COMBINED PROSPECTUS JULY 1, 1996
AS REVISED FEBRUARY 4, 1997
DREYFUS BASIC MONEY MARKET FUND, INC.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND
DREYFUS BASIC MONEY MARKET FUND, INC. AND DREYFUS BASIC U.S.
GOVERNMENT MONEY MARKET FUND (EACH, A "FUND" AND COLLECTIVELY, THE "FUNDS")
ARE EACH OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANIES KNOWN AS
MONEY MARKET MUTUAL FUNDS. EACH FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE YOU
WITH AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT WITH THE PRESERVATION
OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY. EACH FUND SEEKS TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE AND IS DESIGNED TO BENEFIT
INVESTORS WHO DO NOT ENGAGE IN FREQUENT TRANSACTIONS IN FUND SHARES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES EACH FUND'S PORTFOLIO.
AN INVESTMENT IN EACH FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EITHER FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
DREYFUS BASIC MONEY MARKET FUND, INC. (THE "MONEY FUND") INVESTS IN
SHORT-TERM MONEY MARKET OBLIGATIONS INCLUDING U.S. GOVERNMENT SECURITIES,
CERTIFICATES OF DEPOSIT AND OTHER DOMESTIC AND FOREIGN BANK OBLIGATIONS,
REPURCHASE AGREEMENTS, COMMERCIAL PAPER, AND OTHER SHORT-TERM CORPORATE
OBLIGATIONS, AS MORE FULLY DESCRIBED HEREIN.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND (THE "GOVERNMENT MONEY FUND")
INVESTS IN U.S. GOVERNMENT SECURITIES AND REPURCHASE AGREEMENTS IN RESPECT OF
U.S. GOVERNMENT SECURITIES.
EACH FUND IS A SEPARATE ENTITY WITH A SEPARATE PORTFOLIO. THE
OPERATIONS AND RESULTS OF ONE FUND ARE UNRELATED TO THOSE OF THE OTHER FUND.
THIS COMBINED PROSPECTUS HAS BEEN PREPARED FOR YOUR CONVENIENCE TO PROVIDE
YOU THE OPPORTUNITY TO CONSIDER TWO INVESTMENT CHOICES IN ONE DOCUMENT.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT EACH FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED JULY 1, 1996, WHICH
MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF CERTAIN
AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME
INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND
IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE FUND AT
144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR CALL
1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
FEE TABLE......................................... 4
CONDENSED FINANCIAL INFORMATION................... 5
YIELD INFORMATION................................. 6
DESCRIPTION OF THE FUNDS.......................... 6
MANAGEMENT OF THE FUNDS........................... 8
HOW TO BUY SHARES................................. 10
SHAREHOLDER SERVICES.............................. 11
HOW TO REDEEM SHARES.............................. 12
SHAREHOLDER SERVICES PLAN......................... 15
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 15
GENERAL INFORMATION............................... 17
APPENDIX.......................................... 19
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<TABLE>
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FEE TABLE
GOVERNMENT
MONEY MONEY
SHAREHOLDER TRANSACTION EXPENSES FUND FUND
------- ----------
<S> <C> <C> <C> <C> <C>
Exchange Fee............................................................. $5.00 $5.00
Account Closeout Fee..................................................... $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (after expense reimbursement)............................ .33% .28%
Other Expenses........................................................... .12% .17%
Total Fund Operating Expenses (after expense reimbursement).............. .45% .45%
EXAMPLE (applicable to each Fund) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period.............. $10 $19 $30 $62
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by each Fund and investors, the payment of which
will reduce investors' annual return. The Dreyfus Corporation has agreed,
with respect to each Fund, that, until such time as it gives investors at
least 90 days' notice to the contrary, if in any fiscal year of the Fund
certain Fund expenses, including the management fee, exceed .45 of 1% of the
value of the Fund's average net assets for the fiscal year, such Fund may
deduct from the payment to be made to The Dreyfus Corporation under the
Management Agreement, or The Dreyfus Corporation will bear, such excess expense.
