__________________________________________________________________________
COMBINED PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FOR
DREYFUS BASIC MONEY MARKET FUND, INC.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
JULY 3, 1995
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current combined
Prospectus of Dreyfus BASIC Money Market Fund, Inc. (the "Money Fund") and
Dreyfus BASIC U.S. Government Money Market Fund (the "Government Money
Fund")(collectively, the "Funds"), dated July 3, 1995, as it may be
revised from time to time. To obtain a copy of the Funds' Prospectus,
please write to the Funds at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
Each Fund is a separate entity with a separate portfolio. The
operations and investment results of one Fund are unrelated to those of
the other Fund. This combined Statement of Additional Information has
been prepared for an investor's convenience to provide each investor the
opportunity to consider two investment choices in one document.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . . . B-2
Management of the Funds . . . . . . . . . . . . . . . . . . . . . B-7
Management Agreements . . . . . . . . . . . . . . . . . . . . . . B-12
Shareholder Services Plan . . . . . . . . . . . . . . . . . . . . B-14
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . B-14
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . . B-15
Fund Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Determination of Net Asset Value. . . . . . . . . . . . . . . . . B-19
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . B-20
Yield Information . . . . . . . . . . . . . . . . . . . . . . . . B-20
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . B-21
Information About the Funds . . . . . . . . . . . . . . . . . . . B-21
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . . . B-21
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Financial Statements
Money Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Government Money Fund . . . . . . . . . . . . . . . . . . . . . B-34
Reports of Independent Auditors . . . . . . . . . . . . . . . . . B-21, B-39
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Description of
the Funds."
Portfolio Securities
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities
acquired by such Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to
be loans by the Fund entering into them. In an attempt to reduce the risk
of incurring a loss on a repurchase agreement, the Funds will enter into
repurchase agreements only with domestic banks with total assets in excess
of one billion dollars or primary government securities dealers reporting
to the Federal Reserve Bank of New York, with respect to securities of the
type in which the Fund which has entered into the repurchase agreement may
invest or government securities, and will require that additional
securities be deposited with it if the value of the securities purchased
should decrease below resale price. The Manager will monitor on an
ongoing basis the value of the collateral to assure that it always equals
or exceeds the repurchase price. Each Fund will consider on an ongoing
basis the creditworthiness of the institutions with which it enters into
repurchase agreements.
The following applies only with respect to the Money Fund.
Bank Obligations
Domestic commercial banks organized under Federal law are supervised
and examined by the Comptroller of the Currency and are required to be
members of the Federal Reserve System and to have their deposits insured
by the Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they
elect to join. In addition, state banks whose certificates of deposit
("CDs") may be purchased by the Money Fund are insured by the FDIC
(although such insurance may not be of material benefit to the Fund,
depending upon the principal amount of the CDs of each bank held by the
Fund) and are subject to Federal examination and to a substantial body of
Federal law and regulation. As a result of Federal or state laws and
regulations, domestic banks, among other things, generally are required to
maintain specified levels of reserves, limited in the amounts which they
can loan to a single borrower and subject to other regulations designed to
promote financial soundness. However, not all of such laws and
regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of
foreign banks, such as CDs and time deposits ("TDs"), may be general
obligations of the parent banks in addition to the issuing branch, or may
be limited by the terms of a specific obligations and governmental
regulation. Such obligations are subject to different risks than are
those of domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that may
adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding and other taxes on
interest income. These foreign branches and subsidiaries are not
necessarily subject to the same or similar regulatory requirements that
apply to domestic banks, such as mandatory reserve requirements, loan
limitations, and accounting, auditing and financial recordkeeping
requirements. In addition, less information may be publicly available
about a foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal or state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank
with assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch
is located if the branch is licensed in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank
payable at or through all of its agencies or branches within the state.
The deposits of Federal and State Branches generally must be insured by
the FDIC if such branches take deposits of less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign branches
of foreign banks or by domestic branches of foreign banks, the Manager
carefully evaluates such investments on a case-by-case basis.
Floating and variable rate demand notes and bonds are obligations
ordinarily having stated maturities in excess of 13 months, but which
permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding 13 months, in each case upon not more
than 30 days' notice. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligation plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted securities held by the
Money Fund, the Fund intends to treat such securities as liquid securities
in accordance with procedures approved by the Fund's Board of Directors.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Money Fund's
Board of Directors has directed the Manager to monitor carefully the Money
Fund's investments in such securities with particular regard to trading
activity, availability of reliable price information and other relevant
information. To the extent that for a period of time, qualified
institutional buyers cease purchasing such restricted securities pursuant
to Rule 144A, the Money Fund's investing in such securities may have the
effect of increasing the level of illiquidity in its portfolio during such
period.
Reverse Repurchase Agreements. The Money Fund may enter into reverse
repurchase agreements. The Money Fund will maintain in a segregated
custodial account cash, cash equivalents or U.S. Government securities or
other high quality liquid debt securities equal to the aggregate amount of
its reverse repurchase obligations, plus accrued interest, in certain
cases, in accordance with releases promulgated by the Securities and
Exchange Commission. The Securities and Exchange Commission views reverse
repurchase agreement transactions as collateralized borrowings by the
Fund, and, pursuant to the Investment Company Act of 1940, as amended (the
"Act"), the Money Fund must maintain continuous assets coverage (that is,
total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the 300% asset coverage
should decline as a result of market fluctuations or other reasons, the
Money Fund may be required to sell some of its portfolio holdings within
three days to reduce the debt and restore 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities
at that time.
Lending Portfolio Securities. To a limited extent, the Money Fund
may lend its portfolio securities to brokers, dealers and other
institutional investors, provided it receives cash collateral which at all
times is maintained in an amount equal to at least 100% of the current
market value of the securities loaned. By lending its portfolio
securities, the Money Fund can increase its income through the investment
of the cash collateral. For the purposes of this policy, the Money Fund
considers collateral consisting of U.S. Government securities or
irrevocable letters of credit issued by banks whose securities meet the
standards for investment by the Fund to be the equivalent of cash. Such
loans may not exceed 33-1/3% the value of the Money Fund's total assets.
From time to time, the Money Fund may return to the borrower and/or a
third party which is unaffiliated with the Fund, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned
by the Money Fund: (1) the Fund must receive at least 100% cash
collateral from the borrower; (2) the borrower must increase such
collateral whenever the market value of the securities rises above the
level of such collateral; (3) the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan, as
well as any interest or other distributions payable on the loaned
securities, and any increase in market value; and (5) the Fund may pay
only reasonable custodian fees in connection with the loan. These
conditions may be subject to future modification.
Investment Restrictions - Money Fund. The Money Fund has adopted
investment restrictions numbered 1 through 7 below as fundamental
policies. These restrictions cannot be changed without approval by the
holders of a majority (as defined in the Act) of the Money Fund's
outstanding voting shares. Investment restrictions numbered 8 through 14
are not fundamental policies and may be changed by vote of a majority of
the Money Fund's Directors at any time. The Money Fund may not:
1. Borrow money, except to the extent the Fund maintains continuous
asset coverage (that is, total borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed.
2. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
except that the Fund may purchase or sell futures contracts, including
those relating to indices, and options on futures contracts and indices.
3. Act as underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
4. Make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of
the value of its total assets. Any loans of portfolio securities will be
made according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Directors.
5. Invest more than 5% of its assets in the obligations of any
single issuer, except that up to 25% of the value of the Fund's total
assets may be invested without regard to any such limitation.
