Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus BASIC New Jersey
Municipal Money Market Portfolio for its annual reporting period ended August
31, 1997. Your Fund produced a yield of 3.12% and, after taking into account the
effect of compounding, the effective yield was 3.17%.*
THE ECONOMY
A surprisingly robust 3.6% economic growth rate was reported in the recently
revised Gross Domestic Product (GDP), far higher than the 2.2% rate estimated
earlier. This strength continued into the summer as the index of leading
economic indicators rose solidly in July, along with retail spending,
construction spending, and real merchandise exports, which advanced at a
resounding 24% pace over last year. Consumer confidence was up, too, climbing to
129.1 in August from 126.3 in July, nearly reaching the 28-year high seen in
June. That confidence was reflected in higher consumer spending, which rebounded
from an anemic 0.8% during the second quarter to an ebullient 3.5% clip over the
summer months.
Amid all this positive economic news, inflation still appears to be in
abeyance. However, there are hints of a turn: higher energy prices, a tighter
labor market and the potentially inflationary effect of the UPS strike
settlement. Market volatility shows that investors are sensitive to inflationary
pressures, although the Federal Reserve Board's Open Market Committee (FOMC) has
not raised the Federal Funds target rate since March. On the positive side, the
Asian currency crisis could blunt incipient U.S. inflation pressures by hurting
exports to the region and exporters' earnings, thereby muting any potential rise
in U.S. interest rates. Over recent months, interest rates in the money markets
have remained virtually unchanged for securities with maturities of three months
and under, while yields on maturities between nine months and one year have
trended up slightly in anticipation of a Fed interest-rate hike.
MARKET ENVIRONMENT/PORTFOLIO
Each year, as summer approaches, the short-term municipal market experiences
volatility that is reflective of the changing patterns of supply and demand
conditions during the period. These market "technicals" require adjustments to
portfolio strategy in anticipation of conditions such as an increase in
available securities due to fund redemptions (April tax season), a dearth of
supply of high quality issues (end of June maturities), and substantial new
money market issuance (mid-July financings). Our portfolio adjustments have
attempted to structure the Portfolio in such a way as to take advantage of these
changing conditions in an effort to enhance the Portfolio's yield while
maintaining our commitment to high quality holdings.
In response to the changes we anticipated in both cash flow and supply
conditions, we began preparations in early June for extending the average
maturities for the Portfolio. By creating a calendar of upcoming New
Jersey-exempt new issues and by subjecting each new issue to rigorous in-house
credit review, we were positioned to take advantage of those notes which we
believed would be attractive holdings for the Portfolio. Initially, the lack of
supply of suitable New Jersey paper restrained the maturity extension to some
degree. However, where possible, we committed to high quality issues that
lengthened the Portfolio's average maturity to approach the 50-day range. We
expect to continue to purchase notes selectively in the coming months in seeking
to maximize the Portfolio's yield. As we endeavor to accomplish this, we will
continue to commit to those issues which meet our high quality investment
guidelines and which provide the appropriate level of liquidity for the
Portfolio's needs. Additionally, we will monitor any conditions which affect our
marketplace and adjust our investment policy where necessary to pursue
competitive returns.
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Included in this report is a series of detailed statements about the
Portfolio's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the
Portfolio and in The Dreyfus Corporation.
Very truly yours,
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
September 17, 1997
New York, N.Y.