No modification or termination of this agreement currently is contemplated
by The Dreyfus Corporation. The information in the foregoing table does not
reflect any other fee waivers or expense reimbursement arrangements that may
be in effect. The Management Fees noted above, without reimbursement, would
be .50% for each Fund and Total Fund Operating Expenses would be .62% for the
MONEY FUND, and .67% for the GOVERNMENT MONEY FUND. In addition, unlike
certain other funds in the Dreyfus Family of Funds, each Fund will charge
your account $2.00 for each redemption check you write; you also will be
charged $5.00 for each exchange made and for each redemption you make by wire
or pursuant to the Dreyfus TELETRANSFER Privilege, or if you otherwise
closeout your account. These charges will be paid to the Fund's transfer
agent and will reduce the transfer agency charges otherwise payable by each
Fund. See "Shareholder Services" and "How to Redeem Shares." In addition,
certain securities dealers, banks or other financial institutions may charge
their clients direct fees for effecting transactions in shares; such fees are
not reflected in the foregoing table. See "Management of the Funds" and
"Shareholder Services Plan."
CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by Ernst &
Young LLP, each Fund's independent auditors, whose reports thereon appear in
the Statement of Additional Information. Further financial data and related
notes as to each Fund are included in the Statement of Additional
Information, available upon request.
FINANCIAL HIGHLIGHTS
MONEY FUND -- Contained below is per share operating performance data for a
share of Common Stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the MONEY FUND'S financial statements.
<TABLE>
<CAPTION>
MONEY FUND
FISCAL YEAR ENDED FEBRUARY 28/29,
-----------------------------------------------------
PER SHARE DATA: 1993(1) 1994 1995 1996
------ ----- ----- ----
<C> <C> <C> <C>
Net asset value, beginning of year.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ----- ----- ----
INVESTMENT OPERATIONS;
Investment income--net ............................... .032 .033 .046 .058
------ ----- ----- ----
DISTRIBUTIONS;
Dividends from investment income-net.................. (.032) (.033) (.046) (.058)
------ ----- ----- ----
Net asset value, end of year.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ===== ===== ====
TOTAL INVESTMENT RETURN................................... 3.80%(2) 3.40% 4.73% 5.97%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .............. -- .10% .18% .31%
Ratio of net investment income to average net assets . 3.66%(2) 3.33% 4.70% 5.82%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation............. .71%(2) .55% .46% .31%
Net Assets, end of year (000's omitted)............... $734,349 $1,217,032 $1,623,242 $2,098,292
(1)From April 24, 1992 (commencement of operations) to February 28, 1993.
(2)Annualized.
GOVERNMENT MONEY FUND -- 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 GOVER
NMENT MONEY FUND'S financial statements.
GOVERNMENT MONEY FUND
FISCAL YEAR ENDED FEBRUARY 28/29,
------------------------------------------------------
PER SHARE DATA:
1993(1) 1994 1995 1996
------ ----- ----- ----
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 Dreyfus Corporation.............. .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>
YIELD INFORMATION
From time to time, each Fund advertises its yield and effective
yield. Both yield figures are based on historical earnings and are not
intended to indicate future performance. It can be expected that each Fund's
yield will fluctuate substantially. A Fund's yield refers to the income
generated by an investment in such Fund over a seven-day period (which period
will be stated in the advertisement). This income is then annualized. That
is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly,
but, when annualized, the income earned by an investment in a Fund is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Each Fund's
yield and effective yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Funds."
Yield information is useful in reviewing a Fund's performance, but
because yields will fluctuate, such information under certain conditions may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing each Fund's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitortrademark, N. Palm Beach, Florida
33408, IBC's Money Fund Reporttrademark, Morningstar, Inc. and other industry
publications.
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVE
Each Fund's investment objective is to provide you with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. It cannot be changed, as to a Fund, without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of such Fund's outstanding voting
shares. There can be no assurance that a Fund's investment objective will be
achieved. Each Fund pursues this objective in the manner described below.
Securities in which each Fund invests may not earn as high a level of current
income as long-term or lower quality securities which generally have less
liquidity, greater market risk and more fluctuation in market value.