6. Invest less than 25% of its total assets in securities issued by
banks or invest more than 25% of its assets in the securities of issuers
in any other industry, provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. Notwithstanding the foregoing, for
temporary defensive purposes the Fund may invest less than 25% of its
assets in bank obligations.
7. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent that the activities permitted in
Investment Restriction Nos. 1, 2 and 10 may be deemed to give rise to a
senior security.
8. Purchase common stocks, preferred stocks, warrants or other
equity securities, or purchase corporate bonds or debentures, state bonds,
municipal bonds or industrial revenue bonds (except through the purchase
of debt obligations referred to above and in the Prospectus).
9. Invest in securities of other investment companies, except
as they may be acquired as part of a merger, consolidation or acquisition
of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow in connection with
portfolio transactions, such as in connection with writing covered options
and the purchase of securities on a when-issued or forward commitment
basis and collateral and initial or variation margin arrangements with
respect to options, future contracts, including those relating to indices,
and options on futures contracts or indices.
11. Sell securities short or purchase securities on margin.
12. Write or purchase put or call options or combinations thereof.
13. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 10% of the value of its net
assets would be so invested.
14. Invest in companies for the purpose of exercising control.
Investment Restrictions - Government Money Fund. The Government
Money Fund has adopted investment restrictions numbered 1 through 6 below
as fundamental policies. These restrictions cannot be changed without
approval by the holders of a majority (as defined in the Act) of the
Government Money Fund's outstanding voting shares. Investment
restrictions numbered 7 through 12 are not fundamental policies and may be
changed by vote of a majority of the Government Money Fund's Trustees at
any time. The Government Money Fund may not:
1. Borrow money, except for temporary or emergency (not leveraging)
purposes in an amount up to 15% of the value of the Fund's total assets
(including the amount borrowed) based on the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the
borrowing is made; while borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
2. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
except that the Fund may purchase or sell futures contracts, including
those relating to indexes, and options on futures contracts or indexes.
3. Act as underwriter of securities of other issuers.
4. Make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements.
5. Invest more than 25% of its assets in the securities of issuers
in any single industry, provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
6. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 1, 2 and 9 may be deemed to give rise to a
senior security.
7. Purchase common stocks, preferred stocks, warrants or other
equity securities, or purchase corporate bonds or debentures, state bonds,
municipal bonds or industrial revenue bonds.
8. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
9. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
10. Sell securities short or purchase securities on margin.
11. Write or purchase put or call options or combinations thereof.
12. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 10% of its net assets would be
so invested.
With respect to each Fund, if a percentage restriction is adhered to
at the time of investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a
violation of such restriction.
Each Fund may make commitments more restrictive than the respective
restrictions listed above so as to permit the sale of such Fund's shares
in certain states. Should a Fund determine that a commitment is no longer
in the best interests of the Fund and its shareholders, such Fund reserves
the right to revoke the commitment by terminating the sale of its shares
in the state involved.
MANAGEMENT OF THE FUNDS
Directors and officers of the Money Fund and Trustees and officers of
the Government Money Fund, together with information as to their principal
business occupations during at least the last five years, are shown below.
Each Board member who is deemed to be an "interested person" of the Funds,
as defined in the Act, is indicated by an asterisk.
Directors/Trustees of the Fund. Each person listed below serves as a
Director of the Money Fund and as a Trustee of the Government Money Fund.
*DAVID W. BURKE, Director/Trustee. Since August 1994, Consultant to the
Manager. From October 1990 to August 1994, Vice President and Chief
Administrative Officer of the Manager. From 1977 to October 1990,
Mr. Burke was involved in the management of national television news,
as Vice President and Executive Vice President at ABC News, and
subsequently as President of CBS News. Mr. Burke is also a Board
member of 49 other funds in the Dreyfus Family of Funds. He is 59
years old and his address is 200 Park Avenue, New York, New York
10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Mr.
DiMartino has served as Chairman of the Board of various funds in the
Dreyfus Family of Funds. For more than five years prior thereto, he
was President, a director and, until August 1994, Chief Operating
Officer of Dreyfus and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of Dreyfus and
until August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. Mr.
DiMartino is a director and former Treasurer of the Muscular
Dystrophy Association; a trustee of Bucknell University; Chairman of
the Board of Directors of Noel Group, Inc.; a director of HealthPlan
Corporation; a director of Belding Heminway Company, Inc.; and a
director of Curtis Industries, Inc. Mr. DiMartino is also a Board
member of 92 other funds in the Dreyfus Family of Funds. He is 51
years old and his address is 200 Park Avenue, New York, New York
10166.
DIANE DUNST, Director/Trustee. Since January 1992, President of Diane
Dunst Promotion, Inc., a full service promotion agency. From January
1989 to January 1992, Director of Promotion Services, Lear's
Magazine. From 1985 to January 1989, she was Sales Promotion Manager
of ELLE Magazine. Ms. Dunst is also a Board member of eight other
funds in the Dreyfus Family of Funds. She is 55 years old and her
address is 120 E. 87th Street, New York, New York 10128.
ROSALIND GERSTEN JACOBS, Director/Trustee. Director of Merchandise and
Marketing for Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a
merchandise and marketing consulting firm. Prior to 1974, she was a
Vice President of Macy's, New York. Ms. Jacobs is also a Board
member of 19 other funds in the Dreyfus Family of Funds. She is 70
years old and her address is c/o Corporate Property Investors, 305
East 47th Street, New York, New York 10017.
JAY I. MELTZER, Director/Trustee. Physician engaged in private practice
specializing in internal medicine. He is also a member of the
Advisory Board of the Section of Society and Medicine, College of
Physicians and Surgeons, Columbia University and a Clinical Professor
of Medicine, Department of Medicine, Columbia University College of
Physicians and Surgeons. Dr. Meltzer is also a Board member of eight
other funds in the Dreyfus Family of Funds. He is 66 years old and
his address is 903 Park Avenue, New York, New York 10021.
DANIEL ROSE, Director/Trustee. President and Chief Executive Officer of
Rose Associates, Inc., a New York based real estate development and
management firm. He is also Chairman of the Housing Committee of The
Real Estate Board of New York, Inc., and a Trustee of Corporate
Property Investors, a real estate investment company. Mr. Rose is
also a Board member of 22 other funds in the Dreyfus Family of Funds.
He is 65 years old and his address is c/o Rose Associates, Inc., 380
Madison Avenue, New York, New York 10017.
WARREN B. RUDMAN, Director/Trustee. Since January 1993, Partner in the
law firm Paul, Weiss, Rifkind, Wharton & Garrison. From January 1981
to January 1993, Mr. Rudman served as a United States Senator from
the State of New Hampshire. Since January 1993, Mr. Rudman has
served as a director of Chubb Corporation and of the Raytheon
Company. Since 1988, Mr. Rudman has served as a trustee of Boston
College and since 1986 as a member of the Senior Advisory Board of
the Institute of Politics of the Kennedy School of Government at
Harvard University. He also serves as Deputy Chairman of the
President's Foreign Intelligence Advisory Board. From January 1993
through December 31, 1994, Mr. Rudman served as Vice Chairman of the
Federal Reserve Bank of Boston. Mr. Rudman also is a Board member of
16 other funds in the Dreyfus Family of Funds. He is 65 years old
and his address is 1615 L Street, N.W., Suite 1300, Washington D.C.
20036.
