DREYFUS BASIC MONEY MARKET FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus BASIC Money
Market Fund, Inc. For its annual reporting period ended February 29, 1996,
your Fund provided an annualized yield of 5.82%. Income dividends of
approximately $.058 per share were paid to shareholders. Assuming
reinvestment of dividends and accounting for the effect of compounding, the
Fund achieved an annualized effective yield of 5.97%.*
THE ECONOMY
In the past year until very recently, interest rates and economic
activity have steadily declined. On January 31, 1996 the Federal Reserve
Board in its most recent move lowered the Federal Funds rate from 5.50% to
5.25%, which prompted banks to lower the prime rate from 8.50% to 8.25%. The
Federal Reserve also reduced the discount rate from 5.25% to 5.00%. The
reduction in interest rates was a continuation of an easing in monetary
policy that has prevailed since last July.
In the past month it has become apparent that the reduction in interest
rates has affected the pace of economic expansion. Recent evidence has shown
that economic growth is in a possible turnaround. For much of the period, the
Federal Reserve kept a cautious eye on price trends, concerned that undue
monetary stimulus would rekindle inflationary pressures. So far, inflation
has continued at a subdued pace, with the major price indices under control.
Federal Reserve Chairman Alan Greenspan's recent comments regarding the
state of the economy described it as "on track for sustained growth." While
some segments of the economy are still in a "soft patch," signs have emerged
showing improved performance. According to the data used for the March
Federal Reserve Policy meeting, increased activity in the real estate sector
was evident. Retail sales accelerated in the Northeast (the weather having
hindered performance during the previous month). Tight labor markets were
observed in several districts, and a large increase in the employment number
for the month of February revealed strength in the job sector.
MARKET ENVIRONMENT/PORTFOLIO ACTIVITY
The primary focus of the market has been on the Federal Reserve policy
and its possible implications for the direction of interest rates in 1996. As
hopes for further Federal Reserve rate cuts abate, short-term interest rates
have edged slightly higher. While the trend in rates is not on a decided
incline, we believe sustained increases in rates might have a favorable
effect on the U.S. Dollar and on the yield of short-term money market and
government securities. In addition, Washington's ability to deal with budget
deficits remains an important market concern.
For much of the past year, while the fundamental backdrop of a moderate
economic expansion was the norm, portfolio activity for your Fund centered on
extending the average maturity. As always, we intend to take full advantage
of the current environment through discerning important market information,
opportunities in timing, and value.
It is a pleasure to serve you in this way and we look forward to
continued opportunities to assist with your investment program.
We thank you for your continued investment in the Dreyfus BASIC Money
Market Fund, Inc. and in The Dreyfus Corporation.
Very truly yours,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
March 15, 1996
New York, N.Y.
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 29, 1996
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT-26.2% AMOUNT VALUE
________ ________
<S> <C> <C>
Bank of Tokyo Ltd. (London)
5.31%-5.80%, 3/8/96-5/7/96.............................................. $ 38,000,000 $ 37,999,692
Bank of Tokyo Ltd. (Yankee)
5.22%, 8/26/96.......................................................... 7,000,000 7,000,000
Bayerische Vereinsbank AG (Yankee)
5.38%, 1/29/97-2/24/97.................................................. 65,000,000 65,000,000
Berliner Handels-und Frankforter Bank (Yankee)
5.57%, 2/5/97........................................................... 50,000,000 50,000,000
Dai-Ichi Kangyo Bank Ltd. (London)
5.30%-5.33%, 4/9/96-5/8/96.............................................. 15,000,000 15,000,860
Dai-Ichi Kangyo Bank Ltd. (Yankee)
5.49%-5.60%, 4/17/96-4/29/96............................................ 75,000,000 75,004,134
Mitsubishi Bank Ltd. (London)
5.52%, 4/23/96.......................................................... 30,000,000 30,000,580
Mitsubishi Bank Ltd. (Yankee)
5.83%, 3/6/96........................................................... 20,000,000 20,000,039
Sanwa Bank Ltd. (London)
5.85%, 3/5/96........................................................... 35,000,000 35,000,073
Sanwa Bank Ltd. (Yankee)
5.30%-5.61%, 4/4/96-4/29/96............................................. 65,000,000 65,002,548
Sumitomo Bank Ltd. (London)
5.28%, 5/2/96........................................................... 15,000,000 15,001,528
Sumitomo Bank Ltd. (Yankee)
5.30%-5.70%, 4/2/96-5/7/96.............................................. 85,000,000 85,004,421
SwedBank (Yankee)
5.27%, 7/31/96.......................................................... 50,000,000 50,000,000
_______
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $550,013,875)..................................................... $ 550,013,875
=======
BANKERS' ACCEPTANCE-.4%
Bank of Tokyo Ltd. (Yankee)
5.80%, 3/18/96
(cost $9,972,942)....................................................... $ 10,000,000 $ 9,972,942
=======
COMMERCIAL PAPER-12.9%
Bankers Trust New York Corp.
