DREYFUS BASIC MONEY MARKET FUND, INC.
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus BASIC Money Market
Fund, Inc. for its fiscal year ended February 28, 1997. Your Fund produced a
yield of 5.07% and after taking into account the effect of compounding, the
effective yield was 5.19%.*
ECONOMIC REVIEW
Economic evidence in early 1997 indicates that real GDP growth has not
slowed significantly from the 3.2% reported for the four quarters of 1996. A
key economic risk now developing lies in a further escalation of labor market
tightness which could fuel faster wage inflation. This is reigniting fears of
higher future price inflation, even while current prices are held low by the
strong dollar. Market interest rates have recently been led higher by rising
expectations for a Federal Reserve tightening in coming months, which could
help temper demand and would support our view that we are still in a long
economic cycle.
In the household sector, confidence is soaring, job insecurity is
disappearing and real wages are rising. Hence, consumer spending growth
appears fairly solid in early 1997. Simultaneously, a rebound in production
of consumer goods is underway, both to meet the demand and replenish
inventories left depleted at year-end. Elsewhere, capital goods orders have
been slowing since last fall, while export orders are less strong in early
1997, somewhat hurt by the higher dollar. However, a rise in demand for
consumer goods typically will attract imports, bolstering growth overseas;
better foreign economic growth may help offset the higher dollar to sustain
demand for U.S. exports.
Although wages have been on the rise since the fall of 1996, price
inflation has continued to decelerate. The risks for the future from wage
hikes that are driven by labor shortages are twofold: first, they may fuel
overheating in the economy, ultimately promoting price inflation; second,
they may slow profits for some companies. Profits are also vulnerable this
year for import-competing companies and at multinationals that have not
hedged their foreign currency exposure. Nonetheless, we expect overall
profits to sustain steady growth in 1997.
Market interest rates have shifted higher recently. Short term rates are
taking their cue from the Fed, expecting a tightening within a few months.
Long term rates, still within the trading range established over the last 12
months, have nevertheless trended higher. Announcement of a balanced Federal
budget agreement would represent a positive development that could curtail
the rise in bond yields.
The economy will shortly begin its seventh expansion year, a trend that
we believe could continue. A step by the Federal Reserve to tighten interest
rates could prolong this favorable business cycle.
MONEY MARKET OVERVIEW
This past year was a volatile one for the money market. However, the net
change in rates from one end of the fiscal year to the other was not very
great.
The condition of the U.S. economy, the outlook for inflation, and what _
if anything _ the Federal Reserve might do about it were the overriding
influences on the credit markets.
Early in the fiscal period, rates generally rose, especially after strong
employment reports in late spring and early summer convinced the market that
the Fed would need to tighten money rates in order to prevent a recurrence of
inflation. By late summer, however, it became clear that inflation was not an
immediate threat. The Fed acknowledged as much by taking no preemptive
action. Furthermore, the economy was a constructive influence, providing
continued yet moderate growth without exerting undue upward pressure on wage
levels or general price indicators. Thus, in the latter part of the calendar
year, interest rates simmered down.
In early 1997, however, the money market developed a case of jittery
nerves, especially in the face of warnings from the Chairman of the Federal
Reserve Board that something might need to be done to curb excessive stock
market speculation. There has been no action by the Fed to affect interest
rates since late January, 1996, when the Fed lowered the discount rate by a
modest 0.25%.
In spite of the nervousness, the market was essentially neutral on
interest rates until February of this year when Chairman Greenspan became
more outspoken about the possibility of tightening interest rates. At the
same time, some fairly robust economic numbers began to edge rates higher.
The market's present posture, as of mid-March, is to position itself for
higher rates but drastic changes in the climate are not being discounted as
yet.
PORTFOLIO TACTICS
During most of the past year we tried to keep average maturities in the
portfolio longer than the industry average. The purpose, of course, was to
augment yields to the investor. Our maturity structure is designed to deal
with changeable eventualities. Lately, this has resulted in a somewhat less
aggressive posture. We believe this approach confers some defensive benefits
while seeking superior yields.
Sincerely,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
March 17, 1997
New York, N.Y.
* Effective yield is based upon dividends declared daily and reinvested
monthly.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1997
Principal
Negotiable Bank Certificates of Deposit_34.9% Amount Value
____________ __________
<S> <C> <C>
Banc One Wisconsin
5.33%, 3/25/97............................................................ $ 35,000,000 $ 34,999,982
Bankers Trust Co.