SANDER VANOCUR, Director/Trustee. Since January 1992, President of Old
Owl Communications, a full-service communications firm. Since
November 1989, Mr. Vanocur has served as a Director of the Damon
Runyon-Walter Winchell Cancer Research Fund. Also, since January
1994, Mr. Vanocur has served as a Visiting Professional Scholar at
the Freedom Forum First Amendment Center at Vanderbilt University.
From June 1986 to December 1991, he was a Senior Correspondent of ABC
News and, from October 1986 to December 31, 1991, he was Anchor of
the ABC News program "Business World," a weekly business program on
the ABC television network. Mr. Vanocur is also a Board member of 22
other funds in the Dreyfus Family of Funds. He is 67 years old and
his address is 2928 P Street, N.W., Washington, D.C. 20007.
For so long as each Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors/Trustees of
each Fund who are not "interested persons" of such Fund, as defined in the
Act, will be selected and nominated by the Directors/Trustees who are not
"interested persons" of such Fund.
Ordinarily, meetings of shareholders for the purpose of electing
Directors/Trustees will not be held unless and until such time as less
than a majority of the Board members holding office have been elected by
shareholders, at which time the Board members then in office will call a
shareholders' meeting for the election of Board members. Under the Act,
shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Trustee through a declaration in writing
or by vote cast in person or by proxy at a meeting called for that
purpose. Board members of each Fund are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
such Board member when requested in writing to do so by the shareholders
of record of not less than 10% of such Fund's outstanding shares.
Each Fund typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of
the Board receives an additional 25% of such compensation. The aggregate
amount of fees and expenses paid to Board members by each Fund for the
fiscal year ended February 28, 1995, and by all other funds in the Dreyfus
Family of Funds for which such person is a Board member for the year ended
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
(5) Total
Compensation from
Fund and Fund
(3) Pension or Complex Paid to
(2) Aggregate Retirement Benefits (4) Estimated Annual Board Member For
(1) Name of Board Compensation from Accrued as Part of Benefits Upon the 1994 Calendar
Member Fund* Fund's Expenses Retirement Year
- ------------------ ------------------ -------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
David W. Burke $ 27,898
Money Fund $1,277 None None
Government Money Fund** 1,277 None None
Joseph S. DiMartino 3,437** 445,000***
Money Fund None None
Government Money Fund 3,437** None None
Diane Dunst 32,602
Money Fund 2,750 None None
Government Money Fund 2,750 None None
Rosalind Gersten Jacobs 57,638
Money Fund 1,613 None None
Government Money Fund 1,613 None None
Jay I. Meltzer 32,102
Money Fund 2,500 None None
Government Money Fund 2,500 None None
Daniel Rose 62,006
Money Fund 2,750 None None
Government Money Fund 2,750 None None
Warren B. Rudman 29,602
Money Fund 2,750 None None
Government Money Fund 2,750 None None
Sander Vanocur 62,006
Money Fund 2,750 None None
Government Money Fund 2,750 None None
__________________________
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $152 and $143 for all Board
members of the Money Fund and Government Money Fund, respectively as a group.
** Estimated amount for the current fiscal year ending February 28, 1996.
*** Estimated amount for the year ending December 31, 1995.
</TABLE>
Officers of each Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray, and prior to August 1990,
he was employed as an Associate at Sidley & Austin. He is 30 years
old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was Manager of the High Performance Fabric Division
of Springs Industries Inc. He is 33 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System. He is 30 years old.
JOSEPH S. TOWER,III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in
the Corporate Finance and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor, and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was
Assistant Vice President in the Mutual Fund Accounting Department of
the Manager. He is 59 years old.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was
a Senior Legal Product Manager, and from January 1990 to January
1992, he was mutual fund accountant, for The Boston Company Advisors,
Inc. He is 28 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Board members and officers of each Fund, as a group, owned less than
1% of the Fund's shares of beneficial interest outstanding on June 7,
1995.
MANAGEMENT AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Management of the
Funds."
The Manager provides management services pursuant to separate
Management Agreements (respectively, the "Agreement") with each Fund, each
of which is dated August 24, 1994. As to each Fund, the Agreement is
subject to annual approval by (i) such Fund's Board or (ii) vote of a
majority (as defined in the Act) of such Fund's outstanding voting
securities, provided that in either event the continuance also is approved
by a majority of the Board members who are not "interested persons" (as
defined in the Act) of the Fund or the Manager, by vote cast in person at
a meeting called for the purpose of voting on such approval. Each Fund's
Agreement was approved by such Fund's shareholders on August 3, 1994, and
last was approved by the Fund's Board, including a majority of such Fund's
Board members who are not "interested persons" (as defined in the Act) of
the Fund or the Manager, at a meeting held on February 8, 1995. As to
each Fund, the Agreement is terminable without penalty, on 60 days'
notice, by such Fund's Board or by vote of the holders of a majority of
such Fund's shares, or, on not less than 90 days' notice, by the Manager.
Each Agreement will terminate automatically, as to the relevant Fund, in
the event of its assignment (as defined in the Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; Robert E.
Riley, President, Chief Operating Officer and a director; W. Keith Smith,
Vice Chairman of the Board; Lawrence S. Kash, Vice Chairman--Distribution
and a director; Philip L. Toia, Vice Chairman--Operations and
Administration; Stephen E. Canter, Vice Chairman and Chief Investment
Officer, Paul H. Synder, Vice President and Chief Financial Officer;
Daniel C. Maclean III, Vice President and General Counsel; Diane Coffey,
Vice President--Corporate Communications; Jeffrey N. Nachman, Vice
President--Fund Accounting; Mark N. Jacobs, Vice President--Fund Legal and
Compliance, and Secretary; Henry D. Gottmann, Vice President--Retail Sales
and Service; Katherine C. Wickham, Vice President--Human Resources; Elie
M. Genadry, Vice President--Institution Sales; Barbara Casey, Vice
President--Dreyfus Retirement Services; William F. Glavin, Jr. Vice
President--Corporate Development; Andrew Wasser, Vice President--
Information Services; Maurice Bendrihem, Controller; Elvira Oslapas--
Assistant Secretary and Mandell L. Berman, Frank V. Cahouet, Alvin E.
Friedman, Lawrence M. Greene, Julian M. Smerling and David B. Truman,
directors.
The Manager manages each Fund's portfolio of investments in
accordance with the stated policies of such Fund, subject to the approval
of the Fund's Board. The Manager is responsible for investment decisions,
and provides each Fund with portfolio managers who are authorized by its
Board to execute purchases and sales of securities. The portfolio manager
of each Fund is Patricia A. Larkin. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for each Fund as well as for other
funds advised by the Manager. All purchases and sales are reported for
the respective Board's review at the meeting subsequent to such
transactions.
All expenses incurred in the operation of a Fund are borne by such
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by each Fund include: organizational costs, taxes,
interest, brokerage fees and commissions, if any, fees of Board members
who are not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, outside auditing and legal
expenses, costs of maintaining its existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of shareholders'
reports and meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, and any extraordinary expenses.
The Manager maintains office facilities on behalf of each Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to each Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
As compensation for the Manager's services, each Fund has agreed to
pay the Manager a monthly management fee at the annual rate of .50 of 1%
of the value of such Fund's average daily net assets. All fees and
expenses are accrued daily and deducted before the declaration of
dividends to shareholders. As to each Fund, for the period April 24, 1992
(commencement of operations) through February 28, 1993 and for the fiscal
year ended February 28, 1994, no management fee was paid by either Fund
pursuant to separate undertakings by the Manager. For the fiscal year
ended February 28, 1995, the management fees payable by the Money Fund and
the Government Money Fund amounted to $8,169,685 and $2,035,026,
respectively, which fees were reduced by $7,482,518 and $1,789,390,
respectively, pursuant to separate undertakings by the Manager, resulting
in net fees of $687,167 paid by the Money Market Fund and $245,636 paid by
the Government Money Market Fund.
