UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM N-CSR |
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT |
INVESTMENT COMPANIES |
Investment Company Act file number 811-6606 |
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND |
(Exact name of Registrant as specified in charter) |
c/o The Dreyfus Corporation |
200 Park Avenue |
New York, New York 10166 |
(Address of principal executive offices) (Zip code) |
Mark N. Jacobs, Esq. |
200 Park Avenue |
New York, New York 10166 |
(Name and address of agent for service) |
Registrant's telephone number, including area code: (212) 922-6000 |
Date of fiscal year end: | 02/28 | |
Date of reporting period: | 02/28/2007 |
FORM N-CSR
Item 1. Reports to Stockholders.
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
Contents | ||
THE FUND | ||
2 | A Letter from the CEO | |
3 | Discussion of Fund Performance | |
6 | Understanding Your Fund’s Expenses | |
6 | Comparing Your Fund’s Expenses | |
With Those of Other Funds | ||
7 | 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 | |
17 | Report of Independent Registered | |
Public Accounting Firm | ||
18 | Important Tax Information | |
18 | Proxy Results | |
19 | Board Members Information | |
22 | Officers of the Fund | |
FOR MORE INFORMATION | ||
Back Cover |
The Fund
Dreyfus BASIC |
U.S. Government |
Money Market Fund |
A LETTER FROM THE CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC U.S. Government Money Market Fund, covering the 12-month period from March 1, 2006, through February 28, 2007.
The reporting period proved to be a good time for the financial markets, with rallies in the second half of last year helping stocks and bonds achieve positive absolute returns. A number of factors contributed to the markets’ gains, including a more moderate economic expansion, strong business conditions, subdued inflation, stabilizing interest rates and robust investor demand for most asset classes.Although short-term interest rates remained stable over the course of the reporting period, money market instruments continued to provide attractive yields in the wake of the Federal Reserve’s run of 17 consecutive rate hikes between June 2004 and June 2006.
In our analysis, the reporting period provided an excellent reminder of the need for a long-term investment perspective. Adopting too short a time frame has proved costly for some investors recently, as reducing allocations to stocks and bonds generally meant missing rallies. Indeed, history shows that reacting to near-term developments with extreme shifts in strategy rarely is the right decision.We believe that a better strategy is to set a portfolio mix to meet future goals while working through short-term market volatility. Money market funds have continued to play an important role in that mix, providing preservation of capital and relatively high yields. As always, we encourage you to talk with your finanical advisor to help ensure that your portfolio remains aligned with your current financial needs and future investment goals.
Thank you for your continued confidence and support.
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DISCUSSION OF FUND PERFORMANCE
Bernard W. Kiernan, Jr., Portfolio Manager
How did Dreyfus BASIC U.S. Government Money Market Fund perform during the period?
For the 12-month period ended February 28, 2007, the fund produced a yield of 4.69% .Taking into account the effects of compounding, the fund also produced an effective yield of 4.79% .1
What is the fund’s investment approach?
The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity.To pursue this goal, the fund invests exclusively in securities issued or guaranteed as to principal and interest by the U.S. government or its agencies or instrumentalities, and in repurchase agreements (including tri-party repurchase agreements).The securities in which the fund invests include those backed by the full faith and credit of the U.S. government and those that are neither insured nor guaranteed by the U.S. government.
When managing the fund, we closely monitor the outlook for economic growth and inflation, follow overseas developments and consider the posture of the Federal Reserve Board (the “Fed”) in our decisions 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.
What other factors influenced the fund’s performance?
As the reporting period began,low unemployment and strong consumer confidence began to rekindle investors’ long dormant inflation concerns and, as it had since June 2004, the Fed continued to raise short-term interest rates in March. By the spring, inflation concerns had intensified, due in part to hawkish comments from Fed members, and investors widely expected the Fed’s rate hikes in May and June, which drove the federal funds rate to 5.25% .
