,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
--------------------------------------------------------
SHAREHOLDER TRANSACTION FEES
CHARGED IF YOUR ACCOUNT BALANCE IS LESS THAN
$50,000 AT THE TIME OF THE TRANSACTION
Exchange fee $5.00
Account closeout fee* $5.00
Wire and TeleTransfer redemption fee $5.00
Checkwriting charge $2.00
*UNLESS BY EXCHANGE OR WIRE FOR WHICH A CHARGE APPLIES.
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
<PAGE 23>
ACCOUNT POLICIES (CONTINUED)
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND (EXCEPT AS NOTED BELOW) RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that
could adversely affect the portfolio or its operations,
including, for the Intermediate Bond Portfolio and the
Bond Portfolio, those from any individual or group who,
in the fund's view, is likely to engage in excessive
trading (usually defined as more than four exchanges out
of a portfolio within a calendar year)
* refuse any purchase or exchange request in excess of
1% of a portfolio's total assets (applies mainly to the Intermediate Bond
Portfolio and the Bond Portfolio)
* change or discontinue its exchange privilege or
temporarily suspend this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to
seven days (generally applies only in cases of very large redemptions, excessive
trading or during unusual market conditions)
Each portfolio also reserves the right to make a "redemption in kind" -- payment
in portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect portfolio operations (for example, if it represents more
than 1% of a portfolio's assets).
Small account policies
To offset the relatively higher costs of servicing smaller accounts, each
portfolio charges regular accounts with balances below $2,000 an annual fee of
$12. The fee will be imposed during the fourth quarter of each calendar year.
The fee will be waived for any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000, and accounts opened through a financial
institution.
If your account falls below $10,000 in the Money Market Portfolio or New Jersey
Money Market Portfolio, or $5,000 in the Intermediate Bond Portfolio or Bond
Portfolio, you may be asked to increase your balance. If it is still below the
relevant minimum after 45 days, the portfolio may close your account and send
you the proceeds.
<PAGE 24>
DISTRIBUTIONS AND TAXES
EACH PORTFOLIO USUALLY PAYS ITS SHAREHOLDERS DIVIDENDS from its net investment
income once a month, and distributes any net capital gains it has realized once
a year. Your dividends and distributions will be reinvested in your portfolio
unless you instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
EACH PORTFOLIO ANTICIPATES THAT VIRTUALLY ALL OF ITS INCOME DIVIDENDS will be
exempt from federal and, for the New Jersey Money Market Portfolio, New Jersey
state income taxes. However, any dividends paid from interest on taxable
investments or short-term capital gains will be taxable as ordinary income. Any
distributions of long-term capital gains will be taxable as such. The tax status
of any distribution is the same regardless of how long you have been in the
portfolio and whether you reinvest your distributions or take them in cash. In
general, distributions are federally taxable as follows:
--------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
--------------------------------------------------------
INCOME GENERALLY GENERALLY
DIVIDENDS TAX EXEMPT TAX EXEMPT
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of your dividends and distributions will be detailed in your
annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of portfolio shares, including through the checkwriting
privilege, may generate a tax liability.
The table at right also can provide a guide for your potential tax liability
when selling or exchanging portfolio shares. "Short-term capital gains" applies
to portfolio shares sold or exchanged up to 12 months after buying them.
"Long-term capital gains" applies to shares sold or exchanged after 12 months.
Your Investment
<PAGE 25>
SERVICES FOR FUND INVESTORS
Dreyfus Dividend Sweep
FOR AUTOMATICALLY REINVESTING the dividends and distributions from one Dreyfus
fund into another, use Dreyfus Dividend Sweep (not available for IRAs). You can
set up this service with your application or by calling 1-800-645-6561.
Checkwriting privilege
YOU MAY WRITE REDEMPTION CHECKS against your account in amounts of $1,000 or
more. There is a $2.00 charge for each check written, unless you meet the
$50,000 minimum balance requirement at the time of the transaction. The charge
is retained by the relevant portfolio. A fee also will be charged by the
transfer agent if you request a stop payment or if the transfer agent cannot
honor a redemption check due to insufficient funds or another valid reason.
Please do not postdate your checks or use them to close your account.
Exchange privilege
YOU CAN EXCHANGE SHARES WORTH $1,000 OR MORE from one Dreyfus fund into another.
You are allowed only four exchanges out of a portfolio in a calendar year. You
can request your exchange in writing or by phone. Be sure to read the current
prospectus for any fund into which you are exchanging before investing. Any new
account established through an exchange will have the same privileges as your
original account (as long as they are available). There is a $5.00 exchange fee,
unless you meet the $50,000 minimum balance requirement at the time of the
transaction. The charge is retained by the relevant portfolio. You may be
charged a sales load when exchanging into any fund that has one.
<PAGE 26>
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application. For accounts with a balance below $50,000,
there is a $5.00 fee for TeleTransfer redemptions.
24-hour automated account access
YOU CAN EASILY MANAGE YOUR DREYFUS ACCOUNTS, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more -- when it's convenient for you -- by calling 1-800-645-6561.
Account statements
EVERY DREYFUS INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Dreyfus Financial Centers
THROUGH A NATIONWIDE NETWORK of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
EXPERIENCED FINANCIAL CONSULTANTS can help you make informed choices and provide
you with personalized attention in handling account transactions. The Financial
Centers also offer informative seminars and events. To find the Financial Center
nearest you, call 1-800-499-3327.
Your Investment
<PAGE 27>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* Dreyfus BASIC Intermediate
Municipal Bond Portfolio DDA# 8900088451
* Dreyfus BASIC Municipal Bond Portfolio
DDA# 8900088443
* Dreyfus BASIC Municipal
Money Market Portfolio DDA# 8900208767
* Dreyfus BASIC New Jersey Municipal Money Market Portfolio DDA# 890027992
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* Dreyfus BASIC Intermediate
Municipal Bond Portfolio DDA# 8900088451
* Dreyfus BASIC Municipal Bond Portfolio
DDA# 8900088443
* Dreyfus BASIC Municipal
Money Market Portfolio DDA# 8900208767
* Dreyfus BASIC New Jersey Municipal Money Market Portfolio DDA# 8900279923
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
<PAGE 28>
TO SELL SHARES
Write a redemption check OR write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name and share class
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$5,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
Your Investment
<PAGE 29>
For More Information
Dreyfus BASIC Intermediate Municipal Bond Portfolio
Dreyfus BASIC Municipal Bond Portfolio
Dreyfus BASIC Municipal Money Market Portfolio
Dreyfus BASIC New Jersey Municipal Money Market Porfolio
(each a series of Dreyfus BASIC Municipal Fund, Inc.)
----------------------------
SEC file number: 811-6377
More information on these portfolios is available free
upon request, including the following:
Annual/Semiannual Report
Describes each portfolio's performance, lists portfolio
holdings and contains a letter from the portfolio's
manager discussing recent market conditions, economic
trends and fund strategies that significantly affected
the portfolio's performance during the last fiscal year
Statement of Additional Information (SAI)
Provides more details about each portfolio and its
policies. A current SAI is on file with the Securities
and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this
prospectus).
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 Text-only versions of certain fund documents can be viewed
online or downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies, after paying a duplicating fee, by visiting the
SEC's Public Reference Room in Washington, DC (for information, call
1-202-942-8090) or by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2001 Dreyfus Service Corporation BMBP0101
-------------------------------------------------------------------
DREYFUS BASIC MUNICIPAL FUND, INC.
DREYFUS BASIC INTERMEDIATE MUNICIPAL BOND PORTFOLIO
DREYFUS BASIC MUNICIPAL BOND PORTFOLIO
DREYFUS BASIC MUNICIPAL MONEY MARKET PORTFOLIO
DREYFUS BASIC NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 2001
-------------------------------------------------------------------
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus BASIC Intermediate Municipal Bond Portfolio ("Intermediate Bond
Portfolio"), Dreyfus BASIC Municipal Bond Portfolio ("Bond Portfolio"), Dreyfus
BASIC Municipal Money Market Portfolio ("Money Market Portfolio"), and Dreyfus
BASIC New Jersey Municipal Money Market Portfolio ("New Jersey Portfolio")
(each, a "Portfolio") of Dreyfus BASIC Municipal Fund, Inc. (the "Fund"), dated
January 1, 2001, as it may be revised from time to time. To obtain a copy of the
Portfolios' Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. -- Call 516-794-5452
Each Portfolio's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
TABLE OF CONTENTS
Page
Description of the Fund and Portfolios...........................3
Management Of The Fund...........................................24
Management Arrangements..........................................30
Shareholder Services Plan........................................27
How to Buy Shares................................................33
How to Redeem Shares.............................................35
Shareholder Services.............................................38
Determination Of Net Asset Value.................................40
Dividends, Distributions And Taxes...............................41
Portfolio Transactions...........................................44
Performance Information..........................................45
Information About the Fund and Portfolios........................42
Counsel and Independent Auditors.................................50
Appendix A.......................................................51
Appendix B.......................................................54
<PAGE>
DESCRIPTION OF THE FUND AND PORTFOLIOS
The Fund is a Maryland corporation that commenced operations on December
16, 1991. The Fund is an open-end management investment company, known as a
mutual fund.
The Dreyfus Corporation (the "Manager") serves as each Portfolio's
investment adviser.
Dreyfus Service Corporation (the "Distributor") is the distributor of each
Portfolio's shares.
Certain Portfolio Securities
The following information supplements (except as noted) and should be read
in conjunction with the relevant Portfolio's Prospectus.
Municipal Obligations. Each Portfolio will invest at least 80% of the
value of its net assets (except when maintaining a temporary defensive position)
in Municipal Obligations. Municipal Obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multistate agencies or authorities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal income tax. Municipal
Obligations generally include debt obligations issued to obtain funds for
various public purposes as well as certain industrial development bonds issued
by or on behalf of public authorities. Municipal Obligations are classified as
general obligation bonds, revenue bonds and notes. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from the
revenue derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise or other specific revenue source,
but not from the general taxing power. Tax exempt industrial development bonds,
in most cases, are revenue bonds that do not carry the pledge of the credit of
the issuing municipality, but generally are guaranteed by the corporate entity
on whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other revenues.
Municipal Obligations include municipal lease/purchase agreements which are
similar to installment purchase contracts for property or equipment issued by
municipalities. Municipal Obligations bear fixed, floating or variable rates of
interest. The Intermediate Bond Portfolio and Bond Portfolio (each, a "Longer
Term Portfolio") may purchase Municipal Obligations with interest rates that are
determined by formulas under which the rate will change directly or inversely to
changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum. Certain Municipal Obligations purchased by a
Longer Term Portfolio are subject to redemption at a date earlier than their
stated maturity pursuant to call options, which may be separated from the
related Municipal Obligation and purchased and sold separately.
Under normal circumstances, the New Jersey Portfolio will invest at least
65% of the value of its net assets in Municipal Obligations issued by the State
of New Jersey, its political subdivisions, authorities and corporations, and
certain other specified securities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from New Jersey, as well as Federal,
income taxes (collectively, "New Jersey Municipal Obligations"). To the extent
acceptable New Jersey Municipal Obligations are at any time unavailable for
investment by the New Jersey Portfolio, the New Jersey Portfolio will invest
temporarily in Municipal Obligations exempt from Federal, but not New Jersey,
income taxes.
The yields on Municipal Obligations are dependent on a variety of factors,
including general economic and monetary conditions, money market factors,
conditions in the Municipal Obligations market, size of a particular offering,
maturity of the obligation, and rating of the issue.
Certain Tax Exempt Obligations. Each Portfolio may purchase floating and
variable rate demand notes and bonds, which are tax exempt obligations
ordinarily having stated maturities in excess of 13 months, but which permit the
holder to demand payment of principal at any time, or at specified intervals,
which for the Money Market Portfolio and New Jersey Portfolio (each, a "Short
Term Portfolio") will not exceed 13 months, and in each case will be upon not
more than 30 days' notice. Variable rate demand notes include master demand
notes which are obligations that permit each Portfolio to invest fluctuating
amounts at varying rates of interest pursuant to direct arrangements between the
Portfolio, as lender, and the borrower. These obligations permit daily changes
in the amounts borrowed. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks. Changes in the
credit quality of banks and other financial institutions that provide such
credit or liquidity enhancements to securities in which a Portfolio invests
could cause losses to the Portfolio and affect its share price. Because these
obligations are direct lending arrangements between the lender and borrower, it
is not contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value, plus accrued interest. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the Portfolio's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Each obligation purchased by a
Portfolio will meet the quality criteria established for its purchase of
Municipal Obligations.
Tax Exempt Participation Interests. Each Portfolio may purchase from
financial institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives a Portfolio an undivided interest in the Municipal
Obligation in the proportion that the Portfolio's participation interest bears
to the total principal amount of the Municipal Obligation. These instruments may
have fixed, floating or variable rates of interest, and, in the case of the
Short Term Portfolios, will have remaining maturities of 13 months or less. If
the participation interest is unrated, it will be backed by an irrevocable
letter of credit or guarantee of a bank that the Fund's Board has determined
meets prescribed quality standards for banks, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For certain
participation interests, a Portfolio will have the right to demand payment, on
not more than seven days' notice, for all or any part of the Portfolio's
participation interest in the Municipal Obligation, plus accrued interest. As to
these instruments, the Portfolio's intends to exercise its right to demand
payment only upon a default under the terms of the Municipal Obligation, as
needed to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily associated
with Municipal Obligations. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation ordinarily is backed by the municipality's covenant
to budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure
might prove difficult. The Short Term Portfolios will seek to minimize these
risks by investing only in those lease obligations that (1) are rated in one of
the two highest rating categories for debt obligations by at least two
nationally recognized statistical rating organizations (or one rating
organization if the lease obligation was rated only by one such organization);
or (2) if unrated, are purchased principally from the issuer or domestic banks
or other responsible third parties, in each case only if the seller shall have
entered into an agreement with a Short Term Portfolio providing that the seller
or other responsible third party will either remarket or repurchase the lease
obligation within a short period after demand by such Short Term Portfolio.
Certain lease obligations may be illiquid. Determination as to the liquidity of
such securities is made in accordance with guidelines established by the Fund's
Board. Pursuant to such guidelines, the Board has directed the Manager to
monitor carefully each Portfolio's investment in such securities with particular
regard to: (1) the frequency of trades and quotes for the lease obligation; (2)
the number of dealers willing to purchase or sell the lease obligation and the
number of the potential buyers; (3) the willingness of dealers to undertake to
make a market in the lease obligation; (4) the nature of the marketplace trades,
including the time needed to dispose of the mechanics of transfer; and (5) such
other factors concerning the trading market for the lease obligation as the
Manager may deem relevant. In addition, in evaluating the liquidity and credit
quality of a lease obligation that is unrated, the Fund's Board has directed the
Manager to consider (a) whether the lease can be cancelled; (b) what assurance
there is that the assets represented by the lease can be sold; (c) the strength
of the lessee's general credit (e.g., its debt, administrative, economic, and
financial characteristics); (d) the likelihood that the municipality will
discontinue appropriating funding for the leased property because the property
is no longer deemed essential to the operations of the municipality (e.g., the
potential for an "event of nonappropriation"); (e) the legal recourse in the
event of failure to appropriate; and (f) such other factors concerning credit
quality as the Manager may deem relevant. Accordingly, not more than 15% of the
value of the net assets of a Longer Term Portfolio and not more than 10% of the
value of the net assets of a Short Term Portfolio will be invested in lease
obligations that are illiquid and in other illiquid securities.