*Effective yield is based upon dividends declared daily and reinvested monthly.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Statement of Investments August 31, 1997
Principal
Tax Exempt Investments--100.0% Amount Value
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<S> <C> <C>
New Jersey--95.3%
Atlantic County Improvement Authority, Revenue, VRDN (Pooled Government Loan Program)
3% (LOC; Kredietbank) (a,b)............................................... $ 4,000,000 $ 4,000,000
Burlington County, BAN:
4.25%, 4/23/98............................................................ 2,000,000 2,004,307
4.40%, Series C, 6/12/98.................................................. 3,800,000 3,818,501
East Brunswick Township, BAN 3.75%, 1/2/98................................... 3,821,500 3,825,232
Essex County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program)
2.90% (LOC; Banco Santander) (a,b)........................................ 4,600,000 4,600,000
Florence Township, BAN 4%, 2/13/98........................................... 5,000,000 5,005,440
Hudson County Improvement Authority, VRDN (Essential Purpose Pooled Government)
3.25% (LOC: Comerica Bank and Fuji Bank) (a,b)............................ 4,700,000 4,700,000
Monmouth County Improvement Authority, Revenue, VRDN
(Pooled Government Loan Program)
3% (LOC; Union Bank of Switzerland) (a,b)................................. 5,000,000 5,000,000
Morristown, BAN 4.50%, 5/6/98................................................ 1,500,000 1,504,875
State of New Jersey, GO Notes 5%, Series E, 7/15/98.......................... 3,055,000 3,083,822
New Jersey Economic Development Authority:
Thermal Energy Facilities, Revenue (Thermal Energy Limited Partnership)
3.85%, 11/13/97 (Escrowed in; U.S. Treasury Bills)...................... 3,000,000 3,000,000
VRDN:
Dock Facility Revenue, Refunding (Bayonne/ IMTT Project)
3.35%, Series A (LOC; ABN-Amro Bank) (a,b)............................ 2,000,000 2,000,000
EDR, Refunding (Dow Chemical-El Dorado Terminal)
3%, Series 1984A (LOC; Dow Chemical Co.) (a,b)........................ 7,000,000 7,000,000
Industrial and EDR (Merck and Co.)
3.60%, Series A and B (a)............................................. 1,700,000 1,700,000
Natural Gas Facilities, Revenue (NUI Corp. Project)
3.20%, Series A (LOC; The Bank of New York and Insured; AMBAC) (a,b).. 5,000,000 5,000,000
Revenue (First Mortgage-Cranes Mill Project)
2.80%, Series C (LOC; Bank of Ireland) (a,b).......................... 3,500,000 3,500,000
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Statement of Investments August 31, 1997
Principal
Tax Exempt Investments--100.0% Amount Value
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<S> <C> <C>
New Jersey Health Care Facilities Financing Authority, Revenue, VRDN
(Hospital Capital Asset Financing):
3.15%, Series A (LOC; Chase Manhattan Bank) (a,b)....................... $ 5,500,000 $ 5,500,000
3.15%, Series D (LOC; Chase Manhattan Bank) (a,b)....................... 6,000,000 6,000,000
New Jersey Sports and Exposition Authority, VRDN (State Contract)
3.15%, Series C (Insured; MBIA and Liquidity; Barclays Bank) (a).......... 10,145,000 10,145,000
New Jersey Turnpike Authority, Turnpike Revenue, Refunding, VRDN
2.65%, Series D (Insured; FGIC and SBPA; Societe Generale) (a)............ 1,900,000 1,900,000
Passaic County, BAN 4.50%, 9/26/97........................................... 1,805,000 1,805,629
Passaic County Utilities Authority, Notes (Solid Waste Systems Revenue Project)
3.95%, Series B, 9/3/97 (Insured; MBIA)................................... 1,250,000 1,250,000
Port Authority of New York and New Jersey, Special Obligation Revenue, VRDN
(Versatile Structure Obligation):
3.60%, Series 3 (BPA; Morgan Guaranty Trust Co.) (a).................... 6,700,000 6,700,000
3.60%, Series 5 (Liquidity; Bayerische Landesbank) (a).................. 15,500,000 15,500,000
3.70%, Series 4 (LOC; Landesbank Hessen) (a,b).......................... 8,300,000 8,300,000
Salem County Pollution Control Financing Authority, PCR, Refunding, VRDN
(Public Service Electric and Gas)
3.25% (BPA; Swiss Bank Corp. and Insured; MBIA) (a)....................... 6,500,000 6,500,000
Woodbridge Township, BAN 4.25%, 7/1/98....................................... 5,000,000 5,017,980
U.S. Related--4.7%
Commonwealth of Puerto Rico Government Development Bank, Refunding, VRDN
2.90% (LOC; Credit Suisse) (a,b).......................................... 2,800,000 2,800,000
Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities Financing Authority, Revenue
3.80%, 9/1/97 (LOC; ABN-Amro Bank) (b).................................... 3,500,000 3,500,000
------------
TOTAL INVESTMENTS (cost $134,660,786)........................................ $134,660,786
============
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Summary of Abbreviations
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<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
BAN Bond Anticipation Notes MBIA Municipal Bond Investors Assurance
BPA Bond Purchase Agreement Insurance Corporation
EDR Economic Development Revenue PCR Pollution ControlRevenue
FGIC Financial Guaranty Insurance Company SBPA Standby Bond Purchase Agreement
GO General Obligation VRDN Variable Rate Demand Notes
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Summary of Combined Ratings (Unaudited)
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<S> <C> <C> <C> <C> <C>
Fitch (c) or Moody's or Standard & Poor's Percentage of Value
- ------ -------- ---------------- ------------------
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 82.1%
AAA/AA (d) Aaa/Aa (d) AAA/AA (d) 2.3
Not Rated (e) Not Rated (e) Not Rated (e) 15.6
------
100.0%
======
<FN>
Notes to Statement of Investments:
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(a) Securities payable on demand. The interest rate, which is subject to change,
is based upon bank prime rates or an index of market interest rates.
