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 811-3700 |
The Dreyfus/Laurel Tax-Free Municipal Funds |
(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) |
Michael A. Rosenberg, 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: | 06/30 | |
Date of reporting period: | 06/30/07 |
FORM N-CSR
Item 1. Reports to Stockholders.
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbcmmmfx1x1.jpg)
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
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 | |
19 | Statement of Assets and Liabilities | |
20 | Statement of Operations | |
21 | Statement of Changes in Net Assets | |
22 | Financial Highlights | |
23 | Notes to Financial Statements | |
28 | Report of Independent Registered | |
Public Accounting Firm | ||
29 | Important Tax Information | |
30 | Information About the Review and | |
Approval of the Fund’s Investment | ||
Management Agreement | ||
34 | Board Members Information | |
36 | Officers of the Fund | |
FOR MORE INFORMATION | ||
Back Cover |
The Fund
Dreyfus BASIC California Municipal Money Market Fund |
A LETTER FROM THE CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC California Municipal Money Market Fund, covering the 12-month period from July 1, 2006, through June 30, 2007.
The U.S. economy produced mixed signals over the first half of 2007, causing investor sentiment to swing from concerns regarding a domestic economic slowdown stemming from slumping housing markets to worries about mounting inflationary pressures in an environment of robust global growth. However, more recent data have provided stronger signals that a “soft landing” is likely for the U.S. economy.The rate of decline in residential construction is becoming less severe, the industrial inventory slowdown is fading and capital goods orders have strengthened.What’s more, a generally rising stock market has helped to offset any negative “wealth effect” from the weak housing market.
Should these trends persist, we expect U.S. economic growth to hover slightly below long-term averages during the second half of 2007. A moderate economic growth rate and gradually receding inflationary pressures may keep the Federal Reserve Board on the sidelines and help to support yields of money market instruments near current levels. As always, your financial advisor can help you position your investments for these and other developments.
For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbcmmmfx4x2.jpg)
2
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbcmmmfx5x1.jpg)
DISCUSSION OF FUND PERFORMANCE
For the period of July1, 2006, through June 30, 2007, as provided by Joseph Irace, Portfolio Manager
Market and Fund Performance Overview
Yields of money market instruments remained in a relatively narrow trading range as the Federal Reserve Board (the “Fed”) left short-term interest rates unchanged throughout the reporting period in a generally slowing economic environment.
For the 12-month period ended June 30, 2007, Dreyfus BASIC California Municipal Money Market Fund produced a yield of 3.16% and, taking into account the effects of compounding, an effective yield of 3.21% .1
The Fund’s Investment Approach
The fund seeks to provide a high level of current income exempt from federal and California state income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity.To pursue this objective, we attempt to add value by selecting the individual tax-exempt money market instruments from high-quality California exempt issuers that we believe are most likely to provide high tax-exempt current income.We also actively manage the fund’s weighted average maturity in anticipation of interest-rate and supply-and-demand changes in California’s short-term municipal marketplace.
Rather than focusing on economic or market trends, we search for securities that, in our opinion, will help us enhance the fund’s yield.
The management of the fund’s weighted average maturity uses a more tactical approach. If we expect the supply of securities to increase temporarily, we may reduce the fund’s weighted average maturity to make cash available for the purchase of higher yielding securities.This is due to the fact that yields tend to rise if issuers are competing for investor interest. If we expect demand to surge at a time when we anticipate little issuance and therefore lower yields, we may increase the fund’s
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
average weighted maturity to maintain current yields for as long as we deem practical. At other times, we try to maintain a neutral average weighted maturity.
Interest Rates Stabilized as U.S. Economic Growth Moderated
In late June 2006, just days before the start of the reporting period, the Fed implemented its sixteenth consecutive increase of short term interest rates in its ongoing attempt to forestall inflationary pressures in a growing U.S. economy.As a result, the overnight federal funds rate rose to 5.25% . Over the summer of 2006, however, weakness in the housing and automotive sectors contributed to a more moderate rate of U.S. economic growth. In addition, inflationary pressures appeared to subside as energy prices retreated from their record highs.
Investors generally responded to these developments with expectations that a slower economy and lower inflation might prompt the Fed to begin reducing short-term interest rates sometime during 2007. The Fed lent credence to this view when it stopped raising interest rates and held them steady throughout the reporting period as it evaluated the impact of its previous rate hikes on the economy and inflation. In its public comments, the Fed repeatedly stated that it believed inflation was likely to moderate along with economic growth. With the Fed on hold, investor sentiment vacillated between expectations of a rate cut due to the economic slowdown and anticipation that stubborn inflation would cause the Fed to remain on the sidelines longer than previously expected.
In California, tax revenues have continued to increase in an expanding economy, helping to support a balanced operating budget, the state’s credit rating and prices of municipal securities.
Supply-and-Demand Forces Boosted Short-Term Yields
As short-term interest rates stabilized, tax-exempt money market yields traded within a relatively narrow range. However, variable-rate demand notes (“VRDNs”), on which yields are reset daily or weekly, provided
4
higher yields than longer-term instruments at times during the reporting period.This relatively unusual phenomenon, known as an “inverted yield curve,” was primarily the result of supply-and-demand forces.
When the yield curve was inverted, we allocated a large percentage of the fund’s assets to VRDNs, with the remainder invested in municipal notes and seasoned municipal bonds.As yield differences subsequently began to normalize, we reduced the fund’s exposure to VRDNs and increased its holdings of tax-exempt commercial paper with maturities in the three- to five-month range.As a result, the fund’s weighted average maturity increased from a relatively short position to one that was longer than industry averages.
Fund Remains Positioned for an Unchanged Fed Policy
After the Fed’s meeting in June 2007, it continued to assert that its “predominant policy concern remains the risk that inflation will fail to moderate as expected.”These remarks, together with mixed economic and inflation data, suggest to us that the Fed is unlikely either to raise or lower short-term interest rates anytime soon. In addition, we purchased some one-year municipal notes in June, which typically is a heavy month of issuance in California. We therefore intend to maintain the fund’s longer-than-average duration position until we see evidence that the Fed is ready to adjust monetary policy one way or the other.