Tender Option Bonds. Each Portfolio may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest at
a fixed rate substantially higher than prevailing short-term tax exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to tender their
securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Obligation's fixed
coupon rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities, coupled
with the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax exempt rate. The
Manager, on behalf of the Portfolios, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligation, of any
custodian and of the third party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be terminable in
the event of a default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons.
Neither Short Term Portfolio will purchase tender option bonds unless (a)
the demand feature applicable thereto is exercisable by such Portfolio within 13
months of the date of such purchase upon no more than 30 days' notice and
thereafter is exercisable by the Portfolio no less frequently than annually upon
no more than 30 days' notice and (b) at the time of such purchase, the Manager
reasonably expects (i) based upon its assessment of current and historical
interest rate trends, that prevailing short-term tax exempt rates will not
exceed the stated interest rate on the underlying Municipal Obligations at the
time of the next tender fee adjustment and (ii) that the circumstances which
might entitle the grantor of a tender option to terminate the tender option
would not occur prior to the time of the next tender opportunity. At the time of
each tender opportunity, a Short Term Portfolio will exercise the tender option
with respect to any tender option bonds unless the Manager reasonably expects,
(x) based upon its assessment of current and historical interest rate trends,
that prevailing short-term tax exempt rates will not exceed the stated interest
rate on the underlying Municipal Obligations at the time of the next tender fee
adjustment, and (y) that the circumstances which entitle the grantor of a tender
option to terminate the tender option would not occur prior to the time of the
next tender opportunity. The Short Term Portfolios will exercise the tender
feature with respect to tender option bonds, or otherwise dispose of its tender
option bonds, prior to the time the tender option is scheduled to expire
pursuant to the terms of the agreement under which the tender option is granted.
Each Short Term Portfolio otherwise will comply with the provisions of Rule 2a-7
under the Investment Company Act of 1940, as amended (the "1940 Act"), in
connection with the purchase of tender option bonds, including, without
limitation, the requisite determination by the Fund's Board that the tender
option bonds in question meet the quality standards described in Rule 2a-7,
which, in the case of a tender option bond subject to a conditional demand
feature, would include a determination that the security has received both the
required short-term and long-term quality rating or is determined to be of
comparable quality. In the event of a default of the Municipal Obligation
underlying a tender option bond, or the termination of the tender option
agreement, the particular Short Term Portfolio would look to the maturity date
of the underlying security for purposes of compliance with Rule 2a-7 and, if its
remaining maturity was greater than 13 months, the security would be sold as
soon as would be practicable.
A Longer Term Portfolio will purchase tender option bonds only when the
Manager is satisfied that the custodial and tender option arrangements will not
adversely affect the tax exempt status of the underlying Municipal Obligations
and that payment of any tender fees will not have the effect of creating taxable
income for the Portfolio. Based on the tender option bond agreement, the Fund
expects to be able to value the tender option bond at par; however, the value of
the instrument will be monitored to assure that it is valued at fair value.
Custodial Receipts. (Longer Term Portfolios only) Each Longer Term
Portfolio may purchase custodial receipts representing the right to receive
certain future principal and interest payments on Municipal Obligations which
underlie the custodial receipts. A number of different arrangements are
possible. In a typical custodial receipt arrangement, an issuer or a third party
owner of Municipal Obligations deposits such obligations with a custodian in
exchange for two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based on
payments received on the underlying Municipal Obligations. One class has the
characteristics of a typical auction rate security, where at specified intervals
its interest rate is adjusted, and ownership changes, based on an auction
mechanism. This class's interest rate generally is expected to be below the
coupon rate of the underlying Municipal Obligations and generally is at a level
comparable to that of a Municipal Obligation of similar quality and having a
maturity equal to the period between interest rate adjustments. The second class
bears interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but in
this case inversely to changes in the rate of interest of the first class. The
aggregate interest paid with respect to the two classes will not exceed the
interest paid by the underlying Municipal Obligations. The value of the second
class and similar securities typically fluctuates more than the value of a
Municipal Obligation of comparable quality and maturity which would increase the
volatility of the net asset value of the Longer Term Portfolio investing in such
securities. These custodial receipts are sold in private placements. Each Longer
Term Portfolio also may purchase directly from issuers, and not in a private
placement, Municipal Obligations having characteristics similar to custodial
receipts. These securities may be issued as part of a multi-class offering and
the interest rate on certain classes may be subject to a cap or a floor.
Stand-By Commitments. Each Portfolio may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under a stand-by
commitment, a Portfolio obligates a broker, dealer or bank to repurchase, at the
Portfolio's option, specified securities at a specified price and, in this
respect, stand-by commitments are comparable to put options. The exercise of a
stand-by commitment therefore is subject to the ability of the seller to make
payment on demand. Each Portfolio will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise any such rights
thereunder for trading purposes. Each Portfolio may pay for stand-by commitments
if such action is deemed necessary, thus increasing to a degree the cost of the
underlying Municipal Obligation and similarly decreasing such security's yield
to investors. Gains realized in connection with stand-by commitments will be
taxable. The Longer Term Portfolios also may acquire call options on specific
Municipal Obligations. A Longer Term Portfolio generally would purchase these
call options to protect it from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the Municipal
Obligation before maturity. The sale by a Longer Term Portfolio of a call option
that it owns on a specific Municipal Obligation could result in the receipt of
taxable income by the Portfolio. The New Jersey Portfolio will acquire stand-by
commitments only to the extent consistent with the requirements for a "qualified
investment fund" under the New Jersey gross income tax.
Ratings of Municipal Obligations. At least 65% of the value of each Longer
Term Portfolio's net assets will consist of Municipal Obligations which, in the
case of bonds, are rated no lower than A by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Services ("S&P") or Fitch IBCA, Duff &
Phelps ("Fitch" and, together with Moody's and S&P, the "Rating Agencies") or,
if unrated, deemed to be of comparable quality by the Manager. Each Longer Term
Portfolio may invest up to 35% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than A by the Rating
Agencies and as low as the lowest rating assigned by a Rating Agency. Each
Longer Term Portfolio may invest in short-term Municipal Obligations which are
rated in the two highest rating categories by a Rating Agency. Although there is
no current intention of doing so, each Longer Term Portfolio may invest in
Municipal Obligations rated C by Moody's or D by S&P or Fitch, which is the
lowest rating assigned by such Rating Agencies and indicates that the Municipal
Obligation is in default and interest and/or repayment of principal is in
arrears.
Each Short Term Portfolio may invest only in those Municipal Obligations
which are rated in one of the two highest rating categories for debt obligations
by at least two Rating Agencies (or one Rating Agency if the instrument was
rated by only one Rating Agency) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Fund's Board.
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings for the fiscal year ended August 31,
2000, in each case computed on a monthly basis, was as follows:
Fitch or Moody's or S&P Percentage of Value
----- ------- ---
---------------------
Bond Intermediate
Portfolio Bond Portfolio
F1+/F1 MIG 1/VMIG SP-1+/SP-1, 2.8% 2.6%
1,
AAA/AA Aaa/Aa AAA/AA 61.2% 56.1%
AA Aa AA 19.7% 13.3%
A A A 3.9% 18.2%
BBB Baa BBB 10.3% 6.7%
BB Ba BB - 0.6%
B B B - -
Not Rated Not Rated Not Rated 2.1%(1) 2.5%(2)
100.0% 100.0%
(1) Included in the Not Rated category are securities comprising 2.1% of the
Bond Portfolio's market value which, while not rated, have been determined
by the Manager to be of comparable quality to securities rated as follows:
Baa/BBB (1.7%) and Ba/BB (.4%).
(2) Included in the Not Rated category are securities comprising 2.5% of the
Intermediate Bond Portfolio's market value which, while not rated, have
been determined by the Manager to be of comparable quality to securities
rated as follows: Aaa/AAA (.1%) and Baa/BBB (2.4%).
(3) Included in the Not Rated category are securities comprising 1.7% of the
Money Market Portfolio's market value which, while not rated, have been
determined by the Manager to be of comparable quality to securities in the
MIG 1/VMIG 1 rating category.
(4) Included in the Not Rated category are securities comprising 9.4% of the
New Jersey Portfolio's market value which, while not rated, have been
determined by the Manager to be of comparable quality to securities in the
MIG 1/VMIG 1 rating category.
Fitch or Moody's or S&P Percentage of Value
----- ------- ---
---------------------
Money New
Market Jersey
Portfolio Portfolio
F1+/F1 MIG 1/VMIG SP-1+/SP-1, 93.2% 78.1%
1,
P-1 A-1+/A1
AAA/AA Aaa/Aa AAA/AA 5.1% 12.5%
AA Aa AA - -
A A A - -
BBB Baa BBB - -
BB Ba BB - -
B B B - -
Not Rated Not Rated Not Rated 1.7%(3) 9.4%(4)
100.0% 100.0%
If, subsequent to being purchased by a Short Term Portfolio, (a) an issue
of rated Municipal Obligations ceases to be rated in the highest rating category
by at least two rating organizations (or one rating organization if the
instrument was rated by only one organization), or the Fund's Board determines
that it is no longer of comparable quality; or (b) the Manager becomes aware
that any portfolio security not so highly rated or any unrated security has been
given a rating by any rating organization below the rating organization's second
highest rating category, the Fund's Board will reassess promptly whether such
security presents minimal credit risk and will cause a Short Term Portfolio to
take such action as it determines is in the best interest of a Short Term
Portfolio and its shareholders, provided that the reassessment required by
clause (b) is not required if the portfolio security is disposed of or matures
within five business days of the Manager becoming aware of the new rating and
the Fund's Board is subsequently notified of the Manager's actions. Subsequent
to being purchased by a Longer Term Portfolio, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Portfolio. Neither event will require the sale of
such Municipal Obligations by a Longer Term Portfolio, but the Manager will
consider such event in determining whether the Portfolio should continue to hold
the Municipal Obligations.
To the extent the ratings by a Rating Agency for Municipal Obligations may
change as a result of changes in such organization or its rating system, the
Fund will attempt to use comparable ratings as standards for Portfolio
investments in accordance with the relevant Portfolio's investment policies
described in its Prospectus and this Statement of Additional Information. The
ratings of the Rating Agencies represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
Zero Coupon, Pay-In-Kind and Step-Up Securities. (Longer Term Portfolios
only) Each Longer Term Portfolio may invest in zero coupon securities which are
debt securities issued or sold at a discount from their face value which do not
entitle the holder to any periodic payment of interest prior to maturity or a
specified redemption date (or cash payment date); pay-in-kind bonds which are
bonds which generally pay interest through the issuance of additional bonds; and
step-up coupon bonds which are debt securities which typically do not pay
interest for a specified period of time and then pay interest at a series of
different rates. The amount of any discount on these securities varies depending
on the time remaining until maturity or cash payment date, prevailing interest
rates, liquidity of the security and perceived credit quality of the issuer.
Zero coupon securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of these securities generally are
more volatile than the market prices of securities that pay cash interest
periodically and are likely to respond to a greater degree to changes in
interest rates than securities having similar maturities and credit qualities.
Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to accrue income with respect to these securities
prior to the receipt of cash payments. To maintain its qualification as a
regulated investment company and avoid liability for Federal income taxes, a
Portfolio may be required to distribute such income accrued with respect to
these securities and may have to dispose of portfolio securities under
disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements. In addition, unlike bonds which pay interest
throughout the period to maturity, the Portfolio will realize no cash until the
cash payment or maturity date unless a portion of such securities are sold and,
if the issuer defaults, the Portfolio may obtain no return at all on its
investment. Each Longer Term Portfolio may invest up to 5% of its assets in zero
coupon bonds and pay-in-kind bonds which are rated below investment grade. See
"Dividends, Distributions and Taxes."
Illiquid Securities. Each Longer Term Portfolio may invest up to 15% and
each Short Term Portfolio may invest up to 10% of the value of its net assets in
securities as to which a liquid trading market does not exist, provided such
investments are consistent with the Portfolio's investment objective. These
securities may include securities that are not readily marketable, such as
securities that are subject to legal or contractual restrictions on resale, and
repurchase agreements providing for settlement in more than seven days after
notice. As to these securities, the Portfolio investing in such securities is
subject to a risk that should the Portfolio desire to sell them when a ready
buyer is not available at a price the Portfolio deems representative of their
value, the value of the Portfolio's net assets could be adversely affected.
Taxable Investments. From time to time, on a temporary basis other than
for temporary defensive purposes (but not to exceed 20% of the value of its net
assets) or for temporary defensive purposes, a Portfolio may invest in taxable
short-term investments ("Taxable Investments") consisting of: notes of issuers
having, at the time of purchase, a quality rating within the two highest grades
of a Rating Agency; obligations of the U.S. Government, its agencies or
instrumentalities; commercial paper rated not lower than P-2 by Moody's, A-2 by
S&P or F-2 by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of $1 billion or more; time
deposits; bankers' acceptances and other short-term bank obligations; and
repurchase agreements in respect of any of the foregoing. Dividends paid by a
Portfolio that are attributable to income earned by such Portfolio from Taxable
Investments will be taxable to investors. See "Dividends, Distributions and
Taxes." Except for temporary defensive purposes, at no time will more than 20%
of the value of a Portfolio's net assets be invested in Taxable Investments. If
a Short Term Portfolio purchases Taxable Investments, it will value them using
the amortized cost method and comply with Rule 2a-7 under the 1940 Act relating
to purchases of taxable instruments. When the New Jersey Portfolio has adopted a
temporary defensive position, including when acceptable New Jersey Municipal
Obligations are unavailable for investment by the New Jersey Portfolio, in
excess of 35% of the New Jersey Portfolio's net assets may be invested in
securities that are not exempt from State of New Jersey income tax. Under normal
market conditions, the Fund anticipates that not more than 5% of the value of a
Portfolio's total assets will be invested in any one category of Taxable
Investments.
Securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities include U.S. Treasury securities, which differ in their
interest rates, maturities and times of issuance. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities are supported by
the full faith and credit of the U.S. Treasury; others by the right of the
issuer to borrow from the U.S. Treasury; others by discretionary authority of
the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Interest
may fluctuate based on generally recognized reference rates or the relationship
of rates. While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law.
Commercial paper consists of short-term, unsecured promissory notes issued
to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven days)
at a stated interest rate. Investments in time deposits generally are limited to
London branches of domestic banks that have total assets in excess of $1
billion. Time deposits which may be held by a Portfolio will not benefit from
insurance from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
In a repurchase agreement, the Portfolio buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually within
seven days). The repurchase agreement thereby determines the yield during the
purchaser's holding period, while the seller's obligation to repurchase is
secured by the value of the underlying security. The Fund's custodian or
sub-custodian will have custody of, and will segregate, securities acquired by
the Portfolio under a repurchase agreement. Repurchase agreements are considered
by the Staff of the Securities and Exchange Commission to be loans by the
Portfolio that enters into them. Repurchase agreements could involve risks in
the event of a default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Portfolio ability to dispose
of the underlying securities. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, a Portfolio will enter into repurchase
agreements only with domestic banks with total assets in excess of $1 billion,
or primary government securities dealers reporting to the Federal Reserve Bank
of New York, with respect to securities of the type in which the Portfolio may
invest, and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below resale price.
Investment Techniques
The following information supplements (except as noted) and should be read
in conjunction with the relevant Portfolio's Prospectus. A Portfolio's use of
certain of the investment techniques described below may give rise to taxable
income.
Borrowing Money. Each Longer Term Portfolio and the New Jersey Portfolio
is permitted to borrow to the extent permitted under the 1940 Act, which permits
an investment company to borrow in an amount up to 33-1/3% of the value of its
total assets. Each Longer Term Portfolio and the New Jersey Portfolio currently
intends to, and the Money Market Portfolio may, borrow money only for temporary
or emergency (not leveraging) purposes, in an amount up to 15% of the value of
such Portfolio's total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the amount borrowed)
at the time the borrowing is made. While such borrowings exceed 5% of a
Portfolio's total assets, the Portfolio will not make any additional
investments.