The Fund 3 |
DISCUSSION OF FUND PERFORMANCE (continued)
Inflation concerns diminished when it later was announced that U.S. GDP had expanded at a relatively moderate 2.6% annualized rate during the second quarter.The economy appeared to slow further over the summer as housing markets softened.The Fed cited a slower economy when it left short-term interest rates unchanged in August, its first pause in more than two years.
The Fed again left overnight interest rates unchanged in September and October, indicating that those pressures probably would moderate as the economy slowed. In fact, tumbling oil prices put a lid on one of the main drivers of the market’s inflation fears, and a decline in the unemployment rate helped reassure investors that the economy was headed for a soft landing. Expectations of slower economic growth were later verified when it was announced that U.S. GDP growth had moderated to an annualized 2.0% in the third quarter of 2006. Still, Fed members indicated that further policy firming might be needed if inflation remains above the Fed’s comfort zone.
Despite healthy employment gains in December, declines in consumer confidence and orders for durable goods suggested that the economy continued to slow, but at a gradual pace that appeared to hold little risk of recession. The Fed left the federal funds rate unchanged at its December meeting.
As 2007 began, some analysts began to predict that further economic weakness might compel the Fed to reduce interest rates later in the year. However, the U.S. economy appeared to gain new momentum in January, when the U.S. Department of Labor reported that weekly wages rose by an inflation-adjusted 2.1% in 2006. The government also announced that the U.S. economy overall grew moderately at an estimated 2.2% annualized rate in the fourth quarter, and inflation drove consumer prices higher at a relatively tame 2.5% rate in 2006, the lowest annual increase since 2003.
These developments led some investors to conclude that the Fed would remain on the sidelines for much of 2007.The Fed did just that at its meeting in late January, when it left the federal funds rate at 5.25% for
4
the fifth consecutive time. Further evidence in February of a gradual economic slowdown, subdued inflation and sharp declines in equity markets near month-end caused some investors to resume speculation that the Fed might begin to ease later in the year.
As short-term interest rates rose over the first half of the reporting period, we set the fund’s weighted average maturity in a range we considered shorter than industry averages.When short-term rates stabilized in August, we increased the fund’s weighted average maturity to the neutral range. It made little sense to us to establish a longer maturity position with yield differences along the money market yield curve near historically narrow levels.
What is the fund’s current strategy?
After a multi-year period in which Fed actions were predictable,we have entered a more uncertain time, in which every piece of economic data is likely to be scrutinized for its possible impact on monetary policy. Current economic data suggest that the Fed could remain on hold for some time, but new economic data may paint a different picture in our view, making a relatively cautious investment posture prudent.
March 15, 2007
An investment in the fund is not insured or guaranteed by the FDIC or any other government | ||
agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is | ||
possible to lose money by investing in the fund. | ||
1 | Effective yield is based upon dividends declared daily and reinvested monthly. Past performance is | |
no guarantee of future results.Yields fluctuate.Yield provided reflects the absorption of certain fund | ||
expenses by The Dreyfus Corporation pursuant to an agreement in which shareholders will be | ||
given at least 90 days’ notice prior to the time such absorption may be terminated. Had these | ||
expenses not been absorbed, the fund’s yield would have been 4.51% and the fund’s effective | ||
yield would have been 4.61%. |
The Fund |
5 |
UNDERSTANDING YOUR FUND’S EXPENSES(Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus BASIC U.S. Government Money Market Fund from September 1, 2006 to February 28, 2007. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment | ||
