Dreyfus BASIC
U.S. Government
Money Market Fund
SEMIANNUAL REPORT August 31, 2000
(reg.tm)
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
Contents
THE FUND
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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
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Back Cover
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, 2000
through August 31, 2000. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, Thomas S. Riordan.
When the reporting period began, international and domestic economies were
growing strongly, giving rise to concerns that long-dormant inflationary
pressures might reemerge. Consumers continued to spend heavily, unemployment
levels reached new lows and the stock market, while highly volatile, generally
continued to climb.
Because robust economic growth may trigger an acceleration of inflation, the
Federal Reserve Board raised key short-term interest rates twice during the
reporting period before signs of moderation began to appear in the summer of
2000. In total, the Federal Reserve Board has raised short-term interest rates
by 1.75 percentage points since late June 1999. While these economic influences
adversely affected longer term bonds, they positively influenced money market
yields.
We appreciate your confidence over the past six months, 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 15, 2000
DISCUSSION OF FUND PERFORMANCE
Thomas S. 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, 2000 the fund produced an annualized
yield of 5.82%, which, taking into account the effect of compounding, created an
annualized effective yield of 5.98%.(1)
We attribute our performance to higher short-term interest rates, which were
primarily the result of the Federal Reserve Board's (the "Fed") moves toward a
more restrictive monetary policy.
What is the fund's investment approach?
When managing the fund, we closely monitor the outlook for economic growth and
inflation, follow overseas developments and consider the posture of the Fed in
our decision as to how to structure the fund. Based upon our economic outlook,
we actively manage the fund's average maturity in looking for opportunities that
may present themselves in light of possible changes in interest rates. The fund
invests only 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 such securities.
What other factors influenced the fund's performance?
When the reporting period began, the Fed had already taken steps to relieve
inflationary pressures by increasing short-term interest rates four times, each
by 0.25 percentage points. Each interest-rate hike brought renewed debate as to
whether rates were sufficiently high to head off inflation, or whether further
tightening would be necessary. When it was later revealed that gross domestic
product ("GDP") growth had quickened to 7.3% for the fourth quarter 1999,
concern
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
mounted that economic growth was accelerating to a point that might trigger
destructive levels of inflation. Accordingly, the Fed raised interest rates by
another 0.25 percentage points in March.
For the first quarter 2000, GDP grew at a less torrid, but still strong, 5.4%.
Higher energy prices added to inflation concerns. Strong domestic demand for
goods and services continued, and overseas demand for raw materials accelerated
as well.
Through May, consumer confidence and consumer spending showed few signs of
abating in response to the Fed' s actions. Home and auto sales continued at
record paces. The tightest U.S. labor market in the past 30 years added the
threat of wage-driven inflation. These factors led the Fed to its largest rate
hike in the current cycle: a 0.50 percentage-point increase at its May meeting.
More recently, however, we have seen signs that the Fed's rate hikes may have
slowed the economy. Retail sales have declined and inflation figures appeared to
be relatively benign. As a result, the Fed chose not to raise rates further at
its June or August meetings. In addition, Fed Chairman Alan Greenspan commented
in recent testimony that economic growth was slowing, and that
technology-related productivity improvements may have allowed the economy to
grow at a relatively high rate without triggering an acceleration of inflation.
Indeed, unemployment reports, factory orders, retail spending and other recent
data echoed the Fed' s observations. What's more, the April correction in the
Nasdaq market may have had a "reverse wealth effect," causing consumer spending
to slow as investors became less confident in the stock market's returns. In our
view, such data currently reduces the odds of another rate hike before the
November presidential election.
What is the fund's current strategy?
At the start of the six-month reporting period, the fund had adopted a defensive
strategy in anticipation of rising interest rates. More recently, however, when
it became apparent that Fed policy was slowing economic growth, we extended the
fund' s average maturity to a point that we consider in line with that of our
peer group average. This position was intended to balance our need for
flexibility with opportunities to lock in prevailing yields for as long as
practical.
As of August 31, 2000 the fund's average maturity remained in the neutral range
at 53 days. We will continue to monitor the situation, including the economy and
changes in the Fed's monetary policy, and we will look to respond appropriately
with respect to the fund's holdings and maturity stance.