Derivatives. (Longer Term Portfolios only) Each Longer Term Portfolio may
invest in, or enter into, derivatives, such as options and futures, for a
variety of reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker or more
specifically focused way for a Portfolio to invest than "traditional" securities
would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular derivative and the
portfolio as a whole. Derivatives permit a Longer Term Portfolio to increase or
decrease the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Portfolio can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities. However, derivatives may
entail investment exposures that are greater than their cost would suggest,
meaning that a small investment in derivatives could have a large potential
impact on the Portfolio's performance.
If a Longer Term Portfolio invests in derivatives at inopportune times or
judges market conditions incorrectly, such investments may lower the Portfolio's
return or result in a loss. The Portfolio also could experience losses if its
derivatives were poorly correlated with its other investments, or if the
Portfolio were unable to liquidate its position because of an illiquid secondary
market. The market for many derivatives is, or suddenly can become, illiquid.
Changes in liquidity may result in significant, rapid and unpredictable changes
in the prices for derivatives.
Although neither Longer Term Portfolio will be a commodity pool, certain
derivatives subject the Portfolios to the rules of the Commodity Futures Trading
Commission which limit the extent to which a Portfolio can invest in such
derivatives. A Portfolio may invest in futures contracts and options with
respect thereto for hedging purposes without limit. However, a Portfolio may not
invest in such contracts and options for other purposes if the sum of the amount
of initial margin deposits and premiums paid for unexpired options with respect
to such contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Portfolio's assets, after taking into account
unrealized profits and unrealized losses on such contracts and options;
provided, however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily variation margin system operated by the clearing agency
in order to reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
derivatives purchased on an exchange. By contrast, no clearing agency guarantees
over-the-counter derivatives. Therefore, each party to an over-the-counter
derivative bears the risk that the counterparty will default. Accordingly, the
Manager will consider the creditworthiness of counterparties to over-the-counter
derivatives in the same manner as it would review the credit quality of a
security to be purchased by a Longer Term Portfolio. Over-the-counter
derivatives are less liquid than exchange-traded derivatives since the other
party to the transaction may be the only investor with sufficient understanding
of the derivative to be interested in bidding for it.
Futures Transactions--In General. Each Longer Term Portfolio may enter into
futures contracts in U.S. domestic markets. Engaging in these transactions
involves risk of loss to a Portfolio which could adversely affect the value of
the Portfolio's net assets. Although the Portfolio intends to purchase or sell
futures contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of trade
limit the amount of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond that limit or trading
may be suspended for specified periods during the trading day. Futures contract
prices could move to the limit for several consecutive trading days with little
or no trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Portfolio to substantial losses.
Successful use of futures and options with respect thereto by a Longer
Term Portfolio also is subject to the Manager's ability to predict correctly
movements in the direction of the relevant market and, to the extent the
transaction is entered into for hedging purposes, to ascertain the appropriate
correlation between the securities being hedged and the price movements of the
futures contract. For example, if a Portfolio uses futures to hedge against the
possibility of a decline in the market value of securities held in its portfolio
and the prices of such securities instead increase, the Portfolio will lose part
or all of the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions. Furthermore, if
in such circumstances the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements, in which case the
Portfolio may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, a Longer Term Portfolio may be required to segregate
permissible liquid assets to cover its obligations relating to its transactions
in derivatives. To maintain this required cover, the Portfolio may have to sell
portfolio securities at disadvantageous prices or times since it may not be
possible to liquidate a derivative position at a reasonable price. In addition,
the segregation of such assets will have the effect of limiting the Portfolio's
ability otherwise to invest those assets.
Specific Futures Transactions. Each Longer Term Portfolio may purchase and sell
interest rate futures contracts. An interest rate future obligates the Portfolio
to purchase or sell an amount of a specific debt security at a future date at a
specific price.
Options--In General. Each Longer Term Portfolio may invest up to 5% of its
assets, represented by the premium paid, in the purchase of call and put options
with respect to interest rate futures contracts. A Longer Term Portfolio may
write (i.e., sell) covered call and put option contracts to the extent of 20% of
the value of its net assets at the time such option contracts are written. A
call option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying security or securities at the exercise price
at any time during the option period, or at a specific date. Conversely, a put
option gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the exercise price at
any time during the option period, or at a specific date.
A covered call option written by a Longer Term Portfolio is a call option
with respect to which the Portfolio owns the underlying security or otherwise
covers the transaction by segregating permissible liquid assets. A put option
written by a Longer Term Portfolio is covered when, among other things, the
Portfolio segregates permissible liquid assets having a value equal to or
greater than the exercise price of the option to fulfill the obligation
undertaken. The principal reason for writing covered call and put options is to
realize, through the receipt of premiums, a greater return than would be
realized on the underlying securities alone. The Portfolio receives a premium
from writing covered call or put options which it retains whether or not the
option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, a Longer Term Portfolio is unable to effect a
closing purchase transaction in a secondary market, it will not be able to sell
the underlying security until the option expires or it delivers the underlying
security upon exercise or it otherwise covers its position.
Successful use by a Longer Term Portfolio of options and options on
futures will be subject to the Manager's ability to predict correctly movements
in interest rates. To the extent the Manager's predictions are incorrect, the
Portfolio may incur losses.
Future Developments. (Longer Term Portfolios only) Each Longer Term
Portfolio may take advantage of opportunities in options and futures contracts
and options on futures contracts and any other derivatives which are not
presently contemplated for use by a Longer Term Portfolio or which are not
currently available but which may be developed, to the extent such opportunities
are both consistent with the Portfolio's investment objective and legally
permissible for such Portfolio. Before entering into such transactions or making
any such investment, appropriate disclosure will be provided in the Longer Term
Portfolios' Prospectus or this Statement of Additional Information.
Lending Portfolio Securities. (Longer Term and New Jersey Portfolios only)
Each Longer Term Portfolio and the New Jersey Portfolio may lend securities from
its portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Portfolio continues to
be entitled to payments in amounts equal to the interest or other distributions
payable on the loaned securities which affords the Portfolio an opportunity to
earn interest on the amount of the loan and on the loaned securities'
collateral. Loans of portfolio securities may not exceed 33-1/3% of the value of
a Portfolio's total assets, and the Portfolio will receive collateral consisting
of cash, U.S. Government securities or irrevocable letters of credit which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the
Portfolio at any time upon specified notice. A Portfolio might experience risk
of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Portfolio. In connection with its
securities lending transactions, a Portfolio may return to the borrower or a
third party which is unaffiliated with the Fund, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned. The New Jersey Portfolio currently
does not intend to lend portfolio securities.
Short Selling. (Longer Term Portfolios only) Each Longer Term Portfolio
may make short sales, which are transactions in which the Portfolio sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete the transaction, the Portfolio must borrow the
security to make delivery to the buyer. The Portfolio is obligated to replace
the security borrowed by purchasing it subsequently at the market price at the
time of replacement. The price at such time may be more or less than the price
at which the security was sold by the Portfolio, which would result in a loss or
gain, respectively.
A Portfolio will not sell securities short if, after effect is given to
any such short sale, the total market value of all securities sold short would
exceed 25% of the value of such Portfolio's net assets. A Portfolio may not make
a short sale which results in the Portfolio having sold short in the aggregate
more than 5% of the outstanding securities of any class of an issuer.
Each Longer Term Portfolio also may make short sales "against the box," in
which the Portfolio enters into a short sale of a security it owns. Neither
Longer Term Portfolio will at any time have more than 15% of the value of its
net assets in deposits on short sales against the box.
Until the Portfolio replaces a borrowed security in connection with a
short sale, the Portfolio will: (a) segregate permissible liquid assets in an
amount that, together with the amount provided as collateral, always equals the
current value of the security sold short; or (b) otherwise cover its short
position.
Forward Commitments. Each Portfolio may purchase Municipal Obligations and
other securities on a forward commitment, when-issued or delayed-delivery basis,
which means that delivery and payment take place a number of days after the date
of the commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when the
Portfolio enters into the commitment, but the Portfolio does not make payment
until it receives delivery from the counterparty. The Portfolio will commit to
purchase such securities only with the intention of actually acquiring the
securities, but the Portfolio may sell these securities before the settlement
date if it is deemed advisable. The Portfolio will segregate permissible liquid
assets at least equal at all times to the amount of the Portfolio's purchase
commitments.
Municipal Obligations and other securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the level of
interest rates. Securities purchased on a when-issued basis may expose a
Portfolio to risks because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a forward commitment or when-issued
basis can involve the additional risk that the yield available in the market
when the delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a when-issued basis when a
Portfolio is fully or almost fully invested may result in greater potential
fluctuation in the value of the Portfolio's net assets and its net asset value
per share.
Certain Investment Considerations and Risks
General. The Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of Portfolio shares. Because charges may apply
to redemptions and exchanges of Portfolio shares, and because the number of
exchanges permitted is limited, the Fund may not be an appropriate investment
for an investor who intends to engage frequently in such transactions.
Even though interest-bearing securities are investments which promise a
stable stream of income, the prices of such securities are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. Certain securities that may be purchased by a Longer Term
Portfolio, such as those with interest rates that fluctuate directly or
indirectly based on multiples of a stated index, are designed to be highly
sensitive to changes in interest rates and can subject the holders thereof to
extreme reductions of yield and possibly loss of principal. The values of
fixed-income securities also may be affected by changes in the credit rating or
financial condition of the issuing entities. Each Short Term Portfolio seeks to
maintain a stable $1.00 share price, while the net asset value of each Longer
Term Portfolio generally will not be stable and should fluctuate based upon
changes in the value of its respective portfolio securities. Securities in which
a Longer Term Portfolio invests may earn a higher level of current income than
certain shorter-term or higher quality securities which generally have greater
liquidity, less market risk and less fluctuation in market value.
Investing in Municipal Obligations. Each Portfolio may invest more than
25% of the value of its total assets in Municipal Obligations which are related
in such a way that an economic, business or political development or change
affecting one such security also would affect the other securities; for example,
securities the interest upon which is paid from revenues of similar types of
projects, or securities whose issuers are located in the same state. As a
result, each Portfolio may be subject to greater risk as compared to a
comparable fund that does not follow this practice.
Certain provisions in the Internal Revenue Code of 1986, as amended (the
"Code"), relating to the issuance of Municipal Obligations may reduce the volume
of Municipal Obligations qualifying for Federal tax exemption. One effect of
these provisions could be to increase the cost of the Municipal Obligations
available for purchase by a Portfolio and thus reduce the available yield.
Shareholders should consult their tax advisers concerning the effect of these
provisions on an investment in a Portfolio. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations may be
introduced in the future. If any such proposal were enacted that would reduce
the availability of Municipal Obligations for investment by a Portfolio so as to
adversely affect its shareholders, such Portfolio would reevaluate its
investment objective and policies and submit possible changes in its structure
to shareholders for their consideration. If legislation were enacted that would
treat a type of Municipal Obligation as taxable, each Portfolio would treat such
security as a permissible Taxable Investment within the applicable limits set
forth herein.
Investing in New Jersey Municipal Obligations. (New Jersey Portfolio only)
Since the New Jersey Portfolio is concentrated in securities issued by New
Jersey or entities within New Jersey, an investment in the Portfolio may involve
greater risk than investments in certain other types of funds. You should
consider carefully the special risks inherent in the Portfolio's investment in
New Jersey Municipal Obligations. You should review the information in "Appendix
A" which provides a brief summary of special investment considerations and risk
factors relating to investing in New Jersey Municipal Obligations.
Lower Rated Securities. (Longer Term Portfolios only) Each Longer Term
Portfolio may invest up to 35% of the value of its net assets in higher yielding
(and, therefore, higher risk) debt securities, rated Ba by Moody's or BB by S&P
or Fitch, or as low as the lowest rating assigned by a Rating Agency (commonly
known as junk bonds). They may be subject to certain risks with respect to the
issuing entity and to greater market fluctuations than certain lower yielding,
higher rated fixed-income securities. See "Appendix B" for a general description
of the Rating Agencies' ratings of Municipal Obligations. Although ratings may
be useful in evaluating the safety of interest and principal payments, they do
not evaluate the market value risk of these bonds. Each Longer Term Portfolio
will rely on the Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer.
You should be aware that the market values of many of these bonds tend to
be more sensitive to economic conditions than are higher rated securities and
will fluctuate over time. These bonds generally are considered by the Rating
Agencies to be, on balance, predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in the
higher rating categories.
Because there is no established retail secondary market for many of these
securities, the Fund anticipates that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a secondary
trading market for these bonds does exist, it generally is not as liquid as the
secondary market for higher rated securities. The lack of a liquid secondary
market may have an adverse impact on market price and yield and a Longer Term
Portfolio's ability to dispose of particular issues when necessary to meet its
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for a
Portfolio to obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns. An
economic recession could adversely affect the ability of the issuers of lower
rated bonds to repay principal and pay interest thereon which would increase the
incidence of default for such securities. It is likely that any economic
recession also would disrupt severely the market for such securities and have an
adverse impact on their value.
Each Longer Term Portfolio may acquire these bonds during an initial
offering. Such securities may involve special risks because they are new issues.
Neither Portfolio has any arrangement with any person concerning the acquisition
of such securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon bonds, pay-in-kind bonds and step-up coupon bonds, in
which each Longer Term Portfolio may invest up to 5% of its total assets. In
addition to the risks associated with the credit rating of the issuers, the
market prices of these securities may be very volatile during the period no
interest is paid.
Non-Diversified Status. Each Portfolio's classification as a
"non-diversified" investment company means that the proportion of a Portfolio's
assets that may be invested in the securities of a single issuer is not limited
by the 1940 Act. The 1940 Act generally requires a "diversified" investment
company, with respect of 75% of its total assets, to invest not more than 5% of
such assets in securities of a single issuer. Since a relatively high percentage
of each Portfolio's assets may be invested in the securities of a limited number
of issuers or industries, the Portfolios may be more sensitive to changes in the
market value of a single issuer or industry. However, to meet federal tax
requirements, at the close of each quarter each Portfolio may not have more than
25% of its total assets invested in any one issuer and, with respect to 50% of
its total assets, not more than 5% of its total assets invested in any one
issuer. These limitations do not apply to U.S. Government securities.
Simultaneous Investments. Investment decisions for each Portfolio are made
independently from those of other investment companies advised by the Manager.
If, however, such other investment companies desire to invest in, or dispose of,
the same securities as a Portfolio, available investments or opportunities for
sales will be allocated equitably to each investment company. In some cases,
this procedure may adversely affect the size of the position obtained for or
disposed of by a Portfolio or the price paid or received by it.
Investment Restrictions
Each Portfolio's investment objective is a fundamental policy, which
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of the Portfolio's outstanding voting shares. In addition, the
Portfolios have adopted certain investment restrictions as fundamental policies
and certain other investment restrictions as non-fundamental policies, as
described below.
Money Market Portfolio only. The Money Market Portfolio has adopted
investment restrictions numbered 1 through 10 as fundamental policies, which
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of such Portfolio's outstanding voting shares. Investment
restriction number 11 is not a fundamental policy and may be changed by a vote
of a majority of the Fund's Board members at any time. The Money Market
Portfolio may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus for the
Portfolio.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Portfolio's
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Portfolio's
total assets, the Portfolio will not make any additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure borrowings for temporary or emergency
purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that the Portfolio
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage of
the lower purchase price available.
6. Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or oil and gas interests, but this shall not
prevent the Portfolio from investing in Municipal Obligations secured by real
estate or interests therein.
7. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements referred to above and in
the Prospectus for the Portfolio.
8. Invest more than 25% of its total assets in the securities of issuers
in any single industry; provided that there shall be no such limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
9. Invest in companies for the purpose of exercising
control.
10. Invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or acquisition of assets.
11. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid if, in the
aggregate, more than 10% of its net assets would be so invested.
* * *
Intermediate Bond Portfolio, Bond Portfolio and New Jersey Portfolio. Each
of the Longer Term Portfolios and the New Jersey Portfolio has adopted
investment restrictions numbered 1 through 7 as fundamental policies, which
cannot be changed, as to a Portfolio, without approval by the holders of a
majority (as defined in the 1940 Act) of such Portfolio's outstanding voting
shares. Investment restrictions numbered 8 through 13 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board members at
any time. None of these Portfolios may:
1. Invest more than 25% of its total assets in the securities of issuers
in any single industry; provided that there shall be no such limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
2. Borrow money, except to the extent permitted under the 1940 Act (which
currently limits borrowing to no more than 33-1/3% of the value of the
Portfolio's total assets). For purposes of this investment restriction, the
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing.
3. Purchase or sell real estate, commodities or commodity contracts, or
oil and gas interests, but this shall not prevent the Portfolio from investing
in Municipal Obligations secured by real estate or interests therein, or prevent
the Portfolio from purchasing and selling options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
4. Underwrite the securities of other issuers, except that the Portfolio
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage of
the lower purchase price available, and except to the extent the Portfolio may
be deemed an underwriter under the Securities Act of 1933, as amended, by virtue
of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements; however, the Portfolio may lend its
portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Fund's
Board.
6. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent that the activities permitted in Investment
Restrictions numbered 2, 3, 10 and 11 may be deemed to give rise to a senior
security.
7. Purchase securities on margin, but the Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indices, and options on futures contracts
or indices.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and options or as
otherwise provided in the Portfolio's Prospectus.
9. Invest in securities of other investment companies,
except to the extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings and to the extent related
to the deposit of assets in escrow in connection with the purchase of securities
on a when-issued or delayed-delivery basis and collateral and initial or
variation margin arrangements with respect to options, forward contracts,
futures contracts, including those related to indices, and options on futures
contracts or indices.
11. Purchase, sell or write puts, calls or combinations thereof, except as
described in the Portfolio's Prospectus and Statement of Additional Information.
12. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid (which
securities could include participation interests (including municipal
lease/purchase agreements) and floating and variable rate demand obligations as
to which the Portfolio cannot exercise the demand feature as described in the
Portfolio's Prospectus on less than seven days' notice and as to which there is
no secondary market), if, in the aggregate, more than 15% (10% in the case of
the New Jersey Portfolio) of its net assets would be so invested.
13. Invest in companies for the purpose of exercising
control.
* * *
For purposes of Investment Restriction No. 8 with respect to the Money
Market Portfolio, and Investment Restriction No. 1 with respect to each other
Portfolio, industrial development bonds, where the payment of principal and
interest is the ultimate responsibility of companies within the same industry,
are grouped together as an "industry."
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
MANAGEMENT OF THE FUND
The Fund's Board is responsible for the management and supervision of the
Portfolios. The Board approves all significant agreements between the Fund, on
behalf of the Portfolios, and those companies that furnish services to the
Portfolios. These companies are as follows:
The Dreyfus Corporation..............Investment Adviser
Dreyfus Service Corporation..........Distributor
Dreyfus Transfer, Inc................Transfer Agent
The Bank of New York.................Custodian
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years, are
shown below.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of the
Board of various funds in the Dreyfus Family of Funds. He also is a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway Company, Inc.), a button packager and
distributor, Century Business Services, Inc., a provider of various
outsourcing functions for small and medium size companies, The Newark
Group, a privately held company providing a national network of paper
recovery facilities, paperboard mills and paperboard converting plants,
and QuikCAT.com, Inc., a private company engaged in the development of
high speed movement, routing, storage, and encryption of data across
cable, wireless and all modes of data transport. For more than five years
prior to January 1995, he was President, a director and, until August
1994, Chief Operating Officer of the Manager and Executive Vice President
and a director of the Distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Financial Corporation. He is 57 years old and
his address is 200 Park Avenue, New York, New York 10166.
DAVID W. BURKE, Board Member. Board member of various funds in the Dreyfus
Family of Funds. Chairman of the Broadcasting Board of Governors, an
independent board within the United States Information Agency, from August
1994 to November 1998. From August 1994 to December 1994, Mr. Burke was a
Consultant to the Manager, and from October 1990 to August 1994, he was
Vice President and Chief Administrative Officer of the Manager. From 1977
to 1990, Mr. Burke was involved in the management of national television
news, as Vice President and Executive Vice President of ABC News, and
subsequently as President of CBS News. He is 64 years old and his address
is Box 654, Eastham, Massachusetts 02642.
SAMUEL CHASE, Board Member. Retired. From 1982 to 1996, Mr. Chase was President
of Samuel Chase & Company, Ltd., an economic consulting firm. He is 68
years old and his address is 10380 Springhill Road, Belgrade, Montana
59714.
GORDON J. DAVIS, Board Member. Since October 1994, a senior partner with the law
firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September 1994, Mr.
Davis was a senior partner with the law firm of Lord Day & Lord, Barrett
Smith. From 1978 to 1983, he was Commissioner of Parks and Recreation for
the City of New York. He is also a director of Consolidated Edison, a
utility company, and Phoenix Home Life Insurance Company and a member of
various other corporate and not-for-profit boards. He is 59 years old and
his address is 241 Central Park West, New York, New York 10023.
JONI EVANS, Board Member. Senior Vice President of the William Morris Agency
since September 1993. From September 1987 to May 1993, Executive Vice
President of Random House Inc. and, from January 1991 to May 1993,
President and Publisher of Turtle Bay Books; from January 1987 to December
1990, Publisher of Random House-Adult Trade Division; from September 1985
to September 1987, President of Simon and Schuster-Trade Division. She is
58 years old and her address is 1325 Avenue of the Americas, New York, New
York 10019.
ARNOLD S. HIATT, Board Member. Chairman of The Stride Rite Foundation. From
1969 to June 1992, Chairman of the Board, President or Chief Executive
Officer of The Stride Rite Corporation, a multi-divisional footwear
manufacturing and retailing company. Mr. Hiatt is also a director of The
Cabot Corporation. He is 73 years old and his address is 400 Atlantic
Avenue, Boston, Massachusetts 02110.
BURTON N. WALLACK, Board Member. President and co-owner of Wallack Management
Company, a real estate management company managing real estate in the New
York City area. He is 50 years old and his address is 18 East 64th Street,
New York, New York 10021.
The Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the Board
receives an additional 25% of such compensation. Emeritus Board members are
entitled to receive an annual retainer and a per meeting fee of one-half the
amount paid to them as Board members. The aggregate amount of compensation paid
to each Board member by the Fund for the fiscal year ended August 31, 2000, and
by all funds in the Dreyfus Family of Funds for which such person was a Board
member (the number of portfolios of which is set forth in parenthesis next to
each Board member's total compensation)* for the year ended December 31, 1999,
was as follows:
Aggregate Total Compensation From
Name of Board Member Compensation Fund and Fund Complex
From Fund** Paid to Board Member
Joseph S. DiMartino $2,813 $642,177 (189)
David W. Burke $2,250 $228,500 (62)
Samuel Chase $2,000 $ 53,500 (12)
Gordon J. Davis $2,250 $ 89,625 (29)
Joni Evans $2,250 $ 42,250 (12)
Arnold S. Hiatt $2,250 $ 45,000 (12)
Burton N. Wallack $2,250 $ 49,750 (12)
---------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Portfolios, for which the
Board member serves.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $4,007 for all Board members as a group.
Officers of the Fund
STEPHEN E. CANTER, President. President, Chief Operating Officer, Chief
Investment Officer and a director of the Manager, and an officer of 92
other investment companies (comprised of 179 portfolios) managed by the
Manager. Mr. Canter also is a Director or Executive Committee Member of
other investment management subsidiaries of Mellon Financial Corporation,
each of which is an affiliate of the Manager. He is 55 years old.
MARK N. JACOBS, Vice President. Vice President, Secretary and General Counsel
of the Manager, and an officer of 105 other investment companies
(comprised of 192 portfolios) managed by the Manager. He is 54 years old.
JOSEPH CONNOLLY, Vice President and Treasurer. Director - Mutual Fund Accounting
of the Manager, and an officer of 105 other investment companies
(comprised of 192 portfolios) managed by the Manager. He is 43 years old.
JOHN B. HAMMALIAN, Secretary. Associate General Counsel of the Manager, and an
officer of 35 other investment companies (comprised of 38 portfolios)
managed by the Manager. He is 37 years old.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel and Assistant
Secretary of the Manager, and an officer of 105 other investment companies
(comprised of 192 portfolios) managed by the Manager. He is 51 years old.
MICHAEL A. ROSENBERG, Assistant Secretary. Associate General Counsel of the
Manager, and an officer of 92 other investment companies (comprised of 179
portfolios) managed by the Manager. He is 40 years old.
MICHAEL CONDON, Assistant Treasurer. Senior Treasury Manager of the Manager, and
an officer of 32 other investment companies (comprised of 70 portfolios)
managed by the Manager. He is 38 years old.
GREGORY S. GRUBER, Assistant Treasurer. Senior Accounting Manager - Municipal
Bond Funds of the Manager, and an officer of 41 other investment companies
(comprised of 55 portfolios) managed by the Manager. He is 41 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
The Fund's Board members and officers, as a group, owned less than 1% of
each Portfolio's shares outstanding on November 30, 2000.
As of November 30, 2000, the following shareholders were know by the Fund
to own of record 5% or more of the outstanding voting securities of the Bond
Portfolio:
National Investors Services Corp
For the Exclusive Benefit of our Customers
55 Water Street 32nd Floor
New York, NY 10041-3299 6.32% of Shares
As of November 30, 2000, the following shareholders were know by the Fund
to own of record 5% or more of the outstanding voting securities of the New
Jersey Portfolio:
Lee Bordes & John Bordes TTEES
EST of Peter Bordes
C/O Greater Media INC 2
Kennedy Blvd. #3rd
East Brunswick, NJ 08816-1248 6.89 % of Shares
<PAGE>
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a global multibank financial holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international markets.
Mellon is among the twenty largest bank holding companies in the United States
based on total assets.
The Manager provides management services pursuant to a Management
Agreement (the "Agreement") between the Manager and the Fund. As to each
Portfolio, the Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of such Portfolio, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Manager, by
vote cast in person at a meeting called for the purpose of voting on such
approval. As to each Portfolio, the Agreement is terminable without penalty, on
60 days' notice, by the Fund's Board or by vote of the holders of a majority of
such Portfolio's shares, or, on not less than 90 days' notice, by the Manager.
The Agreement will terminate automatically, as to the relevant Portfolio, in the
event of its assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment Officer
and a director; Thomas F. Eggers, Vice Chairman--Institutional and a director;
Lawrence S. Kash, Vice Chairman; J. David Officer, Vice Chairman and a director;
Ronald P. O'Hanley III, Vice Chairman; William T. Sandalls, Jr., Executive Vice
President; Stephen R. Byers, Senior Vice President; Patrice M. Kozlowski, Senior
Vice President--Corporate Communications; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President--Product
Development; Mary Beth Leibig, Vice President--Human Resources; Ray Van Cott,
Vice President--Information Systems; Theodore A. Schachar, Vice President--Tax;
Wendy Strutt, Vice President; William H. Maresca, Controller; James Bitetto,
Assistant Secretary; Steven F. Newman, Assistant Secretary; and Mandell L.
Berman, Burton C. Borgelt, Steven G. Elliot, Martin G. McGuinn, Richard W. Sabo
and Richard F. Syron, directors.
The Manager manages each Portfolio's investments in accordance with the
stated policies of the Portfolio, subject to the approval of the Fund's Board.
The Manager is responsible for investment decisions and provides the Fund with
portfolio managers who are authorized by the Fund's Board to execute purchases
and sales of securities. The Fund's portfolio managers are Richard J. Moynihan,
Joseph P. Darcy, A. Paul Disdier, Douglas J. Gaylor, Joseph Irace, Colleen
Meehan, W. Michael Petty, Scott Sprauer, Samuel J. Weinstock and Monica S.
Wieboldt. The Manager also maintains a research department with a professional
staff of portfolio managers and securities analysts who provide research
services for the Fund and for other funds advised by the Manager.
The Manager's Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by the Manager. In that regard, portfolio managers
and other investment personnel of the Manager must preclear and report their
personal securities transactions and holdings, which are reviewed for compliance
with the Code of Ethics and are also subject to the oversight of Mellon's
Investment Ethics Committee. Portfolio managers and other investment personnel
of the Manager who comply with the preclearance and disclosure procedures of the
Code of Ethics and the requirements of the Committee may be permitted to
purchase, sell or hold securities which also may be or are held in fund(s) they
manage or for which they otherwise provide investment advice.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to each Fund. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not including
the management fee paid by the Fund. The Distributor may use part or all of such
payments to pay securities dealers, banks or other financial institutions in
respect of these services. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time deems
appropriate.
All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by the Manager. The expenses borne by
the Fund include: taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not officers, directors, employees or holders
of 5% or more of the outstanding voting securities of the Manager, Securities
and Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining the Fund's existence, costs of independent
pricing services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders' reports
and corporate meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, and any extraordinary expenses. Expenses
attributable to a particular Portfolio are charged against the assets of that
Portfolio; other expenses of the Fund are allocated among the Portfolios on the
basis determined by the Board, including, but not limited to, proportionately in
relation to the net assets of each Portfolio.
As compensation for the Manager's services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of 0.50% of the value of
each Short Term Portfolio's average daily net assets, and 0.60% of the value of
each Longer Term Portfolio's average daily net assets. All fees and expenses are
accrued daily and deducted before the declaration of dividends to shareholders.
For the fiscal years ended August 31, 1998, 1999 and 2000, the management fees
payable, reduction in fee and net fees paid by the Fund were as follows:
<TABLE>
<CAPTION>
Portfolio Management Fee Payable Reduction in Fee Net Fees Paid by Portfolio
1997 1998 1999 1997 1998 1999 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Portfolio $3,735,343 $3,194,542 $3,105,954 $1,155,582 $1,101,681 $917,721 $2,579,761 $2,092,861 $2,188,233
Intermediate Bond
Portfolio $ 350,994 $ 469,348 $ 609,789 $ 328,180 $ 278,376 $339,691 $ 22,814 $ 190,972 $ 270,098
Bond Portfolio $ 496,223 $ 913,973 $1,368,389 $ 482,224 $ 541,467 $716,594 $ 13,999 $ 372,506 $ 651,795
New Jersey Portfolio $ 608,537 $ 642,288 $ 579,189 $ 324,583 $ 247,828 $231,113 $ 283,954 $ 394,460 $ 348,076
</TABLE>
As to each Portfolio, the Manager has agreed that if in any fiscal year
the aggregate expenses of such Portfolio, exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having jurisdiction
over the Fund, the Fund may deduct from the payment to be made to the Manager
under the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a monthly
basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a Portfolio's net assets increases.
Distributor. The Distributor, a wholly-owned subsidiary of the Manager
located at 200 Park Avenue, New York, New York 10166, serves as each Portfolio's
distributor on a best efforts basis pursuant to an agreement with the Fund which
is renewable annually.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend
disbursing agent. Under a transfer agency agreement with the Fund, the Transfer
Agent arranges for the maintenance of shareholder account records for each
Portfolio, the handling of certain communications between shareholders and the
Portfolio and the payment of dividends and distributions payable by the
Portfolio. For these services, the Transfer Agent receives a monthly fee
computed on the basis of the number of shareholder accounts it maintains for
each Portfolio during the month, and is reimbursed for certain out-of-pocket
expenses.
