DREYFUS BASIC MONEY MARKET FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus BASIC Money Market
Fund for the six-month period ended August 31, 1997. Your Fund produced an
annualized yield of 5.25%. After taking into account the effect of
compounding, the annualized effective yield was 5.38%.*
ECONOMIC REVIEW
The economy has maintained a strong growth trend since last fall,
gradually eroding expectations for a natural slowdown "just around the
corner." Inflation has held steady, even in the face of a substantially
tighter labor market. Corporate profits have continued to surprise on the
upside. Market interest rates have held within a now long-established trading
range. In this setting, monetary policy has remained benign: the Federal
budget is close to being in balance and the Federal Reserve Board (the "Fed")
has kept policy rates unchanged since March.
Real GDP grew at above a 4% rate in the nine months from the third
quarter of 1996 to midyear. Indeed, the initial estimate of near 2% growth in
this year's second quarter was raised to 3.6%, erasing the record of even a
temporarily slow period. Virtually all major economic sectors have
contributed to the economy's growth. In turn, the economy has provided
personal income that, in the prevailing low inflation environment, has
translated into strong real purchasing power. The strength in demand has begun
to raise imports, bolstering foreign economies. Inventories have also
started to accumulate at a faster pace, although inventory levels are
currently still quite lean in relation to sales.
The labor market has tightened substantially in recent months as the pace
of new hiring has consistently exceeded the increase in the labor force.
Despite this, wage growth has been moderate while overall compensation growth
has accelerated only modestly. In their determination to hold the line on
prices, companies have resorted to unconventional hiring methods that, so
far, have avoided the need for higher wage offers.
Consensus expectations for corporate profits have been ratcheted upwards
virtually every month for the last several months. So far, positive surprises
in reported profits have justified the market's higher estimates. However,
the strength of the dollar overseas and other factors could affect future
profits.
Market interest rates have been stable since early 1996, oscillating
within a fairly narrow range. Several factors have kept rates steady: the
absence of faster inflation, positive Federal budget developments and an
accommodating Federal Reserve. Although the Fed has not changed policy rates
since March, they have held a bias towards tightening since last summer.
Therefore a move to tighten interest rates should not come as a surprise.
MONEY MARKET OVERVIEW
Short-term interest rates rose somewhat in the past six months, primarily
due to the action by the Federal Reserve raising the Fed Funds rate by a
quarter point on March 25, 1997. This was the first time in just over two
years that the central bank had raised interest rates. The Fed took its
action as a preventive measure to head off excessive demand in the economy.
Whether it was due to the Fed's intervention, or prospects for a balanced
Federal budget, or to underlying forces of supply and demand, the economy in
the past half year has continued to grow at a satisfying rate, yet without
undue upward pressure on prices or wages. Even the United Parcel Service
settlement with the Teamsters Union in midsummer did not set off an upsurge
in general labor costs.
Federal Reserve officials have let it be known that they will not
hesitate to use the interest rate weapon again, if need be. To date, however,
the conditions that would warrant such a step have not been present. Yet the
market remains wary of another boost in interest rates at a future date.
Prevailing yields have been running between ten and twenty basis points
(hundreths of 1%) above the level of six months ago. Essentially, they have
been moving in a fairly narrow range with a small upward bias.
PORTFOLIO TACTICS
In our endeavor to provide investors with the highest possible yield, our
current strategy has been to keep the average maturity of the portfolio
slightly longer than the Fund's relevant industry average.** With the economy
in a moderate "growth with subdued inflation" scenario, and Fed policy in a
"wait and see" posture, the strategy of keeping longer portfolio maturity has
benefitted the Fund. Of course, should market dynamics change, we will adjust
the portfolio strategy accordingly.
Sincerely,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
September 17, 1997
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
**As measured by the "First Tier" category average reported in the IBC's
Money Fund Report.SM
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
Principal
Negotiable Bank Certificates of Deposit-37.2% Amount Value
-------- --------
Bankers Trust Co.
