DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus BASIC U.S.
Government Money Market Fund. For its annual reporting period ended February
29, 1996, your Fund provided an annualized yield of 5.79%. Income dividends
of approximately $.058 per share were paid to shareholders. Assuming
reinvestment of these dividends and accounting for the effect of compounding,
the Fund achieved an annualized effective yield of 5.94%.*
THE ECONOMY
In the past year until very recently, interest rates and economic
activity have steadily declined. On January 31, 1996 the Federal Reserve
Board in its most recent move lowered the Federal Funds rate from 5.50% to
5.25%, which prompted banks to lower the prime rate from 8.50% to 8.25%. The
Federal Reserve also reduced the discount rate from 5.25% to 5.00%. The
reduction in interest rates was a continuation of an easing in monetary
policy that has prevailed since last July.
In the past month it has become apparent that the reduction in interest
rates has affected the pace of economic expansion. Recent evidence has shown
that economic growth is in a possible turnaround. For much of the period, the
Federal Reserve kept a cautious eye on price trends, concerned that undue
monetary stimulus would rekindle inflationary pressures. So far, inflation
has continued at a subdued pace, with the major price indices under control.
Federal Reserve Chairman Alan Greenspan's recent comments regarding the
state of the economy described it as "on track for sustained growth." While
some segments of the economy are still in a "soft patch," signs have emerged
showing improved performance. According to the data used for the March
Federal Reserve Policy meeting, increased activity in the real estate sector
was evident. Retail sales accelerated in the Northeast (the weather having
hindered performance during the previous month). Tight labor markets were
observed in several districts, and a large increase in the employment number
for the month of February revealed strength in the job sector.
MARKET ENVIRONMENT/PORTFOLIO ACTIVITY
The primary focus of the market has been on the Federal Reserve policy
and its possible implications for the direction of interest rates in 1996. As
hopes for further Federal Reserve rate cuts abate, short-term interest rates
have edged slightly higher. While the trend in rates is not on a decided
incline, sustained increases in rates might have a favorable effect on the
U.S. dollar and on the yield of short-term money market and government
securities. In addition, Washington's ability to deal with budget deficits
remains an important market concern.
For much of the past year, while the fundamental backdrop of a moderate
economic expansion was the norm, portfolio activity for your Fund centered on
extending the average maturity. As always, we intend to take full advantage
of the current environment through discerning important market information,
opportunities in timing, and value.
We thank you for your continued investment in the Dreyfus BASIC U.S.
Government Money Market Fund.
Very truly yours,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
March 15, 1996
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS FEBRUARY 29, 1996
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS-6.0% PURCHASE AMOUNT VALUE
______ _______ _________
<S> <C> <C> <C>
8/22/96.................................................... 5.83 % $65,000,000 $63,271,116
3/6/97..................................................... 5.23 20,000,000 18,994,956
__________
TOTAL U.S. TREASURY BILLS (cost $82,266,072)................... $82,266,072
===========
U.S. GOVERNMENT AGENCIES-97.4%
Federal Farm Credit Banks, Floating Rate Notes
3/7/96..................................................... 5.50% (a) $60,000,000 $59,999,291
9/16/96.................................................... 5.32 (a) 10,000,000 10,004,496
9/30/96.................................................... 5.55 (a) 5,000,000 5,000,000
11/22/96................................................... 5.33 (a) 25,000,000 24,982,474
12/6/96.................................................... 5.33 (a) 60,000,000 59,951,293
12/30/96................................................... 5.33 (a) 50,000,000 49,944,453
5/23/97.................................................... 5.40 (a) 24,000,000 24,096,826
6/13/97.................................................... 5.39 (a) 19,500,000 19,483,692
7/25/97.................................................... 5.33 (a) 50,000,000 49,973,245
8/14/97.................................................... 5.35 (a) 75,000,000 74,982,975
9/15/97.................................................... 5.38 (a) 20,000,000 19,985,567
1/30/98.................................................... 5.59 (a) 50,000,000 49,945,805
6/8/98..................................................... 5.50 (a) 50,000,000 50,000,000
Federal Home Loan Banks, Discount Note
3/1/96..................................................... 5.30 14,575,000 14,575,000
Federal Home Loan Banks, Floating Rate Notes
7/8/96..................................................... 5.30 (a) 10,000,000 9,999,431
11/7/96.................................................... 5.46 (a) 25,000,000 24,996,642
12/19/96................................................... 5.75 (a) 16,000,000 16,000,000
1/24/97.................................................... 5.38 (a) 50,000,000 49,972,134
1/31/97.................................................... 5.67 (a) 23,000,000 23,027,588
2/3/97..................................................... 5.35 (a) 10,000,000 10,034,554
