DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus BASIC U.S.
Government Money Market Fund for the six-month period ended August 31, 1997.
Your Fund produced an annualized yield of 5.20%. After taking into account
the effect of compounding, the annualized effective yield was 5.33%.*
ECONOMIC REVIEW
The economy has maintained a strong growth trend since last fall,
gradually eroding expectations for a natural slowdown "just around the
corner." Inflation has held steady, even in the face of a substantially
tighter labor market. Corporate profits have continued to surprise on the
upside. Market interest rates have held within a now long-established trading
range. In this setting, monetary policy has remained benign: the Federal
budget is close to being in balance and the Federal Reserve Board (the "Fed")
has kept policy rates unchanged since March.
Real GDP grew at above a 4% rate in the nine months from the third
quarter of 1996 to midyear. Indeed, the initial estimate of near 2% growth in
this year's second quarter was raised to 3.6%, erasing the record of even a
temporarily slow period. Virtually all major economic sectors have
contributed to the economy's growth. In turn, the economy has provided
personal income that, in the prevailing low inflation environment, has
translated into strong real purchasing power. The strength in demand has begun
to raise imports, bolstering foreign economies. Inventories have also
started to accumulate at a faster pace, although inventory levels are
currently still quite lean in relation to sales.
The labor market has tightened substantially in recent months as the
pace of new hiring has consistently exceeded the increase in the labor force.
Despite this, wage growth has been moderate while overall compensation growth
has accelerated only modestly. In their determination to hold the line on
prices, companies have resorted to unconventional hiring methods that, so
far, have avoided the need for higher wage offers.
Consensus expectations for corporate profits have been ratcheted
upwards virtually every month for the last several months. So far, positive
surprises in reported profits have justified the market's higher estimates.
However, the strength of the dollar overseas and other factors could affect
future profits.
Market interest rates have been stable since early 1996, oscillating
within a fairly narrow range. Several factors have kept rates steady: the
absence of faster inflation, positive Federal budget developments and an
accommodating Federal Reserve. Although the Fed has not changed policy rates
since March, they have held a bias towards tightening since last summer.
Therefore a move to tighten interest rates should not come as a surprise.
MONEY MARKET OVERVIEW
Short-term interest rates rose somewhat in the past six months,
primarily due to the action by the Federal Reserve raising the Fed Funds rate
by a quarter point on March 25, 1997. This was the first time in just over
two years that the central bank had raised interest rates. The Fed took its
action as a preventive measure to head off excessive demand in the economy.
Whether it was due to the Fed's intervention, or prospects for a
balanced Federal budget, or to underlying forces of supply and demand, the
economy in the past half year has continued to grow at a satisfying rate, yet
without undue upward pressure on prices or wages. Even the United Parcel
Service settlement with the Teamsters Union in midsummer did not set off an
upsurge in general labor costs.
Federal Reserve officials have let it be known that they will not
hesitate to use the interest rate weapon again, if need be. To date, however,
the conditions that would warrant such a step have not been present. Yet the
market remains wary of another boost in interest rates at a future date.
Prevailing yields have been running between ten and twenty basis points
(hundreths of 1%) above the level of six months ago. Essentially, they have
been moving in a fairly narrow range with a small upward bias.
PORTFOLIO TACTICS
In our endeavor to provide investors with the highest possible yield,
our current strategy has been to keep the average maturity of the portfolio
slightly longer than the Fund's relevant industry average.** With the economy
in a moderate "growth with subdued inflation" scenario, and Fed policy in a
"wait and see" posture, the strategy of keeping longer portfolio maturity has
benefitted the Fund. Of course, should market dynamics change, we will adjust
the portfolio strategy accordingly.