July 16, 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. Income may be subject to state and local taxes for | ||
non-California residents, and some income may be subject to the federal alternative minimum tax | ||
(AMT) for certain investors. |
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 California Municipal Money Market Fund from January 1, 2007 to June 30, 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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.25 | |
Ending value (after expenses) | $1,016.20 |
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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.26 | |
Ending value (after expenses) | $1,022.56 | |
† Expenses are equal to the fund’s annualized expense ratio of .45%; multiplied by the average account value over the | ||
period, multiplied by 181/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS June 30, 2007 |
Short-Term | Coupon | Maturity | Principal | |||||
Investments—113.2% | Rate (%) | Date | Amount ($) | Value ($) | ||||
California—102.1% | ||||||||
ABAG Finance Authority for | ||||||||
Non-Profit Corporations, | ||||||||
Revenue (Grauer Foundation for | ||||||||
Education Project) (LOC; | ||||||||
Comerica Bank) | 3.74 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
Acalanes Union High School | ||||||||
District, GO Notes, Refunding | ||||||||
(Insured; FSA) | 5.00 | 8/1/07 | 125,000 | 125,096 | ||||
Adelanto Public Utility Authority, | ||||||||
Revenue, Refunding (Utility | ||||||||
System Project) (Insured; | ||||||||
AMBAC and Liquidity Facility; | ||||||||
Dexia Credit Locale) | 3.88 | 7/1/07 | 6,000,000 a | 6,000,000 | ||||
Anaheim City School District, | ||||||||
GO Notes (Insured; FGIC) | 5.00 | 8/1/07 | 150,000 | 150,128 | ||||
California, | ||||||||
CP (Liquidity Facility: Bank | ||||||||
of Nova Scotia, KBC Bank, | ||||||||
Lloyds TSB Bank PLC, National | ||||||||
Australia Bank, Royal Bank of | ||||||||
Scotland PLC and Societe | ||||||||
Generale) | 3.75 | 7/9/07 | 6,000,000 | 6,000,000 | ||||
California, | ||||||||
CP (Liquidity Facility: Bank | ||||||||
of Nova Scotia, KBC Bank, | ||||||||
Lloyds TSB Bank PLC, National | ||||||||
Australia Bank, Royal Bank of | ||||||||
Scotland PLC and Societe | ||||||||
Generale) | 3.75 | 7/9/07 | 6,000,000 | 6,000,000 | ||||
California, | ||||||||
CP (Liquidity Facility: Bank | ||||||||
of Nova Scotia, KBC Bank, | ||||||||
Lloyds TSB Bank PLC, National | ||||||||
Australia Bank, Royal Bank of | ||||||||
Scotland PLC and Societe | ||||||||
Generale) | 3.76 | 7/9/07 | 3,000,000 | 3,000,000 | ||||
California, | ||||||||
CP (Liquidity Facility: Bank | ||||||||
of Nova Scotia, KBC Bank, | ||||||||
Lloyds TSB Bank PLC, National | ||||||||
Australia Bank, Royal Bank of | ||||||||
Scotland PLC and Societe | ||||||||
Generale) | 3.80 | 7/10/07 | 1,000,000 | 1,000,000 |
The Fund 7
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
California, | ||||||||
Economic Recovery Bonds | 5.00 | 7/1/07 | 125,000 | 125,000 | ||||
California, | ||||||||
Economic Recovery Bonds | 5.00 | 1/1/08 | 285,000 | 286,785 | ||||
California, | ||||||||
GO Notes | 5.50 | 10/1/07 | 600,000 | 602,587 | ||||
California, | ||||||||
GO Notes | 6.30 | 10/1/07 | 300,000 | 301,964 | ||||
California, | ||||||||
GO Notes | 7.20 | 5/1/08 | 100,000 | 102,841 | ||||
California, | ||||||||
GO Notes (Insured; Radian | ||||||||
Group and Liquidity Facility; | ||||||||
Citibank NA) | 3.76 | 7/7/07 | 3,500,000 a,b | 3,500,000 | ||||
California, | ||||||||
GO Notes, Refunding | 5.00 | 10/1/07 | 850,000 | 852,891 | ||||
California, | ||||||||
Various Purpose GO Notes | 11.00 | 12/1/07 | 600,000 | 617,657 | ||||
California, | ||||||||
Various Purpose GO Notes | 6.25 | 4/1/08 | 750,000 | 763,969 | ||||
California, | ||||||||
Veterans GO Notes | 4.65 | 12/1/07 | 100,000 | 100,423 | ||||
California Department of Veteran | ||||||||
Affairs, Home Purchase Revenue | 4.55 | 12/1/07 | 670,000 | 671,903 | ||||
California Economic Development | ||||||||
Financing Authority, IDR | ||||||||
(Applied Aerospace Structures, | ||||||||
Corporation Project) (LOC; | ||||||||
American National Bank and | ||||||||
Trust Company of Chicago) | 3.77 | 7/7/07 | 455,000 a | 455,000 | ||||
California Educational Facilities | ||||||||
Authority, Revenue, Refunding | ||||||||
(Art Center College of Design) | ||||||||
(LOC; Allied Irish Banks) | 3.72 | 7/7/07 | 3,950,000 a | 3,950,000 | ||||
California Health Facilities | ||||||||
Financing Authority, Insured | ||||||||
Revenue (Sutter/CHS) (Insured; | ||||||||
AMBAC and Liquidity Facility: | ||||||||
ABN-AMRO and KBC Bank) | 3.83 | 7/1/07 | 1,550,000 a | 1,550,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
California Infrastructure and | ||||||||
Economic Development Bank, IDR | ||||||||
(Starter and Alternator | ||||||||
Exchange, Inc. Project) (LOC; | ||||||||
California State Teachers | ||||||||
Retirement System) | 3.83 | 7/7/07 | 1,100,000 a | 1,100,000 | ||||
California Infrastucture and | ||||||||
Economic Development Bank, | ||||||||
Industrial Revenue (Nature | ||||||||
Kist Snacks Project) (LOC; | ||||||||
Wells Fargo Bank) | 3.78 | 7/7/07 | 1,500,000 a | 1,500,000 | ||||
California Pollution Control | ||||||||
Financing Authority, PCR | ||||||||
(Evergreen Oil Inc. Project) | ||||||||
(LOC; Bank of The West) | 3.81 | 7/7/07 | 900,000 a | 900,000 | ||||
California Pollution Control | ||||||||
Financing Authority, PCR, | ||||||||
Refunding (Pacific Gas and | ||||||||
Electric Company) | ||||||||
(LOC; Bank One) | 3.84 | 7/1/07 | 8,000,000 a | 8,000,000 | ||||
California Pollution Control | ||||||||
Financing Authority, SWDR | ||||||||
(Greenwaste Recovery, Inc. | ||||||||
Project) (LOC; Comerica Bank) | 3.83 | 7/7/07 | 2,000,000 a | 2,000,000 | ||||
California Pollution Control | ||||||||
Financing Authority, SWDR | ||||||||
(Rainbow Disposal Company Inc. | ||||||||
Project) (LOC; Union Bank of | ||||||||
California) | 3.83 | 7/7/07 | 3,910,000 a | 3,910,000 | ||||
California School Boards | ||||||||
Association Finance | ||||||||
Corporation, COP, TRAN | ||||||||
(California School Cash | ||||||||
Reserve Program) | ||||||||
(Insured; AMBAC) | 4.25 | 7/1/08 | 3,000,000 c | 3,017,970 | ||||
California State University | ||||||||
Institute, CP (LOC: JPMorgan | ||||||||
Chase Bank and State Street | ||||||||
Bank and Trust Co.) | 3.65 | 9/4/07 | 1,361,000 | 1,361,000 |
The Fund 9
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
California Statewide Communities | ||||||||
Development Authority, | ||||||||
California Communities TRAN | ||||||||
Program Note Participations | ||||||||
(Certain Local Agencies) | ||||||||
(Insured; FSA) | 4.50 | 6/30/08 | 2,000,000 c | 2,016,500 | ||||
California Statewide Communities | ||||||||
Development Authority, MFHR | ||||||||
(Copeland Creek Apartments) | ||||||||
(Liquidity Facility; Goldman | ||||||||
Sachs Group Inc. and LOC; | ||||||||