(b) Secured by letters of credit. At August 31, 1997, 45.3% of the Fund's net
assets are backed by letters of credit issued by domestic banks, foreign
banks and corporations.
(c) Fitch currently provides creditworthiness information for a limited number
of investments.
(d) Notes which are not MIG, SP or F rated are represented by bond ratings of
the issuers.
(e) Securities which, while not rated by Fitch, Moody's and Standard & Poor's
have been determined by the Manager to be of comparable quality to those
rated securities in which the Fund may invest.
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See notes to financial statements.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Statement of Assets and Liabilities August 31, 1997
Cost Value
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<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $134,660,786 $134,660,786
Cash............................................. 975,507
Interest receivable.............................. 986,138
Prepaid expenses and other assets................ 10,687
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136,633,118
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LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 25,776
Accrued expenses................................. 53,958
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79,734
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NET ASSETS at value, represented by paid-in capital............................ $136,553,384
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SHARES OUTSTANDING
(1 billion shares of $.001 par value Common Stock authorized).................. 136,553,384
NET ASSET VALUE, offering and redemption price per share....................... $1.00
=====
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Statement of Operations Year Ended August 31, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income.................................. $4,230,797
EXPENSES: Management fee--Note 2(a)........................ $608,537
Shareholder servicing costs--Note 2(b)........... 88,701
Custodian fees................................... 16,641
Registration fees................................ 16,256
Professional fees................................ 16,123
Directors' fees and expenses--Note 2(c).......... 2,504
Prospectus and shareholders' reports............. 2,184
Miscellaneous.................................... 6,015
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Total Expenses.............................. 756,961
Less--reduction in management fee due to
undertaking--Note 2(a)......................... (324,583)
--------
Net Expenses................................ 432,378
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INVESTMENT INCOME--NET, representing net increase in net assets
resulting from operations................................................ $3,798,419
==========
See notes to financial statements.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Statement of Changes in Net Assets
Year Ended Year Ended
August 31, 1997 August 31, 1996*
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<S> <C> <C>
OPERATIONS:
Investment income--net................................................ $ 3,798,419 $ 1,285,661
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DIVIDENDS TO SHAREHOLDERS FROM:
Investment Income--net................................................ (3,798,419) (1,285,661)
------------ ------------
CAPITALSTOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold......................................... 111,644,558 129,477,481
Dividends reinvested.................................................. 3,698,562 1,250,908
Cost of shares redeemed............................................... (79,037,487) (30,480,638)
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Increase (Decrease) in Net Assets from Capital Stock Transactions. 36,305,633 100,247,751
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Total Increase (Decrease) in Net Assets......................... 36,305,633 100,247,751
NET ASSETS:
Beginning of Period................................................... 100,247,751 --
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End of Period......................................................... $136,553,384 $100,247,751
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* From December 1, 1995 (commencement of operations) to August 31, 1996.