MANAGEMENT POLICIES
Each Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, each Fund uses the amortized cost method
of valuing its securities pursuant to Rule 2a-7 under the 1940 Act, which
Rule includes various maturity, quality and diversification requirements,
certain of which are summarized as follows. In accordance with Rule 2a-7,
each Fund is required to maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of 13 months or less and invest only in U.S. dollar denominated
securities determined in accordance with procedures established by each
Fund's Board to present minimal credit risks and, with respect to the MONEY
FUND only, which are rated in one of the two highest rating categories for
debt obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated by only
one such organization), or, if unrated, are of comparable quality as
determined in accordance with procedures established by the MONEY FUND'S
Board. Moreover, the MONEY FUND will purchase only securities so rated in the
highest rating category or, if unrated, of comparable quality as determined
in accordance with such procedures. The nationally recognized statistical
rating organizations currently rating instruments of the type the MONEY FUND
may purchase are Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc., Duff & Phelps Credit
Rating Co., Fitch Investors Service, L.P., IBCA Limited and IBCA Inc., and
Thomson BankWatch, Inc. and their rating criteria are described in the
"Appendix" to the Statement of Additional Information. This discussion
concerning investment ratings and rating organizations does not apply to the
GOVERNMENT MONEY FUND because it invests exclusively in U.S. Government
securities and repurchase agreements in respect thereof. For further
information regarding the amortized cost method of valuing securities, see
"Determination of Net Asset Value" in the Statement of Additional
Information. There can be no assurance that either Fund will be able to
maintain a stable net asset value of $1.00 per share.
MONEY FUND -- The MONEY FUND invests in short-term money market obligations,
including securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations issued by domestic
banks, foreign subsidiaries or foreign branches of domestic banks, and
domestic and foreign branches of foreign banks, repurchase agreements, and
high grade domestic and foreign commercial paper and other short-term
corporate obligations, including those with floating or variable rates of
interest. The MONEY FUND may invest in U.S. dollar denominated obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities, including obligations
of supranational entities. See "Appendix -- Certain Portfolio Securities." In
addition, the MONEY FUND is permitted to lend portfolio securities and enter
into reverse repurchase agreements. See "Appendix -- Investment Techniques."
During normal market conditions, at least 25% of the MONEY FUND'S assets will
be invested in bank obligations. See "Investment Considerations and Risks"
below.
GOVERNMENT MONEY FUND-- The GOVERNMENT MONEY FUND invests in securities
issued or guaranteed as to principal and interest by the U.S. Government or
its agencies or instrumentalities, and repurchase agreements in respect of
such securities. See "Appendix -- Certain Portfolio Securities."
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Each Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of the Fund's shares. Because charges may
apply to redemptions and exchanges of Fund shares, neither Fund may be an
appropriate investment for an investor who intends to engage frequently in
such transactions.
Each Fund will attempt to increase yield by trading to take advantage
of short-term market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect a Fund since neither Fund
usually pays brokerage commissions when it purchases portfolio securities.
The value of the portfolio securities held by each Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its purchase cost. Similarly, if interest
rates have declined from the time a security was purchased, such security, if
sold, might be sold at a price greater than its purchase cost. In either
instance, if the security was purchased at face value and held to maturity,
no gain or loss would be realized.
Dividends and distributions attributable to interest from direct
obligations of the United States and paid by the GOVERNMENT MONEY FUND to
individuals currently are not subject to personal income tax in most states.
Dividends and distributions attributable to interest from other securities in
which the GOVERNMENT MONEY FUND may invest, such as repurchase agreements,
however, may be subject to state tax. See "Dividends, Distributions and
Taxes."
FOREIGN SECURITIES -- Since the MONEY FUND'S portfolio may contain securities
issued by foreign governments, or any of their political subdivisions,
agencies or instrumentalities, and by foreign subsidiaries and foreign
branches of domestic banks, domestic and foreign branches of foreign banks,
and commercial paper issued by foreign issuers, the MONEY FUND may be subject
to additional investment risks with respect to such securities that are
different in some respects from those incurred by a fund which invests only
in debt obligations of U.S. domestic issuers, although such obligations may
be higher yielding when compared to the securities of U.S. domestic issuers.
Such risks include possible political and economic developments, the possible
imposition of foreign withholding taxes on interest income payable on the
securities, the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions which might adversely affect the
payment of principal and interest on these securities and the possible
seizure or nationalization of foreign deposits.
BANK SECURITIES -- To the extent the MONEY FUND'S investments are
concentrated in the banking industry, the MONEY FUND will have
correspondingly greater exposure to the risk factors which are characteristic
of such investments. Sustained increases in interest rates can adversely
affect the availability or liquidity and cost of capital funds for a bank's
lending activities, and a deterioration in general economic conditions could
increase the exposure to credit losses. In addition, the value of the
investment return on the MONEY FUND'S shares could be affected by economic or
regulatory developments in or related to the banking industry, and the
effects of competition within the banking industry as well as with other
types of financial institutions. The MONEY FUND, however, will seek to
minimize its exposure to such risks by investing only in debt securities
which are determined to be of the highest quality pursuant to procedures
established by its Board.