Goldman Sachs Group Inc.) | 3.83 | 7/7/07 | 400,000 a,b | 400,000 | ||||
California Statewide Communities | ||||||||
Development Authority, MFHR | ||||||||
(Vista Montana Apartments) | ||||||||
(Liquidity Facility; Merrill | ||||||||
Lynch Capital Services and | ||||||||
LOC; Merrill Lynch) | 3.82 | 7/7/07 | 2,460,000 a,b | 2,460,000 | ||||
California Statewide Communities | ||||||||
Development Authority, | ||||||||
Revenue, CP (Kaiser Permanente) | 3.65 | 7/12/07 | 1,000,000 | 1,000,000 | ||||
Fresno Unified School District, | ||||||||
GO Notes, Refunding | ||||||||
(Insured; MBIA) | 5.85 | 2/1/08 | 100,000 | 101,167 | ||||
Goldman Sachs Pool Trust, | ||||||||
Revenue (Liquidity Facility; | ||||||||
Goldman Sachs Group and LOC; | ||||||||
IXIS Corporate and | ||||||||
Investment Bank) | 3.83 | 7/7/07 | 3,920,585 a,b | 3,920,585 | ||||
Grossmont Union High School | ||||||||
District, GO Notes | ||||||||
(Insured; MBIA) | 4.00 | 8/1/07 | 750,000 | 750,296 | ||||
Hughson Unified School District, | ||||||||
GO Notes (Insured; FSA) | 10.00 | 8/1/07 | 120,000 | 120,619 | ||||
Los Angeles, | ||||||||
GO Notes, Refunding | ||||||||
(Insured; FSA) | 4.00 | 9/1/07 | 150,000 | 150,012 | ||||
Los Angeles County, | ||||||||
GO Notes, TRAN | 4.50 | 6/30/08 | 1,550,000 c | 1,561,889 |
10
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
Los Angeles County Metropolitan | ||||||||
Transportation Authority, | ||||||||
Proposition A First Tier | ||||||||
Senior Sales Tax Revenue, | ||||||||
Refunding (Insured; FSA) | 5.25 | 7/1/07 | 150,000 | 150,000 | ||||
Los Angeles County Metropolitan | ||||||||
Transportation Authority, | ||||||||
Proposition C Sales Tax | ||||||||
Revenue (Insured; AMBAC) | 5.90 | 7/1/07 | 650,000 | 650,000 | ||||
Los Angeles County Metropolitan | ||||||||
Transportation Authority, | ||||||||
Proposition C Sales Tax | ||||||||
Revenue (Insured; MBIA) | 5.00 | 7/1/07 | 100,000 | 100,000 | ||||
Los Angeles County Metropolitan | ||||||||
Transportation Authority, | ||||||||
Proposition C Sales Tax | ||||||||
Revenue, Refunding | ||||||||
(Insured; MBIA) | 5.00 | 7/1/07 | 280,000 | 280,000 | ||||
Los Angeles County School and | ||||||||
Community College Districts, | ||||||||
Pooled TRANS Participation | ||||||||
Certificates (Los Angeles | ||||||||
County Schools Pooled | ||||||||
Financing Program) | 4.50 | 6/30/08 | 1,500,000 c | 1,512,660 | ||||
Los Angeles Department of Water | ||||||||
and Power, Power System Revenue | 4.50 | 7/1/07 | 145,000 | 145,000 | ||||
Los Angeles Industrial Development | ||||||||
Authority, Empowerment Zone | ||||||||
Facility Revenue (Calko | ||||||||
Steel Inc. Project) (LOC; | ||||||||
Comerica Bank) | 3.78 | 7/7/07 | 2,050,000 a | 2,050,000 | ||||
Los Angeles Municipal Improvement | ||||||||
Corporation, LR, CP (LOC; Bank | ||||||||
of America) | 3.62 | 8/1/07 | 1,000,000 | 1,000,000 | ||||
Los Angeles Unified School District, | ||||||||
GO Notes (Insured; FGIC) | 4.30 | 7/1/07 | 100,000 | 100,000 | ||||
Los Angeles Unified School District, | ||||||||
GO Notes (Insured; MBIA) | 5.00 | 7/1/07 | 100,000 | 100,000 |
The Fund 11
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
Los Angeles Unified School | ||||||||
District, GO Notes, TRAN | 4.25 | 12/3/07 | 400,000 | 400,933 | ||||
M-S-R Public Power Agency, | ||||||||
Revenue, Refunding (San Juan | ||||||||
Project) (Insured; MBIA) | 4.00 | 7/1/07 | 200,000 | 200,000 | ||||
Menlo Park City School District, | ||||||||
GO Notes (Insured; FSA) | 12.00 | 7/1/07 | 200,000 | 200,000 | ||||
Modesto Irrigation District | ||||||||
Financing Authority, Domestic | ||||||||
Water Project Revenue | ||||||||
(Insured; MBIA and Liquidity | ||||||||
Facility; DEPFA Bank PLC) | 3.77 | 7/7/07 | 3,950,000 a,b | 3,950,000 | ||||
New Haven Unified School District, | ||||||||
GO Notes, Refunding | ||||||||
(Insured; FSA) | 12.00 | 8/1/07 | 350,000 | 352,467 | ||||
Norco Redevelopment Agency, | ||||||||
Tax Allocation Revenue, | ||||||||
Refunding (Norco Redevelopment | ||||||||
Project Area Number One) | ||||||||
(Insured; MBIA) | 3.80 | 3/1/08 | 175,000 | 175,000 | ||||
Orange County, | ||||||||
Airport Revenue, Refunding | ||||||||
(Insured; MBIA) | 6.00 | 7/1/07 | 100,000 | 100,000 | ||||
Orange County, | ||||||||
Recovery COP (Insured; MBIA) | 6.00 | 7/1/07 | 100,000 | 100,000 | ||||
Pasadena Unified School District, | ||||||||
GO Notes, Refunding | ||||||||
(Insured; FGIC) | 5.00 | 11/1/07 | 200,000 | 200,708 | ||||
Petaluma City (Elementary) School | ||||||||
District, GO Notes, TRAN | 4.50 | 7/10/07 | 200,000 | 200,021 | ||||
Pittsburg Redevelopment Agency, | ||||||||
Subordinate Tax Allocation | ||||||||
Revenue, Refunding (Los | ||||||||
Medanos Community Development | ||||||||
Project) (Insured; AMBAC) | 4.00 | 9/1/07 | 535,000 | 535,436 | ||||
Pomona Unified School District, | ||||||||
GO Notes, Refunding | ||||||||
(Insured; MBIA) | 5.95 | 8/1/07 | 135,000 | 135,248 | ||||
Ravenswood City School District, | ||||||||
GO Notes, TRAN | 4.00 | 7/1/08 | 2,400,000 c | 2,406,912 |
12
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
Redlands Financing Authority, | ||||||||
Water Revenue, Refunding | ||||||||
(Insured; FSA) | 4.40 | 9/1/07 | 115,000 | 115,162 | ||||
Sacramento County, | ||||||||
GO Notes, TRAN | 4.50 | 7/17/07 | 130,000 | 130,043 | ||||
Sacramento County Sanitation | ||||||||
Districts Financing Authority, | ||||||||
Revenue, Refunding (Sacramento | ||||||||
Regional County Sanitation | ||||||||
District) (Insured; FGIC and | ||||||||
Liquidity Facility; Morgan | ||||||||
Stanley Bank) | 3.77 | 7/7/07 | 4,425,000 a,b | 4,425,000 | ||||
Sacramento Metropolitan Fire | ||||||||
District, GO Notes, TRAN | 4.25 | 6/30/08 | 3,000,000 c | 3,015,780 | ||||
Sacramento Municipal Utility | ||||||||
District, Electric Revenue, | ||||||||
Refunding (Insured; FSA) | 5.00 | 8/15/07 | 100,000 | 100,157 | ||||
Salinas Valley Solid Waste | ||||||||
Authority, Revenue | ||||||||
(Insured; AMBAC) | 5.00 | 8/1/07 | 535,000 | 535,618 | ||||
San Diego, | ||||||||
Water Utility Fund Net System | ||||||||
Revenue (Insured; FGIC) | 4.40 | 8/1/07 | 250,000 | 250,102 | ||||
San Diego County, | ||||||||
COP (Friends of Chabad | ||||||||
Lubavitch) (LOC; Comerica Bank) | 3.72 | 7/7/07 | 1,600,000 a | 1,600,000 | ||||
San Diego County and School | ||||||||
District, TRAN (Note Program | ||||||||
Note Participations) | 4.50 | 6/30/08 | 2,620,000 c | 2,642,060 | ||||
San Diego County Water Authority, | ||||||||
CP (Liquidity Facility; Dexia | ||||||||
Credit Locale) | 3.70 | 9/13/07 | 1,000,000 | 1,000,000 | ||||
San Francisco City and County | ||||||||
Airport Commission, San | ||||||||
Francisco International | ||||||||
Airport Second Series Revenue | ||||||||
(Issue 15A) (Insured; FSA) | 5.50 | 5/1/08 | 140,000 | 141,754 | ||||
San Ysidro School District, | ||||||||
COP (School Facilities | ||||||||
Project) (Insured; MBIA) | 4.05 | 9/1/07 | 100,000 | 100,082 |
The Fund 13
