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 12-month period ended February 28, 1998. Your Fund produced a
yield of 5.27% and, after taking into account the effect of compounding, the
effective yield was 5.40%.*
Economic Review
Accumulating evidence indicates that the economy may have started a shift
toward slower growth this winter. Unlike the late phases of other postwar
business cycles, this year's shift to slower real economic growth is
occurring in tandem with decelerating price inflation. Hence, growth in the
nominal dollar economy (before adjusting for inflation), which determines
overall corporate revenues, could slow considerably. Meanwhile, wage growth
began to accelerate last fall. Slower revenue growth and rising costs have
begun to squeeze profit margins in some sectors, although overall corporate
profit growth has stayed positive. Earlier this year, the Federal Reserve
Board (the "Fed") shifted to a neutral policy stance, abandoning last year's
tightening bias. This stable policy has kept short-term rates steady,
thwarting market expectations for a sustained drop in long-term rates.
The shift to slower economic growth is not broad based. Rather, the
available evidence shows that it predominantly affects manufacturers. This is
indicated by falling export orders, sluggish capital goods orders, weak
automobile production and a shorter manufacturing workweek. By contrast,
strength in the service-producing sector persists unabated. While employment
costs seem well controlled in the manufacturing sector, wages and benefits
paid to service sector workers began to accelerate last fall. The picture
emerging is of late-cycle inflation pressures developing for services in the
domestic economy alongside deterioration in the traded goods economy.
Overall corporate profits posted positive surprises throughout 1997. For
manufacturers, profits were boosted by strong demand as well as higher
productivity and lower unit labor costs. This year, many manufacturers face a
deterioration of their gross revenues. For service sector companies, last
year's profits were boosted by strong demand growth. This year, some service
companies may enjoy a window of opportunity to raise prices, but the risk to
profit growth is that power to counteract rising labor costs by raising
prices may be diminished.
The above hot and cold mix to slower economic growth has kept the Fed's
policy neutral, at least for now. Although long-term bond yields are below
levels of a year ago, substantially lower yields have proven difficult to
attain in the absence of lower short-term rates.
This kind of environment can foster a healthy economic outlook for the
long run, but may be vulnerable to short-term surprises.
The Market Environment
Money market rates have remained within a narrow trading range. With the
Fed apparently content to leave the Federal Funds rate unchanged, market
participants have watched two opposing economic forces-an Asian
crisis-spurred slowdown versus wage inflation caused by tight labor
markets-for clues as to future policy directives. To date, neither the
trade-related slowdown due to the financial problems in Asia nor the
traditional late business cycle inflation upturn has occurred. Until the
effects of the competing economic currents become clear, short-term rates can
be expected to remain in their narrow range.
In March 1997, when the Fed raised short-term rates by a quarter point,
the market began to expect a series of tightenings, and rates reflected those
expectations. As the year progressed, the chief influences on rates continued
to be labor market tightness and corporate productivity. As economic growth
continued without rising inflation, the market began to speak of a "new
paradigm": growth without inflation due to technological advances.
In one speech, Fed Chairman Alan Greenspan appeared to support the
validity of the new paradigm, only to clarify his position at a later date,
saying that he was not an adherent to this new school of thought. As a
result, interest rates at first fell, then rose as the Fed Chairman's
position was clarified.
Indeed, until the economic fallout in Asia, the money market was
expecting a move by the Fed to raise interest rates. Given the current market
environment, it is unclear what the next move by the Fed might be.
Portfolio Focus
With so many cross-currents at work in the money market, we maintained
longer maturities, a strategy which we feel has been beneficial to the Fund.
Our focus is to maintain that posture as long as it corresponds with market
conditions, while bearing in mind that a change in Fed policy or external
conditions affecting the market could require a different approach. Of
course, we will continue to monitor these market forces on a constant basis,
alert for any changes in the prevailing environment.
Sincerely,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
March 17, 1998
New York, N.Y.
* Effective yield is based on dividends declared daily and reinvested
monthly.
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<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998
Principal
Negotiable Bank Certificates of Deposit-33.9% Amount Value
____________ ____________
<S> <C> <C>
Abbey National Treasury Service (Yankee)
5.70%-5.72%, 1/27/99-2/25/99.............................................. $ 65,000,000 $ 65,000,000
ABN-AMRO Bank N.V.
5.83%, 6/19/98............................................................ 25,000,000 25,001,832
Bankers Trust Co.
