-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IzTHaPHmQ7RHEwRnWGfFvYBkP/9gcK14PLKRKzv/hBmk1/SSkG46ksyALJYbCmhM JIcavjt/Y1n5GpH99feMJw== 0000885409-02-000007.txt : 20021022 0000885409-02-000007.hdr.sgml : 20021022 20021022160354 ACCESSION NUMBER: 0000885409-02-000007 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20021022 EFFECTIVENESS DATE: 20021022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS BASIC MONEY MARKET FUND INC CENTRAL INDEX KEY: 0000885409 IRS NUMBER: 133662299 STATE OF INCORPORATION: MD FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06604 FILM NUMBER: 02795140 BUSINESS ADDRESS: STREET 1: 200 PARK AVENUE STREET 2: C/O DREYFUS CORP CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2129226837 MAIL ADDRESS: STREET 1: THE DREYFUS CORPORATION STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: DREYFUS INVESTORS MONEY MARKET FUND INC DATE OF NAME CHANGE: 19600201 N-30D 1 n30d123.txt SEMI-ANNUAL REPORT Dreyfus BASIC Money Market Fund, Inc. SEMIANNUAL REPORT August 31, 2002 The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund. Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND - -------------------------------------------------- 2 Letter from the Chairman 3 Discussion of Fund Performance 6 Statement of Investments 9 Statement of Assets and Liabilities 10 Statement of Operations 11 Statement of Changes in Net Assets 12 Financial Highlights 13 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus BASIC Money Market Fund, Inc. LETTER FROM THE CHAIRMAN Dear Shareholder: We present this semiannual report for Dreyfus BASIC Money Market Fund, Inc., covering the six-month period from March 1, 2002 through August 31, 2002. Inside, you' ll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Thomas S. Riordan. Amid turbulence in the stock market, many investors have turned to the relative stability of the money markets. For some investors, money market funds are part of a broader strategy to diversify among various asset classes. Others, however, have recently turned to money market funds in an attempt to time the stock market. In our view, the latter strategy is a risky one. As a proven investment leader with over 50 years of experience, we approach the financial markets from a fundamental perspective. We have recently seen a number of positive factors suggesting that an expansion of economic activity and profits is likely. In addition, the reliability of financial statements, which has weighed heavily on the markets so far in 2002, should improve in 2003 and 2004, due in part to recent legislation. Nonetheless, if you have questions or are worried about current market conditions, we encourage you to talk with your financial advisor who can help you view current events from the perspective of long-term market trends. In the meantime, we at The Dreyfus Corporation intend to continue basing our investment decisions on an objective, long-term view of the financial markets. Thank you for your continued confidence and support. Sincerely, Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation September 16, 2002 DISCUSSION OF FUND PERFORMANCE Thomas S. Riordan, Portfolio Manager How did Dreyfus BASIC Money Market Fund, Inc. perform during the period? For the six-month period ended August 31, 2002, the fund produced an annualized yield of 1.69% and, taking into account the effects of compounding, an annualized effective yield of 1.71%.(1) What is the fund's investment approach? The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue this goal, the fund invests in a diversified portfolio of high quality short-term debt securities, including U.S. government securities, short-term bank obligations, U.S. dollar-denominated foreign and domestic commercial paper, repurchase agreements, asset-backed securities and U.S. dollar-denominated obligations of foreign governments. Normally, the fund invests at least 25% of its net assets in bank obligations. When managing the fund, we closely monitor the outlook for economic growth and inflation, follow overseas developments and consider the posture of the Federal Reserve Board (the "Fed" ) in our decisions as to how to structure the fund. Based upon our economic outlook, we actively manage the fund's average maturity in looking for opportunities that may present themselves in light of possible changes in interest rates. What other factors influenced the fund's performance? When the reporting period began on March 1, 2002, the U.S. economy had begun to recover from the recession and the September 11 terrorist attacks. The Fed had reacted quickly and decisively to the attacks, reducing the benchmark federal funds rate aggressively in an effort to rekindle economic growth. As a result, the reporting period began with a federal funds rate of 1.75%, its lowest level in 40 years. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) However, as positive economic data accumulated in early 2002, including reports of increased manufacturing activity and strong consumer spending, many analysts expected that the Fed would soon move to a more neutral stance. This proved to be the case when the Fed indicated at its March meeting that an economic recovery was apparently underway, and the risks of recession and inflation were evenly balanced. With this pronouncement, in our view, the Fed signaled that its aggressive rate-cutting campaign was nearing an end. Although many fixed-income investors reacted as if rate hikes would be imminent, the Fed later suggested that this was not necessarily true. With layoffs continuing and consumers spending less, the strength of the recovery remained uncertain. It was later revealed that the U.S. economy grew at a robust 5.0% annualized rate during 2002's first quarter. However, many analysts agreed that this figure was the result of the temporary effects of inventory liquidation as businesses rushed to sell off unsold goods. Indeed, the economic growth rate for the second quarter declined to a more modest 1.1%, according to government estimates. The sluggishness of the economic recovery became more obvious as the reporting period progressed. Jobless claims increased in April and May, indicating that businesses continued to reduce costs through layoffs. The Producer Price Index rose, mainly because of higher energy costs. For their part, consumers began to spend at a slower rate, and consumer sentiment dropped. The economy continued to give mixed signals in June and July. For example, the unemployment rate rose to 5.9% in June, then fell to 5.7% in July, its lowest level since March 2002. By the same token, June's economic data suggested that manufacturing was recovering faster than expected, while July's numbers revealed a drop in the manufacturing index. Meanwhile, the equity markets continued their roller coaster ride as corporate scandals, the prospects of weaker corporate earnings and an uncertain consumer further reduced expectations for a sustainable economic recovery. August's economic data continued to be mixed, but managed to relieve some of the anxiety over the possibility of a double-dip recession. Although the Fed indicated that the risks of economic weakness were greater than the risks of resurgent inflation, historically low interest rates continued to spur mortgage-refinancing activity. Mortgage refinancing put cash in consumers' pockets, helping to sustain consumer spending. In addition, productivity for the second quarter of 2002 was higher than expected, helping businesses enhance profits. What is the fund's current strategy? In this environment, as we have for some time now, we maintained the fund's weighted average maturity toward the long end of its range in order to maintain then current yields for as long as we deemed practical. Given the uneven and uncertain pace of economic recovery, we believe that a move by the Fed toward higher interest rates is unlikely over the foreseeable future. If rates remain unchanged or trend lower, we believe that the fund's relatively long weighted average maturity should position it well for such an environment. As always, of course, we are prepared to consider a change in the fund's strategy as market conditions evolve. September 16, 2002 (1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. The Fund
STATEMENT OF INVESTMENTS August 31, 2002 (Unaudited) Principal NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--32.2% Amount ($) Value ($) - -------------------------------------------------------------------------------- Barclays Bank PLC (London) 1.78%--2%, 9/6/2002--10/4/2002 65,000,000 65,005,441 Credit Agricole Indosuez S.A. (Yankee) 2%, 9/4/2002 50,000,000 50,000,000 Deutsche Bank AG (Yankee) 3.70%, 10/4/2002 25,000,000 24,999,780 Dresdner Bank AG (London) 1.78%, 9/30/2002 75,000,000 75,000,000 First Union National Bank 1.78%, 6/5/2003 35,000,000 (a) 35,032,042 Lloyds TSB Bank PLC (London) 2.02%, 3/21/2003 50,000,000 50,000,000 Toronto-Dominion Bank (Yankee) 1.89%, 12/17/2002 75,000,000 75,096,910 UniCredito Italiano SpA (London) 1.81%, 9/27/2002 50,000,000 50,000,000 Wells Fargo Bank N.A. 1.82%, 10/18/2002 30,000,000 (a) 30,000,000 Westdeutsche Landesbank Girozentrale 1.80%, 7/1/2003 50,000,000 (a) 49,972,859 TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT (cost $505,107,032) 505,107,032 - ------------------------------------------------------------------------------------------------------------------------------------ COMMERCIAL PAPER--8.8% - -------------------------------------------------------------------------------- Amstel Funding Corp. 2.05%, 11/22/2002 30,842,000 (b) 30,699,390 Danske Corp., DE 1.74%, 10/21/2002 25,000,000 24,939,931 ING (U.S.) Funding LLC 2.21%, 1/31/2003 32,000,000 31,706,809 UBS Finance Delaware LLC 1.88%, 9/3/2002 50,000,000 49,994,778 TOTAL COMMERCIAL PAPER (cost $137,340,908) 137,340,908 - ------------------------------------------------------------------------------------------------------------------------------------ CORPORATE NOTES--38.6% - -------------------------------------------------------------------------------- American Honda Finance Corp. 1.83%, 7/23/2003 65,000,000 (a) 65,000,000 Principal CORPORATE NOTES (CONTINUED) Amount ($) Value ($) - -------------------------------------------------------------------------------- Beta Finance Inc. 1.83%, 7/18/2003 58,000,000 (a,b) 57,996,186 K2 (USA) LLC 1.84%, 