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
California (continued) | ||||||||
Santa Ana Financing Authority, | ||||||||
LR, Refunding (Police | ||||||||
Administration and Holding | ||||||||
Facility) (Insured; MBIA) | 4.00 | 7/1/07 | 940,000 | 940,000 | ||||
South Orange County Public | ||||||||
Financing Authority, Special | ||||||||
Tax Revenue (Foothill Area) | ||||||||
(Insured; FGIC) | 7.50 | 8/15/07 | 300,000 | 301,429 | ||||
Southern California Rapid Transit | ||||||||
District, Special Benefit | ||||||||
Assessment District A1 Revenue | ||||||||
(Insured; AMBAC) | 5.90 | 9/1/07 | 250,000 | 250,858 | ||||
Stockton Community Facilities | ||||||||
District, Special Tax Revenue | ||||||||
(Arch Road East Community | ||||||||
Facilities District Number | ||||||||
99-02) (LOC; Wells Fargo Bank) | 3.68 | 7/7/07 | 2,335,000 a | 2,335,000 | ||||
Temecula Valley Unified School | ||||||||
District, GO Notes, Refunding | ||||||||
(Insured; FSA) | 6.00 | 8/1/07 | 200,000 | 200,373 | ||||
West Covina Public Financing | ||||||||
Authority, LR, Refunding | ||||||||
(Public Facilities Project) | ||||||||
(LOC; California State | ||||||||
Teachers Retirement System) | 3.72 | 7/7/07 | 2,695,000 a | 2,695,000 | ||||
U.S. Related—11.1% | ||||||||
Guam, | ||||||||
Limited Obligation Section 30 | ||||||||
Revenue (Insured; FSA) | 3.70 | 12/1/07 | 225,000 | 225,018 | ||||
Puerto Rico Aqueduct and Sewer | ||||||||
Authority, Revenue (Liquidity | ||||||||
Facility; Citibank NA and LOC; | ||||||||
Citibank NA) | 3.79 | 7/7/07 | 6,000,000 a,b | 6,000,000 | ||||
Puerto Rico Aqueduct and Sewer | ||||||||
Authority, Revenue, Refunding | ||||||||
(Insured; MBIA) | 6.00 | 7/1/07 | 165,000 | 165,011 | ||||
Puerto Rico Commonwealth, | ||||||||
Public Improvement GO Notes | ||||||||
(Insured; MBIA) | 6.50 | 7/1/07 | 175,000 | 175,000 |
14
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
U.S. Related (continued) | ||||||||
Puerto Rico Commonwealth, | ||||||||
Public Improvement GO Notes | ||||||||
(Insured; MBIA) | 5.75 | 7/1/08 | 240,000 | 244,708 | ||||
Puerto Rico Commonwealth, | ||||||||
Public Improvement GO Notes, | ||||||||
Refunding (Insured; FGIC) | 5.00 | 7/1/07 | 540,000 | 540,004 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue | ||||||||
(Insured; FSA) | 4.40 | 7/1/07 | 100,000 | 100,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue | ||||||||
(Insured; MBIA) | 5.00 | 7/1/07 | 100,000 | 100,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue | ||||||||
(Insured; MBIA) | 5.20 | 7/1/07 | 140,000 | 140,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue, | ||||||||
Refunding (Insured; MBIA) | 4.50 | 7/1/07 | 350,000 | 350,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue, | ||||||||
Refunding (Insured; MBIA) | 5.25 | 7/1/07 | 100,000 | 100,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue, | ||||||||
Refunding (Insured; MBIA) | 5.50 | 7/1/07 | 125,000 | 125,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue, | ||||||||
Refunding (Insured; MBIA) | 7.00 | 7/1/07 | 1,200,000 | 1,200,000 | ||||
Puerto Rico Electric Power | ||||||||
Authority, Power Revenue, | ||||||||
Refunding (Insured; MBIA) | 7.00 | 7/1/07 | 150,000 | 150,000 | ||||
Puerto Rico Highways and | ||||||||
Transportation Authority, | ||||||||
Highway Revenue (Insured; MBIA) | 6.25 | 7/1/07 | 340,000 | 340,000 | ||||
Puerto Rico Highways and | ||||||||
Transportation Authority, | ||||||||
Transportation Revenue | ||||||||
(Insured; AMBAC) | 4.30 | 7/1/07 | 375,000 | 375,000 |
The Fund 15
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
U.S. Related (continued) | ||||||||
Puerto Rico Highways and | ||||||||
Transportation Authority, | ||||||||
Transportation Revenue | ||||||||
(Insured; AMBAC) | 4.30 | 7/1/07 | 50,000 | 50,000 | ||||
Puerto Rico Industrial Tourist | ||||||||
Educational Medical and | ||||||||
Environmental Control | ||||||||
Facilities Authority, Higher | ||||||||
Education Revenue (Inter | ||||||||
American University of Puerto | ||||||||
Rico Project) (Insured; MBIA) | 5.00 | 10/1/07 | 100,000 | 100,338 | ||||
Puerto Rico Municipal Finance | ||||||||
Agency, GO Notes (Insured; FSA) | 4.00 | 8/1/07 | 835,000 | 835,250 | ||||
Puerto Rico Municipal Finance | ||||||||
Agency, GO Notes (Insured; FSA) | 5.50 | 8/1/07 | 150,000 | 150,243 | ||||
Puerto Rico Municipal Finance | ||||||||
Agency, GO Notes, Refunding | 5.50 | 8/1/07 | 300,000 | 300,466 | ||||
Puerto Rico Public Buildings | ||||||||
Authority, Government | ||||||||
Facilities Revenue | ||||||||
(Insured; MBIA) | 4.65 | 7/1/07 | 200,000 | 200,000 | ||||
Total Investments (cost $122,215,123) | 113.2% | 122,215,123 | ||||||
Liabilities, Less Cash and Receivables | (13.2%) | (14,222,425) | ||||||
Net Assets | 100.0% | 107,992,698 | ||||||
a Securities payable on demand.Variable interest rate—subject to periodic change. | ||||||||
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in | ||||||||
transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2007, these securities | ||||||||
amounted to $24,655,585 or 22.8% of net assets. | ||||||||
c Purchased on a delayed delivery basis. |
16
Summary of Abbreviations | ||||||
ACA | American Capital Access | AGC | ACE Guaranty Corporation | |||
AGIC | Asset Guaranty Insurance | AMBAC | American Municipal Bond | |||
Company | Assurance Corporation | |||||
ARRN | Adjustable Rate Receipt Notes | BAN | Bond Anticipation Notes | |||
BIGI | Bond Investors Guaranty Insurance | BPA | Bond Purchase Agreement | |||
CGIC | Capital Guaranty Insurance | CIC | Continental Insurance | |||
Company | Company | |||||
CIFG | CDC Ixis Financial Guaranty | CMAC | Capital Market Assurance | |||
Corporation | ||||||
COP | Certificate of Participation | CP | Commercial Paper | |||
EDR | Economic Development Revenue | EIR | Environmental Improvement | |||
Revenue | ||||||
FGIC | Financial Guaranty Insurance | |||||
Company | FHA | Federal Housing Administration | ||||
FHLB | Federal Home Loan Bank | FHLMC | Federal Home Loan Mortgage | |||
Corporation | ||||||
FNMA | Federal National | |||||
Mortgage Association | FSA | Financial Security Assurance | ||||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract | |||
GNMA | Government National | |||||
Mortgage Association | GO | General Obligation | ||||
HR | Hospital Revenue | IDB | Industrial Development Board | |||
IDC | Industrial Development Corporation | IDR | Industrial Development Revenue | |||
LOC | Letter of Credit | LOR | Limited Obligation Revenue | |||
LR | Lease Revenue | MBIA | Municipal Bond Investors Assurance | |||
Insurance Corporation | ||||||
MFHR | Multi-Family Housing Revenue | MFMR | Multi-Family Mortgage Revenue | |||
PCR | Pollution Control Revenue | PILOT | Payment in Lieu of Taxes | |||
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes | |||
RAW | Revenue Anticipation Warrants | RRR | Resources Recovery Revenue | |||
SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement | |||
SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue | |||
SONYMA | State of New York Mortgage Agency | SWDR | Solid Waste Disposal Revenue | |||
TAN | Tax Anticipation Notes | TAW | Tax Anticipation Warrants | |||
TRAN | Tax and Revenue Anticipation Notes | XLCA | XL Capital Assurance |
The Fund 17
STATEMENT OF INVESTMENTS (continued)
Summary of Combined Ratings (Unaudited) | ||||||||
Fitch | or Moody’s or | Standard & Poor’s | Value (%) † | |||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 80.2 | |||||
AAA,AA,A d | Aaa,Aa,A d | AAA,AA,A d | 19.8 | |||||
100.0 | ||||||||
† | Based on total investments. | |||||||
d | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. | |||||||
See notes to financial statements. |
18
STATEMENT OF ASSETS AND LIABILITIES June 30, 2007 |
Cost | Value | |||
Assets ($): | ||||
Investment in securities—See Statement of Investments | 122,215,123 | 122,215,123 | ||
Cash | 1,604,585 | |||
Interest receivable | 740,883 | |||
124,560,591 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2 | 11,268 | |||
Payable for investment securities purchased | 16,173,771 | |||
Dividend payable | 282,854 | |||
Payable for shares of Beneficial Interest redeemed | 100,000 | |||
16,567,893 | ||||
Net Assets ($) | 107,992,698 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 107,953,321 | |||
Accumulated net realized gain (loss) on investments | 39,377 | |||
Net Assets ($) | 107,992,698 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 107,953,321 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 |
See notes to financial statements.
The Fund 19
STATEMENT OF OPERATIONS Year Ended June 30, 2007 |
Investment Income ($): | ||
Interest Income | 4,122,293 | |
Expenses: | ||
Management fee—Note 2 | 514,214 | |
Total Expenses | 514,214 | |
Investment Income—Net | 3,608,079 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 39,377 | |
Net Increase in Net Assets Resulting from Operations | 3,647,456 |
See notes to financial statements.
20
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30, | ||||
2007 | 2006 | |||
Operations ($): | ||||
Investment income—net | 3,608,079 | 1,826,370 | ||
Net realized gain (loss) on investments | 39,377 | 25,009 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 3,647,456 | 1,851,379 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (3,632,117) | (1,826,370) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 457,305,950 | 337,774,914 | ||
Dividends reinvested | 1,585,060 | 981,586 | ||
Cost of shares redeemed | (422,980,781) | (338,855,401) | ||
Increase (Decrease) in Net Assets from | ||||
Beneficial Interest Transactions | 35,910,229 | (98,901) | ||
Total Increase (Decrease) in Net Assets | 35,925,568 | (73,892) | ||
Net Assets ($): | ||||
Beginning of Period | 72,067,130 | 72,141,022 | ||
End of Period | 107,992,698 | 72,067,130 |
See notes to financial statements.
The Fund 21
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.
Year Ended June 30, | ||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Investment Operations: | ||||||||||
Investment income—net | .032 | .025 | .014 | .005 | .008 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.032) | (.025) | (.014) | (.005) | (.008) | |||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Total Return (%) | 3.21 | 2.50 | 1.34 | .53 | .84 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .45 | .45 | .46 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||
to average net assets | �� | 3.16 | 2.49 | 1.37 | .52 | .83 | ||||
Net Assets, end of period ($ x 1000) | 107,993 | 72,067 | 72,141 | 57,791 | 75,393 |
See notes to financial statements.
22
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus BASIC California Municipal Money Market Fund (the “fund”) is a separate non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the “Trust”) which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company, currently offering three series including the fund.The fund’s investment objective is to provide a high level of current income exempt from federal, California income taxes to the extent 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. During the reporting period, the Manager was a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”). During the reporting period, Dreyfus Service Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, served as the distributor of the fund’s shares, which are sold to the public without a sales charge.Effective June 30,2007,the Distributor became known as MBSC Securities Corporation.
On July 1, 2007, Mellon Financial and The Bank of New York Company, Inc. merged, forming The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.
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.
(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.
The Fund 23
NOTES TO FINANCIAL STATEMENTS (continued)
It is the fund’s policy to maintain a continuous net asset value per share of $1.00 for the fund; 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.
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. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian, Mellon Bank, N.A.
(d) 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
24
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.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain, if any, 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 beginning after December 15, 2006. Management believes that the application of this standard will not have a material impact on the financial statements of the fund.
At June 30, 2007, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.
The tax character of distributions paid to shareholders during the fiscal periods ended June 30, 2007 and June 30, 2006, were all tax exempt income.
During the period ended June 30, 2007, as a result of permanent book to tax differences, primarily due to dividend reclassification, the fund increased accumulated undistributed investment income-net by $24,038 and decreased accumulated net realized gain (loss) on investments by the same amount. Net assets were not affected by this reclassification.
The Fund 25
NOTES TO FINANCIAL STATEMENTS (continued)
At June 30,2007,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—Investment Management Fee and Other Transactions with Affiliates:
Pursuant to an Investment Management Agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Each Trustee receives $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses.With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chair of the compensation committee receives $900 per
26
meetings and, with respect to audit committee meetings, the Chair of the audit committee receives $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund. These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $11,268.
NOTE 3—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowings. During the period ended June 30, 2007, the fund did not borrow under the Facility.