6.01%, 8/28/98............................................................ 10,000,000 9,998,115
Bankers Trust Co. (Yankee)
5.92%, 10/27/98........................................................... 15,000,000 15,004,717
Bank of Tokyo-Mitsubishi (Yankee)
5.70%, 4/14/98............................................................ 25,000,000 25,000,000
Barclays Bank PLC (Yankee)
5.75%, 1/25/99............................................................ 25,000,000 25,000,000
Bayerische Landesbank (Yankee)
5.87%, 7/17/98............................................................ 24,500,000 24,494,494
Credit Agricole Indosuez S.A. (Yankee)
5.50%, 1/14/99............................................................ 30,000,000 30,000,000
Deutsche Bank AG (Yankee)
5.61%, 2/26/99............................................................ 10,000,000 9,996,194
Dresdner Bank AG (Yankee)
5.84%, 3/13/98............................................................ 25,000,000 25,000,270
Generale Bank (Yankee)
5.92%, 7/17/98............................................................ 15,000,000 14,998,915
National Westminster Bank PLC (Yankee)
6.00%-6.08%, 5/20/98-6/26/98.............................................. 63,500,000 63,499,352
Royal Bank of Canada
5.61%, 2/23/99(a)......................................................... 50,000,000 49,968,969
Societe Generale (London)
5.82%, 5/1/98............................................................. 20,000,000 20,004,216
Societe Generale (Yankee)
5.70%-5.76%, 3/3/98-4/28/98............................................... 66,000,000 65,999,823
SwedBank (Yankee)
5.70%, 7/28/98............................................................ 25,000,000 25,000,000
Swiss Bank Corp. (Yankee)
5.75%-6.00%, 6/12/98-10/1/98.............................................. 50,700,000 50,710,246
Westdeutsche Landesbank Girozentrale (London)
5.84%, 8/18/98............................................................ 15,000,000 15,005,223
Westdeutsche Landesbank Girozentrale (Yankee)
5.69%, 1/25/99............................................................ 25,000,000 25,000,000
____________
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $584,682,366)....................................................... $ 584,682,366
=============
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Commercial Paper-29.0% Amount Value
____________ ____________
Bear Stearns Companies Inc.
5.76%, 10/2/98............................................................ $ 25,000,000 $ 24,175,833
BHF Finance (DE)
5.55%, 3/13/98............................................................ 22,000,000 21,959,520
Den Norske Bank ASA
5.54%, 5/18/98............................................................ 50,000,000 49,408,500
General Electric Capital Corp.
5.53%, 4/15/98............................................................ 25,000,000 24,829,063
General Motors Acceptance Corp.
5.75%-5.86%, 4/24/98-8/18/98.............................................. 70,000,000 68,500,633
Goldman Sachs Group L.P.
5.81%, 5/8/98............................................................. 7,000,000 6,925,294
Lehman Brothers Holdings Inc.
5.97%, 3/13/98............................................................ 5,000,000 4,990,475
Merrill Lynch & Co. Inc.
5.52%-5.74%, 4/20/98-7/28/98.............................................. 55,000,000 54,216,222
Nordbanken N.A. Inc.
5.53%-5.71%, 3/16/98-5/6/98............................................... 65,000,000 64,619,313
Spintab AB
5.56%-5.85%, 4/14/98-6/26/98.............................................. 82,000,000 80,884,533
Svenska Handelsbanken Inc.
5.69%, 3/16/98-3/27/98.................................................... 75,000,000 74,742,701
UBS Finance (De) Inc.
5.68%, 3/2/98............................................................. 25,000,000 24,996,055
____________
TOTAL COMMERCIAL PAPER
(cost $500,248,142)....................................................... $ 500,248,142
=============
Corporate Notes-17.7%
Bear Stearns Companies Inc.
5.68%, 7/10/98(a)......................................................... $ 25,000,000 $ 25,000,000
CTN Trust Series 1
5.61%, 9/2/98(a,b,c)...................................................... 50,000,000 50,088,016
Comerica Bank
5.71%, 4/17/98(a)......................................................... 50,000,000 49,996,893
Heller Financial Inc.
5.80%, 4/15/98(a)......................................................... 25,000,000 25,000,000
Lehman Brothers Holdings Inc.
5.71%-5.80%, 1/13/99-3/22/99(a)........................................... 70,000,000 70,000,000
Merrill Lynch & Co. Inc.
5.71%, 1/11/99(a)......................................................... 25,000,000 25,000,000
Paine Webber Group Inc.
5.88%, 7/13/98(a)......................................................... 10,000,000 10,020,609
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1998
Principal
Corporate Notes (continued) Amount Value
____________ ____________
Salomon Brothers Inc.
5.85%, 6/1/98(a).......................................................... $ 50,000,000 $ 50,000,000
____________
TOTAL CORPORATE NOTES
(cost $305,105,518)....................................................... $ 305,105,518
=============
Promissory Notes-4.3%
Goldman Sachs Group L.P.
5.80%-5.87%, 4/9/98-10/2/98(b,c)
(cost $75,000,000)........................................................ $ 75,000,000 $ 75,000,000
=============
Short-Term Bank Notes-3.2%
Bayerische Landesbank Girozentrale
5.56%, 8/14/98............................................................ $ 25,000,000 $ 25,027,951
Lasalle National Bank
5.90%, 7/17/98............................................................ 30,000,000 30,000,000
____________
TOTAL SHORT-TERM BANK NOTES
(cost $55,027,951)........................................................ $ 55,027,951
=============
Time Deposits-10.5%
Berliner Handels-und Frankforter Bank (Grand Cayman)
5.72%, 3/2/98............................................................. $ 40,000,000 $ 40,000,000
Chase Manhattan Bank (London)
5.69%, 3/2/98............................................................. 70,000,000 70,000,000
Fleet Bank of Massachusetts (Grand Cayman)
5.50%, 3/2/98............................................................. 70,270,000 70,270,000
____________
TOTAL TIME DEPOSITS
(cost $180,270,000)....................................................... $ 180,270,000
=============
TOTAL INVESTMENTS
(cost $1,700,333,977)........................................... 98.6% $1,700,333,977
===== =============
CASH AND RECEIVABLES (NET)........................................ 1.4% $ 24,636,939
===== =============
NET ASSETS........................................................ 100.0% $1,724,970,916
===== =============
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 11/10/97-1/5/98 at a cost of $50,156,050 for CTN Trust
Series I and $75,000,000 for Goldman Sachs Group L.P. At February 28,
1998, the aggregate value of these securities is $125,088,016 representing
approximately 7.3% of net assets and are valued at amortized cost.