The Bank of New York (the "Custodian"), 100 Church Street, New York, New
York 10286, acts as the custodian of each Portfolio's investments. The Custodian
has no part in determining the investment policies of any Portfolio or which
securities are to be purchased or sold by a Portfolio. Under a custody agreement
with the Fund, the Custodian holds each Portfolio's securities and keeps all
necessary accounts and records. For its custody services, the Custodian receives
a monthly fee based on the market value of the Portfolio's assets held in
custody and receives certain securities transactions charges.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant to
which the Fund, with respect to each Portfolio, reimburses the Distributor an
amount not to exceed an annual rate of 0.25% of the value of each Portfolio's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries and providing reports and other information, and services
related to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, with respect to
each Portfolio, and the purposes for which such expenditures were incurred, must
be made to the Fund's Board for their review. In addition, the Plan provides
that material amendments of the Plan must be approved by the Fund's Board, and
by the Board members who are not "interested persons" (as defined in the 1940
Act) of the Fund and have no direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plan is subject to annual approval
by such vote of the Board members cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable at any time with respect
to each Portfolio by vote of a majority of the Board members who are not
"interested persons" and have no direct or indirect financial interest in the
operation of the Plan.
For the fiscal year ended August 31, 2000, the Money Market Portfolio paid
$281,205, the Intermediate Bond Portfolio paid $79,275, the Bond Portfolio paid
$205,918 and the New Jersey Portfolio paid $75,286 under the Plan.
HOW TO BUY SHARES
General. Portfolio shares are sold without a sales charge. You may be
charged a fee if you effect transactions in Portfolio shares through a
securities dealer, bank or other financial institution. Share certificates are
issued only upon your written request. No certificates are issued for fractional
shares. It is not recommended that any Portfolio be used as a vehicle for Keogh,
IRA or other qualified plans. The Fund reserves the right to reject any purchase
order.
The minimum initial investment is $25,000 for each Short Term Portfolio
and $10,000 for each Longer Term Portfolio. Subsequent investments in each
Portfolio must be at least $1,000. The initial investment must be accompanied by
the Account Application.
Shares of each Short Term Portfolio are sold on a continuous basis as the
net asset value per share next determined after an order in proper form and
Federal Funds (monies of member banks within the Federal Reserve System which
are held on deposit at a Federal Reserve Bank) are received by the Transfer
Agent or other entity authorized to receive orders on behalf of the Fund. If you
do not remit Federal Funds, your payment must be converted into Federal Funds.
This usually occurs within one business day of receipt of a bank wire or within
two business days of receipt of a check drawn on a member bank of the Federal
Reserve System. Checks drawn on banks which are not members of the Federal
Reserve System may take considerably longer to convert into Federal Funds. Prior
to receipt of Federal Funds, your money will not be invested.
The net asset value per share of each Short Term Portfolio is determined
as of 12:00 Noon, New York time, on each day the New York Stock Exchange is open
for business. Net asset value per share is computed by dividing the value of the
specific Short Term Portfolio's net assets (i.e., the value of its assets less
liabilities) by the total number of such Portfolio's shares outstanding. See
"Determination of Net Asset Value."
If your payments for shares of a Short Term Portfolio are received in or
converted into Federal Funds by 12:00 Noon, New York time, by the Transfer
Agent, you will receive the dividend declared that day. If your payments are
received in or converted into Federal Funds after 12:00 Noon, New York time, by
the Transfer Agent, you will begin to accrue dividends on the following business
day.
Qualified institutions may telephone orders for purchase of a Short Term
Portfolio's shares. These orders will become effective at the price determined
at 12:00 Noon, New York time, and the shares purchased will receive the dividend
on Portfolio shares declared on that day, if the telephone order is placed by
12:00 Noon, New York time, and Federal Funds are received by 4:00 p.m., New York
time, on that day.
Shares of each Longer Term Portfolio are sold on a continuous basis at the
net asset value per share next determined after an order in proper form is
received by the Transfer Agent or other entity authorized to receive orders on
behalf of the Fund. The net asset value per share of each Longer Term Portfolio
is determined as of the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m., New York time), on each day the New York Stock
Exchange is open for business. For purposes of determining the net asset value
of each Longer Term Portfolio, options and futures contracts will be valued 15
minutes after the close of trading on the floor of the New York Stock Exchange.
Net asset value per share is computed by dividing the value of the specific
Longer Term Portfolio's net assets (i.e., the value of its assets less
liabilities) by the total number of such Portfolio's shares outstanding. See
"Determination of Net Asset Value."
Using Federal Funds. (Short Term Portfolios only) The Transfer Agent or
the Fund may attempt to notify you upon receipt of checks drawn on banks that
are not members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means of
transmitting the money. If you are a customer of a securities dealer, bank or
other financial institution and your order to purchase shares of a Short Term
Portfolio is paid for other than in Federal Funds, the securities dealer, bank
or other financial institution, acting on your behalf, will complete the
conversion into, or itself advance, Federal Funds generally on the business day
following receipt of your order. The order is effective only when so converted
and received by the Transfer Agent. If you have sufficient Federal Funds or a
cash balance in your brokerage account with a securities dealer, bank or other
financial institution, your order to purchase Short Term Portfolio shares will
become effective on the day that the order, including Federal Funds, is received
by the Transfer Agent.
Dreyfus TeleTransfer Privilege. You may purchase shares by telephone if
you have checked the appropriate box and supplied the necessary information on
the Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any day the Transfer Agent and
the New York Stock Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day following such purchase
order. Purchase orders made after 4:00 p.m., New York time, on any day the
Transfer Agent and the New York Stock Exchange are open for business, or orders
made on Saturday, Sunday or any Federal holiday (e.g., when the New York Stock
Exchange is not open for business), will be credited to the shareholder's Fund
account on the second bank business day following such purchase order. To
qualify to use the Dreyfus TeleTransfer Privilege, the initial payment for
purchase of Portfolio shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular redemption
are to be wired to an account at any other bank, the request must be in writing
and signature-guaranteed. See "Redemption of Shares--Dreyfus TeleTransfer
Privilege."
Reopening an Account. You may reopen an account with a minimum investment
of $10,000 without filing a new Account Application during the calendar year the
account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
HOW TO REDEEM SHARES
General. The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. However, if you have purchased Portfolio shares by check or by
Dreyfus TeleTransfer Privilege and subsequently submit a written redemption
request to the Transfer Agent, the Fund may delay sending the redemption
proceeds (or redeeming such shares in the case of a Short Term Portfolios), for
up to eight business days after the purchase of such shares. In addition, the
Fund will not honor checks under the Checkwriting Privilege, and will reject
requests to redeem shares by wire or telephone or pursuant to the Dreyfus
TeleTransfer Privilege, for a period of up to eight business days after receipt
by the Transfer Agent of the purchase check or the Dreyfus TeleTransfer purchase
against which such redemption is requested. These procedures will not apply if
your shares were purchased by wire payment, or if you otherwise have a
sufficient collected balance in your account to cover the redemption request.
Prior to the time any redemption of shares of a Short Term Portfolios is
effective, dividends on such shares will accrue and be payable, and you will be
entitled to exercise all other rights of beneficial ownership. Fund shares may
not be redeemed until the Transfer Agent has received your Account Application.
Transaction Fees. You will be charged $5.00 when you redeem all shares in
your account or your account is otherwise closed out. The fee will be deducted
from your redemption proceeds and paid to the Transfer Agent. The account
closeout fee does not apply to exchanges out of a Portfolio or to wire or
Dreyfus TeleTransfer redemptions, for each of which a $5.00 fee may apply;
however, the Fund will waive the account closeout fee if the closing balance in
your account on the business day immediately preceding the effective date of
such transaction is $50,000 or more. Securities dealers, banks, and other
financial institutions may charge their clients a fee for effecting redemptions
of Portfolio shares.
Checkwriting Privilege. The Fund provides redemption checks ("Checks")
automatically upon opening an account, unless you specifically refuse the
Privilege by checking the applicable "No" box on the Account Application. Checks
will be sent only to the registered owner(s) of the account and only to the
address of record. The Checkwriting Privilege may be established for an existing
account by a separate signed Shareholder Services Form. The Account Application
or Shareholder Services Form must be manually signed by the registered owner(s).
Checks are drawn on your Fund account and may be made payable to the order of
any person in an amount of $1,000 or more. Your account will be charged $2.00
for each Check you write; however, the Fund will waive this fee if the closing
balance in your account on the business day immediately preceding the effective
date of such transaction is $50,000 or more. When a Check is presented to the
Transfer Agent for payment, the Transfer Agent, as your agent, will cause the
Fund to redeem a sufficient number of shares in your account to cover the amount
of the Check and the $2.00 charge. Dividends are earned until the Check clears.
After clearance, a copy of the Check will be returned to you. You generally will
be subject to the same rules and regulations that apply to checking accounts,
although election of this Privilege creates only a shareholder-transfer agent
relationship with the Transfer Agent.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will honor,
upon presentment, even if presented before the date of the Check, all postdated
Checks which are dated within six months of presentment for payment, if they are
otherwise in good order.
The Transfer Agent will impose a fee for stopping payment of a Check upon
your request or if the Transfer Agent cannot honor a Check due to insufficient
funds or other valid reason. If the amount of the Check, plus any applicable
charges, is greater than the value of the shares in your account, the Check will
be returned marked insufficient funds and you may be subject to extra charges.
Checks should not be used to close an account.
This Privilege will be terminated immediately, without notice, with
respect to any account in a Longer Term Portfolio which is, or becomes, subject
to backup withholding on redemptions. Any Check written on an account which has
become subject to backup withholding on redemptions will not be honored by the
Transfer Agent.
Wire Redemption Privilege. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions from
any person representing himself or herself to be you and reasonably believed by
the Transfer Agent to be genuine. You will be charged a $5.00 fee for each wire
redemption, which will be deducted from your account and paid to the Transfer
Agent; however, the Fund will waive this fee if the closing balance in your
account on the business day immediately preceding the effective date of such
transaction is $50,000 or more. Ordinarily, the Fund will initiate payment for
shares of a Short Term Portfolio redeemed pursuant to this Privilege on the same
business day if the Transfer Agent receives the redemption request in proper
form prior to Noon on such day; otherwise, and with respect to all Longer Term
Portfolio shares redeemed pursuant to this Privilege, the Fund will initiate
payment on the next business day. Redemption proceeds ($5,000 minimum) will be
transferred by Federal Reserve wire only to the commercial bank account
specified by you on the Account Application or Shareholder Services Form, or to
a correspondent bank if your bank is not a member of the Federal Reserve System.
Fees ordinarily are imposed by such bank and usually are borne by the investor.
Immediate notification by the correspondent bank to your bank is necessary to
avoid a delay in crediting the funds to your bank account.
If you have access to telegraphic equipment, you may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
If you do not have direct access to telegraphic equipment, you may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. You should advise the operator that the above transmittal code must be
used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as described
below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. You should be aware that if you also have
selected the Dreyfus TeleTransfer Privilege, any request for a wire redemption
will be effected as a Dreyfus TeleTransfer transaction through the ACH system
unless more prompt transmittal specifically is requested. Redemption proceeds
will be on deposit in your account at an ACH member bank ordinarily two business
days after receipt of the redemption request. You will be charged a $5.00 fee
for each redemption made pursuant to this Privilege, which will be deducted from
your account and paid to the Transfer Agent; however, the Fund will waive this
fee if the closing balance in your account on the business day immediately
preceding the effective date of such transaction is $50,000 or more. See "How to
Buy Shares--Dreyfus TeleTransfer Privilege."
Stock Certificates; Signatures. Any certificates representing Fund shares
to be redeemed must be submitted with the redemption request. Written redemption
requests must be signed by each shareholder, including each holder of a joint
account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on the
cover.
Redemption Commitment. The Fund has committed itself to pay in cash all
redemption requests by any shareholder of record of a Portfolio, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value of
such Portfolio's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such amount, the
Fund's Board reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Portfolio to the detriment of the
existing shareholders. In such event, the securities would be valued in the same
manner as the portfolio of the Portfolio is valued. If the recipient sells such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings), (b) when trading
in the markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. You may purchase up to four times per calendar year, in
exchange for shares of a Portfolio, shares of other Portfolios or shares of
certain other funds managed or administered by the Manager or Founders Asset
Management LLC ("Founders"), an affiliate of the Manager, to the extent such
shares are offered for sale in your state of residence. Shares of other
Portfolios or other funds purchased by exchange will be purchased on the basis
of relative net asset value per share as follows:
A. Exchanges for shares of funds offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares
purchased with a sales load and additional shares
acquired through reinvestment of dividends or
distributions of any such funds (collectively referred
to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred
to herein as "Offered Shares"), but if the sales load
applicable to the Offered Shares exceeds the maximum
sales load that could have been imposed in connection
with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you must notify the Transfer
Agent of your prior ownership of fund shares and your account number.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application, indicating
that you specifically refuse this Privilege. By using the Telephone Exchange
Privilege, you authorize the Transfer Agent to act on telephonic instructions
(including over The Dreyfus Touch(R) automated telephone system) from any person
representing himself or herself to be you, and reasonably believed by the
Transfer Agent to be genuine. Telephone exchanges may be subject to limitations
as to the amount involved or the number of telephone exchanges permitted. Shares
issued in certificate form are not eligible for telephone exchange. You will be
charged a $5.00 fee for each exchange made out of the Fund, which will be
deducted from your account and paid to the Transfer Agent; however, the Fund
will waive this fee if the closing balance in your account on the business day
immediately preceding the effective date of such transaction is $50,000 or more.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject any
exchange request in whole or in part. Shares may be exchanged only between
accounts having identical names and other identifying designations. The Fund
Exchanges service may be modified or terminated at any time upon notice to
shareholders.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, from a Portfolio in shares of another Portfolio or fund in the Dreyfus
Family of Funds or a fund advised by Founders of which you are a shareholder.
Shares of other funds purchased pursuant to this privilege will be purchased on
the basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares
of other funds offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which
charges a sales load may be invested in shares of other
funds sold with a sales load (referred to herein as
"Offered Shares"), but if the sales load applicable to
the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or
distributions are being swept (without giving effect to
any reduced loads), the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in shares
of other funds that impose a contingent deferred sales charge
("CDSC") and the applicable CDSC, if any, will be imposed upon
redemption of such shares.
DETERMINATION OF NET ASSET VALUE
Amortized Cost Pricing. (Short Term Portfolios only) The valuation of each
Short Term Portfolio's portfolio securities is based upon their amortized cost
which does not take into account unrealized capital gains or losses. This
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold the instrument.
The Fund's Board has established, as a particular responsibility within
the overall duty of care owed to the Short Term Portfolios' investors,
procedures reasonably designed to stabilize each Portfolio's price per share as
computed for purposes of purchases and redemptions at $1.00. Such procedures
include review of each Short Term Portfolio's portfolio holdings by the Fund's
Board at such intervals as it deems appropriate, to determine whether such
Portfolio's net asset value calculated by using available market quotations or
market equivalents deviates from $1.00 per share based on amortized cost. Market
quotations and market equivalents used in such review are obtained from an
independent pricing service (the "Service") approved by the Fund's Board. The
Service values each Short Term Portfolio's investments based on methods which
include consideration of: yields or prices of municipal bonds of comparable
quality, coupon, maturity and type; indications of values from dealers; and
general market conditions. The Service also may employ electronic data
processing techniques and/or a matrix system to determine valuations.