The Fund 27
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Board of Trustees and Shareholders of The Dreyfus/Laurel Tax-Free Municipal Funds: |
We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC California Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 California Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York August 6, 2007 |
28
IMPORTANT TAX INFORMATION ( U n a u d i t e d )
In accordance with federal tax law, the fund hereby designates all the dividends paid from investment income-net during the fiscal year ended June 30, 2007 as “exempt-interest dividends” (not subject to regular federal and, for individuals who are California residents, California personal income taxes).As required by federal tax law rules, shareholders will receive notification of their portion of the fund’s exempt-interest dividends paid for the 2007 calendar year on Form 1099-INT, which will be mailed by January 31, 2008.
The Fund 29
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Trustees held on January 31 and February 1, 2007, the Board considered the re-approval for an annual period of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.
Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information.The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement. The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund.The Board also reviewed the number of shareholder accounts in the fund, as well as the fund’s asset size.
The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.
30
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and placed significant emphasis on comparisons to a group of retail, no-load California tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional California tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data.The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended November 30, 2006, and noted that the fund’s total return performance was the top performer in the Performance Group and above the Performance Universe medians for each of the periods.
The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper.The Board noted that the fund was the only fund in the Expense Group with a “unitary fee” structure. The Board also noted that the fund’s management fee was above the Expense Group and Expense Universe medians and the expense ratio was below the Expense Group and Expense Universe medians.
Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”). They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.The Board analyzed differences
The Fund 31
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) |
in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager’s performance and the services provided, noting the fund’s “unitary fee”structure.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the services provided.
Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.
It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that
32
the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
- The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
- The Board was satisfied with the fund’s performance.
- The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
- The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2008.
The Fund 33
BOARD MEMBERS INFORMATION ( U n a u d i t e d )
Joseph S. DiMartino (63) |
Chairman of the Board (1999) |
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 |
• Senior Advisor to Ivory Investment Management, L.P., a registered investment adviser to three |
private funds. |
No. of Portfolios for which Board Member Serves: 165 ———————
James M. Fitzgibbons (72) |
Board Member (1983) |
Principal Occupation During Past 5 Years: |
• Chairman of the Board, Davidson Cotton Company (1998-2002) |
Other Board Memberships and Affiliations: |
• Bill Barrett Company, an oil and gas exploration company, Director |
No. of Portfolios for which Board Member Serves: 24 ———————
J. Tomlinson Fort (79) |
Board Member (1994) |
Principal Occupation During Past 5 Years: |
• Retired; Of Counsel, Reed Smith LLP (1998-present) |
Other Board Memberships and Affiliations: |
• Allegheny College, Emeritus Trustee |
• Pittsburgh Ballet Theatre,Trustee |
• American College of Trial Lawyers, Fellow |
No. of Portfolios for which Board Member Serves: 24 ———————
Kenneth A. Himmel (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years: |
• President and CEO, Related Urban Development, a real estate development company |
(1996-present) |
• President and CEO, Himmel & Company, a real estate development company (1980-present) |
• CEO, American Food Management, a restaurant company (1983-present) |
No. of Portfolios for which Board Member Serves: 24
34
Stephen J. Lockwood (60) |
Board Member (1993) |
Principal Occupation During Past 5 Years:
- Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company (2000-present)
No. of Portfolios for which Board Member Serves: 24 ———————
Roslyn M. Watson (57) |
Board Member (1992) |
Principal Occupation During Past 5 Years: |
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) |
Other Board Memberships and Affiliations:
- American Express Centurion Bank, Director
- The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee
- National Osteoporosis Foundation,Trustee
No. of Portfolios for which Board Member Serves: 24 ———————
Benaree Pratt Wiley (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years:
- Principal,The Wiley Group, a firm specializing in strategy and business development (2005-present)
- President and CEO,The Partnership, an organization dedicated to increasing the representation of African Americans in positions of leadership, influence and decision-making in Boston, MA (1991-2005)
Other Board Memberships and Affiliations:
- Boston College,Trustee
- Blue Cross Blue Shield of Massachusetts, Director
- Commonwealth Institute, Director
- Efficacy Institute, Director
- PepsiCo African-American, Advisory Board
- The Boston Foundation, Director
- Harvard Business School Alumni Board, Director
No. of Portfolios for which Board Member Serves: 33 ———————
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.
Francis P. Brennan, Emeritus Board Member
The Fund 35
OFFICERS OF THE FUND ( U n a u d i t e d )
J. DAVID OFFICER, President since |
December 2006. |
Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 83 investment companies (comprised of 165 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1998.
PHILLIP N. MAISANO, Executive Vice |
President since July 2007. |
Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 83 investment companies (compromised of 165 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or board member of certain other investment management subsidiaries of The Bank of New York Mellon Corperation, each of which is an affiliate of the Manager. He is 60 years old and has been employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.
MARK N. JACOBS, Vice President since |
March 2000. |
Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 61 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since February 1991.
36
ROBERT R. MULLERY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 42 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1985.
ROBERT ROBOL, Assistant Treasurer |
since December 2002. |
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer since July 2007.
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer |
since August 2005. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 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 84 investment companies (comprised of 181 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 (84 investment companies, comprised of 181 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 50 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 |
July 2002. |
Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 80 investment companies (comprised of 177 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Distributor since October 1998.
The Fund 37
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbcmmmfx40x1.jpg)
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, 2007, is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
© 2007 MBSC Securities Corporation
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbmmmmfx1x1.jpg)
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
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 | |
14 | Statement of Assets and Liabilities | |
15 | Statement of Operations | |
16 | Statement of Changes in Net Assets | |
17 | Financial Highlights | |
18 | Notes to Financial Statements | |
23 | Report of Independent Registered | |
Public Accounting Firm | ||
24 | Important Tax Information | |
25 | Information About the Review and | |
Approval of the Fund’s Investment | ||
Management Agreement | ||
29 | Board Members Information | |
31 | Officers of the Fund | |
FOR MORE INFORMATION | ||
Back Cover |
The Fund
Dreyfus BASIC Massachusetts Municipal Money Market Fund |
A LETTER FROM THE CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC Massachusetts Municipal Money Market Fund, covering the 12-month period from July 1, 2006, through June 30, 2007.
The U.S. economy produced mixed signals over the first half of 2007, causing investor sentiment to swing from concerns regarding a domestic economic slowdown stemming from slumping housing markets to worries about mounting inflationary pressures in an environment of robust global growth. However, more recent data have provided stronger signals that a “soft landing” is likely for the U.S. economy.The rate of decline in residential construction is becoming less severe, the industrial inventory slowdown is fading and capital goods orders have strengthened.What’s more, a generally rising stock market has helped to offset any negative “wealth effect” from the weak housing market.
Should these trends persist, we expect U.S. economic growth to hover slightly below long-term averages during the second half of 2007. A moderate economic growth rate and gradually receding inflationary pressures may keep the Federal Reserve Board on the sidelines and help to support yields of money market instruments near current levels. As always, your financial advisor can help you position your investments for these and other developments.
For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbmmmmfx4x2.jpg)
2
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbmmmmfx5x1.jpg)
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2006, through June 30, 2007, as provided by J. Christopher Nicholl, Portfolio Manager
Fund and Market Performance Overview
Money market yields remained relatively stable over the reporting period in an environment characterized by moderating economic growth and no change in monetary policy by the Federal Reserve Board (the “Fed”).