The Manager has agreed that if in any fiscal year a Fund's aggregate
expenses, exclusive of taxes, brokerage, interest on borrowings and (with
the prior written consent of the necessary state securities commissions)
extraordinary expenses, but including the management fee, exceed the
expense limitation of any state having jurisdiction over the Fund, such
Fund may deduct from the payment to be made to the Manager under its
Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Funds' respective net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Shareholder
Services Plan."
Each Fund has adopted a Shareholder Services Plan (the "Plan")
pursuant to which the Fund reimburses Dreyfus Service Corporation 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.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Board members for their review. In addition, the Plan provides that
material amendments of the Plan must be approved by the Board members who
are not "interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of the Plan by
vote cast in person at a meeting called for the purpose of considering
such amendments. The Plan is subject to annual approval by such vote of
the Board members cast in person at a meeting called for the purpose of
voting on the Plan. The Plan is terminable at any time by vote of a
majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
For the fiscal year ended February 28, 1995, $1,461,702 was
chargeable to the Money Fund and $174,959 was chargeable to the Government
Money Fund under the Fund's Plan.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as each Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Using Federal Funds. The Shareholder Services Group, Inc., each
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), or
the investor's Fund may attempt to notify the investor upon receipt of
checks drawn on banks that are not members of the Federal Reserve System
as to the possible delay in conversion into Federal Funds and may attempt
to arrange for a better means of transmitting the money. If the investor
is a customer of a securities dealer, bank or other financial institution
and his order to purchase a Fund's shares is paid for other than in
Federal Funds, the securities dealer, bank or other financial institution
acting on behalf of its customer, will complete the conversion into, or
itself advance, Federal Funds generally on the business day following
receipt of the customer order. The order is effective only when so
converted and received by the Transfer Agent. An order for the purchase
of a Fund's shares placed by an investor with sufficient Federal Funds or
cash balance in his brokerage account with a securities dealer, bank or
other financial institution will become effective on the day that the
order, including Federal Funds, is received by the Transfer Agent.
Transactions Through Securities Dealers. Each Fund's shares may be
purchased and redeemed through securities dealers which may charge a
nominal transaction fee for such services. Some dealers will place the
respective Fund's shares in an account with their firm. Dealers also may
require that the customer not take physical delivery of stock
certificates; the customer not request redemption checks to be issued in
the customer's name; fractional shares not be purchased; monthly income
distributions be taken in cash; or other conditions.
No sales charge is imposed by either the Fund or the Distributor,
although investment dealers, banks and other institutions may make
reasonable charges to investors for their services. The services provided
and the applicable fees are established by each dealer or other
institution acting independently of the respective Fund. Each Fund has
been given to understand that these fees may be charged for customer
services including, but not limited to, same-day investment of client
funds; same-day access to client funds; advice to customers about the
status of their accounts, yield currently being paid or income earned to
date; provision of periodic account statements showing security and money
market positions; other services available from the dealer, bank or other
institution; and assistance with inquiries related to their investment.
Any such fees will be deducted monthly from the investor's account, which
on smaller accounts could constitute a substantial portion of
distributions. Small, inactive, long-term accounts involving monthly
service charges may not be in the best interest of investors. Investors
should be aware that they may purchase shares of either Fund directly from
such Fund without imposition of any maintenance or service charges, other
than those already described herein. In some states, banks or other
institutions effecting transactions in Fund's shares may be required to
register as dealers pursuant to state law.
Reopening an Account. An investor may reopen an account with a
minimum investment of $10,000 without filing a new Account Application
during the calendar year the account is closed or during the following
calendar year, provided the information on the old Account Application is
still applicable.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Redeem
Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the investor's Fund provide
Redemption Checks ("Checks") drawn on such Fund's account. Checks will be
sent only to the registered owner(s) of the account and only to the
address of record. The Account Application or later written request must
be manually signed by the registered owner(s). Checks may be made payable
to the order of any person in an amount of $1,000 or more. When a Check
is presented to the Transfer Agent for payment, the Transfer Agent, as the
investor's agent, will cause the Fund to redeem a sufficient number of
shares in the investor's account to cover the amount of the Check and the
$2.00 charge. Dividends are earned until the Check clears. After
clearance, a copy of the Check will be returned to the investor.
Investors generally will be subject to the same rules and regulations that
apply to checking accounts, although election of this Privilege creates
only a shareholder-transfer agent relationship with the Transfer Agent.
If the amount of the Check, plus any applicable charges, is greater
than the value of the shares in an investor's account, the Check will be
returned marked insufficient funds. Checks should not be used to close an
account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine. An
investor will be charged a $5.00 fee for each wire redemption from either
Fund, which will be deducted from the investor's account and paid to the
Transfer Agent. Ordinarily, each Fund will initiate payment for shares
redeemed pursuant to this Privilege on the next business day after receipt
by the Transfer Agent of a redemption request in proper form. Redemption
proceeds will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account
Application or Shareholder Services Form. Redemption proceeds, if wired,
must be in the amount of $5,000 or more and will be wired to the
investor's account at the bank of record designated in the investor's file
at the Transfer Agent, if the investor's bank is a member of the Federal
Reserve System, or to a correspondent bank if the investor's bank is not a
member. Fees ordinarily are imposed by such bank and usually are borne by
the investor. Immediate notification by the correspondent bank to the
investor's bank is necessary to avoid a delay in crediting the funds to
the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-
654-7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each investor, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians. For more information
with respect to signature-guarantees, please call one of the telephone
numbers listed on the cover.
Redemption Commitment. Each Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
such Fund's net assets at the beginning of such period. Such commitment
is irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, each Fund's Board reserves the right to make payments in whole or
in part in securities or other assets in case of an emergency or any time
a cash distribution would impair the liquidity of such Fund to the
detriment of its existing shareholders. In such event, the securities
would be valued in the same manner as such Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption with respect to a
Fund may be suspended or the date of payment postponed (a) during any
period when the New York Stock Exchange is closed (other than customary
weekend and holiday closings), (b) when trading in the market such Fund
ordinarily utilizes is restricted, or when an emergency exists as
determined by the Securities and Exchange Commission so that disposal of
such Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities
and Exchange Commission by order may permit to protect such Fund's
shareholders.
FUND EXCHANGES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Fund Exchanges."
Shares of other funds purchased by exchange will be purchased on the
basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, an investor must give exchange instructions
to the Transfer Agent in writing wire or by telephone. The ability to
issue exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "NO" box on the
Account Application, indicating that the investor specifically refuses
this Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares issued in certificate form are not
eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
This Privilege is available to shareholders resident in any state in
which shares of the fund being acquired may legally be sold. Shares may
be exchanged only between accounts having identical names and other
identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Each Fund reserves the right to
reject any exchange request in whole or in part. The availability of Fund
Exchanges may be modified or terminated at any time upon notice to
shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy
Shares."
Amortized Cost Pricing. The valuation of each Fund's portfolio
securities is based upon their amortized cost which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower
than the price the respective Fund would receive if it sold the
instrument.