SIMULTANEOUS INVESTMENTS -- Investment decisions for each Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as a Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by a Fund or the price paid or received
by a Fund.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as each Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of May 31, 1996, The Dreyfus Corporation managed
or administered approximately $80 billion in assets for more than 1.7 million
investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the affairs of each Fund under a separate Management Agreement
with each Fund, subject to the authority of the MONEY FUND'S Board in
accordance with Maryland law, and the GOVERNMENT MONEY FUND'S Board in
accordance with Massachusetts law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$237 billion in assets as of March 31, 1996, including approximately $83
billion in proprietary mutual fund assets. As of March 31, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $886 billion in assets,
including approximately $61 billion in mutual fund assets.
Under the terms of its respective Management Agreement, each Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of .50
of 1% of the value of the Fund's average daily net assets. For the fiscal
year ended February 29, 1996, the MONEY FUND and GOVERNMENT MONEY FUND paid
The Dreyfus Corporation a monthly management fee at the effective annual rate
of .19 of 1% and .14 of 1%, respectively, of the value of such Fund's average
daily net assets pursuant to separate undertakings by The Dreyfus
Corporation. From time to time, The Dreyfus Corporation may waive receipt of
its fees and/or voluntarily assume certain expenses of a Fund, which would
have the effect of lowering that Fund's overall expense ratio and increasing
yield to investors. Neither Fund will pay The Dreyfus Corporation at a later
time for any amounts it may waive, nor will either Fund reimburse The Dreyfus
Corporation for any amounts it may assume.
The Dreyfus Corporation has agreed, with respect to each Fund, that,
until such time as The Dreyfus Corporation gives shareholders at least 90
days' notice to the contrary, if in any fiscal year of the Fund its 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 .45 of 1% of
the value of its average daily net assets for the fiscal year, the Fund may
deduct from the payment to be made to The Dreyfus Corporation under its
Management Agreement, or The Dreyfus Corporation will bear, such excess
expense.
In allocating brokerage transactions, TheDreyfus Corporation seeks to
obtain the best execution of orders at the most favorable price. Subject to
this determination, The Dreyfus Corporation may consider, among other things,
the receipt of research services and/or the sale of shares of a Fund or other
funds managed, advised or administered by The Dreyfus Corporation as factors
in the selection of broker-dealers to execute portfolio transactions for each
Fund. See "Portfolio Transactions" in the Statement of Additional
Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers, banks or other financial institutions in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Transfer and Dividend Disbursing
Agent (the "Transfer Agent") for each Fund. The Transfer Agent will receive
the $5.00 exchange fee, the $5.00 account closeout fee, the $5.00 wire and
Dreyfus TELETRANSFER redemption fee, and the $2.00 checkwriting charge,
described below. A sufficient number of your shares will be redeemed
automatically to pay these amounts. These payments will reduce the transfer
agency fee otherwise payable by each Fund. By purchasing shares of a Fund,
you are deemed to have consented to this procedure. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Custodian for each Fund.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. Share certificates are issued
only upon your written request. No certificates are issued for fractional
shares. Each Fund reserves the right to reject any purchase order.