9/20/2002 30,000,000 (a,b) 30,000,000 Lehman Brothers Holdings Inc. 2.38%--2.58%, 12/27/2002--5/15/2003 37,100,000 37,940,743 Lehman Brothers Holdings Inc. 1.90%, 4/4/2003 40,300,000 (a) 40,382,605 Links Finance LLC 2.40%, 11/26/2002 17,000,000 (b) 17,000,000 Merrill Lynch & Co. Inc. 1.78%, 3/6/2003 25,000,000 (a) 25,000,000 Morgan Stanley Dean Witter & Co. 1.83%, 1/16/2003 25,000,000 (a) 25,018,516 Paradigm Funding LLC 1.76%--1.78%, 10/29/2002--11/4/2002 80,000,000 (a,b) 80,000,000 Salomon Smith Barney Holdings Inc. 1.75%--1.85%, 1/24/2003--5/5/2003 62,000,000 (a) 62,011,667 Sigma Finance Inc. 1.77%, 10/21/2002 50,000,000 (a,b) 49,999,657 Sigma Finance Inc. 2.50%, 11/15/2002 25,000,000 (b) 24,975,075 Societe Generale 1.77%, 3/24/2003 80,000,000 (a) 79,980,892 U.S. Bancorp 2.62%, 5/15/2003 10,000,000 10,266,869 TOTAL CORPORATE NOTES (cost $605,572,210) 605,572,210 - ------------------------------------------------------------------------------------------------------------------------------------ PROMISSORY NOTES--5.1% - -------------------------------------------------------------------------------- Goldman Sachs Group Inc. 2.25%--2.51%, 10/25/2002--6/12/2003 (cost $80,000,000) 80,000,000 (c) 80,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM BANK NOTES--9.6% - -------------------------------------------------------------------------------- Bank One N.A. 1.83%, 8/15/2003 50,000,000 (a) 49,985,699 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal SHORT-TERM BANK NOTES (CONTINUED) Amount ($) Value ($) - -------------------------------------------------------------------------------- Bayerische Hypo-und Vereinsbank AG 1.82%, 11/5/2002 50,000,000 (a) 49,999,109 National City Bank 1.80%, 8/22/2003 50,000,000 (a) 49,997,568 TOTAL SHORT-TERM BANK NOTES (cost $149,982,376) 149,982,376 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT AGENCIES--5.7% - -------------------------------------------------------------------------------- Federal Home Loan Banks 1.96%--1.97%, 9/10/2003--9/12/2003 (cost $90,000,000) 90,000,000 90,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ TIME DEPOSITS--2.0% - -------------------------------------------------------------------------------- State Street Bank & Trust Co. (Grand Cayman) 1.81%, 9/3/2002 (cost $31,500,000) 31,500,000 31,500,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $1,599,502,526) 102.0% 1,599,502,526 LIABILITIES, LESS CASH AND RECEIVABLES (2.0%) (31,366,802) NET ASSETS 100.0% 1,568,135,724
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (B) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT AUGUST 31, 2002, THESE SECURITIES AMOUNTED TO $290,670,308 REPRESENTING 18.5% OF NET ASSETS. (C) THESE NOTES WERE ACQUIRED FOR INVESTMENT, AND NOT WITH THE INTENT TO DISTRIBUTE OR SELL. SECURITIES RESTRICTED AS TO PUBLIC RESALE. THESE SECURITIES WERE ACQUIRED BETWEEN 1/29/2002 AND 6/12/2002 AT A COST OF $80,000,000. AT AUGUST 31, 2002, THE AGGREGATE VALUE OF THESE SECURITIES WAS $80,000,000 REPRESENTING 5.1% OF NET ASSETS AND ARE VALUED AT AMORTIZED COST. SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF ASSETS AND LIABILITIES August 31, 2002 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 1,599,502,526 1,599,502,526 Cash 1,340,763 Interest receivable 7,819,986 Prepaid expenses 33,774 1,608,697,049 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 381,865 Payable for investment securities purchased 40,000,000 Accrued expenses 179,460 40,561,325 - -------------------------------------------------------------------------------- NET ASSETS ($) 1,568,135,724 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 1,568,120,066 Accumulated undistributed net investment income 65,313 Accumulated net realized gain (loss) on investments (49,655) - -------------------------------------------------------------------------------- NET ASSETS ($) 1,568,135,724 - -------------------------------------------------------------------------------- SHARES OUTSTANDING (3 billion shares of $.001 par value Common Stock authorized) 1,568,120,066 NET ASSET VALUE, offering and redemption price per share ($) 1.00 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF OPERATIONS Six Months Ended August 31, 2002 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 17,964,787 EXPENSES: Management fee--Note 2(a) 4,186,306 Shareholder servicing costs--Note 2(b) 876,663 Directors' fees and expenses--Note 2(c) 57,519 Custodian fees 46,170 Registration fees 29,698 Professional fees 26,271 Prospectus and shareholders' reports 10,079 Miscellaneous 7,641 TOTAL EXPENSES 5,240,347 Less--reduction in management fee due to undertaking--Note 2(a) (1,472,671) NET EXPENSES 3,767,676 INVESTMENT INCOME--NET 14,197,111 - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) 12,374 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 14,209,485 SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended August 31, 2002 Year Ended (Unaudited) February 28, 2002 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 14,197,111 63,672,012 Net realized gain (loss) from investments 12,374 364,189 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 14,209,485 64,036,201 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): INVESTMENT INCOME--NET (14,131,798) (63,672,012) - -------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS ($1.00 per share): Net proceeds from shares sold 482,845,104 1,364,924,240 Dividends reinvested 13,447,865 60,300,673 Cost of shares redeemed (740,673,786) (1,468,084,918) INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS (244,380,817) (42,860,005) TOTAL INCREASE (DECREASE) IN NET ASSETS (244,303,130) (42,495,816) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 1,812,438,854 1,854,934,670 END OF PERIOD 1,568,135,724 1,812,438,854 Undistributed investment income--net 65,313 -- SEE NOTES TO FINANCIAL STATEMENTS. The Fund