Each Fund's Board has established, as a particular responsibility
within the overall duty of care owed to its Fund's investors, procedures
reasonably designed to stabilize such Fund's price per share as computed
for purposes of sales and redemptions at $1.00. Such procedures include
review of the relevant Fund's portfolio holdings at such intervals as
deemed appropriate, to determine whether such Fund's net asset value
calculated by using available market quotations or market equivalents de-
viates from $1.00 per share based on amortized cost. In such review,
investments for which market quotations are readily available will be
valued at the most recent bid price or yield equivalent for such
securities or for securities of comparable maturity, quality and type, as
obtained from one or more of the major market makers for the securities to
be valued. Other investments and assets will be valued at fair value as
determined in good faith by the relevant Board.
The extent of any deviation between a Fund's net asset value based
upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by its Board. If such deviation
exceeds 1/2 of 1%, the Board will consider what actions, if any, will be
initiated. In the event the Board determines that a deviation exists
which may result in material dilution or other unfair results to investors
or existing shareholders, it has agreed to take such corrective action as
it regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or paying dis-
tributions from capital or capital gains; redeeming shares in kind; or es-
tablishing a net asset value per share by using available market
quotations or market equivalents.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Dividends,
Distributions and Taxes."
Ordinarily, gains and losses from portfolio transactions will be
treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the
Internal Revenue Code of 1986, as amended.
Any fee imposed by the Fund and paid by an investor in connection
with an exchange or redemption of Fund shares may result in a capital loss
to such investor. In general, such loss will be treated as a short-term
capital loss if the shares were held for one year or less, or a long-term
capital loss if the shares were held for more than one year.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Yield
Information."
For the seven-day period ended February 28, 1995, the yield of the
Money Fund was 6.05% and its effective yield was 6.23%. For the same
seven-day period, the yield of the Government Money Fund was 6.18% and its
effective yield was 6.37%. Each Fund's yield and effective yield reflect
the waiver of a portion of the management fee by the Manager without which
the yield and effective yield for the seven-day period ended February 28,
1995, would have been, for the Money Fund, 5.84% and 6.01%, respectively,
and, for the Government Money Fund, 5.86% and 6.03%, respectively. Yield
is computed in accordance with a standardized method which involves
determining the net change in the value of a hypothetical pre-existing
Fund account having a balance of one share at the beginning of a seven
calendar day period for which yield is to be quoted, dividing the net
change by the value of the account at the beginning of the period to
obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value
of the account reflects the value of additional shares purchased with div-
idends declared on the original share and any such additional shares and
fees that may be charged to shareholder accounts, in proportion to the
length of the base period and the Fund's average account size, but does
not include realized gains and losses or unrealized appreciation and
depreciation. Effective yield is computed by adding 1 to the base period
return (calculated as described above), raising that sum to a power equal
to 365 divided by 7, and subtracting 1 from the result.
Yields fluctuate and are not necessarily representative of future
results. Investors should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in a Fund is not guaranteed.
See "Determination of Net Asset Value" for a discussion of the manner in
which each Fund's respective price per share is determined.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the
issuer or an underwriter or a market maker for the securities.
Ordinarily, no brokerage commissions are paid by a Fund for such
purchases. Purchases from underwriters of portfolio securities include a
concession paid by the issuer to the underwriter and the purchase price
paid to market makers for securities may include the spread between the
bid and asked price. Neither Fund has paid brokerage commissions to date.
Transactions are allocated to various dealers by the respective
Fund's portfolio managers in their best judgment. The primary
consideration is prompt and effective execution of orders at the most
favorable price. Subject to that primary consideration, dealers may be
selected for research, statistical or other services to enable the Manager
to supplement its own research and analysis with the views and information
of other securities firms.
Research services furnished by brokers through which a Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising such Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
Each Fund sends annual and semi-annual financial statements to all
its respective shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
is each Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the transfer and dividend disbursing agent for each
Fund. Neither The Bank of New York nor The Shareholder Services Group,
Inc. has any part in determining the investment policies of either Fund or
which securities are to be purchased or sold by a Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for each Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of being sold pursuant to the Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of each Fund.
APPENDIX
This Appendix is applicable only to eligible investments of the Money
Fund.
Description of the highest commercial paper, bond and other short-
and long-term rating categories assigned by Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, Inc. ("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), IBCA
Limited and IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("BankWatch").
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted with a plus sign (+) designation.
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
The rating Fitch-1 (Highest Grade) is the highest commercial paper
rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment.
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor.
The designation A1 by IBCA indicates that the obligation is supported
by a very strong capacity for timely repayment. Those obligations rated
A1+ are supported by the highest capacity for timely repayment.
The rating TBW-1 is the highest short-term obligation rating assigned
by BankWatch. Obligations rated TBW-1 are regarded as having the
strongest capacity for timely repayment.
Bond and Long-Term Ratings
Bonds rated AAA by S&P are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest.
Bonds rated Aaa by Moody's are judged by Moody's to be of the best
quality. Bonds rated Aa by Moody's are judged by Moody's to be of high
quality by all standards and, together with the Aaa group, they comprise
what are generally known as high-grade bonds.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high-
grade, broadly marketable, suitable for investment by trustees and
fiduciary institutions and liable to but slight market fluctuation other
than through changes in the money rate. The prime feature of an AAA bond
is a showing of earnings several times or many times interest
requirements, with such stability of applicable earnings that safety is
beyond reasonable question whatever changes occur in conditions.
Bonds rated AAA by Duff are considered by Duff to be of the highest
credit quality. The risk factors are negligible, being only slightly more
than U.S. Treasury debt.
Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest
is substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
IBCA also assigns a rating to certain international and U.S. banks.
An IBCA bank rating represents IBCA's current assessment of the strength
of the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual
rating system comprised of Legal Ratings and Individual Ratings. In
addition, IBCA assigns banks Long- and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range in
gradation from 1 through 5, address the question of whether the bank would
receive support provided by central banks or shareholders if it
experienced difficulties, and such ratings are considered by IBCA to be a
prime factor in its assessment of credit risk. Individual Ratings, which
range in gradations from A through E, represent IBCA's assessment of a
bank's economic merits and address the question of how the bank would be
viewed if it were entirely independent and could not rely on support from
state authorities or its owners.
In addition to its ratings of short-term obligations, BankWatch
assigns a rating to each issuer it rates, in gradations of A through E.
BankWatch examines all segments of the organization, including, where
applicable, the holding company, member banks or associations, and other
subsidiaries. In those instances where financial disclosure is incomplete
or untimely, a qualified rating (QR) is assigned to the institution.
BankWatch also assigns, in the case of foreign banks, a country rating
which represents an assessment of the overall political and economic
stability of the country in which the bank is domiciled.