<S> <C> <C>
5.68%-6.01%, 2/19/98-8/28/98 (a).......................................... $ 60,000,000 $ 59,978,098
Bank of Tokyo-Mitsubishi (Yankee)
5.60%-6.00%, 9/17/97-11/19/97............................................. 75,000,000 75,001,406
Barclays Bank PLC (Yankee)
5.67%, 2/20/98 (a)........................................................ 50,000,000 49,988,608
Bayerische Hypothenken-und Wechsel-Bank AG (London)
5.78%, 1/9/98............................................................. 25,000,000 25,002,242
Dresdner Bank AG (Yankee)
5.84%, 3/13/98............................................................ 25,000,000 25,004,346
Fuji Bank Ltd. (Yankee)
5.76%, 10/2/97............................................................ 35,000,000 35,000,000
Generale Bank (Yankee)
5.92%, 7/17/98............................................................ 15,000,000 14,997,492
Industrial Bank of Japan Ltd. (Yankee)
5.80%-5.94%, 10/1/97-11/24/97............................................. 37,000,000 37,000,000
Morgan Guaranty Trust Co.
5.51%, 9/18/97............................................................ 25,000,000 25,003,890
National Westminster Bank PLC (London)
5.53%, 10/1/97............................................................ 15,000,000 14,999,947
National Westminster Bank PLC (Yankee)
6.00%-6.08%, 5/20/98-6/26/98.............................................. 63,500,000 63,501,171
Sanwa Bank Ltd. (London)
6.00%, 10/20/97........................................................... 45,000,000 45,000,594
Societe Generale (Yankee)
5.57%-5.80%, 9/17/97-4/28/98.............................................. 60,000,000 60,000,308
Sumitomo Bank Ltd. (Yankee)
5.60%-6.02%, 9/3/97-10/31/97.............................................. 65,000,000 65,000,005
SwedBank (Yankee)
5.61%-5.65%, 10/9/97-11/14/97............................................. 65,000,000 65,000,000
Swiss Bank Corp.(Yankee)
6.00%, 6/12/98............................................................ 20,000,000 20,002,974
Westdeutsche Landesbank (London)
5.84%, 8/18/98............................................................ 15,000,000 15,010,784
--------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $695,491,865)....................................................... $ 695,491,865
============
Bankers' Acceptances-1.2%
Dai-Ichi Kangyo Bank LTD (Yankee)
5.90%-6.01%, 10/8/97-10/28/97
(cost $22,821,624)........................................................ $ 23,000,000 $ 22,821,624
========
Commercial Paper-29.0%
Abbey National North America
5.66%, 2/2/98............................................................. $ 25,000,000 $ 24,411,806
Associated Corporation of North America
5.60%, 9/2/97............................................................. 75,000,000 74,988,333
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Principal
Commercial Paper (continued) Amount Value
-------- --------
Bankers Trust New York Corp.
<S> <C> <C>
5.67%, 10/27/97........................................................... $ 25,000,000 $ 24,788,444
Bear Stearns Companies Inc.
5.53%, 9/25/97............................................................ 10,000,000 9,963,333
General Electric Capital Corp.
5.71%, 12/30/97........................................................... 20,000,000 19,630,000
General Motors Acceptance Corp.
5.61%-5.94%, 9/16/97/-11/25/97............................................ 85,000,000 84,222,549
Lehman Brothers Holdings Inc.
5.78%-6.06%, 10/3/97-3/13/98.............................................. 85,000,000 84,183,769
Merrill Lynch & Co. Inc.
5.74%-5.76%, 1/6/98-4/20/98............................................... 80,000,000 77,955,236
PHH Corp.
5.66%, 9/26/97............................................................ 18,730,000 18,657,421
Salomon Inc.
5.85%, 2/2/98............................................................. 30,000,000 29,271,067
Sanwa Business Credit Corp.