For the 12-month period ended June 30, 2007, Dreyfus BASIC Massachusetts Municipal Money Market Fund produced a yield of 3.16% .Taking into account the effects of compounding, the fund also produced an effective yield of 3.21% .1
The Fund’s Investment Approach
The fund seeks to provide a high level of current income exempt from federal and Massachusetts state income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity.To pursue this objective, we attempt to add value by selecting the individual tax-exempt money market instruments from Massachusetts issuers that we believe are most likely to provide high tax-exempt current income, while focusing on credit risk. We also actively manage the fund’s weighted average maturity in anticipation of interest-rate and supply-and-demand changes in Massachusetts’s short-term municipal marketplace.
Rather than focusing on economic or market trends, we search for securities that, in our opinion, will help us enhance the fund’s yield.
The management of the fund’s weighted average maturity uses a more tactical approach. If we expect the supply of securities to increase temporarily, we may reduce the fund’s weighted average maturity to make cash available for the purchase of higher yielding securities.This is due to the fact that yields tend to rise temporarily if issuers are competing for investor interest. If we expect demand to surge at a time when we anticipate little issuance and therefore lower yields, we may increase
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
the fund’s weighted average maturity to maintain current yields for as long as practical.At other times, we try to maintain a neutral weighted average maturity.
Steady Fed Policy Has Supported Tax-Exempt Yields
After 16 consecutive increases in short-term interest rates between June 2004 and June 2006, the Fed held the overnight federal funds rate steady at 5.25% throughout the reporting period.The Fed’s sustained pause reflected its desire to monitor the effects of its previous rate hikes on the economy and inflation before taking further action.With the Fed on hold, yields of tax-exempt money market instruments remained in a relatively tight trading range.
In the meantime, U.S. economic growth moderated as housing markets faltered and consumer spending softened. After growing moderately during the second half of 2006, the U.S. economy expanded at an annualized rate of 0.7% in the first quarter of 2007, its slowest pace in several years.Yet, inflation remained stubbornly above the Fed’s comfort zone for most of the reporting period, as a robust labor market put upward pressure on wages and rising food and energy costs pushed consumer prices higher in the spring. In this environment of mixed economic and inflation data, investor sentiment shifted relatively frequently between a belief that the Fed was likely to begin reducing interest rates to avoid recession and expectations that the Fed would remain on the sidelines longer than expected to wring inflationary pressures out of the economy.
Even as the national economy slowed, Massachusetts’ personal income tax revenues rose during the reporting period, reflecting the state’s diverse economic base.As a result, budget reserves have grown and the state’s credit rating has been stable.
Supply-and-Demand Forces Boosted Short-Term Yields
As issuance patterns in the short-term market have changed, due to the continued creation of short-term “tender option bonds” (long-term municipal bonds that have been structured and repackaged as short-term
4
instruments), the predominant shape of the yield curve has changed as well.What used to be a relatively rare occurrence, a theoretical inverted yield curve where short-term rates are higher than long-term rates, has become far more prevalent in the market. It therefore made little sense for the fund to invest in one-year municipal notes. Accordingly, in the fourth quarter of 2006, we began to gradually reduce the fund’s weighted average maturity by substantially increasing its holdings of variable rate demand notes (“VRDNs”) and eliminating its positions in tax-exempt commercial paper.We continued to complement the fund’s floating-rate holdings with relatively light positions in municipal notes and seasoned municipal bonds in an attempt to guard against potential volatility in yields of money market instruments.As a result, by the end of the reporting period, the fund’s weighted average maturity had declined from a longer-than-average position to one that was roughly in line with industry averages.
Fund Remains Positioned for Stable Interest Rates
After its meeting in late June 2007, the Fed commented that its “predominant policy concern remains the risk that inflation will fail to moderate as expected.”These remarks, together with mixed economic and inflation data, suggest to us that the Fed is unlikely to adjust short-term interest rates anytime soon. Instead, we believe that supply-and-demand forces are more likely to influence tax-exempt yield over the foreseeable future.We therefore intend to maintain the fund’s emphasis on VRDNs for the time being.
July 16, 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. Income may be subject to state and local taxes for | ||
non-Massachusetts residents, and some income may be subject to the federal alternative minimum | ||
tax (AMT) for certain investors. |
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 Massachusetts Municipal Money Market Fund from January 1, 2007 to June 30, 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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.25 | |
Ending value (after expenses) | $1,016.20 |
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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.26 | |
Ending value (after expenses) | $1,022.56 | |
† Expenses are equal to the fund’s annualized expense ratio of .45%; multiplied by the average account value over the | ||
period, multiplied by 181/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS June 30, 2007 |
Short-Term | Coupon | Maturity | Principal | |||||
Investments—95.3% | Rate (%) | Date | Amount ($) | Value ($) | ||||
ABN AMRO Munitops Certificates | ||||||||
Trust (Massachusetts Water | ||||||||
Resources Authority) (Insured; FSA | ||||||||
and Liquidity Facility; ABN-AMRO) | 3.77 | 7/7/07 | 5,845,000 a | 5,845,000 | ||||
Boston Industrial Development | ||||||||
Financing Authority, Revenue | ||||||||
(Fenway Community Health | ||||||||
Center Project) (LOC; Fifth | ||||||||
Third Bank) | 3.70 | 7/7/07 | 4,240,000 a | 4,240,000 | ||||
Boston Industrial Development | ||||||||
Financing Authority, Revenue | ||||||||
(Fenway Community Health | ||||||||
Center Project) (LOC; Fifth | ||||||||
Third Bank) | 3.70 | 7/7/07 | 6,000,000 a | 6,000,000 | ||||
Braintree, | ||||||||
GO Notes, BAN | 4.00 | 11/14/07 | 4,500,000 | 4,508,098 | ||||
Canton Housing Authority, | ||||||||
MFHR, Refunding (Canton | ||||||||
Arboretum Apartments) | ||||||||
(Insured; FNMA) | 3.78 | 7/7/07 | 6,665,000 a | 6,665,000 | ||||
Eclipse Funding Trust, | ||||||||
Revenue (Massachusetts Water | ||||||||
Resources Authority) (Insured; | ||||||||
MBIA and Liquidity Facility; | ||||||||
U.S. Bank) | 3.75 | 7/7/07 | 6,000,000 a | 6,000,000 | ||||
Marblehead, | ||||||||
GO Notes, BAN | 4.25 | 8/17/07 | 2,226,500 | 2,228,297 | ||||
Massachusetts | ||||||||
(Putters Program) (Insured; | ||||||||
AMBAC and Liquidity Facility; | ||||||||
JPMorgan Chase Bank) | 3.78 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
Massachusetts, | ||||||||