assuming actual returns for the six months ended February 28, 2007 | ||
Expenses paid per $1,000 † | $ 2.26 | |
Ending value (after expenses) | $1,024.20 |
COMPARING YOUR FUND’S EXPENSES |
WITH THOSE OF OTHER FUNDS (Unaudited) |
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment | ||
assuming a hypothetical 5% annualized return for the six months ended February 28, 2007 | ||
Expenses paid per $1,000 † | $ 2.26 | |
Ending value (after expenses) | $1,022.56 | |
† Expenses are equal to the fund’s annualized expense ratio of .45%, multiplied by the average account value over the | ||
period, multiplied by 181/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS |
February 28, 2007 |
Annualized | ||||||||
Yield on | ||||||||
Date of | Principal | |||||||
U.S. Government Agencies—98.0% | Purchase (%) | Amount ($) | Value ($) | |||||
Federal Farm Credit Bank | ||||||||
4/11/08 | 5.24 a | 50,000,000 | 49,983,787 | |||||
Federal Home Loan Bank System: | ||||||||
3/1/07 | 5.16 | 130,000,000 | 130,000,000 | |||||
7/18/07 | 5.22 a | 25,000,000 | 24,998,868 | |||||
Federal Home Loan Mortgage Corp.: | ||||||||
3/5/07 | 5.26 | 47,950,000 | 47,922,669 | |||||
4/18/07 | 5.24 | 43,969,000 | 43,671,183 | |||||
Federal National Mortgage Association: | ||||||||
5/2/07 | 5.22 | 37,841,000 | 37,508,956 | |||||
7/25/07 | 5.23 | 50,000,000 | 48,965,833 | |||||
Total U.S. Government Agencies | ||||||||
(cost $383,051,296) | 383,051,296 | |||||||
Repurchase Agreements—2.0% | ||||||||
Barclays Financial LLC | ||||||||
dated 2/28/07, due 3/1/07 in the amount | ||||||||
of $8,001,156 (fully collateralized by $8,490,000 | ||||||||
Federal Home Loan Mortgage Corp., Notes, | ||||||||
0%, due 12/7/07, value $8,160,588) | ||||||||
(cost $8,000,000) | 5.20 | 8,000,000 | 8,000,000 | |||||
Total Investments (cost $391,051,296) | 100.0% | 391,051,296 | ||||||
Cash and Receivables (Net) | .0% | 28,156 | ||||||
Net Assets | 100.0% | 391,079,452 | ||||||
a Variable rate security—interest rate subject to periodic change. | ||||||||
Portfolio Summary (Unaudited) † | ||||||||
Value (%) | Value (%) | |||||||
Federal Home Loan Bank System | 39.7 | Federal Farm Credit Bank | 12.8 | |||||
Federal Home Loan Mortgage Corp. | 23.4 | Repurchase Agreements | 2.0 | |||||
Federal National Mortgage | ||||||||
Association | 22.1 | 100.0 | ||||||
† Based on net assets. | ||||||||
See notes to financial statements. |
The Fund 7
STATEMENT OF ASSETS AND LIABILITIES |
February 28, 2007 |
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments | 391,051,296 | 391,051,296 | ||
Cash | 87,978 | |||
Interest receivable | 508,412 | |||
Prepaid expenses | 35,090 | |||
391,682,776 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2(b) | 105,597 | |||
Payable for shares of Beneficial interest redeemed | 379,853 | |||
Accrued expenses | 117,874 | |||
603,324 | ||||
Net Assets ($) | 391,079,452 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 391,165,612 | |||
Accumulated net realized gain (loss) on investments | (86,160) | |||
Net Assets ($) | 391,079,452 | |||
Shares Outstanding | ||||
(unlimited number of $.001 par value shares of Beneficial interest authorized) | 391,165,612 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 |
See notes to financial statements.
8
STATEMENT OF OPERATIONS |
Year Ended February 28, 2007 |
Investment Income ($): | ||
Interest Income | 22,256,452 | |
Expenses: | ||
Management fee—Note 2(a) | 2,172,142 | |
Shareholder servicing costs—Note 2(b) | 317,138 | |
Custodian fees | 70,952 | |
Professional fees | 64,692 | |
Trustees’ fees and expenses—Note 2(c) | 57,726 | |
Registration fees | 27,794 | |
Prospectus and shareholders’ reports | 11,978 | |
Miscellaneous | 17,190 | |
Total Expenses | 2,739,612 | |
Less—reduction in management fee | ||
due to undertaking—Note 2(a) | (784,684) | |
Less—reduction in custody fees due to | ||
earnings credits—Note 1(b) | (2,355) | |
Net Expenses | 1,952,573 | |
Investment Income—Net | 20,303,879 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 500 | |
Net Increase in Net Assets Resulting from Operations | 20,304,379 |
See notes to financial statements.