5.62%, 10/23/97........................................................... 20,000,000 19,839,956
UBS Finance (De) Inc.
5.63%, 9/2/97............................................................. 75,000,000 74,988,271
--------
TOTAL COMMERCIAL PAPER
(cost $542,900,185)....................................................... $ 542,900,185
========
Corporate Notes-8.6%
Abbey National PLC
5.60%, 11/21/97........................................................... $ 35,000,000 $ 34,992,159
Bear Stearns Companies Inc.
5.68%, 7/10/98 (a)........................................................ 25,000,000 25,000,000
General Motors Acceptance Corp.
5.72%, 10/17/97........................................................... 25,000,000 24,998,905
Heller Financial Inc.
5.80%, 4/15/98 (a)........................................................ 25,000,000 25,000,000
Salomon Inc.
5.85%, 6/1/98 (a)......................................................... 50,000,000 50,000,000
--------
TOTAL CORPORATE NOTES
(cost $159,991,064)....................................................... $ 159,991,064
========
Promissory Notes-4.3%
Goldman Sachs Group L.P.
5.81%-5.85%, 9/10/97-10/10/97 (b,c)
(cost $80,000,000)........................................................ $ 80,000,000 $ 80,000,000
========
Short-Term Bank Notes-7.6%
Bank of America Illinois
5.54%-5.58%, 9/30/97-11/19/97............................................. $ 36,900,000 $ 36,904,456
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Principal
Short-Term Bank Notes (continued) Amount Value
-------- --------
Bayerische Lanbesbank Girozentrale
<S> <C> <C>
5.64%- 8/14/98............................................................ $ 25,000,000 $ 25,058,428
Comerica Bank
5.71%, 4/17/98 (a)........................................................ 50,000,000 49,984,925
Lasalle National Bank
5.90%, 7/17/98............................................................ 30,000,000 30,000,000
--------
TOTAL SHORT-TERM BANK NOTES
(cost $141,947,809)....................................................... $ 141,947,809
========
U.S. Government Agencies-8.0%
Federal National Mortgage Association,
Floating Rate Notes
5.61%, 1/21/98 (a)
(cost $149,969,898)....................................................... $ 150,000,000 $149,969,898
========
Time Deposits-1.3%
Fleet Bank of Massachusetts (Grand Cayman)
5.50%, 9/2/97
(cost $23,579,000)........................................................ $ 23,579,000 $ 23,579,000
========
TOTAL INVESTMENTS
(cost $1,816,701,445)........................................ 97.2% $1,816,701,445
==== ========
CASH AND RECEIVABLES (NET)..................................... 2.8% $ 52,197,555
==== ========
NET ASSETS..................................................... 100.0% $1,868,899,000
==== ========
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 11/18/96-2/14/97 at a cost of par value. At August 31,
1997, the aggregate value of these securities is $80,000,000 representing
approximately 4.3% 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 AUGUST 31, 1997 (UNAUDITED)
Cost Value
--------- ---------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $1,816,701,445 $1,816,701,445
Cash....................................... 55,055,168
Interest receivable........................ 22,958,527
Prepaid expenses and other assets.......... 131,756
---------
1,894,846,896
---------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 810,835
Payable for investment securities purchased 25,000,000
Accrued expenses and other liabilities..... 137,061
---------
25,947,896
---------
NET ASSETS.................................................................. $1,868,899,000
=========
REPRESENTED BY: Paid-in capital............................ $1,868,938,831
Accumulated undistributed investment income-net 526,133
Accumulated net realized gain (loss) on investments (565,964)
---------
NET ASSETS.................................................................. $1,868,899,000
=========
SHARES OUTSTANDING
(3 BILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............... 1,868,938,831
NET ASSET VALUE, offering and redemption price per share.................... $1.00
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS AUGUST 31, 1997 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $51,462,376
EXPENSES: Management fee-Note 2(a)................... $ 4,507,809
Shareholder servicing costs-Note 2(b)...... 1,462,947
Custodian fees............................. 69,351
Registration fees.......................... 49,610
Professional fees.......................... 30,350
Prospectus and shareholders' reports....... 20,018
Directors' fees and expenses-Note 2(c)..... 12,314
Miscellaneous.............................. 752
------
Total Expenses....................... 6,153,151
Less-reduction in management fee due to
undertaking-Note 2(a).................. (2,096,123)
------