The minimum initial investment is $25,000. Subsequent investments
must be at least $1,000. The initial investment must be accompanied by the
Account Application.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments to open new accounts which are mailed
should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor
subsequent investments should be made by third party check. Purchase orders
may be delivered in person only to a Dreyfus Financial Center. THESE ORDERS
WILL BE FORWARDED TO THE RELEVANT FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, together with the applicable
Fund's DDA# as shown below, for purchase of Fund shares in your name: DDA
#8900204419/Dreyfus BASIC Money Market Fund, Inc., or DDA #8900204427/Dreyfus
BASIC U.S. Government Money Market Fund. The wire must include your Fund
account number (for new accounts, your Taxpayer Identification Number ("TIN")
should be included instead), account registration and dealer number, if
applicable. If your initial purchase of Fund shares is by wire, please call
1-800-645-6561 after completing your wire payment to obtain your Fund account
number. Please include your Fund account number on the Account Application
and promptly mail the Account Application to the Fund, as no redemptions will
be permitted until the Account Application is received. You may obtain
further information about remitting funds in this manner from your bank. All
payments should be made in U.S. dollars and, to avoid additional fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. Each Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Shares of each Fund also may be purchased through IRA accounts and
other kinds of retirement accounts, such as Keogh Plans and SEP-IRA's,
provided the opening balance is at least $5,000. Subsequent investments in
such retirement accounts must be at least $1,000. For details, please contact
Dreyfus Retirement Services, a division of Dreyfus Service Corporation, by
calling toll free 1-800-358-5566.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
Shares of each Fund are sold on a continuous basis at the net asset
value per share next determined after an order in proper form is received by
the Transfer Agent or other agent or entity subject to the direction of such
agents. Net asset value per share is determined as of the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m., New York time)
on each day the New York Stock Exchange or Transfer Agent, as to the MONEY
FUND, or the New York Stock Exchange, as to the Government Money Fund, is
open for business. Net asset value per share is computed by dividing the
value of the Fund's net assets (i.e., the value of its assets less
liabilities) by the total number of shares outstanding. See "Determination of
Net Asset Value" in the Statement of Additional Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase shares (minimum $1,000,
maximum $150,000 per day) without charge by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account designated
in one of these documents and your Fund account. Only a bank account
maintained in a domestic financial institution which is an Automated Clearing
House member may be so designated. The Fund may modify or terminate this
Privilege at any time. No fee is contemplated for purchases of Fund shares
pursuant to this Privilege.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by telephoning
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES -- You may purchase, in exchange for shares of your Fund,
shares of certain other funds managed or administered by The Dreyfus
Corporation, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use. You will be charged a $5.00 fee for each exchange you
make out of your Fund. This fee will be deducted from your account and paid
to the Transfer Agent.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before an exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $1,000; furthermore,
when establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the fund
into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, or by a separate signed
Shareholder Services Form, also available by calling 1-800-645-6561. If you
have established the Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-800-645-6561 or, if you are calling from overseas,
call 516-794-5452. See "How to Redeem Shares _ Procedures." Upon an exchange
into a new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the
fund into which the exchange is made: Telephone Exchange Privilege, Check
Redemption Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege, Dreyfus TELETRANSFER Privilege and the dividend/capital gain
distribution option (except for Dreyfus Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares of the fund purchased with a sales load, or (c) acquired through
reinvestment of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange you must notify
the Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. Each Fund reserves the right to
reject any exchange request in whole or in part and will reject any request
to exchange out of one of the Funds in excess of four during any calendar
year. The availability of Fund Exchanges may be modified or terminated at any
time upon notice to shareholders. See "Dividends, Distributions and Taxes."
DREYFUS DIVIDEND SWEEP PRIVILEGE -- Dreyfus Dividend Sweep Privilege enables
you to invest automatically dividends or dividends and capital gain
distributions, if any, paid by the Fund in shares of another fund in the
Dreyfus Family of Funds of which you are a shareholder. Shares of the other
fund will be purchased at the then-current net asset value; however, a sales
load may be charged with respect to investments in shares of a fund sold with
a sales load. If you are investing in a fund that charges a sales load, you
may qualify for share prices which do not include the sales load or which
reflect a reduced sales load. If you are investing in a fund that charges a
contingent deferred sales charge, the shares purchased will be subject to the
contingent deferred sales charge, if any, applicable to the purchased shares.
See "Shareholder Services" in the Statement of Additional Information. For
more information concerning this Privilege or to request a Dividend Options
Form, please call toll free 1-800-645-6561. You may cancel your participation
in this Privilege by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of this Privilege is effective three business
days following receipt. This Privilege is available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply. Each Fund may modify or terminate this Privilege at
any time or charge a service fee. No such fee currently is contemplated.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, your Fund will redeem the shares at the
next determined net asset value.
YOU WILL BE CHARGED $5.00 WHEN YOU REDEEM ALL SHARES IN YOUR ACCOUNT
OR YOUR ACCOUNT IS OTHERWISE CLOSED OUT. The fee will be deducted from your
redemption proceeds and paid to the Transfer Agent. The account closeout fee
does not apply to exchanges out of the Fund or to wire or Dreyfus TELETRANSFER
redemptions, for each of which a $5.00 fee applies. Securities dealers,
banks and other financial institutions may charge their clients a nominal fee
for effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.
Each Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK OR BY THE
DREYFUS TELETRANSFER PRIVILEGE AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, THE REDEMPTION WILL BE EFFECTIVE AND THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK OR DREYFUS TELETRANSFER PURCHASE ORDER, WHICH MAY TAKE
UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR
REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE DREYFUS TELETRANSFER PURCHASE
ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT
APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE
A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH
SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL
OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until
the Transfer Agent has received your Account Application.
