Dreyfus BASIC
U.S. Government
Money Market Fund
SEMIANNUAL REPORT
August 31, 1999
(reg.tm)
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The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
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Contents
THE FUND
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
FOR MORE INFORMATION
Back Cover
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The Fund
Dreyfus BASIC U.S. Government Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus BASIC U.S.
Government Money Market Fund covering the six-month period from March 1, 1999
through August 31, 1999. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, Thomas Riordan.
Before the reporting period began, financial crises in overseas markets had
produced concerns among investors that economies in the U.S. and abroad might
slow. In response, the Federal Reserve Board reduced short-term interest rates
last fall in an attempt to stimulate economic growth. Its strategy apparently
worked, because signs of renewed economic strength became evident early in 1999,
fueling fears that inflationary pressures might re-emerge.
As a result, after remaining relatively steady during the first quarter of 1999,
yields on money market securities rose during the second quarter in response to
expectations that the Federal Reserve Board might raise short-term interest
rates. In fact, the Federal Reserve raised rates twice during the summer of 1999
in an attempt to forestall a potential resurgence of inflationary pressures.
This increase effectively reversed most of last fall's interest-rate cuts, and
led to higher yields on most money market securities.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus BASIC U.S. Government Money Market Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
September 14, 1999
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DISCUSSION OF FUND PERFORMANCE
Thomas Riordan, Portfolio Manager
How did Dreyfus BASIC U.S. Government Money Market Fund perform during the
period?
For the six-month period ended August 31, 1999, Dreyfus BASIC U.S. Government
Money Market Fund produced an annualized yield of 4.52% and, taking into account
the effects of compounding, an annualized effective yield of 4.62%.(1) The fund
provided a total return of 2.33%(2) compared to the Lipper U.S. Government Money
Market Funds category average total return of 2.15% for the same period.(3)
What is the fund's investment approach?
There are many factors we consider when managing the fund. We closely monitor
the outlook for economic growth and inflation. We follow overseas developments
for any influence they may have on the domestic economy. The posture of the
Federal Reserve Board is also a key determinant in our decision as to how best
to structure the portfolio.
Based upon our economic outlook, we actively manage the average maturity of the
fund in an effort to take advantage of expected changes in interest rates. For
example, if we believe that interest rates are likely to fall, we typically will
lengthen our average maturity in order to lock in today's higher rates.
Conversely, in a rising interest-rate environment, we typically will shorten our
maturities in order to be able to reinvest at higher rates in the future.
In terms of investments, the fund is only invested in securities issued or
guaranteed as to principal and interest by the U.S. government, its agencies and
instrumentalities, as well as repurchase agreements backed by U.S. Treasury
securities.
What other factors influenced the fund's performance?
When the six-month reporting period began on March 1, 1999, evidence began to
emerge that economies around the world had seen the
The Fund
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DISCUSSION OF FUND PERFORMANCE (CONTINUED)
worst of the currency and credit crises that affected Asian, Russian and Latin
American markets last summer and fall. In the wake of that market turmoil, the
Federal Reserve had reduced short-term interest rates in an attempt to provide
liquidity and stimulate economic growth. Its strategy appears to have worked,
because concerns arose in the first quarter of 1999 that global and domestic
factors may be pushing the U.S. economy towards unsustainable growth.
Between February and May, conflicting economic signals allowed short-term rates
to remain relatively stable while longer term bond yields rose. Those signals
included signs of economic strength in the consumer sector of the economy and
relative weakness in the industrial sector. As a result, most investors saw no
compelling reason for the Federal Reserve to either increase interest rates to
dampen growth, or to reduce rates in an attempt to stimulate growth.
In June, however, it became clearer that economic growth in the world's major
industrialized nations was clearly improving. The U.S. economy continued to move
ahead briskly, evidenced by a strong rebound in manufacturing output that showed
signs of gaining momentum. Consumer confidence was at a 30-year high. Employment
was strong, with hourly wages rising. Because of concerns that overly rapid
economic growth might lead to destructive inflationary pressures, the Federal
Reserve increased interest rates twice during the summer of 1999, effectively
offsetting most of last fall's rate cuts.
These higher interest rates were generally negative for the fund's existing
holdings, but we believe they may enable us to lock in prevailing high yields if
interest rates decline due to a slowdown in the domestic economy.
What is the portfolio's current strategy?