5.42%-5.81%, 3/15/96-7/8/96............................................. $ 49,000,000 $ 48,474,808
Chrysler Financial Corp.
5.28%, 4/29/96.......................................................... 25,000,000 24,786,125
General Motors Acceptance Corp.
5.57%-5.76%, 3/15/96-3/20/96............................................ 75,000,000 74,797,334
Lehman Brothers Holdings Inc.
5.32%, 4/8/96........................................................... 15,000,000 14,916,558
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
________ ________
Merrill Lynch & Co. Inc.
5.18%-5.57%, 3/29/96-7/29/96............................................ $ 40,000,000 $ 39,409,908
Spintab AB
5.42%-5.90%, 4/11/96-4/19/96............................................ 68,786,000 68,308,802
_______
TOTAL COMMERCIAL PAPER (cost $270,693,535).................................. $ 270,693,535
=======
CORPORATE NOTES-17.4%
Bear Stearns Companies Inc.
5.40%-5.56%, 6/10/96-11/18/96 (a)....................................... $ 75,000,000 $ 75,000,000
Comerica Bank
5.40%, 7/26/96 (a)...................................................... 30,000,000 29,999,644
General Electric Capital Corp.
5.40%-5.53%, 3/29/96-5/15/96 (a)........................................ 80,000,000 79,997,947
Lehman Brothers Holdings Inc.
5.50%-5.70%, 5/16/96-1/6/97 (a)......................................... 75,000,000 75,000,000
Merrill Lynch & Co. Inc.
5.38%-5.60%, 4/22/96-2/13/97 (a)........................................ 55,000,000 54,997,317
PHH Corp.
5.45%, 6/27/96 (a)...................................................... 50,000,000 49,995,346
_______
TOTAL CORPORATE NOTES (cost $364,990,254)................................... $ 364,990,254
=======
PROMISSORY NOTES-4.6%
Goldman Sachs Group L.P.
5.17%-5.88%, 3/11/96-9/25/96 (b,c)
(cost $96,000,000)...................................................... $ 96,000,000 $ 96,000,000
=======
SHORT-TERM BANK NOTES-16.7%
Banc One Milwaukee
5.37%, 2/6/97 (a)....................................................... $ 48,000,000 $ 47,982,674
Bank of America NT & SA
5.08%, 1/24/97.......................................................... 50,000,000 50,010,852
Bank of New York Co. Inc.