The Fund 9 |
STATEMENT OF CHANGES IN NET ASSETS
Year Ended February 28, | ||||
2007 | 2006 | |||
Operations ($): | ||||
Investment income—net | 20,303,879 | 14,219,589 | ||
Net realized gain (loss) on investments | 500 | (2,069) | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 20,304,379 | 14,217,520 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (20,303,879) | (14,219,589) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 218,011,801 | 390,820,923 | ||
Dividends reinvested | 19,363,048 | 13,678,500 | ||
Cost of shares redeemed | (311,611,168) | (413,535,020) | ||
Increase (Decrease) in Net Assets | ||||
from Beneficial Interest Transactions | (74,236,319) | (9,035,597) | ||
Total Increase (Decrease) in Net Assets | (74,235,819) | (9,037,666) | ||
Net Assets ($): | ||||
Beginning of Period | 465,315,271 | 474,352,937 | ||
End of Period | 391,079,452 | 465,315,271 |
See notes to financial statements.
10 |
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.
Fiscal Year Ended February, | ||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Investment Operations: | ||||||||||
Investment income—net | .047 | .031 | .011 | .007 | .015 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.047) | (.031) | (.011) | (.007) | (.015) | |||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Total Return (%) | 4.79 | 3.11 | 1.12 | .74 | 1.46 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .63 | .62 | .63 | .62 | .61 | |||||
Ratio of net expenses | ||||||||||
to average net assets | .45 | .45 | .45 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||
to average net assets | 4.67 | 3.05 | 1.08 | .75 | 1.47 | |||||
Net Assets, end of period ($ x 1,000) | 391,079 | 465,315 | 474,353 | 601,253 | 739,219 |
See notes to financial statements.
The Fund 11
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus BASIC U.S. Government Money Market Fund (the “fund”) is registered under the Investment Company Act of 1940, 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” or “Dreyfus”) serves as the fund’s investment adviser. The Manager is a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”). Dreyfus Service Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold to the public without a sales charge.
On December 4, 2006, Mellon Financial and The Bank of New York Company, Inc. announced that they had entered into a definitive agreement to merge. The new company will be called The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus would become a wholly-owned subsidiary of The Bank of New York Mellon Corporation.The transaction is subject to certain regulatory approvals and the approval of The Bank of New York Company, Inc.’s and Mellon Financial’s shareholders, as well as other customary conditions to closing. Subject to such approvals and the satisfaction of the other conditions, Mellon Financial and The Bank of New York Company, Inc. expect the transaction to be completed in the third quarter of 2007.
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 U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
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The fund enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Trustees to represent the fair value of the fund’s investments.
On September 20, 2006, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
(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, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of investments represents amortized cost.
The fund has an arrangement with the custodian bank whereby the fund receives earnings credits from the custodian when positive cash balances are maintained, which are used to offset custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund may enter into repurchase agreements with financial institutions, deemed to be creditworthy by the Manager, subject to the seller’s agreement to repurchase and the fund’s agreement to resell such
The Fund 13 |
NOTES TO FINANCIAL STATEMENTS (continued)
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, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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.
On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years
14
beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management does not believe that the application of this standard will have a material impact on the financial statements of the fund.
At February 28, 2007, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.
The accumulated capital loss carryover of $86,160 is available to be applied against future net securities profits, if any, realized subsequent to February 28, 2007. If not applied, $425 of the carryover expires in fiscal 2008, $28,890 expires in fiscal 2011, $1,550 expires in fiscal 2012, $53,226 expires in fiscal 2013 and $2,069 expires in fiscal 2014.
The tax character of distributions paid to shareholders during the fiscal periods ended February 28, 2007 and February 28, 2006, were all ordinary income.
At February 28, 2007, 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 (“Agreement”) with the Manager, the management fee is computed at the annual rate of .50% 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, if the fund’s aggregate expenses, exclusive of taxes, brokerage fees, interest on borrowings and extraordinary expenses, exceed an annual rate of .45% of the value of the fund’s average daily net assets, the fund may deduct from the payment to be made to the Manager under the Agreement, or the Manager will bear, such excess expense. The reduction in management fee, pursuant to the undertaking, amounted to $784,684 during the period ended February 28, 2007.