See notes to financial statements.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Financial Highlights
Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
Year Ended August 31,
-------------------------
PER SHARE DATA: 1997 1996(1)
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<S> <C> <C>
Net asset value, beginning of period.................................... $1.00 $1.00
----- -----
Investment Operations:
Investment income--net.................................................. .031 .025
----- -----
Distributions:
Dividends from investment income--net................................... (.031) (.025)
----- -----
Net asset value, end of period.......................................... $1.00 $1.00
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TOTAL INVESTMENT RETURN.................................................... 3.17% 3.38%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................. .36% .06%(2)
Ratio of net investment income to average net assets.................... 3.12% 3.25%(2)
Decrease reflected in above expense ratios due to undertakings by the Manager .27% .68%(2)
Net Assets, end of period (000's Omitted)............................... $136,553 $100,248
<FN>
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(1) From December 1, 1995 (commencement of operations) to August 31, 1996.
(2) Annualized.
See notes to financial statements.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC New Jersey Municipal Money Market Portfolio (the "Fund") is a
series of Dreyfus BASIC Municipal Fund, Inc. (the "Company") which is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering four series, including the Fund. The Fund's investment objective is to
provide investors with as high a level of current income exempt from Federal and
New Jersey income tax as is consistent with the preservation of capital and
maintenance of liquidity. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. is the distributor of the Fund's shares,
which are sold to the public without a sales charge.
The Company accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
It is the Fund's policy to maintain a continuous net asset value per share
of $1.00; the Fund has adopted certain investment, portfolio valuation and
dividend and distribution policies to enable it to do so. There is no assurance,
however, that the Fund will be able to maintain a stable net asset value per
share of $1.00.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Company's Board of Directors to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Interest income, adjusted for amortization
of premiums and original issue discounts on investments, is earned from
settlement date and recognized on the accrual basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis.
Cost of investments represents amortized cost.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations held
by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, if any,
it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal Revenue
Code, and to make distributions of income and net realized capital gain
sufficient to relieve it from substantially all Federal income and excise taxes.
At August 31, 1997, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2--Management Fee and Other Transactions With Affiliates:
(A) Pursuant to a management agreement with the Manager, the management fee
is computed at the annual rate of .50 of 1% of the value of the Fund's average
daily net assets and is payable monthly. The Manager had undertaken from
September 1, 1996 through April 20, 1997, to reduce the management fee paid by
the Fund, to the extent that the Fund's aggregate annual expenses exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses, exceeded
specified annual percentages of the value of the Fund's average daily net
assets. The Manager has currently undertaken from April 21, 1997 through June
30, 1998, to reduce the management fee paid by the Fund, to the extent that the
Fund's aggregate expenses (exclusive of certain expenses as described above)
exceed an annual rate of .45 of 1% of the value of the Fund's average daily net
assets. The reduction in management fee, pursuant to the undertakings, amounted
to $324,583 during the period ended August 31, 1997.
(B) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not to
exceed an annual rate of .25 of 1% of the value of the Fund's average daily net
assets for certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the period
ended August 31, 1997, the Fund was charged an aggregate of $74,759 pursuant to
the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $7,254 during the period ended August 31, 1997.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Company an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
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Dreyfus BASIC New Jersey Municipal Money Market Portfolio
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Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Directors
Dreyfus BASIC New Jersey Municipal Money Market Portfolio
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus BASIC New Jersey Municipal
Money Market Portfolio (one of the Series constituting Dreyfus BASIC Municipal
Fund, Inc.) as of August 31, 1997, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1997 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Dreyfus BASIC New Jersey Municipal Money Market Portfolio at August 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for the two years in the period then ended, and the financial highlights
for each of the indiciated years, in conformity with generally accepted
accounting principles.
New York, New York
October 3, 1997
Important Tax Information (Unaudited)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended August
31, 1997 as "exempt-interest dividends" (not subject to regular Federal and, for
individuals who are New Jersey residents, New Jersey personal income taxes).
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BASIC New Jersey
Municipal Money
Market Portfolio
Annual Report
August 31, 1997
<PAGE>
Dreyfus BASIC New Jersey
Municipal Money Market Portfolio
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 127AR978
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