Over most of the reporting period, the portfolio benefited from our commitment
to a longer-than-average maturity. That's because interest rates did not begin
to rise until the second quarter of 1999. Consequently, as long as interest
rates remained relatively stable, longer maturities enhanced returns by locking
in prevailing yields.
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However, when it became clear that robust economic growth was likely to lead to
higher interest rates, we began to reduce the fund's average maturity in order
to keep cash available for higher yielding instruments. More recently, we have
once again begun to modestly extend the fund's average maturity. That's because
the market appeared to anticipate the Federal Reserve's rate hike in late
August, and interest rates were near the high end of their expected range. By
modestly extending the fund' s average maturity, we are attempting to lock in
high current yields as inflation fears abate.
September 14, 1999
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY
THE FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE
VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
3 SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
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<TABLE>
STATEMENT OF INVESTMENTS (CONTINUED)
STATEMENT OF INVESTMENTS
August 31, 1999 (Unaudited)
Annualized
Yield on
Date of Principal
U.S. GOVERNMENT AGENCIES--91.5% Purchase (%) Amount ($) Value ($)
Federal Farm Credit Bank, Consolidated Systemwide
Medium Term Notes
<S> <C> <C> <C>
9/17/1999 5.14(a) 95,000,000 95,000,000
9/17/1999 5.15(a) 70,000,000 70,000,000
1/28/2000 5.31(a) 50,000,000 49,995,144
6/29/2000 5.30(a) 40,000,000 39,990,564
Federal Home Loan Banks, Discount Notes
2/11/2000 4.89 13,350,000 13,344,201
2/22/2000 4.89 75,000,000 74,982,624
2/24/2000 5.08 22,075,000 22,054,360
3/29/2000 4.95 25,000,000 24,997,123
4/7/2000 5.70 42,270,000 42,084,268
5/26/2000 5.19 5,000,000 4,998,593
7/14/2000 5.44 25,000,000 24,998,918
7/19/2000 5.44 49,760,000 49,729,032
Federal Home Loan Banks, Floating Rate Notes
10/15/1999 5.13(a) 25,000,000 25,000,000
10/29/1999 4.98(a) 20,000,000 20,000,000
6/21/2000 5.35(a) 165,000,000 164,948,005
Federal Home Loan Banks, Notes
10/1/1999 4.78 10,000,000 10,008,854
1/27/2000 4.73 25,050,000 25,051,219
4/26/2000 4.94 11,000,000 11,001,860
Federal National Mortgage Association, Discount Notes
2/10/2000 4.82 50,000,000 49,985,023
4/20/2000 4.96 10,000,000 9,996,325
Federal National Mortgage Association,
Floating Rate Notes
10/20/1999 5.27(a) 50,000,000 50,000,000
1/21/2000 5.32(a) 50,000,000 50,000,000
Federal National Mortgage Association, Notes
5/12/2000 5.01 25,000,000 25,000,520
10/18/2000 4.78 16,200,000 16,218,509
Student Loan Marketing Association,
Floating Rate Notes
10/1/1999 5.17(a) 40,000,000 40,000,000
TOTAL U.S. GOVERNMENT AGENCIES
(cost $1,009,385,142) 1,009,385,142
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Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--7.1% Purchase (%) Amount ($) Value ($)
Barclays Capital Inc.
dated 8/31/1999, due 9/1/1999 in the amount of
$7,841,187 (fully collateralized by U.S. Treasury
Bills, due 7/31/2000, value $7,962,161) 5.45 7,840,000 7,840,000
Donaldson, Lufkin & Jenrette Securities Inc.
dated 8/31/1999, due 9/1/1999 in the amount of
$50,007,528 (fully collateralized by U.S. Treasury
Bills, due 6/30/2000, value $50,626,451) 5.42 50,000,000 50,000,000
Warburg Dillon Read Inc.