(c) These notes were acquired for investment, not with the intent to
distribute or sell.
SEE NOTES TO FINANCIAL STATEMENTS.
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<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $1,700,333,977 $1,700,333,977
Cash....................................... 5,946,135
Interest receivable........................ 20,055,024
_______________
1,726,335,136
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 293,255
Accrued expenses and other liabilities..... 1,070,965
_______________
1,364,220
_______________
NET ASSETS.................................................................. $1,724,970,916
===============
REPRESENTED BY: Paid-in capital............................ $1,725,288,005
Accumulated undistributed investment income-net 248,851
Accumulated net realized gain (loss) on investments (565,940)
_______________
NET ASSETS.................................................................. $1,724,970,916
===============
SHARES OUTSTANDING
(3 BILLION SHARES OF $.001 PAR VALUE COMMON STOCK AUTHORIZED)............... 1,725,288,005
NET ASSET VALUE, offering and redemption price per share.................... $1.00
=====
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1998
INVESTMENT INCOME
INCOME Interest Income............................ $101,200,714
EXPENSES: Management fee-Note 2(a)................... $ 8,827,622
Shareholder servicing costs-Note 2(b)...... 2,899,338
Custodian fees............................. 138,839
Registration fees.......................... 113,763
Professional fees.......................... 60,261
Prospectus and shareholders' reports....... 33,910
Directors' fees and expenses-Note 2(c)..... 25,003
Miscellaneous.............................. 32,590
_____________
Total Expenses....................... 12,131,326
Less-reduction in management fee due to
undertaking-Note 2(a).................. (4,160,978)
_____________
Net Expenses......................... 7,970,348
_____________
INVESTMENT INCOME-NET....................................................... 93,230,366
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... (74,821)
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 93,155,545
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
February 28, 1998 February 28, 1997
_________________ _________________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................. $ 93,230,366 $ 98,308,888
Net realized gain (loss) on investments............................... (74,821) (143,799)
_______________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations..... 93,155,545 98,165,089
_______________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................. (92,981,515) (98,308,888)
_______________ _______________
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold......................................... 2,048,718,827 1,753,786,198
Dividends reinvested.................................................. 87,421,489 92,292,687
Cost of shares redeemed............................................... (2,205,335,475) (2,150,235,405)
_______________ _______________
Increase (Decrease) in Net Assets from Capital Stock Transactions... (69,195,159) (304,156,520)
_______________ _______________
Total Increase (Decrease) in Net Assets........................... (69,021,129) (304,300,319)
NET ASSETS:
Beginning of Period................................................... 1,793,992,045 2,098,292,364
_______________ _______________
End of Period......................................................... $1,724,970,916 $1,793,992,045
=============== ===============
UNDISTRIBUTED INVESTMENT INCOME-NET..................................... $ 248,851 ----
_______________ _______________
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 beeen derived from the Fund's financial statements.
Fical Year Ended February,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<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........................ .053 .051 .058 .046 .033
______ ______ ______ ______ ______
Distributions:
Dividends from investment income-net......... (.053) (.051) (.058) (.046) (.033)
______ ______ ______ ______ ______
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.......................... 5.38% 5.19% 5.97% 4.73% 3.40%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... . .45% .45% .31% .18% .10%
Ratio of net investment income to average net assets 5.28% 5.08% 5.82% 4.70% 3.33%
Decrease reflected in above expense ratios due to
undertakings by the Manager................ .24% .23% .31% .46% .55%
Net Assets, end of period (000's Omitted).... $1,724,971 $1,793,992 $2,098,292 $1,623,242 $1,217,032
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 in securities 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 March 2, 1998, the Fund declared a cash dividend of approximately
$.0001 per share from undistributed investment income-net which includes
investment income-net for Saturday, February 28, 1998.
(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 $566,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 28, 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, $209,000 expires in fiscal 2005
and $84,000 expires in fiscal 2006.
At February 28, 1998, 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 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 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 $4,160,978 during the period ended February 28,
1998.
(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, 1998, the Fund was charged $2,424,082
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. During the
period ended February 28, 1998, the Fund was charged $289,873 pursuant to the
transfer agency agreement.
(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, 1998, 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, 1998 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, 1998, 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.
New York, New York
March 31, 1998
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. 123AR982
BASIC
Money Market
Fund, Inc.
Annual Report
February 28, 1998
Registration Mark
[Dreyfus logo]