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS FEBRUARY 28, 1995
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--26.0% AMOUNT VALUE
---------------- ------------
<S> <C> <C>
ABN-AMRO Bank N.V. (Yankee)
6.15%, 4/5/95........................................................... $ 40,000,000 $ 40,000,761
Bank of Tokyo Ltd. (Yankee)
6.75%, 6/5/95........................................................... 20,000,000 20,000,000
Dai-Ichi Kangyo Bank Ltd. (Yankee)
6.17%-6.65%, 5/17/95-6/30/95............................................ 43,000,000 43,047,688
Fuji Bank Ltd. (Yankee)
6.35%, 4/24/95.......................................................... 25,000,000 25,000,000
Industrial Bank of Japan Ltd. (London)
5.28%, 3/1/95........................................................... 15,000,000 15,000,000
Industrial Bank of Japan Ltd. (Yankee)
6.18%-6.56%, 4/3/95-6/2/95.............................................. 58,000,000 58,000,000
Mitsubishi Bank Ltd. (London)
6.56%, 4/19/95.......................................................... 12,000,000 11,971,517
Mitsubishi Bank Ltd. (Yankee)
6.22%-6.40%, 5/23/95-6/15/95............................................ 63,000,000 63,015,777
Norinchukin Bank (Yankee)
6.17%, 5/22/95.......................................................... 15,000,000 15,000,637
Sanwa Bank Ltd. (London)
6.23%, 6/16/95.......................................................... 20,000,000 20,008,421
Sanwa Bank Ltd. (Yankee)
5.77%-6.64%, 4/21/95-6/9/95............................................. 43,000,000 43,013,041
Sumitomo Bank Ltd. (Yankee)
5.23%-6.59%, 3/7/95-6/9/95.............................................. 48,000,000 48,010,296
SwedBank (Yankee)
6.65%, 5/5/95........................................................... 20,000,000 20,000,000
--------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $422,068,138)..................................................... $ 422,068,138
==============
BANKERS' ACCEPTANCES--5.9%
Bank of Tokyo Ltd. (Yankee)
5.92%-6.58%, 3/9/95-6/20/95............................................. $ 52,050,000 $ 51,379,176
Dai-Ichi Kangyo Bank Ltd. (Yankee)
6.03%-6.77%, 4/3/95-5/30/95............................................. 20,000,000 19,814,661
Fuji Bank Ltd. (Yankee)
6.17%, 5/16/95.......................................................... 15,000,000 14,807,467
Mitsubishi Bank Ltd. (Yankee)
6.06%, 3/15/95.......................................................... 4,900,000 4,888,567
Sumitomo Bank Ltd. (Yankee)
5.27%, 3/6/95........................................................... 5,000,000 4,996,431
--------------
TOTAL BANKERS' ACCEPTANCES
(cost $95,886,302)...................................................... $ 95,886,302
==============
COMMERCIAL PAPER--35.1%
American Home Products Corp.
6.07%-6.82%, 3/23/95-6/9/95............................................. $ 67,000,000 $ 66,147,822
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
---------------- -------------
Chrysler Financial Corp.
6.28%, 6/27/95.......................................................... $ 25,000,000 $ 24,496,042
Den Danske Corp. Inc.
6.00%-6.52%, 4/14/95-6/19/95............................................ 45,000,000 44,433,194
Ford Motor Credit Co.
6.12%, 5/30/95.......................................................... 25,000,000 24,623,125
General Electric Capital Corp.
5.11%-6.56%, 3/10/95-4/18/95............................................ 35,000,000 34,794,417
General Electric Capital Services Inc.
5.11%-6.56%, 3/14/95-4/14/95............................................ 90,000,000 89,378,017
General Motors Acceptance Corp.
5.86%-6.44%, 3/10/95-6/5/95............................................. 77,000,000 76,197,125
Generale Bank Inc.
6.49%, 4/20/95.......................................................... 18,500,000 18,336,840
Lehman Brothers Holdings Inc.
5.25%, 3/17/95.......................................................... 20,000,000 19,955,111
Merrill Lynch & Co. Inc.
5.73%, 4/17/95.......................................................... 25,000,000 24,818,201
NationsBank Corp.
6.00%, 4/19/95.......................................................... 25,000,000 24,800,938
NYNEX Corp.
6.28%-6.76%, 4/4/95-5/22/95............................................. 11,990,000 11,888,322
PNC Funding Corp.
5.82%, 4/3/95........................................................... 15,000,000 14,921,900
Sears Roebuck Acceptance Corp.
6.46%-6.70%, 4/6/95-6/12/95............................................. 46,000,000 45,573,640
Seventy Five State Street
6.04%, 3/24/95(a)....................................................... 10,175,000 10,136,191
Spintab AB
6.02%-6.04%, 3/15/95-3/23/95............................................ 20,000,000 19,940,878
Woolwich Building Society
6.68%, 6/12/95.......................................................... 20,000,000 19,628,056
-------------
TOTAL COMMERCIAL PAPER
(cost $570,069,819)..................................................... $ 570,069,819
=============
CORPORATE NOTES--20.7%
Abbey National Treasury Services PLC
6.26%, 4/25/95 (b,c).................................................... $ 15,000,000 $ 15,009,407
Bankers Trust New York Corp.
6.20%, 3/17/95 (b,c).................................................... 25,000,000 24,999,342
Bear Stearns Companies Inc.
6.04%-6.08%, 8/25/95-1/26/96 (c)........................................ 80,000,000 80,000,000
Chemical Banking Corp.
6.31%, 4/27/95 (c)...................................................... 24,000,000 24,006,878
First National Bank of Chicago
6.31%, 6/8/95 (c)....................................................... 25,000,000 25,002,522
Ford Motor Credit Co.
5.11%, 3/2/95........................................................... 3,500,000 3,500,317
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995
PRINCIPAL
CORPORATE NOTES (CONTINUED) AMOUNT VALUE
---------------- -------------
General Motors Acceptance Corp.
6.22%, 3/17/95.......................................................... $ 3,000,000 $ 3,001,137
Lehman Brothers Holdings Inc.
6.47%-6.75%, 6/5/95-9/18/95 (c)......................................... 55,000,000 55,000,000
Merrill Lynch & Co. Inc.
6.19%, 4/19/95-4/27/95 (c).............................................. 45,000,000 45,000,000
PHH Corp.
6.00%, 3/10/95 (c)...................................................... 60,000,000 60,000,000
-------------
- ---TOTAL CORPORATE NOTES
(cost $335,519,603)..................................................... $ 335,519,603
==============
PROMISSORY NOTES--4.7%
Goldman Sachs Group L.P.
5.19%-6.56%, 3/3/95-6/12/95 (d,e)
(cost $76,000,000)...................................................... $ 76,000,000 $ 76,000,000
==============
SHORT-TERM BANK NOTES--2.8%
FCC National Bank (Delaware)
5.98%, 3/14/95 (c)...................................................... $ 20,000,000 $ 19,999,642
First National Bank of Boston
6.31%, 6/7/95........................................................... 25,000,000 25,000,000
--------------
TOTAL SHORT-TERM BANK NOTES
(cost $44,999,642)...................................................... $ 44,999,642
==============
U.S. GOVERNMENT AGENCIES--3.2%
Federal Farm Credit Banks
Floating Rate Notes
6.25%, 5/10/95 (c)...................................................... $ 10,000,000 $ 10,000,000
Federal Home Loan Banks
Floating Rate Notes
6.58%, 1/31/97 (c)...................................................... 5,000,000 5,000,000
Federal National Mortgage Association
Floating Rate Notes
3.59%-6.67%, 4/16/95-2/14/97 (c)........................................ 34,000,000 34,000,546
Student Loan Marketing Association
Floating Rate Notes
6.06%-6.15%, 3/20/95-8/7/95 (c)......................................... 3,250,000 3,250,644
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $52,251,190)...................................................... $ 52,251,190
==============
TIME DEPOSITS--.1%
First Union National Bank (Nassau)
6.06%, 3/1/95
(cost $2,649,000)....................................................... $ 2,649,000 $ 2,649,000
==============
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995
PRINCIPAL
REPURCHASE AGREEMENTS--1.4% AMOUNT VALUE
---------------- -------------
Eastbridge Capital Inc., 6.10%
dated 2/28/95, due 3/1/95 in the amount of
$23,003,897 (fully collateralized by $23,505,000
U.S. Treasury Bills due 5/11/95, value
$23,236,103)
(cost $23,000,000)...................................................... $ 23,000,000 $ 23,000,000
=============
TOTAL INVESTMENTS
(cost $1,622,443,694).......................................... 99.9% $1,622,443,694
====== ==============
CASH AND RECEIVABLES (NET)......................................... .1% $ 798,071
====== ==============
NET ASSETS ................................................... 100.0% $1,623,241,765
====== ==============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Backed by irrevocable letter of credit.