5.51%, 6/13/96.......................................................... 25,000,000 25,000,000
Comerica Bank
5.36%, 2/14/97 (a)...................................................... 50,000,000 49,967,281
First National Bank of Boston
5.81%, 6/5/96........................................................... 10,000,000 10,000,000
First National Bank of Boston
5.47%-5.48%, 5/10/96-6/21/96 (a)........................................ 88,500,000 88,499,753
NBD Bank, NA
6.42%, 4/26/96.......................................................... 25,000,000 25,000,000
Society National Bank
6.48%, 4/25/96.......................................................... 23,500,000 23,497,316
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996
PRINCIPAL
SHORT-TERM BANK NOTES (CONTINUED) AMOUNT VALUE
________ ________
Society National Bank
5.37%, 2/14/97 (a)...................................................... $ 30,000,000 $ 29,966,086
_______
TOTAL SHORT-TERM BANK NOTES
(cost $349,923,962)..................................................... $ 349,923,962
=======
U.S. GOVERNMENT AGENCIES-20.5%
Federal Farm Credit Banks
Floating Rate Notes
5.34%, 11/25/96 (a)..................................................... $ 50,000,000 $49,975,465
Federal Home Loan Banks
Floating Rate Notes
5.83%, 1/31/97 (a)...................................................... 5,000,000 5,000,000
Federal National Mortgage Association
Floating Rate Notes
5.34%-5.85%, 6/20/96-1/21/98 (a)........................................ 375,000,000 374,824,572
_______
TOTAL U.S. GOVERNMENT AGENCIES (cost $429,800,037).......................... $ 429,800,037
=======
TIME DEPOSITS-.3%
Berliner Handels-und Frankforter Bank (Grand Cayman)
5.50%, 3/1/96
(cost $6,334,000)....................................................... $ 6,334,000 $ 6,334,000
=======
TOTAL INVESTMENTS (cost $2,077,728,605)............................. 99.0% $2,077,728,605
===== =======
CASH AND RECEIVABLES (NET).......................................... 1.0% $ 20,563,759
===== =======
NET ASSETS.......................................................... 100.0% $2,098,292,364
===== =======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Variable interest rate - subject to periodic change.
(b) Securities restricted as to public resale. These securities were
acquired from 9/11/95 to 2/12/96 at a cost of par value. At February 29,
1996, the aggregate value of these securities is $96 million,
representing approximately 4.6% of net assets and are valued at amortized
cost.
(c) These notes were acquired for investment, not with the intent to
distribute or sell.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $2,077,728,605
Cash.................................................................... 5,731,001
Interest receivable..................................................... 15,490,133
Prepaid expenses........................................................ 201,636
_______
2,099,151,375
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 383,154
Accrued expenses and other liabilities.................................. 475,857 859,011
______ _______
NET ASSETS.................................................................. $2,098,292,364
=======
REPRESENTED BY:
Paid-in capital......................................................... $2,098,639,684
Accumulated net realized (loss) on investments.......................... (347,320)
_______
NET ASSETS at value applicable to 2,098,639,684 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $2,098,292,364
=======
NET ASSET VALUE, offering and redemption price per share
($2,098,292,364 / 2,098,639,684 shares)................................. $1.00
===
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 29, 1996
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 119,514,902
EXPENSES:
Management fee-Note 2(a).............................................. $ 9,747,085
Shareholder servicing costs-Note 2(b)................................. 1,705,883
Registration fees..................................................... 270,779
Custodian fees........................................................ 155,908
Professional fees..................................................... 68,720
Prospectus and shareholders' reports.................................. 47,842
Directors' fees and expenses-Note 2(c)................................ 29,792
______
TOTAL EXPENSES.................................................. 12,026,009
Less-reduction in management fee due
to undertakings-Note 2(a)......................................... 5,960,272
______
NET EXPENSES.................................................... 6,065,737
_______
INVESTMENT INCOME-NET....................................................... 113,449,165
NET REALIZED (LOSS) ON INVESTMENTS-Note 1(b)................................ (131,085)
_______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 113,318,080
=======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED
______________________________________
FEBRUARY 28, FEBRUARY 29,
1995 1996
_________ _________
<S> <C> <C>
OPERATIONS:
Investment income-net............................................... $ 76,813,860 $ 113,449,165
Net realized (loss) on investments.................................. (126,050) (131,085)
________ _______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 76,687,810 113,318,080
________ _______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net............................................... (76,813,860) (113,449,165)
________ _______
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold....................................... 2,588,359,537 2,618,953,833
Dividends reinvested................................................ 71,571,677 106,821,314
Cost of shares redeemed............................................. (2,253,594,949) (2,250,593,463)
________ _______
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............ 406,336,265 475,181,684
________ _______
TOTAL INCREASE IN NET ASSETS.................................. 406,210,215 475,050,599
NET ASSETS:
Beginning of year................................................... 1,217,031,550 1,623,241,765
________ _______
End of year......................................................... $ 1,623,241,765 $ 2,098,292,364
======== =======
</TABLE>
See notes to financial statements.