5.43%, 2/19/98............................................................ 50,000,000 49,962,380
Bank of Tokyo-Mitsubishi (Yankee)
5.60%-6.00%, 4/15/97-10/3/97.............................................. 32,000,000 32,000,146
Barclays Bank PLC (Yankee)
5.42%, 2/20/98............................................................ 50,000,000 49,976,421
Bayerische Hypothenken-und Wechsel-Bank AG (London)
5.78%, 1/9/98............................................................. 25,000,000 25,005,415
Chase Manhattan Bank (USA)
5.50%, 7/9/97............................................................. 25,000,000 25,000,000
Dai-Ichi Kangyo Bank Ltd. (Yankee)
5.65%-5.70%, 3/31/97-7/23/97.............................................. 35,000,000 35,000,781
Fuji Bank Ltd. (Yankee)
5.45%-5.64%, 3/17/97-4/23/97.............................................. 85,000,000 85,000,954
Industrial Bank of Japan Ltd. (Yankee)
5.55%, 4/7/97............................................................. 10,000,000 9,999,983
Morgan Guaranty Trust Co.
5.51%, 9/18/97............................................................ 25,000,000 25,045,991
Sanwa Bank Ltd. (London)
5.44%, 4/7/97............................................................. 30,000,000 30,003,289
Sanwa Bank Ltd. (Yankee)
5.49%-5.70%, 3/31/97-5/19/97.............................................. 15,000,000 15,000,474
Societe Generale (Yankee)
5.57%-6.03%, 7/21/97-10/7/97.............................................. 90,000,000 90,010,820
Sumitomo Bank Ltd. (Yankee)
5.56%-5.82%, 4/14/97-10/31/97............................................. 55,000,000 55,000,000
SwedBank (Yankee)
5.61%-5.65%, 10/9/97-11/14/97............................................. 65,000,000 65,000,000
______________
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $627,006,636)....................................................... $ 627,006,636
===============
Bankers' Acceptances_3.5%
Bank of Tokyo-Mitsubishi (Yankee)
5.70%, 3/10/97............................................................ $ 7,250,000 $ 7,239,941
Industrial Bank of Japan Ltd. (Yankee)
5.71%, 3/19/97............................................................ 55,000,000 54,847,100
______________
TOTAL BANKERS' ACCEPTANCES
(cost $62,087,041)........................................................ $ 62,087,041
===============
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997
Principal
Commercial Paper_13.9% Amount Value
____________ ____________
Bankers Trust New York Corp.
5.44%-5.67%, 8/12/97-10/27/97............................................. $ 35,000,000 $ 33,851,889
Lehman Brothers Holdings Inc.
5.51%-5.78%, 4/28/97-10/3/97.............................................. 70,000,000 68,397,067
Merrill Lynch & Co. Inc.
5.50%, 8/4/97-10/14/97.................................................... 60,000,000 58,353,097
Morgan Stanley Group Inc.
5.41%, 4/25/97............................................................ 30,000,000 29,755,250
Salomon Inc.
5.78%, 8/4/97............................................................. 14,000,000 13,659,053
Sanwa Business Credit Corp.
5.44%, 5/19/97............................................................ 20,000,000 19,764,756
Spintab AB
5.40%, 5/7/97............................................................. 25,000,000 24,752,007
______________
TOTAL COMMERCIAL PAPER
(cost $248,533,119)....................................................... $ 248,533,119
===============
Corporate Notes_13.2%
Abbey National PLC
5.22%, 3/17/97............................................................ $ 50,000,000 $ 49,997,679
Abbey National Treasury Services PLC
5.60%, 11/21/97........................................................... 35,000,000 34,974,346
Bear Stearns Companies Inc.
5.51%-5.52%, 6/27/97-7/8/97(a)............................................ 75,000,000 75,000,000
General Motors Acceptance Corp.
5.28%-5.64%, 3/13/97-4/15/97.............................................. 46,210,000 46,302,578
Lehman Brothers Holdings Inc.
5.81%, 6/15/97............................................................ 10,000,000 10,045,020
Merrill Lynch & Co. Inc.
5.47%, 5/13/97............................................................ 20,000,000 19,999,227
______________
TOTAL CORPORATE NOTES
(cost $236,318,850)....................................................... $ 236,318,850
===============
Promissory Notes_4.6%
Goldman Sachs Group L.P.