Each Fund reserves the right to redeem your account at its option
upon not less than 45 days written notice if your account's net asset value
is $10,000 or less and remains so during the notice period. The $5.00 account
closeout fee would be charged in such case.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. The Fund makes available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities. Each Fund reserves the right to
refuse any request made by wire or telephone, including requests made shortly
after a change of address, and may limit the amount involved or the number of
such requests. Each Fund may modify or terminate any redemption privilege at
any time. Shares held under Keogh Plans, IRAs or other retirement plans, and
shares for which certificates have been issued, are not eligible for the
Check Redemption, Wire Redemption, Telephone Redemption or Dreyfus
TELETRANSFER Privilege.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. Each Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
Fund shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE RELEVANT FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including each owner
of a joint account, and each signature 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. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $5,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $1,000 or more. Redemption Checks should not be used
to close your account. Your account will be charged $2.00 for each Redemption
Check you write. The Transfer Agent also will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check due to insufficient funds or other valid
reason. You should date your Redemption Checks with the current date when you
write them. Please do not postdate your Redemption Checks. If you do, the
Transfer Agent will honor, upon presentment, even if presented before the
date of the check, all postdated Redemption Checks which are dated within six
months of presentment for payment, if they are otherwise in good order. The
Fund may return an unpaid Redemption Check that would draw your account
balance below $5.00 and you may be subject to extra charges. If you hold
shares in a Dreyfussponsored IRA account, you may be permitted to make
withdrawals from your IRA account using checks furnished to you by The Dreyfus
Trust Company.
WIRE REDEMPTION PRIVILEGE -- You may request by wire or telephone that
redemption proceeds (minimum $5,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You also may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $5,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $1,000 per day) be transferred between your Fund
account and your bank account . Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. You
will be charged a $5.00 TELETRANSFER fee for each Dreyfus TELETRANSFER
redemption, which will be deducted from your account and paid to the Transfer
Agent.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by telephoning
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES PLAN
Each Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus 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 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Ordinarily, dividends are declared from net investment income on each
day the New York Stock Exchange and Transfer Agent, as to the MONEY FUND, or
the New York Stock Exchange, as to the GOVERNMENT MONEY FUND, is open for
business. Each Fund's earnings for Saturdays, Sundays and holidays are
declared as dividends on the next business day. Dividends for each Fund
usually are paid on the last calendar day of each month, and are
automatically reinvested in additional Fund shares at net asset value or, at
your option, paid in cash. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be paid
to you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of
any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along with the
proceeds of the redemption, after the deduction of any fees. Distributions
from net realized securities gains, if any, generally are declared and paid
once a year, but either 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"), in all events in a manner consistent with the
provisions of the 1940 Act. Neither Fund will make distributions from net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive distributions in
cash or to reinvest in additional Fund shares at net asset value. All
expenses are accrued daily and deducted before declaration of dividends to
investors.
Dividends derived from net investment income, together with
distributions from any net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income, whether received in cash or reinvested in additional Fund
shares. No dividend paid by a Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions from net
realized long-term securities gains of a Fund, if any, will be taxable to
U.S. shareholders as long-term capital gains for Federal income tax purposes
regardless of how long you have held your Fund shares and whether such
distributions are received in cash or reinvested in additional Fund shares.
The Code provides that the net capital gains of an individual generally will
not be subject to Federal income tax at a rate in excess of 28%. Dividends
and distributions may be subject to certain state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by a
Fund to a foreign investor generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. Dividends and distributions
attributable to interest from direct obligations of the United States and
paid by a Fund to individuals currently are not subject to tax in most states.