Net Expenses......................... 4,057,028
-------
INVESTMENT INCOME-NET....................................................... 47,405,348
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... (74,845)
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $47,330,503
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 1997 Year Ended
(Unaudited) February 28, 1997
--------- ----------
OPERATIONS:
<S> <C> <C>
Investment income-net................................................. $ 47,405,348 $ 98,308,888
Net realized gain (loss) on investments............................... (74,845) (143,799)
--------- ---------
Net Increase (Decrease) in Net Assets Resulting from Operations..... 47,330,503 98,165,089
--------- ---------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................. (46,879,215) (98,308,888)
--------- ---------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold......................................... 1,128,818,777 1,753,786,198
Dividends reinvested.................................................. 44,082,320 92,292,687
Cost of shares redeemed............................................... (1,098,445,430) (2,150,235,405)
--------- ---------
Increase (Decrease) in Net Assets from Capital Stock Transactions... 74,455,667 (304,156,520)
--------- ---------
Total Increase (Decrease) in Net Assets........................... 74,906,955 (304,300,319)
NET ASSETS:
Beginning of Period................................................... 1,793,992,045 2,098,292,364
--------- ---------
End of Period......................................................... $ 1,868,899,000 $ 1,793,992,045
========= =========
UNDISTRIBUTED INVESTMENT INCOME-NET..................................... $ 526,133 ----
--------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
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 period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
August 31, 1997 Fiscal Year Ended February,
----------------------------------------------------
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993(1)
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---- ---- ---- ---- ---- ----
Investment Operations:
Investment income-net................. .026 .051 .058 .046 .033 .032
---- ---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net.. (.026) (.051) (.058) (.046) (.033) (.032)
---- ---- ---- ---- ---- ----
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................... 5.24%(2) 5.19% 5.97% 4.73% 3.40% 3.80%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .45%(2) .45% .31% .18% .10% -
Ratio of net investment income to
average net assets.................. 5.26%(2) 5.08% 5.82% 4.70% 3.33% 3.66%(2)
Decrease reflected in above expense ratios due to
undertakings by the Manager......... .23%(2) .23% .31% .46% .55% .71%(2)
Net Assets, end of period (000's Omitted) $1,868,899 $1,793,992 $2,098,292 $1,623,242 $1,217,032 $734,349
(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 (UNAUDITED)
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. is 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 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 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.
On September 2, 1997, the Fund declared a cash dividend of approximately
$.0003 per share from undistributed investment income-net which includes
investment income-net for Saturday, August 30, 1997 and Sunday, August 31,
1997.
(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 $482,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 28, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through February 28, 1997, which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, $90,000 of the carryover
expires in fiscal 2002, $126,000 expires in fiscal 2003, $57,000 expires in
fiscal 2004 and $209,000 expires in fiscal 2005.
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).
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 has undertaken,
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
until such time as it gives shareholders at least 90 days' notice to the
contrary, to reduce the management fee paid by the Fund, to the extent that
the Fund's aggregate annual expenses, exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses, exceed an annual rate of .45 of 1%
of the value of the Fund's average daily net assets. The reduction in
management fee, pursuant to the undertaking, amounted to $2,096,123 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
$1,225,332 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 $128,223 during the period ended August 31, 1997.
(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.
Registration Mark
[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.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 123SA978
Registration Mark
[Dreyfus logo]
BASIC
Money Market
Fund, Inc.
Semi-Annual
Report
August 31, 1997