Sincerely,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
September 17, 1997
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
** As measured by the "Government Only" category average as reported in IBC's
Money Fund Report.SM
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS AUGUST 31, 1997 (UNAUDITED)
Annualized
Yield on
Date of Principal
U.S. Treasury Bills-3.7% Purchase Amount Value
------ -------- --------
<S> <C> <C> <C>
9/18/97.................................................... 5.57% $ 40,000,000 $ 39,896,949
2/5/98..................................................... 5.48 10,000,000 9,773,310
--------
TOTAL U.S. TREASURY BILLS (cost $49,670,259)................... $ 49,670,259
========
U.S. Government Agencies-95.1%
Federal Farm Credit Banks, Consolidated Systemwide Discount Notes
1/21/98.................................................... 5.64% $ 30,000,000 $ 29,368,100
4/30/98.................................................... 6.00 14,000,000 13,469,532
Federal Farm Credit Banks, Consolidated Systemwide Medium Term Notes
9/15/97.................................................... 5.63 (a) 20,000,000 19,999,641
1/30/98.................................................... 5.59 (a) 50,000,000 49,988,310
6/8/98..................................................... 5.75 (a) 50,000,000 50,000,000
6/19/98.................................................... 5.60 (a) 50,000,000 49,969,194
6/18/99.................................................... 5.60 (a) 50,000,000 50,000,000
Federal Home Loan Banks, Discount Notes
9/2/97..................................................... 5.48 165,350,000 165,324,830
1/28/98.................................................... 5.51 40,000,000 39,112,622
2/27/98.................................................... 5.75 5,645,000 5,492,309
4/24/98.................................................... 6.00 12,700,000 12,230,771
Federal Home Loan Banks, Notes
11/18/97................................................... 5.62 24,220,000 24,220,000
12/9/97.................................................... 5.57 50,000,000 49,996,610
1/22/98.................................................... 5.66 50,000,000 49,983,292
6/9/98..................................................... 5.93 10,000,000 10,002,316
6/12/98.................................................... 6.03 25,000,000 25,000,000
6/23/98.................................................... 5.59 25,000,000 25,001,156
6/24/98.................................................... 5.99 20,000,000 19,998,540
6/30/98.................................................... 5.95 25,000,000 25,000,000
Federal Home Loan Mortgage Corp., Discount Notes
3/27/98.................................................... 6.04 17,000,000 16,442,825
Federal Home Loan Mortgage Corp., Floating Rate Notes
6/30/98.................................................... 6.03 (a) 10,000,000 9,986,480
Federal Home Loan Mortgage Corp., Notes
3/17/98.................................................... 5.76 25,000,000 24,972,210
Federal National Mortgage Association, Discount Notes
9/8/97..................................................... 5.40 4,265,000 4,260,713
10/24/97................................................... 5.41 25,000,000 24,810,452
11/24/97................................................... 5.39 15,000,000 14,820,800
1/16/98.................................................... 5.51 15,000,000 14,700,884
7/24/98.................................................... 5.61 25,000,000 23,797,875
Federal National Mortgage Association, Floating Rate Notes
4/15/98.................................................... 5.63 (a) 50,000,000 49,984,892
5/21/98.................................................... 5.62 (a) 25,000,000 24,989,491
6/19/98.................................................... 5.70 (a) 100,000,000 99,985,397
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) AUGUST 31, 1997 (UNAUDITED)
Annualized
Yield on
Date of Principal
U.S. Government Agencies (continued) Purchase Amount Value
------ -------- --------
Federal National Mortgage Association, Floating Rate Notes (continued):
<S> <C> <C> <C>
6/29/98.................................................... 5.72% (a) $ 100,000,000 $ 99,985,074
7/10/98.................................................... 5.60 (a) 60,000,000 59,960,355
Federal National Mortgage Association, Notes
6/18/98.................................................... 5.61 55,000,000 55,041,133
7/31/98.................................................... 5.80 10,000,000 9,989,326
Student Loan Marketing Association, Floating Rate Notes
1/27/98.................................................... 6.08 (a) 20,000,000 19,971,511
Student Loan Marketing Association, Notes
5/15/98.................................................... 6.01 25,000,000 25,002,516
--------
TOTAL U.S. GOVERNMENT AGENCIES (cost $1,292,859,157)........... $1,292,859,157
========
TOTAL INVESTMENTS (cost $1,342,529,416)............... 98.8% $1,342,529,416
==== ========
CASH AND RECEIVABLES (NET)............................ 1.2% $ 16,934,720
==== ========
NET ASSETS............................................ 100.0% $1,359,464,136
==== ========
Notes to Statement of Investments:
(a) Variable interest rate-subject to periodic change.