dated 8/31/1999, due 9/1/1999 in the amount of
$21,003,162 (fully collateralized by U.S. Treasury
Bills, due 2/29/2000, value $21,427,432) 5.42 21,000,000 21,000,000
TOTAL REPURCHASE AGREEMENTS
(cost $78,840,000) 78,840,000
TOTAL INVESTMENTS (cost $1,088,225,142) 98.6% 1,088,225,142
CASH AND RECEIVABLES (NET) 1.4% 14,926,650
NET ASSETS 100.0% 1,103,151,792
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 (Unaudited)
Cost Value
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(b) 1,088,225,142 1,088,225,142
Cash 5,503,491
Interest receivable 9,706,147
Prepaid expenses 46,415
1,103,481,195
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 254,052
Accrued expenses and other liabilities 75,351
329,403
NET ASSETS ($) 1,103,151,792
COMPOSITION OF NET ASSETS ($):
Paid-in capital 1,103,770,453
Accumulated net realized gain (loss) on investments (618,661)
NET ASSETS ($) 1,103,151,792
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized) 1,103,770,453
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
STATEMENT OF OPERATIONS
Six Months Ended August 31, 1999 (Unaudited)
<S> <C> <C> <C>
INVESTMENT INCOME ($):
INTEREST INCOME 28,167,378
EXPENSES:
Management fee--Note 2(a) 2,822,378
Shareholder servicing costs--Note 2(b) 518,701
Custodian fees 45,072
Registration fees 18,535
Professional fees 15,631
Trustees' fees and expenses--Note 2(c) 10,365
Prospectus and shareholders' reports 10,072
Miscellaneous 3,561
TOTAL EXPENSES 3,444,315
Less--reduction in management fee due to
undertaking-Note 2(a) (908,178)
NET EXPENSES 2,536,137
INVESTMENT INCOME--NET 25,631,241
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) 9,653
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 25,640,894
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 1999 Year Ended
(Unaudited) February 28, 1999
<S> <C> <C>
OPERATIONS ($):
Investment income--net 25,631,241 61,063,913
Net realized gain (loss) on investments 9,653 (11,328)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 25,640,894 61,052,585
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (25,925,982) (60,955,715)
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 418,351,737 1,024,399,996
Dividends reinvested 25,313,799 57,885,133
Cost of shares redeemed (522,827,448) (1,208,430,626)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (79,161,912) (126,145,497)
TOTAL INCREASE (DECREASE) IN NET ASSETS (79,447,000) (126,048,627)
NET ASSETS ($):
Beginning of Period 1,182,598,792 1,308,647,419
END OF PERIOD 1,103,151,792 1,182,598,792
Undistributed investment income--net -- 294,741
SEE NOTES TO FINANCIAL STATEMENTS.
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FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
August 31, 1999 Fiscal Year Ended February,
(Unaudited) 1999 1998 1997 1996 1995
PER SHARE DATA ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .023 .049 .052 .051 .058 .046
Distributions:
Dividends from investment
income--net (.023) (.049) (.052) (.051) (.058) (.046)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN (%) 4.62(a) 5.06 5.33 5.20 5.94 4.67
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .45(a) .45 .45 .45 .31 .17
Ratio of net investment income
to average net assets 4.53(a) 4.97 5.22 5.09 5.79 5.05
Decrease reflected in above
expense ratios due to
undertakings by the Manager .16(a) .16 .17 .20 .36 .44
Net Assets, end of period
($ x 1,000) 1,103,152 1,182,599 1,308,647 1,459,949 1,366,056 1,041,722
(A) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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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, as amended (the "Act"), as a diversified
open-end management investment company. The fund's investment objective is to
provide investors with as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services, Inc.
is the distributor of the fund's shares, which are sold to the public without a
sales charge.
It is the fund's policy to maintain a continuous net asset value per share of
$1.00; the fund has adopted certain investment, portfolio valuation and dividend
and distribution policies to enable it to do so. There is no assurance, however,
that the fund will be able to maintain a stable net asset value per share of
$1.00.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at amortized cost,
which has been determined by the fund's Board of 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.
Under the terms of the custody agreement, the fund received net earnings credits
of $1,969 based on available cash balances left on deposit. Income earned under
this arrangement is included in interest income.
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The fund may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the fund' s 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 of 1986, as amended (the
" Code"). To the extent that net realized capital gain can be offset by capital
loss carryovers, it is the policy of the fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the fund to continue to qualify as
a regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The fund has an unused capital loss carryover of approximately $618,500
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 28, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accor The Fund
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
dance with generally accepted accounting principles. If not applied, $200 of the
carryover expires in fiscal 2003, $523,000 expires in fiscal 2005, $43,300
expires in fiscal 2006 and $52,000 expires in fiscal 2007.
At August 31, 1999, 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 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 $908,178 during the period ended August 31, 1999.
(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, 1999, the fund was charged $408,637 pursuant to the Shareholder
Services Plan.
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The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended August 31, 1999, the fund was charged $37,047 pursuant to the transfer
agency agreement.
(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.
The Fund
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NOTES
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For More Information
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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request
to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 124SA998
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