(b) Security 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 February 28,
1995, this security amounted to $15 million, or .9% of net assets.
(c) Variable interest rate - subject to periodic change.
(d) This note was acquired for investment, not with the intent to
distribute or sell.
(e) Securities restricted as to public resale. These securities were
acquired from 6/9/94 to 2/8/95 at a cost of par value. At February 28,
1995, the aggregate value of these securities is $76 million,
representing approximately 4.7% of net assets and are valued at amortized
cost.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value_Note 1(a,b)......................... $1,622,443,694
Interest receivable..................................................... 9,537,576
Prepaid expenses........................................................ 99,382
-------------
1,632,080,652
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 126,834
Due to Custodian........................................................ 6,351,898
Payable for investment securities purchased............................. 1,808,458
Accrued expenses and other liabilities.................................. 551,697 8,838,887
------------- -------------
NET ASSETS ................................................................ $1,623,241,765
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,623,458,000
Accumulated net realized (loss) on investments.......................... (216,235)
----------------
NET ASSETS at value applicable to 1,623,458,000 shares outstanding
(3 billion shares of $.001 par value Common Stock authorized)........... $1,623,241,765
==============
NET ASSET VALUE, offering and redemption price per share
($1,623,241,765 / 1,623,458,000 shares)................................. $1.00
=====
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 79,707,482
EXPENSES:
Management fee_Note 2(a).............................................. $ 8,169,685
Shareholder servicing costs_Note 2(b)................................. 1,681,524
Registration fees..................................................... 211,157
Custodian fees........................................................ 127,032
Professional fees..................................................... 66,697
Prospectus and shareholders' reports.................................. 30,756
Directors' fees and expenses_Note 2(c)................................ 18,778
Miscellaneous......................................................... 70,511
-------------
10,376,140
Less_reduction in management fee due
to undertakings_Note 2(a)......................................... 7,482,518
-------------
TOTAL EXPENSES.................................................. 2,893,622
----------------
INVESTMENT INCOME--NET...................................................... 76,813,860
NET REALIZED (LOSS) ON INVESTMENTS--Note 1(b)............................... (126,050)
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 76,687,810
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED FEBRUARY 28,
-----------------------------------
1994 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................... $ 34,971,459 $ 76,813,860
Net realized gain (loss) on investments................................. 2,011 (126,050)
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 34,973,470 76,687,810
---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net................................................... (35,108,645) (76,813,860)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 1,904,044,188 2,588,359,537
Dividends reinvested.................................................... 32,950,757 71,571,677
Cost of shares redeemed................................................. (1,454,177,330) (2,253,594,949)
---------------- ----------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS................ 482,817,615 406,336,265
---------------- ----------------
TOTAL INCREASE IN NET ASSETS...................................... 482,682,440 406,210,215
NET ASSETS:
Beginning of year....................................................... 734,349,110 1,217,031,550
---------------- ----------------
End of year............................................................. $1,217,031,550 $1,623,241,765
================ ================
See notes to financial statements.
</TABLE>
DREYFUS BASIC MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated July 3, 1995.
See notes to financial statements.
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administation services, the parent company of which is Boston
Institutional Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Directors to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(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 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 $216,000
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to February 28, 1995. If not
applied, $90,000 of the carryover expires in fiscal 2002 and $126,000 expires
in fiscal 2003.
DREYFUS BASIC MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At February 28, 1995, 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 ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full fiscal year. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (excluding certain
expenses as described above) exceed 2 1/2% of the first $30 million, 2% of
the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue
sky" regulations. However, the Manager had undertaken from March 1, 1994
through October 4, 1994 to waive receipt of the management fee payable to it
by the Fund, and thereafter had undertaken through October 17, 1994 to reduce
the management fee paid by the Fund, to the extent that the Fund's aggregate
expenses (excluding certain expenses as described above) exceeded specified
annual percentages of the Fund's average daily net assets. The Manager has
currently undertaken from October 18, 1994 through March 31, 1995 or until
such time as the net assets of the Fund exceed $2 billion, regardless of
whether they remain at that level, to waive receipt of the management fee
payable to it by the Fund in excess of an annual rate of .10 of 1% of the
Fund's average daily net assets. The reduction in management fee, pursuant to
the undertakings, amounted to $7,482,518 for the year ended February 28,
1995.
In addition, the Manager has undertaken through June 30, 1996, to reduce
the management fee paid by the Fund, to the extent that the Fund's aggregate
annual expenses (excluding certain expenses as described above) exceed an
annual rate of .45 of 1% of the average daily value of the Fund's net assets.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the year ended
February 28, 1995, the Fund was charged an aggregate of $1,461,702 pursuant
to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives 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 TRUSTEES
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, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of February 28, 1995 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, 1995, 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 4, 1995
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS FEBRUARY 28, 1995
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS--4.2% PURCHASE AMOUNT VALUE
------------ -------------- -------------
<S> <C> <C> <C>
8/10/95..................................................... 6.40% $ 25,000,000 $ 24,302,500
11/16/95.................................................... 6.84 20,000,000 19,074,111
-------------
TOTAL U.S. TREASURY BILLS (cost $43,376,611) ................... $ 43,376,611
=============
U.S. GOVERNMENT AGENCIES-95.0%
Federal Farm Credit Banks, Discount Notes
3/6/95...................................................... 5.09% $ 10,000,000 $ 9,993,111
5/9/95...................................................... 6.01 11,065,000 10,941,146
6/12/95..................................................... 6.24 315,000 309,511
6/19/95..................................................... 6.53 1,000,000 980,597
8/7/95...................................................... 6.38 14,700,000 14,298,764
Federal Farm Credit Banks, Floating Rate Notes
5/26/95..................................................... 6.30(a) 10,000,000 10,000,000
9/30/96..................................................... 6.30(a) 5,000,000 5,000,000
Federal Home Loan Banks, Discount Notes
3/1/95...................................................... 5.95 191,880,000 191,880,000
3/7/95...................................................... 5.98 10,000,000 9,990,133
3/20/95..................................................... 5.19 25,000,000 24,933,368
5/3/95...................................................... 6.39 10,000,000 9,890,450
5/4/95...................................................... 6.40 15,000,000 14,832,800
5/15/95..................................................... 6.41 210,000 207,261
5/22/95..................................................... 6.02 21,440,000 21,150,405
6/19/95..................................................... 6.34 49,265,000 48,334,555
11/24/95.................................................... 7.09 15,000,000 14,260,767
1/25/96..................................................... 6.73 4,000,000 3,767,900
Federal Home Loan Banks, Floating Rate Notes
12/19/96.................................................... 6.50(a) 16,000,000 16,000,000
1/31/97..................................................... 6.42(a) 23,000,000 23,057,639
Federal Home Loan Mortgage Corp., Discount Notes
4/4/95...................................................... 6.25 40,000,000 39,768,611
5/3/95...................................................... 6.22 12,146,000 12,015,916
5/19/95..................................................... 6.04 3,000,000 2,960,829
8/2/95...................................................... 6.37 9,000,000 8,762,455
Federal Home Loan Mortgage Corp., Floating Rate Notes