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED)
Cost Value
--------- ---------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $1,342,529,416 $1,342,529,416
Cash....................................... 5,351,137
Interest receivable........................ 12,133,954
Prepaid expenses and other assets.......... 101,831
---------
1,360,116,338
---------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 514,926
Accrued expenses and other liabilities..... 137,276
---------
652,202
---------
NET ASSETS.................................................................. $1,359,464,136
=========
REPRESENTED BY: Paid-in capital............................ $1,359,649,447
Accumulated undistributed investment income-net 387,213
Accumulated net realized gain (loss) on investments (572,524)
---------
NET ASSETS.................................................................. $1,359,464,136
=========
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 1,359,649,447
NET ASSET VALUE, offering and redemption price per share.................... $1.00
=====
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SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1997 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income................................ $39,885,118
EXPENSES: Management fee-Note 2(a)....................... $ 3,525,036
Shareholder servicing costs-Note 2(b).......... 713,183
Registration fees.............................. 62,543
Custodian fees................................. 60,121
Professional fees.............................. 38,675
Trustees' fees and expenses-Note 2(c).......... 11,935
Prospectus and shareholders' reports........... 10,077
Miscellaneous.................................. 10,515
-------
Total Expenses............................... 4,432,085
Less-reduction in management fee due to
undertaking-Note 2(a)........................... (1,274,425)
-------
Net Expenses........................................... 3,157,660
-------
INVESTMENT INCOME-NET....................................................... 36,727,458
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... (45,148)
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $36,682,310
=======
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 1997 Year Ended
(Unaudited) February 28, 1997
--------- ---------
OPERATIONS:
<S> <C> <C>
Investment income-net................................................ $ 36,727,458 $ 71,619,751
Net realized gain (loss) on investments.............................. (45,148) (527,166)
-------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations.... 36,682,310 71,092,585
-------- --------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net................................................ (36,340,245) (71,619,751)
-------- --------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................ 626,206,055 1,673,931,454
Dividends reinvested................................................. 34,388,014 67,642,692
Cost of shares redeemed.............................................. (761,421,395) (1,647,153,837)
-------- --------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (100,827,326) 94,420,309
-------- --------
Total Increase (Decrease) in Net Assets.......................... (100,485,261) 93,893,143
NET ASSETS:
Beginning of Period.................................................. 1,459,949,397 1,366,056,254
-------- --------
End of Period........................................................ $1,359,464,136 $1,459,949,397
======== ========
Undistributed investment income-net.................................... $ 387,213 -----
-------- --------
SEE NOTES TO FINANCIAL STATEMENTS.
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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 period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
August 31, 1997 Fiscal Year Ended February,
----------------------------------------------------
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993(1)
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---- ---- ---- ---- ---- ----
Investment Operations:
Investment income-net................. .026 .051 .058 .046 .032 .031
---- ---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net.. (.026) (.051) (.058) (.046) (.032) (.031)
---- ---- ---- ---- ---- ----
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................... 5.24%(2) 5.20% 5.94% 4.67% 3.30% 3.69%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .45%(2) .45% .31% .17% .02% .
Ratio of net investment income
to average net assets............... 5.27%(2) 5.09% 5.79% 5.05% 3.24% 3.58%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .18%(2) .20% .36% .44% .64% .75%(2)
Net Assets, end of period (000's Omitted) $1,359,464 $1,459,949 $1,366,056 $1,041,722 $265,691 $116,696
(1) From April 24, 1992 (commencement of operations) to February 28, 1993.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 the maintenance of liquidity. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public without a sales charge.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value per share of $1.00.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost, which
has been determined by the Fund's Board of 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.
On September 2, 1997, the Fund declared a cash dividend of approximately
$.0006 per share from undistributed investment income-net which includes
investment income-net for Saturday August 30, 1997 and Sunday August 31,
1997.
(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 $523,200
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 28, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through February 28, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, $200 of the carryover
expires in fiscal 2003 and $523,000 expires in fiscal 2005.
At August 31, 1997, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .50 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager has undertaken,
until such time as it gives shareholders at least 90 days' notice to the
contrary, to reduce the management fee paid by
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the Fund, to the extent that the Fund's aggregate expenses, exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses, exceed
an annual rate of .45 of 1% of the value of the Fund's average daily net
assets. The reduction in management fee, pursuant to the undertaking,
amounted to $1,274,425 during the period ended August 31, 1997.
(b) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not
to exceed an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended August 31, 1997, the Fund was charged an aggregate of
$530,991 pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $81,025 during the period ended August 31, 1997.
(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.
Registration Mark
[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.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 124SA978
Registration Mark
[Dreyfus logo]
BASIC
U.S. Government
Money Market Fund
Semi-Annual
Report
August 31, 1997