3/6/97..................................................... 5.22 (a) 25,000,000 24,994,075
Federal Home Loan Mortgage Corp., Discount Note
4/23/96.................................................... 6.28 16,000,000 15,860,787
Federal Home Loan Mortgage Corp., Floating Rate Note
6/30/98.................................................... 5.78 (a) 10,000,000 9,961,903
Federal National Mortgage Association, Discount Note
4/15/96.................................................... 6.31 45,000,000 44,665,875
Federal National Mortgage Association, Floating Rate Notes
6/3/96..................................................... 5.42 (a) 25,000,000 24,997,219
10/7/96.................................................... 5.47 (a) 18,000,000 18,031,259
2/14/97.................................................... 5.85 (a) 10,000,000 10,000,000
2/18/97.................................................... 5.74 (a) 31,000,000 31,014,135
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 29, 1996
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. GOVERNMENT AGENCIES (CONTINUED) PURCHASE AMOUNT VALUE
________ _________ ____________
Federal National Mortgage Association, Floating Rate Notes (continued)
3/27/97.................................................... 5.30%(a) $5,000,000 $5,000,000
4/4/97..................................................... 4.91 (a) 50,000,000 49,974,415
4/11/97.................................................... 5.29 (a) 20,000,000 19,989,800
6/20/97.................................................... 5.27 (a) 20,000,000 20,016,716
6/20/97.................................................... 5.46 (a) 100,000,000 99,987,842
7/24/97.................................................... 5.36 (a) 25,000,000 25,000,000
6/19/98.................................................... 5.45 (a) 100,000,000 99,957,846
6/29/98.................................................... 5.47 (a) 100,000,000 99,957,850
Student Loan Marketing Association, Floating Rate Notes
3/20/96.................................................... 5.18 (a) 1,000,000 1,000,024
11/1/96.................................................... 5.07 (a) 14,600,000 14,618,365
12/20/96................................................... 5.11 (a) 25,000,000 25,000,000
1/23/97.................................................... 5.07 (a) 13,905,000 13,928,351
1/23/97.................................................... 5.06 (a) 10,000,000 10,016,753
1/27/98.................................................... 5.82 (a) 20,000,000 19,865,830
__________
TOTAL U.S. GOVERNMENT AGENCIES (cost $1,330,794,511)........... $1,330,794,511
===========
TOTAL INVESTMENTS
(cost $1,413,060,583)........................... 103.4% $1,413,060,583
====== ===============
LIABILITIES, LESS CASH AND RECEIVABLES.............. (3.4%) $ (47,004,329)
====== ==============
NET ASSETS.......................................... 100.0% $1,366,056,254
====== ==============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate-subject to periodic change.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value-Note 1(a)........................... $1,413,060,583
Cash.................................................................... 6,280,579
Interest receivable..................................................... 11,232,987
Prepaid expenses........................................................ 158,465
_____________
1,430,732,614
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $441,643
Payable for investment securities purchased............................. 63,978,831
Accrued expenses and other liabilities.................................. 255,886 64,676,360
________ ______________
NET ASSETS.................................................................. $1,366,056,254
_____________
REPRESENTED BY:
Paid-in capital......................................................... $1,366,056,464
Accumulated net realized (loss) on investments.......................... (210)
_____________
NET ASSETS at value applicable to 1,366,056,464 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $1,366,056,254
===============
NET ASSET VALUE, offering and redemption price per share
($1,366,056,254 / 1,366,056,464 shares)................................. $1.00
=====
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 29, 1996
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $76,467,239
EXPENSES:
Management fee-Note 2(a).............................................. $6,266,897
Shareholder servicing costs-Note 2(b)................................. 1,415,057
Registration fees..................................................... 405,413
Custodian fees........................................................ 101,465
Professional fees..................................................... 47,128
Prospectus and shareholders' reports.................................. 46,094
Trustees' fees and expenses-Note 2(c)................................. 27,174
Miscellaneous......................................................... 19,747
_____________
TOTAL EXPENSES.................................................. 8,328,975
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 4,484,591
____________
NET EXPENSES.................................................... 3,844,384
_________
INVESTMENT INCOME-NET....................................................... 72,622,855
NET REALIZED GAIN ON INVESTMENTS-Note 1(b).................................. 100,431
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $72,723,286
=============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED
_____________________________
FEBRUARY 28, FEBRUARY 29,