September 15, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
The Fund
STATEMENT OF INVESTMENTS
<TABLE>
August 31, 2000 (Unaudited)
STATEMENT OF INVESTMENTS
Annualized
Yield on
Date of Principal
U.S. GOVERNMENT AGENCIES--97.2% Purchase (%) Amount ($) Value ($)
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<S> <C> <C> <C>
Federal Farm Credit Bank, Consolidated Systemwide
Medium Term Notes
6/21/2002 6.58 (a) 25,000,000 24,991,662
Federal Home Loan Banks, Discount Notes
9/13/2000 6.55 75,000,000 74,838,875
9/20/2000 6.47 70,000,000 69,763,556
11/10/2000 6.51 30,000,000 29,626,083
12/1/2000 5.91 32,000,000 31,987,031
2/7/2001 6.61 32,815,000 31,886,705
4/26/2001 6.57 50,000,000 49,913,613
Federal Home Loan Banks, Floating Rate Notes
9/20/2000 6.66 (a) 150,000,000 149,997,742
9/25/2000 6.66 (a) 50,000,000 49,999,042
3/29/2001 6.52 (a) 50,000,000 49,994,426
6/12/2001 6.50 (a) 25,000,000 25,000,000
Federal National Mortgage Association, Discount Notes
12/27/2000 6.52 80,000,000 78,341,200
2/8/2001 6.62 40,261,000 39,114,009
3/1/2001 6.62 50,000,000 48,388,597
Federal National Mortgage Association, Floating Rate Notes
6/7/2001 6.57 (a) 50,000,000 49,968,312
11/5/2001 6.55 (a) 125,000,000 124,954,698
TOTAL U.S. GOVERNMENT AGENCIES
(cost $928,765,551) 928,765,551
Annualized
Yield on
Date of Principal
REPURCHASE AGREEMENTS--1.7% Purchase (%) Amount ($) Value ($)
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Goldman, Sachs & Co
dated 8/31/2000, due 9/1/2000
in the amount of $16,223,861
(fully collateralized by U.S. Treasury
Notes 5.25% due 5/31/2001,
value $16,221,000) 6.35 16,221,000 16,221,000
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TOTAL INVESTMENTS
(cost $ 944,986,551) 98.9% 944,986,551
CASH AND RECEIVABLES (NET) 1.1% 10,626,093
NET ASSETS 100.0% 955,612,644
(A) VARIABLE INTEREST RATE-SUBJECT TO PERIODIC CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000 (Unaudited)
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments-Note 1(b) 944,986,551 944,986,551
Cash 4,063,687
Interest receivable 6,914,099
Prepaid expenses 22,639
955,986,976
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 293,443
Accrued expenses and other liabilities 80,889
374,332
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NET ASSETS ($) 955,612,644
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 956,230,135
Accumulated net realized gain (loss) on investments (617,491)
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NET ASSETS ($) 955,612,644
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares
of Beneficial Interest authorized) 956,230,135
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended August 31, 2000 (Unaudited)
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INVESTMENT INCOME ($):
INTEREST INCOME 30,935,893
EXPENSES:
Management fee--Note 2(a) 2,467,023
Shareholder servicing costs--Note 2(b) 493,936
Custodian fees 46,397
Professional fees 25,805
Prospectus and shareholders' reports 15,894
Registration fees 16,611
Trustees' fees and expenses--Note 2(c) 10,931
Miscellaneous 2,942
TOTAL EXPENSES 3,079,539
Less--reduction in management fee due to
undertaking--Note 2(a) (858,619)
NET EXPENSES 2,220,920
INVESTMENT INCOME--NET 28,714,973
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NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) 1,169
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 28,716,142
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 2000 Year Ended
(Unaudited) February 29, 2000
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OPERATIONS ($):
Investment income--net 28,714,973 51,981,493
Net realized gain (loss) from investments 1,169 9,654
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 28,716,142 51,991,147
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DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (28,714,973) (52,276,234)
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BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 374,874,169 805,249,908
Dividends reinvested 27,345,468 49,748,818
Cost of shares redeemed (442,904,962) (1,041,015,631)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (40,685,325) (186,016,905)
TOTAL INCREASE (DECREASE) IN NET ASSETS (40,684,156) (186,301,992)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 996,296,800 1,182,598,792
END OF PERIOD 955,612,644 996,296,800
SEE NOTES TO FINANCIAL STATEMENTS.
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.
<TABLE>
Six Months Ended
August 31, 2000 Fiscal Year Ended February,
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(Unaudited) 2000 1999 1998 1997 1996
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .029 .048 .049 .052 .051 .058
Distributions:
Dividends from investment
income--net (.029) (.048) (.049) (.052) (.051) (.058)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 5.89(a) 4.88 5.06 5.33 5.20 5.94
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .45(a) .45 .45 .45 .45 .31
Ratio of net investment income
to average net assets 5.84(a) 4.75 4.97 5.22 5.09 5.79
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation .18(a) .17 .16 .17 .20 .36
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Net Assets, end of period
($ x 1,000) 955,613 996,297 1,182,599 1,308,647 1,459,949 1,366,056
(A) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The 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, as amended (the "Act"), as a diversified
open-end management investment company. The fund's investment objective is to
provide investors with as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. The Dreyfus
Corporation (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary
of Mellon Financial Corporation ("Mellon"). Effective March 22, 2000, Dreyfus
Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund' s which are sold to the public without a sales
charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the
distributor.
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 receives net earnings credits
based on available cash balances left on deposit.
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 $619,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to February 29, 2000. If not
applied, $200 of the carryover expires in fis
The Fund
cal 2003, $523,000 expires in fiscal 2005, $43,300 expires in fiscal 2006,
$52,000 expires in fiscal 2007 and $500 expires in fiscal 2008.
At August 31, 2000, 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 fees, interest on borrowings
and extraordinary expenses, exceed an annual rate of .45 of 1% of the value of
the fund' s average daily net assets. The reduction in management fee, pursuant
to the undertaking, amounted to $858,619 during the period ended August 31,
2000.
(b) Under the Shareholder Services Plan, the fund reimburses DSC 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, 2000, the fund was charged $401,712 pursuant to the Shareholder
Services Plan.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended August 31, 2000, the fund was charged $74,232 pursuant to the transfer
agency agreement.
(c) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective August 2, 2000, each
Board member who is not an "affiliated person" as defined in the Act receives an
annual fee of $30,000 and an attendance fee of $4,000 for each in person meeting
and $500 for telephone meetings. These fees are allocated among the funds in the
Fund Group. The Chairman of the Board receives an additional 25% of such
compensation. Prior to August 2, 2000, each Board member who was not an
" affiliated person" as defined in the Act received from the fund an annual fee
of $1,500 and an attendance fee of $250 per meeting. The Chairman of the Board
received an additional 25% of such compensation. Subject to the fund's Emeritus
Program Guidelines, Emeritus Board members, if any, receive 50% of the fund's
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
The Fund
NOTES
For More Information
Dreyfus BASIC 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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request
to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 124SA008