6/30/98..................................................... 6.53(a) 10,000,000 9,945,518
Federal National Mortgage Association, Discount Notes
5/3/95...................................................... 6.18 18,000,000 17,808,165
5/8/95...................................................... 6.06 10,615,000 10,495,298
5/17/95..................................................... 6.38 18,550,000 18,302,653
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. GOVERNMENT AGENCIES (CONTINUED) PURCHASE AMOUNT VALUE
------------ -------------- -------------
Federal National Mortgage Association, Discount Notes (continued):
5/19/95..................................................... 6.41% $ 325,000 $ 320,536
5/31/95..................................................... 6.43 45,000,000 44,286,788
6/12/95..................................................... 6.47 42,990,000 42,215,437
6/15/95..................................................... 6.15 12,100,000 11,885,165
6/16/95..................................................... 6.36 54,700,000 53,692,943
6/19/95..................................................... 6.56 35,000,000 34,318,916
6/20/95..................................................... 6.44 17,000,000 16,671,348
6/22/95..................................................... 6.46 8,000,000 7,842,051
6/23/95..................................................... 6.42 10,000,000 9,802,083
7/11/95..................................................... 6.31 8,955,000 8,753,393
7/17/95..................................................... 6.27 29,300,000 28,614,926
7/26/95..................................................... 6.50 15,000,000 14,614,125
8/8/95...................................................... 6.38 15,000,000 14,588,000
8/31/95..................................................... 6.30 31,790,000 30,804,245
Federal National Mortgage Association, Floating Rate Notes
1/26/96..................................................... 6.26(a) 17,000,000 17,010,169
2/14/97..................................................... 6.67(a) 10,000,000 10,000,000
2/18/97..................................................... 6.48(a) 31,000,000 31,028,749
Student Loan Marketing Association, Floating Rate Notes
3/20/95..................................................... 6.03(a) 2,200,000 2,200,389
8/7/95...................................................... 6.07(a) 2,200,000 2,200,414
3/20/96..................................................... 6.09(a) 1,000,000 1,000,475
12/20/96.................................................... 6.04(a) 25,000,000 25,000,000
1/23/97..................................................... 5.98(a) 13,905,000 13,954,407
1/27/98..................................................... 6.58(a) 20,000,000 19,795,377
-------------
TOTAL U.S. GOVERNMENT AGENCIES (cost $990,487,788).............. $ 990,487,788
=============
TOTAL INVESTMENTS (cost $1,033,864,399).............. 99.2% $1,033,864,399
====== ==============
CASH AND RECEIVABLES (NET)........................... .8% $ 7,857,656
====== ==============
NET ASSETS........................................... 100.0% $1,041,722,055
====== ==============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate-subject to periodic change.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value_Note 1(a)........................... $1,033,864,399
Cash.................................................................... 7,654,865
Interest receivable..................................................... 1,098,167
Prepaid expenses........................................................ 327,400
----------------
1,042,944,831
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 75,036
Payable for shares of Beneficial Interest redeemed...................... 865,379
Accrued expenses and other liabilities.................................. 282,361 1,222,776
---------- ----------------
NET ASSETS ................................................................ $1,041,722,055
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,041,822,696
Accumulated net realized (loss) on investments.......................... (100,641)
----------------
NET ASSETS at value applicable to 1,041,822,696 shares outstanding
(unlimited number of $.001 par value shares of Beneficial Interest authorized) $1,041,722,055
==============
NET ASSET VALUE, offering and redemption price per share
($1,041,722,055 / 1,041,822,696 shares)................................. $1.00
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $21,228,240
EXPENSES:
Management fee_Note 2(a).............................................. $2,035,026
Shareholder servicing costs_Note 2(b)................................. 179,900
Registration fees..................................................... 129,497
Custodian fees........................................................ 50,860
Professional fees..................................................... 29,926
Trustees' fees and expenses_Note 2(c)................................. 18,245
Prospectus and shareholders' reports.................................. 9,200
Miscellaneous......................................................... 19,714
------------
2,472,368
Less_reduction in management fee due to
undertakings_Note 2(a)............................................ 1,789,390
------------
TOTAL EXPENSES.................................................. 682,978
-------------
INVESTMENT INCOME--NET...................................................... 20,545,262
NET REALIZED (LOSS) ON INVESTMENTS--Note 1(b)............................... (96,907)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $20,448,355
=============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED FEBRUARY 28,
-----------------------------------
1994 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income_net................................................... $ 6,646,915 $ 20,545,262
Net realized (loss) on investments...................................... (3,118) (96,907)
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 6,643,797 20,448,355
---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net................................................... (6,667,922) (20,545,262)
---------------- ----------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 443,808,311 1,427,941,614
Dividends reinvested.................................................... 6,396,795 18,991,741
Cost of shares redeemed................................................. (301,186,102) (670,805,165)
---------------- ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.......... 149,019,004 776,128,190
---------------- ----------------
TOTAL INCREASE IN NET ASSETS...................................... 148,994,879 776,031,283
NET ASSETS:
Beginning of year....................................................... 116,695,893 265,690,772
---------------- ----------------
End of year............................................................. $ 265,690,772 $1,041,722,055
================ ================
See notes to financial statements.
</TABLE>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated July 3, 1995.
See notes to financial statements.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Trustees 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 $58,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 28, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through February 28, 1995, which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $199 of the carryover
expires in fiscal 2001, $2,269 of the carryover expires in fiscal 2002 and
$55,532 of the carryover expires in fiscal 2003.
At February 28, 1995, 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 ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
expenses, exceed the expense limitation of any state having jurisdiction over
the Fund for any full fiscal year. The most stringent state expense
limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (excluding certain
expenses as described above) exceed 2 1/2% of the first $30 million, 2% of
the next $70 million and 1 1/2% of the excess over $100 million of the
average value of the Fund's net assets in accordance with California "blue sky
" regulations. However, the Manager had undertaken from March 1, 1994 through
October 4, 1994, to waive receipt of the management fee payable to it by the
Fund and thereafter, had undertaken through October 17, 1994, to reduce the
management fee paid by the Fund, to the extent that the Fund's aggregate
expenses (excluding certain expenses as described above) exceeded specified
annual percentages of the Fund's average daily net assets. The Manager has
currently undertaken from October 18, 1994 through March 31, 1995, to waive
receipt of the management fee payable to it by the Fund in excess of an
annual rate of .10 of 1% of the Fund's average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to
$1,789,390 for the year ended February 28, 1995.
In addition, the Manager has undertaken through June 30, 1996 to reduce
the management fee paid by the Fund, to the extent that the Fund's aggregate
annual expenses (excluding certain expenses as described above) exceed an
annual rate of .45 of 1% of the average daily value of the Fund's net assets.
The undertakings may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the year ended
February 28, 1995, the Fund was charged an aggregate of $174,959 pursuant to
the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives 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 U.S. GOVERNMENT MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus BASIC U.S. Government Money Market Fund, including the statement of
investments, as of February 28, 1995, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of February 28, 1995 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 U.S. Government Money Market Fund at February 28,
1995, 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 signature logo)
New York, New York
April 3, 1995