5.43%-5.85%, 3/17/97-10/10/97(b,c)
(cost $83,000,000)........................................................ $ 83,000,000 $ 83,000,000
=============
Short-Term Bank Notes_7.1%
Bank of America Illinois
5.54%-5.58%, 9/30/97-11/19/97............................................. $ 36,900,000 $ 36,936,898
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1997
Principal
Short-Term Bank Notes (continued) Amount Value
___________ ___________
First National Bank of Boston
5.44%-5.50%, 3/17/97-4/11/97.............................................. $ 90,000,000 $ 90,000,000
______________
TOTAL SHORT-TERM BANK NOTES
(cost $126,936,898)....................................................... $ 126,936,898
=============
U.S. Government Agencies_11.1%
Federal National Mortgage Association ,
Floating Rate Notes(a)
5.36%-5.46%, 6/20/97-1/21/98
(cost $199,929,475)....................................................... $ 200,000,000 $ 199,929,475
==============
Time Deposits_10.6%
Berliner Handels-und Frankforter Bank AG
5.42%, 3/3/97............................................................. $ 69,887,000 $ 69,887,000
First Union National Bank (Nassau)
5.38%, 3/3/97............................................................. 60,000,000 60,000,000
Westdeutsche Landesbank Girozentrale (Cayman)
5.38%, 3/3/97............................................................. 60,000,000 60,000,000
______________
TOTAL TIME DEPOSITS
(cost $189,887,000)....................................................... $ 189,887,000
===============
TOTAL INVESTMENTS
(cost $1,773,699,019)........................................... 98.9% $1,773,699,019
======== ================
CASH AND RECEIVABLES (NET)........................................ 1.1% $ 20,293,026
======== ================
NET ASSETS........................................................ 100.0% $1,793,992,045
======== ================
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 February 28,
1997, the aggregate value of these securities is $83 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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $1,773,699,019 $1,773,699,019
Cash....................................... 3,788,903
Interest receivable........................ 16,930,087
Prepaid expenses........................... 76,703
_______________
1,794,494,712
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 365,429
Accrued expenses and other liabilities..... 137,238
_______________
502,667
_______________
NET ASSETS.................................................................. $1,793,992,045
=================
REPRESENTED BY: Paid-in capital............................ $1,794,483,164
Accumulated net realized gain (loss) on investments (491,119)
_______________
NET ASSETS ................................................................. $1,793,992,045
=================
SHARES OUTSTANDING
(3 BILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............... 1,794,483,164
NET ASSET VALUE, offering and redemption price per share ................... $1.00
=======
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1997
INVESTMENT INCOME
INCOME Interest Income............................ $ 107,002,405
EXPENSES: Management fee_Note 2(a)................... $ 9,681,910
Shareholder servicing costs_Note 2(b)...... 3,138,758
Custodian fees............................. 137,496
Professional fees.......................... 73,355
Registration fees.......................... 43,913
Prospectus and shareholders' reports....... 41,877
Directors' fees and expenses_Note 2(c)..... 25,556
Miscellaneous.............................. 46,125
____________
Total Expenses....................... 13,188,990
Less_reduction in management fee due to
undertaking_Note 2(a).................. (4,495,473)
____________
Net Expenses......................... 8,693,517
_____________
INVESTMENT INCOME_NET....................................................... 98,308,888
NET REALIZED GAIN (LOSS) ON INVESTMENTS_Note 1(b)........................... (143,799)
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 98,165,089
==============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
February 28, 1997 February 29, 1996
___________________ ___________________
OPERATIONS:
Investment income_net............................................... $ 98,308,888 $ 113,449,165
Net realized gain (loss) on investments............................. (143,799) (131,085)
_______________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations... 98,165,089 113,318,080
_______________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net............................................... (98,308,888) (113,449,165)
_______________ _______________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold....................................... 1,753,786,198 2,618,953,833
Dividends reinvested................................................ 92,292,687 106,821,314
Cost of shares redeemed............................................. (2,150,235,405) (2,250,593,463)
_______________ _______________
Increase (Decrease) in Net Assets from Capital Stock Transactions. (304,156,520) 475,181,684
_______________ _______________
Total Increase (Decrease) in Net Assets......................... (304,300,319) 475,050,599
NET ASSETS:
Beginning of Period................................................. 2,098,292,364 1,623,241,765
_______________ _______________
End of Period....................................................... $ 1,793,992,045 $ 2,098,292,364
================ =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<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.
Fiscal Year Ended February,
____________________________________________________________________
PER SHARE DATA: 1997 1996 1995 1994 1993(1)
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
_______ _______ _______ _______ _______
Investment Operations:
Investment income_net...................... .051 .058 .046 .033 .032
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income_net......... (.051) (.058) (.046) (.033) (.032)
_______ _______ _______ _______ _______
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ========= ======= ========
TOTAL INVESTMENT RETURN......................... 5.19% 5.97% 4.73% 3.40% 3.80%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .45% .31% .18% .10% -
Ratio of net investment income
to average net assets...................... 5.08% 5.82% 4.70% 3.33% 3.66%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager......... .23% .31% .46% .55% .71%(2)
Net Assets, end of period (000's Omitted) $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.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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. 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.
(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 February 28, 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,
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
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the extent that the Fund's aggregate 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 $4,495,473 during
the period ended February 28, 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 February 28, 1997, the Fund was charged an aggregate
of $2,686,551 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 $239,959 during the period ended February 28, 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.
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 28, 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 February 28, 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 Money Market Fund, Inc. at February 28, 1997, 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 & Young LLP signature logo]
New York, New York
April 2, 1997
[Dreyfus lion "d" logo]
Registration Mark
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. 123AR972
[Dreyfus logo]
Registration Mark
BASIC
Money Market
Fund, Inc.
Annual Report
February 28, 1997