The Fund 15 |
NOTES TO FINANCIAL STATEMENTS (continued) |
(b) Under the Shareholder Services Plan, the fund reimburses the Distributor an amount not to exceed an annual rate of .25% 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 February 28, 2007, the fund was charged $221,552 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 February 28, 2007, the fund was charged $63,665 pursuant to the transfer agency agreement.
During the period ended February 28, 2007, the fund was charged $4,127 for services performed by the Chief Compliance Officer.
The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees $144,914, chief compliance officer fees $2,726 and transfer agency per account fees $10,400, which are offset against an expense reimbursement currently in effect in the amount of $52,443.
(c) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
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REPORT OF INDEPENDENT REGISTERED |
PUBLIC ACCOUNTING FIRM |
Shareholders and Board of Trustees |
Dreyfus BASIC U.S. Government Money Market Fund |
We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC U.S. Government Money Market Fund, including the statement of investments, as of February 28, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the years indicated therein.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting.Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2007 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus BASIC U.S. Government Money Market Fund at February 28, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated years, in conformity with U.S. generally accepted accounting principles.
New York, New York |
April 9, 2007 |
The Fund 17
IMPORTANT TAX INFORMATION (Unaudited)
For federal tax purposes, the fund hereby designates 100% of the ordinary income dividends paid during the fiscal year ended February 28, 2007 as qualifying “interest related dividends.”
PROXY RESULTS (Unaudited)
The fund held a special meeting of shareholders on November 30, 2006.The proposal considered at the meeting, and the results, are as follows:
Shares | ||||
Votes For | Authority Withheld | |||
To elect additional Board Members: | ||||
Clifford L. Alexander † | 169,686,354 | 5,780,374 | ||
Peggy C. Davis † | 169,655,585 | 5,811,144 | ||
Joseph S. DiMartino | 169,571,178 | 5,895,551 | ||
Ernest Kafka † | 169,345,018 | 6,121,711 | ||
Nathan Leventhal † | 169,547,090 | 5,919,638 | ||
† Each new Board member’s term commenced on January 1, 2007. | ||||
In addition to Joseph S. DiMartino, David W. Burke, Diane Dunst, Jay I. Meltzer, Daniel Rose,Warren B. | ||||
Rudman and Sander Vanocur continue as Board members of the fund. |
18
BOARD MEMBERS INFORMATION (Unaudited)
Joseph S. DiMartino (63) |
Chairman of the Board (1995) |
Principal Occupation During Past 5 Years: |
• Corporate Director and Trustee |
Other Board Memberships and Affiliations:
- The Muscular Dystrophy Association, Director
- Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director
- The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director
- Sunair Services Corporation, a provider of certain outdoor-related services to homes and businesses, Director
No. of Portfolios for which Board Member Serves: 190
———————
Clifford L. Alexander, Jr. (73) |
Board Member (2007) |
Principal Occupation During Past 5 Years:
- President of Alexander & Associates, Inc., a management consulting firm ( January 1981-present)
- Chairman of the Board of Moody’s Corporation (October 2000-October 2003)
Other Board Memberships and Affiliations: |
• Mutual of America Life Insurance Company, Director |
No. of Portfolios for which Board Member Serves: 67
———————
David W. Burke (70) |
Board Member (1994) |
Principal Occupation During Past 5 Years: |
• Corporate Director and Trustee |
Other Board Memberships and Affiliations: |
• John F. Kennedy Library Foundation, Director |
No. of Portfolios for which Board Member Serves: 81
———————
Peggy C. Davis (64) |
Board Member (2007) |
Principal Occupation During Past 5 Years:
- Shad Professor of Law, New York University School of Law (1983-present)
- Writer and teacher in the fields of evidence, constitutional theory, family law, social sciences and the law, legal process and professional methodology and training
No. of Portfolios for which Board Member Serves: 80
The Fund 19 |
BOARD MEMBERS INFORMATION (Unaudited) (continued)
Diane Dunst (67) |
Board Member (1990) |
Principal Occupation During Past 5 Years: |
• President, Huntting House Antiques |