The extent of any deviation between a Short Term Portfolio's net asset
value based upon available market quotations or market equivalents and $1.00 per
share based on amortized cost will be examined by the Fund's Board. If such
deviation exceeds 1/2%, the Fund's Board will consider what actions, if any,
will be initiated. In the event the Fund's Board determines that a deviation
exists which may result in material dilution or other unfair results to
investors or existing shareholders, it has agreed to take such corrective action
as it regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions from
capital or capital gains; redeeming shares in kind; or establishing a net asset
value per share by using available market quotations or market equivalents.
Valuation of Portfolio Securities. (Longer Term Portfolios only) The
investments of each Longer Term Portfolio are valued each business day by an
independent pricing service (the "Service") approved by the Fund's Board of
Directors. When, in the judgment of the Service, quoted bid prices for
investments are readily available and are representative of the bid side of the
market, these investments are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for such
securities). The value of other investments (which constitute a majority of the
portfolio securities) is determined by the Service based on methods which
include consideration of: yields or prices of municipal bonds of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. The Service may employ electronic data processing
techniques and/or a matrix system to determine valuations. The Service's
procedures are reviewed by the Portfolio's officers under the general
supervision of the Fund's Board. These procedures need not be used to determine
the value of securities held by a Portfolio if, in the opinion of a committee
appointed by the Fund's Board, some other method would more accurately reflect
the fair value of such securities. Expenses and fees, including the management
fee (reduced by the expense limitation, if any), are accrued daily and are taken
into account for the purpose of determining the net asset value of Portfolio
shares.
New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Portfolio qualified as a "regulated
investment company" under the Code for the fiscal year ended August 31, 2000.
Each Portfolio intends to continue to so qualify if such qualification is in the
best interests of its shareholders. As a regulated investment company, a
Portfolio will pay no Federal income tax on net investment income and net
realized capital gains to the extent that such income and gains are distributed
to shareholders in accordance with applicable provisions of the Code. To qualify
as a regulated investment company, the Portfolio must distribute at least 90% of
its net income (consisting of net investment income from tax exempt obligations
and net short-term capital gains) to its shareholders, and must meet certain
asset diversification and other requirements. If a Portfolio did not qualify as
a regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. The term "regulated
investment company" does not imply the supervision of management or investment
practices or policies by any government agency.
Each Portfolio ordinarily declares dividends from its net investment
income on each day the New York Stock Exchange is open for business. Dividends
usually are paid on the last business day (calendar day in the case of each
Short Term Portfolio) of each month and are automatically reinvested in
additional Portfolio shares at net asset value or, at your option, paid in cash.
The Portfolio's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day in the case of each Short Term Portfolio
and on the next business day in the case of each Longer Term Portfolio. With
respect to each Longer Term Portfolio, Portfolio shares begin earning income
dividends on the day following the date of purchase. If you redeem all shares in
your account at any time during the month, all dividends to which you are
entitled will be paid to you along with the proceeds of the redemption, after
deduction of any fees. If you are an omnibus accountholder and indicate in a
partial redemption request that a portion of any accrued dividends to which such
account is entitled belongs to an underlying accountholder who has redeemed all
shares in his or her account, such portion of the accrued dividends will be paid
to you along with the proceeds of the redemption, after the deduction of any
fees. Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but each Portfolio may make distributions on a
more frequent basis to comply with the distribution requirements of the Code, in
all events in a manner consistent with the provisions of the 1940 Act.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividend or distribution and all future dividends and distributions payable to
you in additional Portfolio shares at net asset value. No interest will accrue
on amounts represented by uncashed distribution or redemption checks.
Management of the Fund believes that the New Jersey Portfolio has
qualified as a "qualified investment fund" within the meaning of the New Jersey
gross income tax. The primary criteria for constituting the New Jersey Portfolio
a "qualified investment fund" are that (i) the Portfolio is an investment
company registered with the Securities and Exchange Commission which, for the
calendar year in which the dividends and distributions (if any) are paid, has no
investments other than interest-bearing obligations, obligations issued at a
discount, and cash and cash items, including receivables, and financial options,
futures and forward contracts, or other similar financial instruments relating
to interest-bearing obligations, obligations issued at a discount or bond
indices related thereto and (ii) at the close of each quarter of the taxable
year, the Portfolio has not less than 80% of the aggregate principal amount of
all of its investments, excluding financial options, futures and forward
contracts, or other similar financial instruments, related to interest-bearing
obligations, obligations issued at a discount or bond indices related thereto,
cash and cash items, which cash items shall include receivables, in New Jersey
Municipal Obligations, including obligations of Puerto Rico, the Virgin Islands
and other territories and possessions of the United States and certain other
specified securities exempt from Federal and New Jersey income taxes.
Additionally, a qualified investment fund must comply with certain continuing
reporting requirements.
If the New Jersey Portfolio continues to qualify as a qualified investment
fund and complies with its reporting obligations, (a) dividends and
distributions by the New Jersey Portfolio to a New Jersey resident individual
shareholder will not be subject to New Jersey gross income tax to the extent
that the dividends and distributions are attributable to income earned by the
New Jersey Portfolio as interest on or gain from New Jersey Municipal
Obligations, and (b) gain from the sale of New Jersey Portfolio shares by a New
Jersey resident individual shareholder will not be subject to the New Jersey
gross income tax. Shares of the New Jersey Portfolio are not subject to property
taxation by New Jersey or its political subdivisions. To the extent that you are
subject to state and local taxes outside of New Jersey, dividends and
distributions earned by an investment in the New Jersey Portfolio may represent
taxable income.
In the case of a Short Term Portfolio's shares redeemed in connection with
any transaction fees, a shareholder will recognize a capital loss in the amount
of the fee paid. In the case of Longer Term Portfolio's shares redeemed in
connection with any transaction fees, such fees will either decrease a capital
gain or increase a capital loss realized in such disposition. In general, such
loss will be treated as a short-term capital loss if the shares were held for
one year or less, or, in the case of shares held for greater than one year, a
long-term capital loss.
In the case of the Longer Term Portfolios, any dividend or distribution
paid shortly after an investor's purchase may have the effect of reducing the
net asset value of his shares below the cost of his investment. Such a
distribution would be a return on investment in an economic sense although
taxable as stated under "Distributions and Taxes" in the Prospectus. In
addition, the Code provides that if a shareholder holds Fund shares for six
months or less and has received an exempt-interest dividend with respect to such
shares, any loss incurred on the sale of such shares will be disallowed to the
extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain or loss. However, all or a portion of the gain realized
from the disposition of certain market discount bonds will be treated as
ordinary income. In addition, all or a portion of the gain realized from
engaging in "conversion transactions" (generally including certain transactions
designed to convert ordinary income into capital gain) may be treated as
ordinary income.
Gain or loss, if any, realized by the Longer Term Portfolios from certain
financial futures and options transactions ("Section 1256 contracts") will be
treated as 60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of Section 1256 contracts
as well as from closing transactions. In addition, any Section 1256 contracts
remaining unexercised at the end of a Longer Term Portfolio's taxable year will
be treated as sold for their fair market value, resulting in additional gain or
loss to the Longer Term Portfolio characterized as described above.
Offsetting positions held by a Longer Term Portfolio involving certain
futures and options transactions may be considered, for tax purposes, to
constitute "straddles." To the extent the straddle rules apply to positions
established by the Portfolio, losses realized by the Portfolio may be deferred
to the extent of unrealized gain in the offsetting position. In addition,
short-term capital loss on straddle positions may be recharacterized as
long-term capital loss, and long-term capital gains on straddle positions may be
treated as short-term capital gains or ordinary income. Certain of the straddle
positions held by a Portfolio may constitute "mixed straddles." The Portfolio
may make one or more elections with respect to the treatment of "mixed
straddles," resulting in different tax consequences. In certain circumstances,
the provisions governing the tax treatment of straddles override or modify
certain of the provisions discussed above.
If a Portfolio either (1) holds an appreciated financial position with
respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale, futures,
forward, or offsetting notional principal contract (collectively, a "Contract")
respecting the same or substantially identical property or (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as, or substantially identical to, the underlying property, the
Portfolio generally will be taxed as if the appreciated financial position were
sold at fair market value on the date the Portfolio enters into the financial
position or acquires the property, respectively. Transactions that are
identified hedging or straddle transactions under other provisions of the Code
can be subject to the constructive sale provisions.
Investment by the Longer Term Portfolio in securities issued at a discount
or providing for deferred interest or for payment of interest in the form of
additional obligations, such as zero coupon securities and pay-in-kind bonds,
could, under special tax rules, affect the amount, timing and character of
distributions to shareholders. For example, a Longer Term Portfolio could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion in
order to maintain its qualifications as a regulated investment company. In that
case, the Portfolio may have to dispose of securities which it might otherwise
have continued to hold in order to generate cash to satisfy these distribution
requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as principal. Newly-issued securities ordinarily are purchased directly
from the issuer or from an underwriter; other purchases and sales usually are
placed with those dealers from which it appears that the best price or execution
will be obtained. Usually no brokerage commissions, as such, are paid by a
Portfolio for such purchases and sales, although the price paid usually includes
an undisclosed compensation to the dealer. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers ordinarily
are executed at a price between the bid and asked price. No brokerage
commissions have been paid by any Portfolio to date.
Transactions are allocated to various dealers by a Portfolio's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and analysis
with the views and information of other securities firms and may be selected
based upon their sales of shares of the Portfolios or other funds advised by the
Manager or its affiliates.
Research services furnished by brokers through which a Portfolio effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by brokers
in connection with other funds the Manager advises may be used by the Manager in
advising a Portfolio. Although it is not possible to place a dollar value on
these services, it is the Manager's opinion that the receipt and study of such
services should not reduce the overall expenses of its research department.
PERFORMANCE INFORMATION
Money Market Portfolio. For the seven-day period ended August 31, 2000,
the Money Market Portfolio's yield was 3.85%, and its effective yield was 3.92%.
These yields reflect the waiver of a portion of the management fee and/or the
absorption of certain expenses by the Manager, without which such yields would
have been 3.69% and 3.76%, respectively.
Based upon the highest 2000 Federal income tax rate of 39.60%, the Money
Market Portfolio's tax equivalent yield for the seven-day period ended August
31, 2000 was 6.37%. Without the above-referenced fee waiver in effect such
tax-equivalent yield would have been 6.11%.
New Jersey Portfolio. For the seven-day period ended August 31, 2000, the
New Jersey Portfolio's yield was 3.61% and effective yield was 3.67%. These
yields reflect the waiver of a portion of the management fee and/or the
absorption of certain expenses by the Manager, without which such yields would
have been 3.43% and 3.49%, respectively.
Based upon the highest combined 2000 Federal and New Jersey income tax
rate of 43.45%, the New Jersey Portfolio's tax equivalent yield for the
seven-day period ended August 31, 2000 was 6.38%. Without the above-referenced
fee waiver in effect such tax-equivalent yield would have been 6.07%.
Longer Term Portfolios. The Intermediate Bond Portfolio's 30-day yield for
the period ended August 31, 2000 was 4.65%. The Bond Portfolio's 30-day yield
for the period ended August 31, 2000 was 5.19%. These yields reflect the waiver
of a portion of the management fee and/or the absorption of certain expenses by
the Manager, without which such yields would have been 4.32% and 4.84%,
respectively.
Based upon the highest 2000 Federal income tax rate of 39.60%, the
Intermediate Bond Portfolio's and Bond Portfolio's tax equivalent 30-day yield
for the period ended August 31, 2000 was 7.70% and 8.59%, respectively. Without
the above-referenced fee waiver in effect such tax equivalent yield would have
been 7.15% and 8.01%, respectively.
For the one- and five-year periods ended August 31, 2000 and for the
period May 4, 1994 (commencement of operations) through August 31, 2000, the
average annual total return of the Intermediate Bond Portfolio was 6.36%, 5.55%
and 6.16%, respectively. For the one- and five-year periods ended August 31,
2000 and for the period May 6, 1994 (commencement of operations) through August
31, 2000, the average annual total return of the Bond Portfolio was 6.41%, 6.26%
and 6.93%, respectively. During the period, the Manager waived receipt of the
management fee and/or absorbed certain Portfolio expenses, without which returns
would have been lower.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
For the period from the Intermediate Bond Portfolio's commencement of
operations (May 4, 1994) through August 31, 2000, the total return of the
Portfolio was 46.01%. For the period from the Bond Portfolio's commencement of
operations (May 6, 1994) through August 31, 2000, the total return of the
Portfolio was 52.75%, respectively. During the period, the Manager waived
receipt of the management fee and/or absorbed certain Portfolio expenses,
without which returns would have been lower.
Total return is calculated by subtracting the amount of the Portfolio's
net asset value per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period), and dividing the
result by the net asset value per share at the beginning of the period.
Computation of Yield. Current yield for a Short Term Portfolio is computed
in accordance with a standardized method which involves determining the net
change in the value of a hypothetical pre-existing Portfolio account having a
balance of one share at the beginning of a seven calendar day period for which
yield is to be quoted, dividing the net change by the value of the account at
the beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net change
in the value of the account reflects the value of additional shares purchased
with dividends declared on the original share and any such additional shares and
fees that may be charged to shareholder accounts, in proportion to the length of
the base period and the Portfolio's average account size, but does not include
realized gains and losses or unrealized appreciation and depreciation. Effective
yield is computed by adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7, and subtracting 1
from the result.
Current yield for a Longer Term Portfolio is computed pursuant to a
formula which operates as follows: the amount of the Portfolio's expenses
accrued for a 30-day period (net of reimbursements) is subtracted from the
amount of the dividends and interest earned (computed in accordance with
regulatory requirements) by it during the period. That result is then divided by
the product of: (a) the average daily number of shares outstanding during the
period that were entitled to receive dividends and distributions, and (b) the
net asset value per share on the last day of the period less any undistributed
earned income per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to the 6th
power, after which 1 is subtracted. The current yield is then arrived at by
multiplying the result by 2.
All Portfolios. Tax equivalent yield is computed by dividing that portion
of the yield or effective yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that portion, if
any, of the yield of the Portfolio that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal marginal personal income tax rate presently in effect. The tax
equivalent figure, however, does not include the potential effect of any state
(except with respect to the New Jersey Portfolio) or local (including, but not
limited to, county, district or city) taxes, including applicable surcharges. In
addition, there may be pending legislation which could affect such stated tax
rate or yields. Each investor should consult its tax adviser, and consider its
own factual circumstances and applicable tax laws, in order to ascertain the
relevant tax equivalent yield.
Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the type and
quality of the instruments in the portfolio, portfolio maturity and operating
expenses. An investor's principal in a Portfolio is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which a
Portfolio's price per share is determined.
From time to time, a Portfolio may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be used
for illustrative purposes only and are not representative of the Portfolio's
past or future performance.
Comparative performance information may be used from time to time in
advertising or marketing a Portfolio's shares, including data from
Wiesenberger/Thomson Financial Investment, Lipper Analytical Services, Inc.,
Bank Rate Monitor(TM), IBC's Money Fund Report(TM), Moody's Bond Survey Bond
Index, Lehman Brothers Municipal Bond Index, Morningstar, Inc. and other indices
and industry publications. From time to time, advertising materials for a
Portfolio also may refer to or discuss then, current or past economic
conditions, developments, and/or events, to actual or proposed legislation or to
statistical or other information concerning trends relating to investment
companies, as compiled by industry associations such as the Investment Company
Institute. From time to time, advertising materials for a Portfolio may refer to
Morningstar, Inc. ratings and related analysis supporting the ratings. In
addition, advertising materials for a Portfolio may, from time to time include
biographical information relating to its portfolio managers and may refer to, or
include commentary by a portfolio manager relating to investment strategy, asset
growth, current or past business, political, economic or financial conditions
and other matters of general interest to investors.