Dividends and distributions attributable to interest from other securities in
which each Fund may invest may be subject to state tax. The GOVERNMENT MONEY
FUND intends to provide shareholders with a statement which sets forth
the percentage of dividends and distributions paid by such Fund that is
attributable to interest income from direct obligations of the United States.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Federal regulations generally require each Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and
distributions from net realized securities gains paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify a Fund to institute backup
withholding if the IRS determines a shareholder's TIN is incorrect or if a
shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of each Fund believes that such Fund has qualified for the
fiscal year ended February 29, 1996 as a "regulated investment company" under
the Code. Each Fund intends to continue to so qualify as long as such
qualification is in the best interests of its shareholders. Such
qualification relieves a Fund of any liability for Federal income tax to the
extent its earnings are distributed in accordance with applicable provisions
of the Code. Each Fund is subject to a non-deductible 4% excise tax, measured
with respect to certain undistributed amounts of taxable investment income
and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
MONEY FUND -- The MONEY FUND was incorporated under Maryland law on March 17,
1992, and commenced operations on April 24, 1992. The MONEY FUND is
authorized to issue 3 billion shares of Common Stock, par value $.001 per
share. Each share has one vote.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the MONEY FUND to hold annual meetings of shareholders. As a
result, MONEY FUND shareholders may not consider each year the election of
Directors or the appointment of auditors. However, pursuant to the MONEY
FUND'S By-Laws, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Fund to hold a special meeting of
shareholders for purposes of removing a Director from office and for any
other purpose. MONEY FUND shareholders may remove a Director by the
affirmative vote of a majority of the MONEY FUND'S outstanding voting shares.
In addition, the Board of Directors will call a meeting of shareholders for
the purpose of electing Directors if, at any time, less than a majority of
the Directors then holding office have been elected by shareholders.
GOVERNMENT MONEY FUND -- The GOVERNMENT MONEY FUND was organized as an
unincorporated business trust under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust (the "Trust
Agreement") dated September 12, 1990, and commenced operations on April 24,
1992. The GOVERNMENT MONEY FUND is authorized to issue an unlimited number of
shares of Beneficial Interest, par value $.001 per share. Each share has one
vote.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the GOVERNMENT
MONEY FUND. However, the Trust Agreement disclaims shareholder liability for
acts or obligations of the GOVERNMENT MONEY FUND and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the GOVERNMENT MONEY FUND'S property for all losses and
expenses of any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the GOVERNMENT
MONEY FUND itself would be unable to meet its obligations, a possibility
which management believes is remote. Upon payment of any liability incurred
by the GOVERNMENT MONEY FUND, the shareholder paying such liability will be
entitled to reimbursement from the general assets of the Fund. The GOVERNMENT
MONEY FUND intends to conduct its operations in such a way as to avoid, as
far as possible, ultimate liability of the shareholders for liabilities of
the Fund. As discussed under "Management of the Funds" in the Statement of
Additional Information, the GOVERNMENT MONEY FUND ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
BOTH FUNDS -- Although each Fund is offering only its own shares, it is
possible that one Fund might become liable for any misstatement in this
Prospectus about the other Fund. The respective Boards of the Funds have
considered this factor in approving the use of this single combined
Prospectus.
The Transfer Agent maintains a record of your ownership and will send
confirmations and statements of account. Each Fund sends an annual and
semi-annual financial report to all its shareholders.
Shareholder inquiries may be made by writing to your Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling 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.
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- The MONEY FUND may borrow money, including in connection
with the entry into reverse repurchase agreements described below, provided
that it maintains continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. The GOVERNMENT MONEY FUND may borrow money, but only for temporary
or emergency (not leveraging) purposes, in an amount up to 15% of the value
of its total assets (including the amount borrowed) valued at 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 a Fund's total
assets, the Fund will not make any additional investments.
REVERSE REPURCHASE AGREEMENTS -- The MONEY FUND may enter into reverse
repurchase agreements with banks, brokers or dealers. Reverse repurchase
agreements involve the transfer by the MONEY FUND of an underlying debt
instrument in return for cash proceeds based on a percentage of the value of
the security. At an agreed upon future date, the MONEY FUND repurchases the
security, at principal, plus accrued interest. As a result of these
transactions, the MONEY FUND is exposed to greater potential fluctuations in
the value of its assets and its net asset value per share. These transactions
will be subject to interest costs which may or may not be recovered by
appreciation of the securities purchased; in certain cases, interest costs on
the money borrowed may exceed the return received on the securities
purchased. The MONEY FUND'S Board has considered the risks to the MONEY FUND
and its shareholders which may result from the entry into reverse repurchase
agreements and has determined that the entry into such agreements is
consistent with the MONEY FUND'S investment objective and management
policies.