No. of Portfolios for which Board Member Serves: 32
———————
Ernest Kafka (74) |
Board Member (2007) |
Principal Occupation During Past 5 Years:
- Physician engaged in private practice specializing in the psychoanalysis of adults and adolescents (1962-present)
- Instructor,The New York Psychoanalytic Institute (1981-present)
- Associate Clinical Professor of Psychiatry at Cornell Medical School (1987-2002)
No. of Portfolios for which Board Member Serves: 32
———————
Nathan Leventhal (64) |
Board Member (2007) |
Principal Occupation During Past 5 Years: |
• Chairman of the Avery-Fisher Artist Program (November 1997-present) |
Other Board Memberships and Affiliations:
- Movado Group, Inc., Director
- NYC Mayor’s Committee on Appointments, Chairman
No. of Portfolios for which Board Member Serves: 32
———————
Jay I. Meltzer (78) |
Board Member (1991) |
Principal Occupation During Past 5 Years:
- Physician, Internist and Specialist in Clinical Hypertension
- Clinical Professor of Medicine at Columbia University & College of Physicians and Surgeons
- Faculty Associate, Center for Bioethics, Columbia
No. of Portfolios for which Board Member Serves: 32
20
Daniel Rose (77) |
Board Member (1992) |
Principal Occupation During Past 5 Years:
- Chairman and Chief Executive Officer of Rose Associates, Inc., a New York based real estate development and management firm
Other Board Memberships and Affiliations:
- Baltic-American Enterprise Fund,Vice Chairman and Director
- Harlem Educational Activities Fund, Inc., Chairman
- Housing Committee of the Real Estate Board of New York, Inc., Director
No. of Portfolios for which Board Member Serves: 41
———————
Warren B. Rudman (76) |
Board Member (1993) |
Principal Occupation During Past 5 Years:
- Of Counsel to (from January 1993 to December 31, 2003, Partner in) the law firm Paul, Weiss, Rifkind,Wharton & Garrison LLP
Other Board Memberships and Affiliations:
- Collins & Aikman Corporation, Director
- Allied Waste Corporation, Director
- Boston Scientific, Director
No. of Portfolios for which Board Member Serves: 41 |
———————
Sander Vanocur (79) |
Board Member (1992) |
Principal Occupation During Past 5 Years: |
• President, Old Owl Communications |
No. of Portfolios for which Board Member Serves: 41
———————
Once elected all Board Members serve for an indefinite term, but achieve Emeritus status upon reaching age 80.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund’s Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.
Rosalind Gersten Jacobs, Emeritus Board Member
The Fund 21 |
OFFICERS OF THE FUND (Unaudited)
J. DAVID OFFICER, President since |
December 2006. |
Chief Operating Officer,Vice Chairman and a director of the Manager, and an officer of 90 investment companies (comprised of 190 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1, 1998.
MARK N. JACOBS, Vice President since |
March 2000. |
Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since June 1977.
MICHAEL A. ROSENBERG, Vice President |
and Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since October 1991.
JAMES BITETTO, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel and Assistant Secretary of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President |
and Assistant Secretary since |
August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. She is 51 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since June 2000.
JANETTE E. FARRAGHER, Vice President |
and Assistant Secretary since |
August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. She is 44 years old and has been an employee of the Manager since February 1984.
JOHN B. HAMMALIAN, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since February 1991.
ROBERT R. MULLERY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since May 1986.
22
JEFF PRUSNOFSKY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 41 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since |
November 2001. |
Director – Mutual Fund Accounting of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1985.
ERIK D. NAVILOFF, Assistant Treasurer |
since August 2005. |
Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since November 1992.
ROBERT ROBOL, Assistant Treasurer |
since August 2003. |
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 42 years old and has been an employee of the Manager since October 1988.
ROBERT SVAGNA, Assistant Treasurer |
since December 2005. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since November 1990.