1995 1996
___________ ____________
<S> <C> <C>
OPERATIONS:
Investment income-net............................................... $20,545,262 $ 72,622,855
Net realized gain (loss) on investments............................. (96,907) 100,431
___________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 20,448,355 72,723,286
___________ ____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net............................................... (20,545,262) (72,622,855)
___________ ____________
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold....................................... 1,427,941,614 1,786,037,880
Dividends reinvested................................................ 18,991,741 68,115,281
Cost of shares redeemed............................................. (670,805,165) (1,529,919,393)
___________ ____________
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 776,128,190 324,233,768
___________ ____________
TOTAL INCREASE IN NET ASSETS.................................. 776,031,283 324,334,199
NET ASSETS:
Beginning of year................................................... 265,690,772 1,041,722,055
___________ ____________
End of year......................................................... $1,041,722,055 $1,366,056,254
============== ==============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
FISCAL YEAR ENDED FEBRUARY,
____________________________________________
PER SHARE DATA: 1993(1) 1994 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net asset value, beginning of year....................... $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
INVESTMENT OPERATIONS;
Investment income-net.................................... .031 .032 .046 .058
------ ------ ------ ------
DISTRIBUTIONS;
Dividends from investment income-net..................... (.031) (.032) (.046) (.058)
------ ------ ------ ------
Net asset value, end of year............................. $ 1.00 $1.00 $1.00 $1.00
======= ======= ====== =======
TOTAL INVESTMENT RETURN...................................... 3.69%(2) 3.30% 4.67% 5.94%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. -- .02% .17% .31%
Ratio of net investment income to average net assets..... 3.58%(2) 3.24% 5.05% 5.79%
Decrease reflected in above expense ratios due to
undertakings by the Manager............................ .75%(2) .64% .44% .36%
Net Assets, end of year (000's Omitted).................. $116,696 $265,691 $1,041,722 $1,366,056
_______________________________________
(1) From April 24, 1992 (commencement of operations) to February 28, 1993.
(2) Annualized.
</TABLE>
See notes to financial statements.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC U.S. Government Money Market Fund (the "Fund") is
registered under the Investment Company Act of 1940 ("Act") as a diversified
open-end management investment company. The Fund's investment objective is to
provide investors with as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services,
Inc. (the "Distributor") acts as the distributor of the Fund's shares, which
are sold to the public without a sales charge.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value 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 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 $210 available for
Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to February 29, 1996. If not applied,
the carryover expires in fiscal 2003.
At February 29, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 (exclusive of 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. The Manager had undertaken from March 1, 1995 through
January 19, 1996 to reduce the management fee paid by the Fund, to the
extent that the Fund's aggregate annual expenses (exclusive of certain
expenses as described above) exceeded specified annual percentages of the
Fund's average daily net assets. The Manager has currently undertaken from
January 20, 1996 through June 30, 1996 to reduce the management fee paid
by the Fund, to the extent that the Fund's aggregate annual expenses
(exclusive of 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 reduction
in management fee, pursuant to the undertakings, amounted to $4,484,591 for
the year ended February 29, 1996.
The Manager may modify the existing undertaking provided that the Fund's
shareholders are given 90 days prior notice.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended February 29, 1996, the Fund was charged an aggregate of
$1,133,516 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $26,672 for the period from
December 1, 1995 through February 29, 1996.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS BASIC 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 29, 1996, 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 29, 1996 by correspondence with the custodian
and brokers. 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 29,
1996, 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
March 29, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates
48.35% of the ordinary income dividends paid during its fiscal year ended
February 29, 1996 as attributable to interest income from direct obligations
of the United States government. Such dividends are currently exempt from
taxation for individual income tax purposes in most states, including New
York, California and the District of Columbia.
[Dreyfus lion "d" logo]
DREYFUS BASIC U.S. GOVERNMENT
MONEY MARKET FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 124AR962
[Dreyfus logo]
BASIC
U.S. Government
Money Market Fund
Annual Report
February 29, 1996