FORWARD COMMITMENTS -- The MONEY FUND may purchase securities on a forward
commitment or when-issued basis, which means that delivery and payment take
place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward commitment
or when-issued security are fixed when the MONEY FUND enters into the
commitment, but the MONEY FUND does not make payment until it receives
delivery from the counterparty. The MONEY FUND will commit to purchase such
securities only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is deemed
advisable. The MONEY FUND will not accrue income in respect of a security
purchased on a forward commitment basis prior to its stated delivery date. A
segregated account of the MONEY FUND consisting of cash, cash equivalents or
U.S. Government securities or other high quality liquid debt securities at
least equal at all times to the amount of the forward commitments will be
established and maintained at the MONEY FUND'S custodian bank.
LENDING PORTFOLIO SECURITIES -- The MONEY FUND may lend securities from its
portfolio to brokers, dealers and other institutional investors needing to
borrow securities to complete certain transactions. The MONEY FUND continues
to be entitled to payments in amounts equal to the interest or other
distributions payable on the loaned securities which affords the MONEY FUND
an opportunity to earn interest on the amount of the loan and on the loaned
securities' collateral. Loans of portfolio securities may not exceed 33 1/3%
of the value of the MONEY FUND'S total assets, and the MONEY FUND will
receive collateral consisting of cash, U.S. Government securities or
irrevocable letters of credit which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. Such loans are terminable at any time upon specified notice. The
MONEY FUND might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the MONEY
FUND.
PORTFOLIO SECURITIES
U.S. GOVERNMENT SECURITIES -- Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Interest may fluctuate based on generally
recognized reference rates or the relationship of rates. While the U.S.
Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will always
do so, since it is not so obligated by law.
REPURCHASE AGREEMENTS -- In a repurchase agreement, the Fund buys, and the
seller agrees to repurchase, a security at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including the possible
delays or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS -- The MONEY FUND may purchase certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks
and domestic and foreign branches of foreign banks. With respect to such
securities issued by foreign subsidiaries or foreign branches of domestic
banks, and domestic and foreign branches of foreign banks, the MONEY FUND may
be subject to additional investment risks that are different in some respects
from those incurred by a fund which invests only in debt obligations of U.S.
domestic issuers. See "Description of the Funds -- Investment Considerations
and Risks -- Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER -- The MONEY FUND may purchase commercial paper consisting
of short-term, unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by the MONEY FUND will consist only of
direct obligations issued by domestic and foreign entities. The other
corporate obligations in which the MONEY FUND may invest consist of high
quality, U.S. dollar denominated short-term bonds and notes (including
variable amount master demand notes) issued by domestic and foreign
corporations, including banks.
FLOATING AND VARIABLE RATE OBLIGATIONS -- The MONEY FUND may purchase
floating and variable rate demand notes and bonds, which 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. Variable rate demand notes include master demand notes which are
obligations that permit the MONEY FUND to invest fluctuating amounts, at
varying rates of interest, pursuant to direct arrangements between the MONEY
FUND, as lender, and the borrower. These obligations permit daily changes in
the amount borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the MONEY FUND'S right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand.
PARTICIPATION INTERESTS -- The MONEY FUND may purchase from financial
institutions participation interests in securities in which the Fund may
invest. A participation interest gives the MONEY FUND an undivided interest
in the security in the proportion that the Fund's participation interest
bears to the total principal amount of the security. These instruments may
have fixed, floating or variable rates of interest, with remaining maturities
of 13 months or less. If the participation interest is unrated, or has been
given a rating below that which is permissible for purchase by the MONEY FUND,
the participation interest will be backed by an irrevocable letter of credit
or guarantee of a bank, or the payment obligation otherwise will be
collateralized by U.S. Government securities, or, in the case of unrated
participation interests, The Dreyfus Corporation must have determined that
the instrument is of comparable quality to those instruments in which the MONEY
FUND may invest. For certain participation interests, the MONEY FUND will
have the right to demand payment, on not more than seven days' notice, for
all or any part of the Fund's participation interest in the security, plus
accrued interest. As to these instruments, the MONEY FUND intends to exercise
its right to demand payment only upon a default under the terms of the
security, as needed to provide liquidity to meet redemptions, or to maintain
or improve the quality of its investment portfolio.
ILLIQUID SECURITIES -- The MONEY FUND may invest up to 10% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. By investing in these
securities, the MONEY FUND is subject to a risk that should the Fund desire
to sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN EACH
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF SUCH FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY A FUND. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
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Combined
Prospectus for
BASIC Money Market Fund, Inc.
BASIC U.S. Government
Money Market
Fund
Registration Mark
Copy Rights1997 Dreyfus Service Corporation
123/124p020397