FINANCIAL HIGHLIGHTS The following table describes the performance for the fiscal periods indicated. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended August 31, 2002 Fiscal Year Ended February ---------------------------------------------------------------------- (Unaudited) 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 Investment Operations: Investment income--net .008 .035 .061 .050 .051 .053 Distributions: Dividends from investment income--net (.008) (.035) (.061) (.050) (.051) (.053) Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) 1.69(a) 3.54 6.23 5.10 5.19 5.38 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .45(a) .45 .45 .45 .45 .45 Ratio of net investment income to average net assets 1.70(a) 3.50 6.06 4.98 5.08 5.28 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .18(a) .17 .17 .15 .13 .24 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,568,136 1,812,439 1,854,935 1,913,618 1,837,664 1,724,971 (A) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
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, as amended (the "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 (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N. A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Dreyfus Service Corporation (the "Distributor") , a wholly-owned subsidiary of the Manager, 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 accounting principles generally accepted in the United States 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. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid The Fun NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) 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 of 1986, as amended (the "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 3, 2002, the fund declared a cash dividend of approximately $.0001 per share from undistributed investment income-net which includes investment income-net for Saturday August 31, 2002. (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 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 $62,029 available for federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to February 28, 2002. If not applied, $51,814 of the carryover expires in fiscal 2006 and $10,215 expires in fiscal 2007. The tax character of distributions paid to shareholders during the fiscal year ended February 28, 2002 was all ordinary income. The tax character of current year distributions will be determined at the end of the current fiscal year. At August 31, 2002, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see Statement of Investments.) 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 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, if the fund's aggre gate annual expenses, exclusive of taxes, brokerage fees, 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 fund may deduct from the payment to be made to the Manager under the Agreement, or the Manager will bear, such excess expenses. The reduction in management fee, pursuant to the undertaking, amounted to $1,472,671 during the period ended August 31, 2002. (B) Under the Shareholder Services Plan, the fund reimburses the Distributor 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, 2002, the fund was charged $876,663 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 August 31, 2002, the fund was charged $141,923 pursuant to the transfer agency agreement. (C) Each Board member also serves as a Board member of other funds within the Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not an "affiliated person" as defined in the Act receives an annual fee of $25,000 and an attendance fee of $4,000 for each in person meeting and $500 for telephone meetings. These fees are allocated among the funds in the Fund Group. The Chairman of the Board receives an additional 25% of such compensation. Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the annual retainer fee and per meeting fee paid at the time the Board member achieves emeritus status. The Fund NOTES For More Information 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9263 Boston, MA 02205-8501 Distributor Dreyfus Service Corporation 200 Park Avenue New York, NY 10166 To obtain information: BY TELEPHONE Call 1-800-645-6561 BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 BY E-MAIL Send your request to info@dreyfus.com ON THE INTERNET Information can be viewed online or downloaded from: http://www.dreyfus.com (c) 2002 Dreyfus Service Corporation 123SA0802 -----END PRIVACY-ENHANCED MESSAGE-----