INFORMATION ABOUT THE FUND AND PORTFOLIOS
Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Portfolio shares are of one class and have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights and
are freely transferable.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office.
Shareholders may remove a Board member by the affirmative vote of a majority of
the Fund's outstanding voting shares. In addition, the Board will call a meeting
of shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected by
shareholders.
The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act and for other purposes. A shareholders of one portfolio is
not deemed to be a shareholder of any other portfolio. For certain matters
shareholders vote together as a group; as to others they vote separately by
portfolio.
To date, the Board has authorized the creation of four Portfolios. All
consideration received by the Fund for shares of one of the Portfolios and all
assets in which such consideration is invested will belong to that Portfolio
(subject only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income attributable to, and the expenses of,
one Portfolio are treated separately from those of the other Portfolios. The
Fund has the ability to create, from time to time, new Portfolios without
shareholder approval.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise to the holders of the outstanding voting securities of an investment
company, such as the Fund, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each Portfolio affected by such matter. Rule 18f-2 further provides that a
Portfolio shall be deemed to be affected by a matter unless it clear that the
interests of each Portfolio in the matter are identical or that the matter does
not affect any interest of such Portfolio. However, the Rule exempts the
selection of independent accountants and the election of Board members from the
separate voting requirements of the Rule.
With respect to the Longer Term Portfolios only, each of these Portfolios
is intended to be a long-term investment vehicle and is not designed to provide
investors with a means of speculating on short-term market movements. A pattern
of frequent purchases and exchanges can be disruptive to efficient portfolio
management and, consequently, can be detrimental to the Portfolio's performance
and its shareholders. Accordingly, if the Fund's management determines that an
investor is following a market-timing strategy or is otherwise engaging in
excessive trading, the Fund, with or without prior notice, may temporarily or
permanently terminate the availability of Fund Exchanges, or reject in whole or
part any purchase or exchange request, with respect to such investor's account.
Such investors also may be barred from purchasing other funds in the Dreyfus
Family of Funds. Generally, an investor who makes more than four exchanges out
of a Portfolio during any calendar year or who makes exchanges that appear to
coincide with a market-timing strategy may be deemed to be engaged in excessive
trading. Accounts under common ownership or control will be considered as one
account for purposes of determining a pattern of excessive trading. In addition,
the Fund may refuse or restrict purchase or exchange requests for Portfolio
shares by any person or group if, in the judgment of the Fund's management, the
Portfolio would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the Portfolio receives or anticipates receiving simultaneous orders that may
significantly affect the Portfolio (e.g., amounts equal to 1% or more of the
Portfolio's total assets). If an exchange request is refused, the Fund will take
no other action with respect to the Portfolio shares until it receives further
instructions from the investor. A Portfolio may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the
Portfolio. The Fund's policy on excessive trading applies to investors who
invest in a Portfolio directly or through financial intermediaries, but does not
apply to the Auto-Exchange Privilege, to any automatic investment or withdrawal
privilege described herein, or to participants in employer-sponsored retirement
plans.
During times of drastic economic or market conditions, the Fund may
suspend Fund Exchanges temporarily without notice and treat exchange requests
based on their separate components--redemption orders with a simultaneous
request to purchase the other fund's shares. In such a case, the redemption
request would be processed at the Portfolio's next determined net asset value
but the purchase order would be effective only at the net asset value next
determined after the fund being purchased receives the proceeds of the
redemption, which may result in the purchase being delayed.
To offset the relatively higher costs of servicing smaller accounts, the
Fund charges regular accounts with balances below $2,000 (which have not been
redeemed by the Fund) an annual account fee of $12. The valuation of accounts
and the imposition of the fee will occur during the fourth quarter of each
calendar year. The fee will be waived for any investor whose aggregate Dreyfus
mutual fund investments total at least $25,000, and will not apply to IRA
accounts, accounts participating in automatic investment programs or accounts
opened by a securities dealer, bank or other financial institution.
The Fund sends annual and semi-annual financial statements to
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
Portfolio shares being sold pursuant to the Portfolios' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of the Fund.
APPENDIX A
(NEW JERSEY PORTFOLIO ONLY)
RISK FACTORS -- INVESTING IN NEW JERSEY MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State of New Jersey
and various local agencies available as of the date of this Statement of
Additional Information. While the Fund has not independently verified this
information, it has no reason to believe that such information is not correct in
all material respects.
New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective commercial agriculture. New Jersey's principal manufacturing
industries produce chemicals and pharmaceuticals, electrical equipment and
instruments, printing, machinery and food products. Other economic activities
include business and health services, wholesale and retail trade, insurance,
tourism, petroleum refining and truck farming.
During 1999, a continuation of the national business expansion, a strong
business climate in the State, and positive developments in neighboring
metropolitan areas contributed to the State's economic expansion - the second
strongest year for economic growth since 1988.
Employment within the State increased by 1.7% in 1999, resulting in an
increase of over 65,000 jobs. Job gains were primarily spread across the service
producing industries with particularly strong growth in wholesale and retail
trade (20,400) and business services (20,200). Computer software and personnel
supply related companies accounted for the bulk of the job growth in the
business services sub-sector, adding 15,000 jobs.
With strong labor market conditions, New Jersey's personal income
increased at a pace of 5.8% in 1999, making it the first year since 1992 that
the New Jersey growth rate was above the national rate. The strong State economy
also led to a 6.5% growth in retail sales. Low inflation, approximately 2%,
continues to benefit New Jersey consumers and businesses, and low interest rates
have increased spending on housing and other consumer durables. In 1999, home
building was at its highest level since 1988.
New Jersey's unemployment rate remained low in 1999 - close to the
national average. Joblessness, in terms of both absolute level and its rate, has
been falling steadily since its peak in 1992. The early trends in year 2000
indicate that the number of unemployed persons in New Jersey has dropped to its
lowest level since mid-1989.
The economic outlook for 2000/2001 is for continued growth, but at
somewhat more moderate rates. Employment is expected to increase by
approximately 50,000 jobs, reflecting a slowing national economy and shortages
in skilled technical specialties that will constrain job growth. The outlook
also indicates a steady slowing in State personal income growth from 5.7% in
2000 to 4.8% in 2001.
A slower growing national economy and the national election year campaign
make it increasingly unlikely that any changes in national economic or fiscal
policy will be implemented that will impact the State's economy significantly in
the forecast period. However, uncertainties in the international economy are
likely to remain due to oil price and currency issues.
Other areas of concern include the volatility in the stock market,
possible significant shifts in consumer and investor confidence, unstable and
potentially deflationary international economic conditions, and the prospect of
leaner U.S. corporate profits. In addition, the restructuring of major
industries will continue due to cost containment, globalization of competition,
and deregulation concerns. Although the forecasts for 2000/2001 contain more
risks than in the recent past, the basic fundamentals of the State's economic
health remain favorable.
The New Jersey outlook is based on expected national economic performance
and on recent State strategic policy actions aimed at infrastructure
improvements, effective education and training of the State's workforce, and
maintaining a competitive business environment. Investments in each of these
policy areas are critical to maintaining the long-term health of the State's
economy.
In July 1991, S&P lowered New Jersey's general obligation bond rating from
"AAA" to "AA+". As of May 2000, S&P, Moody's and Fitch rated New Jersey's
long-term general obligations "AA+", "Aal" and "AA+", respectively.
The revised estimate as shown in the Governor's fiscal year 2000 Budget
forecasts Sales and Use tax collections for fiscal year 2000 of $5.575 billion,
a 10.3% increase from the fiscal year 1999 revenue. The fiscal year 2001
estimate of $5.993 billion is a 7.5% increase from the fiscal year 2000
estimate.
The revised estimate as shown in the Governor's fiscal year 2000 Budget
forecasts gross income tax collections for fiscal year 2000 of $7.035 billion,
an 11.2% increase from fiscal year 1999 revenue. The fiscal year 2001 estimate
of $7.580 billion is a 7.7% increase from fiscal year 2000. Included in the
fiscal year 2000 and fiscal year 2001 estimates is the enactment of a property
tax deduction, to be phased in over a three-year period, permitting a deduction
by resident taxpayers against gross income tax of a percentage of their property
taxes.
The revised estimate as shown in the Governor's fiscal year 2000 Budget
forecasts corporations business tax collections for fiscal year 2000 of $1.396
billion, a 0.5% decrease from fiscal year 1999 revenue. The fiscal year 2001
estimate of $1.486 billion is a 6.4% increase from fiscal year 2000. Included in
the corporation business tax estimates for fiscal year 2000 and fiscal year 2001
is an estimate of amounts which were previously collected pursuant to the gross
receipts and franchise taxes applicable to utilities and which are now collected
pursuant to the corporation business tax related to the utilities.
Estimated receipts from State taxes and revenues, including the three
principal taxes set forth above, are forecasts based on the best information
available at the time of such forecasts. Changes in economic activity in the
State and the nation, consumption of durable goods, corporate financial
performance and other factors that are difficult to predict may result in actual
collections being more or less than forecasted.
Should revenues be less than the amount anticipated in the budget for a
fiscal year, the Governor may, pursuant to statutory authority, prevent any
expenditure under any appropriation. There are additional means by which the
Governor may ensure that the State is operated efficiently and does not incur a
deficit. No supplemental appropriation may be enacted after adoption of an
appropriations act except where there are sufficient revenues on hand or
anticipated, as certified by the Governor, to meet such appropriation. In the
past when actual revenues have been less than the amount anticipated in the
budget, the Governor has exercised her plenary powers leading to, among other
actions, implementation of a hiring freeze for all State departments and the
discontinuation of programs for which appropriations were budgeted but not yet
spent.
The State appropriated approximately $18.486 billion, $19.975 billion
(adjusted) for fiscal years 1999 and 2000, respectively. Of the $21.253 billion
recommended for appropriation in fiscal year 2001 from the General Fund, the
Property Tax Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $8.394 billion was recommended for State aid to
local governments, $6.548 billion was appropriated for grants-in-aid (payments
to individuals or public or private agencies for benefits to which a recipient
is entitled by law or for the provision of service on behalf of the State),
$4.616 billion for direct State services, $530 million for debt service on State
general obligation bonds and $1.165 billion for capital construction.
Should tax revenues be less than the amount anticipated in the Budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent any
expenditure under any appropriation. The recommended appropriations reflect the
amounts contained in the Governor's fiscal year 2001 Budget.
The State made appropriations for principal and interest payments for
general obligation bonds for fiscal year 2000 in the amount of $518.7 million.
The Governor's fiscal year 2001 Budget included a recommended appropriation in
the amount of $530.0 million for principal and interest payments for general
obligations bonds.
<PAGE>
APPENDIX B
Rating Categories
Description of certain ratings assigned by S&P, Moody's and Fitch:
S&P
Long-term
AAA
An obligation rated 'AAA' has the highest rating assigned by S&P. The obligor's
capacity to meet its financial commitment on the obligation is extremely strong.
AA
An obligation rated 'AA' differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A
An obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB
An obligation rated 'BBB' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC, and C
Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having
significant speculative characteristics. 'BB' indicates the least degree of
speculation and 'C' the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
BB
An obligation rated 'BB' is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
B
An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB', but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC
An obligation rated 'CCC' is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC
An obligation rated 'CC' is currently highly vulnerable to nonpayment.
C
A subordinated debt or preferred stock obligation rated 'C' is currently highly
vulnerable to nonpayment. The 'C' rating may be used to cover a situation where
a bankruptcy petition has been filed or similar action taken, but payments on
this obligation are being continued. A 'C' also will be assigned to a preferred
stock issue in arrears on dividends or sinking fund payments, but that is
currently paying.
D
An obligation rated 'D' is in payment default. The 'D' rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
r
The symbol 'r' is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk--such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
N.R.
The designation 'N.R.' indicates that no rating has been requested, that there
is insufficient information on which to base a rating, or that S&P does not rate
a particular obligation as a matter of policy.
Note: The ratings from 'AA' to 'CCC' may be modified by the addition of a plus
(+) or minus (-) sign designation to show relative standing within the major
rating categories.
Short-term
SP-1
Strong capacity to pay principal and interest. An issue determined to possess a
very strong capacity to pay debt service is given a plus sign (+) designation.
SP-2
Satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
SP-3
Speculative capacity to pay principal and interest.
Commercial paper
A-1
This designation indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2
Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
'A-1'.
A-3
Issues carrying this designation have an adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B
Issues rated B are regarded as having only speculative capacity for timely
payment.
C
This rating is assigned to short-term debt obligations with a doubtful capacity
for payment.
D
Debt rated 'D' is payment default. The 'D' rating category is used when interest
payments or principal payments are not made on the due date, even if the
applicable grace period has not expired, unless S&P believes such payments will
be made during such grace period.
<PAGE>
Moody's
Long-term
Aaa
Bonds rated 'Aaa' are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edged."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds rated 'Aa' are judged to be of high quality by all standards. Together
with the 'Aaa' group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in 'Aaa' securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the 'Aaa' securities.
A
Bonds rated 'A' possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa
Bonds rated 'Baa' are considered as medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba
Bonds rated 'Ba' are judged to have speculative elements; their future cannot be
considered as well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B
Bonds rated 'B' generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa
Bonds rated 'Caa' are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or interest.
Ca
Bonds rated 'Ca' represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C
Bonds rated 'C' are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from 'Aa' through 'Caa'. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
Prime rating system (short-term)
Issuers rated Prime-1 (or supporting institutions) have a superior ability for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or supporting institutions) have an acceptable ability
for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
MIG/VMIG--U.S. short-term
Municipal debt issuance ratings are designated as Moody's Investment Grade (MIG)
and are divided into three levels -- MIG 1 through MIG 3.
The short-term rating assigned to the demand feature of variable rate demand
obligations (VRDOs) is designated as VMIG. When either the long- or short-term
aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or
NR/VMIG 1.
MIG 1/VMIG1
This designation denotes superior credit quality. Excellent protection is
afforded by established cash flows, highly reliable liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes strong credit quality. Margins of protection are ample,
although not as large as in the preceding group.
MIG 3/VMIG 3
This designation denotes acceptable credit quality. Liquidity and cash-flow
protection may be narrow, and market access for refinancing is likely to be less
well-established.
SG
This designation denotes speculative-grade credit quality. Debt instruments in
this category may lack sufficient margins of protection.
Fitch
Long-term investment grade
AAA
Highest credit quality. 'AAA' ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.
AA
Very high credit quality. 'AA' ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
A
High credit quality. 'A' ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB
Good credit quality. 'BBB' ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Long-term speculative grade
BB
Speculative. 'BB' ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.
B
Highly speculative. 'B' ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC, C
High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon sustained, favorable business or economic
developments. 'CC' ratings indicate that default of some kind appears probable.
'C' ratings signal imminent default.
DDD, DD, D
Default. The ratings of obligations in this category are based on their
prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. 'DDD' obligations have the highest potential for recovery,
around 90% - 100% of outstanding amounts and accrued interest. 'DD' ratings
indicate potential recoveries in the range of 50% - 90% and 'D' the lowest
recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated 'DDD' have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated 'DD' and 'D' are generally undergoing a formal
reorganization or liquidation process; those rated 'DD' are likely to satisfy a
higher portion of their outstanding obligations, while entities rated 'D' have a
poor prospect of repaying all obligations.
<PAGE>
Short-term
A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet financial commitments
in a timely manner.