DREYFUS BASIC MONEY MARKET FUND, INC.
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 year indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FEBRUARY,
________________________________________________
PER SHARE DATA: 1993(1) 1994 1995 1996
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net asset value, beginning of year....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
____ ____ ____ ____
INVESTMENT OPERATIONS;
Investment income-net.................................... .032 .033 .046 .058
____ ____ ____ ____
DISTRIBUTIONS;
Dividends from investment income-net..................... (.032) (.033) (.046) (.058)
____ ____ ____ ____
Net asset value, end of year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
==== ==== ==== ====
TOTAL INVESTMENT RETURN...................................... 3.80%(2) 3.40% 4.73% 5.97%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. . .10% .18% .31%
Ratio of net investment income to average net assets..... 3.66%(2) 3.33% 4.70% 5.82%
Decrease reflected in above expense ratios due to undertakings
by the Manager......................................... .71%(2) .55% .46% .31%
Net Assets, end of year (000's Omitted)................. $734,349 $1,217,032 $1,623,242 $2,098,292
(1) From April 24, 1992 (commencement of operations) to February 28, 1993.
(2) Annualized.
</TABLE>
See notes to financial statements.
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC Money Market Fund, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company. The Fund's investment objective is to provide
investors with as high a level of current income as is consistent with the
preservation of capital and the 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. (the "Distributor") acts as the distributor of the Fund's shares, which
are sold to the public without a sales charge.
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 of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund'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. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
(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, 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, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $273,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 29, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through February 29, 1996, which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, $90,000 of the carryover
expires in fiscal 2002, $126,000 expires in fiscal 2003 and $57,000 expires
in fiscal 2004.
At February 29, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (exclusive of certain
expenses as described above) exceed 2 1\2% of the first $30 million, 2% of the
next $70 million and 1 1\2% of the excess over $100 million of the average
value of the Fund's net assets in accordance with California "blue sky"
regulations. However, the Manager had undertaken from March 1, 1995 through
January 4, 1996 to waive receipt of the management fee payable to it by the
Fund, to the extent that the Fund's aggregate expenses (exclusive of certain
expenses as described above) exceed specified annual percentages of the
Fund's average daily net assets. The Manager has currently undertaken from
January 5, 1996 through June 30, 1996, to reduce the management fee paid by
the Fund, to the extent that the Fund's aggregate annual expenses (exclusive
of certain expenses as described above) exceed an annual rate of .45 of 1% of
the average daily value of the Fund's net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $5,960,272 for the year ended
February 29, 1996.
The Manager may modify the existing undertaking provided that the Fund's
shareholders are given 90 days prior notice.
Effective December 1, 1995, 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 $55,321 for the period from
December 1, 1995 through February 29, 1996.
(B) Pursuant to the Fund's 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 year ended February 29, 1996, the Fund was charged an aggregate of
$1,276,493 pursuant to the Shareholder Services Plan.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS BASIC MONEY MARKET FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS BASIC MONEY MARKET FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus BASIC Money Market Fund, Inc., including the statement of
investments, as of February 29, 1996, 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. Our procedures included confirmation of
securities owned as of February 29, 1996 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 Money Market Fund, Inc. at February 29, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
March 29, 1996
[Dreyfus lion "d" logo]
DREYFUS BASIC
MONEY MARKET FUND, INC.
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.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 123AR962
[Dreyfus logo]
BASIC
Money Market
Fund, Inc.
Annual Report
February 29, 1996