GAVIN C. REILLY, Assistant Treasurer |
since December 2005. |
Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 91 investment companies (comprised of 206 portfolios) managed by the Manager. He is 38 years old and has been an employee of the Manager since April 1991.
JOSEPH W. CONNOLLY, Chief Compliance |
Officer since October 2004. |
Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (91 investment companies, comprised of 206 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon’s Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 49 years old and has served in various capacities with the Manager since 1980, including manager of the firm’s Fund Accounting Department from 1997 through October 2001.
WILLIAM GERMENIS, Anti-Money |
Laundering Compliance Officer since |
October 2002. |
Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 87 investment companies (comprised of 202 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Distributor since October 1998.
The Fund 23 |
NOTES
For More | Information | |||
Dreyfus BASIC | Transfer Agent & | |||
U.S. Government | Dividend Disbursing Agent | |||
Money Market Fund | Dreyfus Transfer, Inc. | |||
200 Park Avenue | 200 Park Avenue | |||
New York, NY | 10166 | New York, NY 10166 | ||
Manager | Distributor | |||
The Dreyfus Corporation | Dreyfus Service Corporation | |||
200 Park Avenue | 200 Park Avenue | |||
New York, NY | 10166 | New York, NY 10166 | ||
Custodian | ||||
The Bank of New York | ||||
One Wall Street | ||||
New York, NY | 10286 | |||
Ticker Symbol: | DBGXX | |||
Telephone 1-800-645-6561 |
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 |
E-mail Send your request to info@dreyfus.com |
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com |
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund's Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090.
Information regarding how the fund voted proxies relating to portfolio securities for the 12-month period ended June 30, 2006, is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
© 2007 Dreyfus Service Corporation
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that Joseph S. DiMartino, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Mr. DiMartino is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $38,511 in 2006 and $38,511 in 2007.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $0 in 2006 and $0 in 2007.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2006 and $0 in 2007.
Note: For the second paragraph in each of (b) through (d) of this Item 4, certain of such services were not pre-approved prior to May 6, 2003, when such services were required to be pre-approved. On and after May 6, 2003, 100% of all services provided by the Auditor were pre-approved as required. For comparative purposes, the fees shown assume that all such services were pre-approved, including services that were not pre-approved prior to the compliance date of the pre-approval requirement.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $3,318 in 2006 and $3,047 in 2007. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates which required pre-approval by the Audit Committee were $0 in 2006 and $0 in 2007.
(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $174 in 2006 and $188 in 2007. These services consisted of a review of the Registrant's anti-money laundering program.
The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee were $0 in 2006 and $0 in 2007.
Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $777,420 in 2006 and $488,611 in 2007.
Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Auditor's independence.
Item 5. | Audit Committee of Listed Registrants. | |
Not applicable. | ||
Item 6. | Schedule of Investments. | |
Not applicable. | ||
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management | |
Investment Companies. | ||
Not applicable. | ||
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. | |
Not applicable. | ||
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Companies and | |
Affiliated Purchasers. | ||
Not applicable. | ||
Item 10. | Submission of Matters to a Vote of Security Holders. |
The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the
Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor East, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders.
Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
DREYFUS BASIC U.S. GOVERNMENT MONEY MARKET FUND | ||
By: | /s/ J. David Officer | |
J. David Officer | ||
President | ||
Date: | April 25, 2007 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of | ||
1940, this Report has been signed below by the following persons on behalf of the Registrant and in the | ||
capacities and on the dates indicated. | ||
By: | /s/ J. David Officer | |
J. David Officer | ||
President | ||
Date: | April 25, 2007 | |
By: | /s/ James Windels | |
James Windels | ||
Treasurer | ||
Date: | April 25, 2007 |
EXHIBIT INDEX
(a)(1) | Code of ethics referred to in Item 2. | |
(a)(2) | Certifications of principal executive and principal financial officers as required by Rule 30a- | |
2(a) under the Investment Company Act of 1940. (EX-99.CERT) | ||
(b) | Certification of principal executive and principal financial officers as required by | |
Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT) |