F1
Highest credit quality. Indicates the strongest capacity for timely payment of
financial commitments; may have an added "+" to denote any exceptionally strong
credit feature.
F2
Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.
F3
Fair credit quality. The capacity for timely payment of financial commitment is
adequate; however, near-term adverse changes could result in a reduction
non-investment grade.
B
Speculative. Minimal capacity for timely payment of financial
commitments plus vulnerability to near-term adverse changes in
financial and economic conditions.
C
High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic
environment.
D
Default. Denotes actual or imminent payment default.
'NR' indicates that Fitch does not rate the issuer or issue in question.
Notes to long-term and short-term ratings: A plus (+) or minus (-) sign
designation may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the 'AAA' long-term rating
category, to categories below 'CCC', or to short-term ratings other than 'F1.'
DREYFUS BASIC MUNICIPAL FUND, INC.
PART C. OTHER INFORMATION
_________________________
Item 23. Exhibits.
(a) Articles of Incorporation dated August 8, 1991 and Articles of
Amendment are incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on April 1, 1996.
(b) Amended By-Laws.
(d) Management Agreement dated August 24, 1994, as amended October 11,
1995 is incorporated by reference to Exhibit (5) of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A, filed on
December 29, 1995.
(e) Distribution Agreement.
(f) Custody Agreement is incorporated by reference to Exhibit (8)(a) of
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on April 1, 1996. Forms of Sub-Custodian Agreements
are incorporated by reference to Exhibit 8(b) of Post-Effective
Amendment No. 3 to the Registration Statement, filed on December 15,
1993.
(g) Shareholder Services Plan dated August 24, 1994, as amended October
11, 1995 is incorporated by reference to Exhibit (9) of Post
Effective Amendment No. 9 to the Registration Statement, filed on
December 29, 1995.
(i) Opinion and consent of Registrant's counsel is incorporated by
reference to Exhibit (10) of Post Effective Amendment No. 19 to the
Registration Statement on Form N-1A, filed on April 1, 1996.
(j) Consent of Independent Auditors.
(p) Code of Ethics
Other Exhibits
(a) Powers of Attorney
(b) Certificate of Secretary
Item 24. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 25. Indemnification
_______ _______________
Reference is made to Article VIII of the Registrant's Articles of
Incorporation, dated August 7, 1991, as amended on October 19, 1994,
filed as Exhibit (1) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A, filed on April 1, 1996. The
application of these provisions is limited by Article VIII of the
Registrant's By-Laws incorporated by reference to Exhibit (2) of
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A, filed on April 29, 1996, and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act
and is, therefore, unenforceable. In the event that a claim for
indemnification is against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any such action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in such Act and will be governed by the final
adjudication of such issue.
Reference is also made to the Distribution Agreement, as amended.
Item 26. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser, manager and distributor for sponsored investment
companies registered under the Investment Company Act of 1940 and as
an investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves primarily
as a registered broker-dealer of shares of investment companies
sponsored by Dreyfus and of other investment companies for which
Dreyfus acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Investment Advisors, Inc., another
wholly-owned subsidiary, provides investment management services to
various pension plans, institutions and individuals.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
----------------------------------------------------------------------------------
Officers and Directors of Investment Adviser
Name and Position
With Dreyfus Other Businesses Position Held Dates
CHRISTOPHER M. CONDRON Franklin Portfolio Associates, Director 1/97 - Present
Chairman of the Board and LLC*
Chief Executive Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 - Present
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc.* Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Financial Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
Founders Asset Management, Chairman 12/97 - Present
LLC**** Director 12/97 - Present
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Executive Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 - Present
Company*
The Boston Company Financial President 6/89 - 1/97
Strategies, Inc. * Director 6/89 - 1/97
MANDELL L. BERMAN Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Corporation+ Director 6/91 - Present
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN E. CANTER Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, Director 2/99 - Present
LLC*
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Founders Asset Management, Member, Board of 12/97 - Present
LLC**** Managers
Acting Chief Executive 7/98 - 12/98
Officer
The Dreyfus Trust Company+++ Director 6/95 - Present
Chairman 1/99 - Present
President 1/99 - Present
Chief Executive Officer 1/99 - Present
THOMAS F. EGGERS Dreyfus Service Corporation++ Chief Executive Officer 3/00 - Present
Vice Chairman - Institutional and Chairman of the
and Director Board
Executive Vice President 4/96 - 3/00
Director 9/96 - Present
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Advisors, Inc. Director 1/00 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 3/99 - Present
Massachusetts, Inc. +++
Dreyfus Brokerage Services, Inc. Director 11/97 - 6/98
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Financial Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Executive Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Services, Inc. Chairman 11/97 - 2/99
401 North Maple Ave. Chief Executive Officer 11/97 - 2/98
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.+++ Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Inc. ++ Director 1/97 - 4/99
Dreyfus Insurance Agency of Chairman 5/97 - 3/99
Massachusetts, Inc.++++ President 5/97 - 3/99
Director 5/97 - 3/99
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - 6/99
Corporation++ President 5/97 - 6/99
Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Advisors, Chairman 12/95 - 1/99
Inc. Chief Executive Officer 12/95 - 1/99
Wilmington, DE President 12/95 - 1/99
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Laurel Capital Advisors, Inc. + Trustee 12/91 - 1/98
Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
Boston Safe Deposit and Trust Director 6/93 - 1/99
Company+ Executive Vice President 6/93 - 4/98
MARTIN G. MCGUINN Mellon Financial Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
J. DAVID OFFICER Dreyfus Service Corporation++ President 3/00 - Present
Vice Chairman Executive Vice President 5/98 - 3/00
and Director Director 3/99 - Present
Dreyfus Service Organization, Director 3/99 - Present
Inc.++
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Dreyfus Brokerage Services, Inc. Chairman 3/99 - Present
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp. + Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - 6/99
Services, Inc.* Director 8/96 - 6/99
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp. + Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
RICHARD W. SABO Founders Asset Management, President 12/98 - Present
Director LLC**** Chief Executive Officer 12/98 - Present
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive Officer 6/99 - Present
Waltham, MA 02454-9046
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive Officer 4/94 - 6/99
New York, NY 10006
RONALD P. O'HANLEY Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
Franklin Portfolio Associates, Director 3/97 - Present
LLC*
Boston Safe Deposit and Trust Executive Committee 1/99 - Present
Company* Member
Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management LTD Executive Committee 10/98 - Present
(UK) Member
London, England Director 10/98 - Present
Mellon Asset Management Non-Resident Director 11/98 - Present
(Japan) Co., LTD
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 2/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates, LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon Equity Associates, LLP+ Trustee 1/98 - Present
Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
STEPHEN R. BYERS Dreyfus Service Corporation++ Senior Vice President 3/00 - Present
Director of Investments and
Senior Vice President
Gruntal & Co., LLC Executive Vice President 5/97 - 11/99
New York, NY Partner 5/97 - 11/99
Executive Committee 5/97 - 11/99
Member
Board of Directors 5/97 - 11/99
Member
Treasurer 5/97 - 11/99
Chief Financial Officer 5/97 - 6/99
PATRICE M. KOZLOWSKI None
Senior Vice President - Corporate
Communications
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Company+++ Chief Financial Officer 3/99 - Present
Controller Treasurer 9/98 - Present
Director 3/97 - Present
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Director 8/00 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 - Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc. +++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp. ++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant Treasurer 3/93 - 3/99
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
WILLIAM T. SANDALLS, JR. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - 8/00
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97 - 12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company +++ Director 1/96 - Present
Dreyfus Service Organization, Treasurer 10/96 - 3/99
Inc.++
Dreyfus Insurance Agency of Director 5/97 - 3/99
Massachusetts, Inc.++++ Treasurer 5/97 - 3/99
Executive Vice President 5/97 - 3/99
DIANE P. DURNIN Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and Advertising
Development Division
MARY BETH LEIBIG None
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
The Dreyfus Consumer Credit Chairman 6/99 - Present
Corporation ++ President 6/99 - Present
Dreyfus Investment Advisors, Vice President - Tax 10/96 - Present
Inc.++
Dreyfus Precious Metals, Inc. +++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Vice President - Tax 10/96 - Present
Inc.++
WENDY STRUTT None
Vice President
RAYMOND J. VAN COTT Mellon Financial Corporation+ Vice President 7/98 - Present
Vice President -
Information Systems
Computer Sciences Corporation Vice President 1/96 - 7/98
El Segundo, CA
JAMES BITETTO The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109.
</TABLE>
Item 27. Principal Underwriters
-------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC U.S. Government Money Market Fund
7) Dreyfus California Intermediate Municipal Bond Fund
8) Dreyfus California Tax Exempt Bond Fund, Inc.
9) Dreyfus California Tax Exempt Money Market Fund
10) Dreyfus Cash Management
11) Dreyfus Cash Management Plus, Inc.
12) Dreyfus Connecticut Intermediate Municipal Bond Fund
13) Dreyfus Connecticut Municipal Money Market Fund, Inc.
14) Dreyfus Florida Intermediate Municipal Bond Fund
15) Dreyfus Florida Municipal Money Market Fund
16) Dreyfus Founders Funds, Inc.
17) The Dreyfus Fund Incorporated
18) Dreyfus Global Growth Fund
19) Dreyfus GNMA Fund, Inc.
20) Dreyfus Government Cash Management Funds
21) Dreyfus Growth and Income Fund, Inc.
22) Dreyfus Growth and Value Funds, Inc.
23) Dreyfus Growth Opportunity Fund, Inc.
24) Dreyfus Debt and Equity Funds
25) Dreyfus Index Funds, Inc.
26) Dreyfus Institutional Money Market Fund
27) Dreyfus Institutional Preferred Money Market Fund
28) Dreyfus Institutional Short Term Treasury Fund
29) Dreyfus Insured Municipal Bond Fund, Inc.
30) Dreyfus Intermediate Municipal Bond Fund, Inc.
31) Dreyfus International Funds, Inc.
32) Dreyfus Investment Grade Bond Funds, Inc.
33) Dreyfus Investment Portfolios
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus U.S. Treasury Intermediate Term Fund
56) Dreyfus U.S. Treasury Long Term Fund
57) Dreyfus 100% U.S. Treasury Money Market Fund
58) Dreyfus U.S. Treasury Short Term Fund
59) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
60) Dreyfus Pennsylvania Municipal Money Market Fund
61) Dreyfus Premier California Municipal Bond Fund
62) Dreyfus Premier Equity Funds, Inc.
63) Dreyfus Premier International Funds, Inc.
64) Dreyfus Premier GNMA Fund
65) Dreyfus Premier Opportunity Funds
66) Dreyfus Premier Worldwide Growth Fund, Inc.
67) Dreyfus Premier Municipal Bond Fund
68) Dreyfus Premier New York Municipal Bond Fund
69) Dreyfus Premier State Municipal Bond Fund
70) Dreyfus Premier Value Equity Funds
71) Dreyfus Short-Intermediate Government Fund
72) Dreyfus Short-Intermediate Municipal Bond Fund
73) The Dreyfus Socially Responsible Growth Fund, Inc.
74) Dreyfus Stock Index Fund
75) Dreyfus Tax Exempt Cash Management
76) The Dreyfus Premier Third Century Fund, Inc.
77) Dreyfus Treasury Cash Management
78) Dreyfus Treasury Prime Cash Management
79) Dreyfus Variable Investment Fund
80) Dreyfus Worldwide Dollar Money Market Fund, Inc.
81) General California Municipal Bond Fund, Inc.
82) General California Municipal Money Market Fund
83) General Government Securities Money Market Funds, Inc.
84) General Money Market Fund, Inc.
85) General Municipal Bond Fund, Inc.
86) General Municipal Money Market Funds, Inc.
87) General New York Municipal Bond Fund, Inc.
88) General New York Municipal Money Market Fund
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
Positions and
Name and principal offices with
business address Positions and offices with the Distributor Registrant
---------------- ------------------------------------------ ----------
Thomas F. Eggers * Chief Executive Officer and Chairman of the Board None
J. David Officer * President and Director None
Stephen Burke * Executive Vice President None
Charles Cardona * Executive Vice President and Director None
Anthony DeVivio ** Executive Vice President and Director None
Michael Millard ** Executive Vice President and Director None
David K. Mossman ** Executive Vice President and Director None
Jeffrey N. Nachman *** Executive Vice President and Chief Operations Officer None
William T. Sandalls, Jr. * Executive Vice President None
William H. Maresca * Chief Financial Officer and Director None
James Book ** Senior Vice President None
Ken Bradle ** Senior Vice President None
Stephen R. Byers * Senior Vice President None
Joseph Connolly * Senior Vice President Vice President
and Treasurer
Joseph Eck + Senior Vice President None
William Glenn * Senior Vice President None
Bradley Skapyak * Senior Vice President None
Jane Knight * Chief Legal Officer and Secretary None
Stephen Storen * Chief Compliance Officer None
Jeffrey Cannizzaro * Vice President - Compliance None
John Geli ** Vice President None
Maria Georgopoulos * Vice President - Facilities Management None
William Germenis * Vice President - Compliance None
Walter T. Harris * Vice President None
Janice Hayles * Vice President None
Hal Marshall * Vice President - Compliance None
Paul Molloy * Vice President None
B.J. Ralston ** Vice President None
Theodore A. Schachar * Vice President - Tax None
James Windels * Vice President Assistant
Treasurer
James Bitetto * Assistant Secretary None
Ronald Jamison * Assistant Secretary None
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY 11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills, CA 90210.
**** Principal business address is One Mellon Bank Center, Pittsburgh, PA 15258
+ Principal business address is One Boston Place, Boston, MA 02108
</TABLE>
Item 28. Location of Accounts and Records
------- --------------------------------
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
Providence, Rhode Island 02940-9671
2. Bank of New York
100 Church Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
------- -------------------
Not Applicable
Item 30. Undertakings
------- ------------
For each Portfolio, The Dreyfus Corporation has undertaken, until
such time as they give shareholders at least 90 days' notice to
the contrary, if the aggregate expenses of the Portfolio,
exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, but including the management fee, exceed
.45 of 1% of the value of the Portfolio's average daily net
assets, the Portfolio may deduct from the payment to be made to
Dreyfus under the Management Agreement, or Dreyfus will bear,
such excess expense.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, and
State of New York on the 28th day of December, 2000.
DREYFUS BASIC MUNICIPAL FUND, INC.
BY: /s/Stephen E. Canter*
-------------------------------------
STEPHEN E. CANTER, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
/s/Stephen E. Canter* President and Treasurer 12/28/00
____________________________ (Principal Executive, Financial
Stephen E. Canter and Accounting Officer)
/s/Joseph Connolly* Vice President and Assistant 12/28/00
____________________________ Treasurer (Principal
Joseph Connolly Accounting Officer)
/s/David Burke* Director 12/28/00
----------------------------
David Burke
/s/Samuel Chase* Director 12/28/00
----------------------------
Samuel Chase
/s/Gordon J. Davis* Director 12/28/00
----------------------------
Gordon J. Davis
/s/Joseph S. DiMartino* Director 12/28/00
----------------------------
Joseph S. DiMartino
/s/Joni Evans* Director 12/28/00
----------------------------
Joni Evans
/s/Arnold S. Hiatt* Director 12/28/00
----------------------------
Arnold S. Hiatt
/s/Burton Wallack* Director 12/28/00
----------------------------
Burton Wallack
*BY: /s/John B. Hammalian
--------------------------
John B. Hammalian,
Attorney-in-Fact
INDEX OF EXHIBITS
Exhibit No.
23(b) Amended By Laws
23(e) Distribution Agreement
23(j) Consent of Ernst & Young LLP
23(p) Code of Ethics
Other Exhibits
(a) Powers of Attorney
(b) Certificate of Secretary