GO Notes, Refunding (Liquidity | ||||||||
Facility; Citibank NA) | 3.74 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
Massachusetts, | ||||||||
GO Notes, Refunding (Liquidity | ||||||||
Facility; Landesbank | ||||||||
Hessen-Thuringen Girozentrale) | 3.73 | 7/7/07 | 2,850,000 a | 2,850,000 | ||||
Massachusetts Bay Transportation | ||||||||
Authority, General | ||||||||
Transportation Systems, GO | ||||||||
Notes (Liquidity Facility; | ||||||||
Westdeutsche Landesbank) | 3.70 | 7/7/07 | 3,500,000 a | 3,500,000 |
The Fund 7
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Beaver | ||||||||
Country Day School Issue) | ||||||||
(LOC; Allied Irish Banks) | 3.76 | 7/7/07 | 4,400,000 a | 4,400,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Boston | ||||||||
Children’s Museum Issue) (LOC; | ||||||||
Royal Bank of Scotland) | 3.70 | 7/7/07 | 2,235,000 a | 2,235,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Brandon | ||||||||
Residential Treatment | ||||||||
Center, Inc. Project) | ||||||||
(LOC; SunTrust Bank) | 3.73 | 7/7/07 | 1,700,000 a | 1,700,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Checon | ||||||||
Corporation Issue) (LOC; Bank | ||||||||
of America) | 3.75 | 7/7/07 | 3,250,000 a | 3,250,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Dexter School | ||||||||
Project) (Insured; MBIA | ||||||||
and Liquidity Facility; | ||||||||
Wachovia Bank) | 3.77 | 7/7/07 | 1,000,000 a | 1,000,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Elderhostel, | ||||||||
Inc. Issue) (LOC; Royal Bank | ||||||||
of Scotland PLC) | 3.76 | 7/7/07 | 3,165,000 a | 3,165,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Exploration | ||||||||
School, Inc. Issue) (LOC; TD | ||||||||
Banknorth, N.A.) | 3.75 | 7/7/07 | 2,250,000 a | 2,250,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Holy Cross | ||||||||
College Issue) (Insured; AMBAC | ||||||||
and Liquidity Facility; Morgan | ||||||||
Stanley Bank) | 3.78 | 7/7/07 | 1,600,000 a,b | 1,600,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Lasell | ||||||||
College Issue) (LOC; Citizens | ||||||||
Bank of Massachusetts) | 3.75 | 7/7/07 | 6,000,000 a | 6,000,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Meadowbrook | ||||||||
School Project) (LOC; Allied | ||||||||
Irish Banks) | 3.73 | 7/7/07 | 1,370,000 a | 1,370,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (WGBH | ||||||||
Educational Foundation Issue) | ||||||||
(Insured; AMBAC and Liquidity | ||||||||
Facility; Royal Bank of Canada) | 3.72 | 7/7/07 | 2,045,000 a | 2,045,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Worcester Academy | ||||||||
Issue) (LOC; Allied Irish Banks) | 3.77 | 7/7/07 | 3,000,000 a | 3,000,000 | ||||
Massachusetts Development Finance | ||||||||
Agency, Revenue (Youth | ||||||||
Opportunities Upheld, Inc. | ||||||||
Issue) (LOC; TD Banknorth, N.A.) | 3.75 | 7/7/07 | 6,500,000 a | 6,500,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities Authority, | ||||||||
Revenue (Amherst College Issue) | 3.60 | 1/10/08 | 3,000,000 | 3,000,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Capital | ||||||||
Asset Program Issue) (Insured; | ||||||||
MBIA and Liquidity Facility; | ||||||||
State Street Bank and Trust Co.) | 3.85 | 7/1/07 | 840,000 a | 840,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Capital | ||||||||
Asset Program Issue) (LOC; | ||||||||
Bank of America) | 3.85 | 7/1/07 | 2,000,000 a | 2,000,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Capital | ||||||||
Asset Program Issue) (LOC; | ||||||||
Citizens Bank of Massachusetts) | 3.74 | 7/7/07 | 300,000 a | 300,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Children’s | ||||||||
Hospital Issue) (Insured; | ||||||||
AMBAC and Liquidity Facility; | ||||||||
Bank of America) | 3.90 | 7/1/07 | 2,000,000 a | 2,000,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Emmanuel | ||||||||
College Issue) (LOC: Allied | ||||||||
Irish Banks and State Street | ||||||||
Bank and Trust Co.) | 3.75 | 7/7/07 | 4,750,000 a | 4,750,000 |
The Fund 9
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Harvard | ||||||||
University Issue) | 3.72 | 7/7/07 | 6,700,000 a | 6,700,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue | ||||||||
(Massachusetts Institute of | ||||||||
Technology Issue) | 3.69 | 7/7/07 | 6,500,000 a | 6,500,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Partners | ||||||||
HealthCare System Issue) (LOC; | ||||||||
Citibank NA) | 3.75 | 7/7/07 | 6,000,000 a | 6,000,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Peabody | ||||||||
Essex Museum Issue) (LOC; | ||||||||
Royal Bank of Scotland) | 3.70 | 7/7/07 | 4,400,000 a | 4,400,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Putters | ||||||||
Program) (Insured; FGIC and | ||||||||
Liquidity Facility; JPMorgan | ||||||||
Chase Bank) | 3.78 | 7/7/07 | 4,485,000 a | 4,485,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Wellesley | ||||||||
College Issue) | 3.72 | 7/7/07 | 4,675,000 a | 4,675,000 | ||||
Massachusetts Health and | ||||||||
Educational Facilities | ||||||||
Authority, Revenue (Williams | ||||||||
College Issue) | 3.70 | 7/7/07 | 2,300,000 a | 2,300,000 | ||||
Massachusetts School Building | ||||||||
Authority, Dedicated Sales Tax | ||||||||
Revenue (Insured; FSA and | ||||||||
Liquidity Facility; Morgan | ||||||||
Stanley Bank) | 3.78 | 7/7/07 | 3,500,000 a,b | 3,500,000 |
10
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
Massachusetts Water Resources | ||||||||
Authority, Multi-Modal | ||||||||
Subordinated General Revenue, | ||||||||
Refunding (Insured; FGIC and | ||||||||
Liquidity Facility; Bayerische | ||||||||
Landesbank) | 3.75 | 7/7/07 | 3,700,000 a | 3,700,000 | ||||
Massachusetts Water Resources | ||||||||
Authority, Multi-Modal | ||||||||
Subordinated General Revenue, | ||||||||
Refunding (Insured; FGIC and | ||||||||
Liquidity Facility; Dexia | ||||||||
Credit Locale) | 3.73 | 7/7/07 | 2,600,000 a | 2,600,000 | ||||
Massachusetts Water Resources | ||||||||
Authority, Multi-Modal | ||||||||
Subordinated General Revenue, | ||||||||
Refunding (LOC; Landesbank | ||||||||
Hessen-Thuringen Girozentrale) | 3.90 | 7/1/07 | 1,015,000 a | 1,015,000 | ||||
Northborough-Southborough Regional | ||||||||
School District, GO Notes, BAN | 4.00 | 10/25/07 | 2,500,000 | 2,503,679 | ||||
Raynham, | ||||||||
GO Notes, BAN | 4.35 | 8/24/07 | 1,900,000 | 1,902,170 | ||||
University of Massachusetts | ||||||||
Building Authority, Project | ||||||||
and Refunding Revenue | ||||||||
(Insured; AMBAC and Liquidity | ||||||||
Facility; DEPFA Bank PLC) | 3.74 | 7/7/07 | 3,000,000 a | 3,000,000 | ||||
Total Investments (cost $154,522,244) | 95.3% | 154,522,244 | ||||||
Cash and Receivables (Net) | 4.7% | 7,539,315 | ||||||
Net Assets | 100.0% | 162,061,559 |
a Securities payable on demand.Variable interest rate—subject to periodic change. |
b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in |
transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2007, these securities |
amounted to $5,100,000 or 3.1% of net assets. |
The Fund 11
STATEMENT OF INVESTMENTS (continued)
Summary of Abbreviations | ||||||
ACA | American Capital Access | AGC | ACE Guaranty Corporation | |||
AGIC | Asset Guaranty Insurance | AMBAC | American Municipal Bond | |||
Company | Assurance Corporation | |||||
ARRN | Adjustable Rate Receipt Notes | BAN | Bond Anticipation Notes | |||
BIGI | Bond Investors Guaranty Insurance | BPA | Bond Purchase Agreement | |||
CGIC | Capital Guaranty Insurance | CIC | Continental Insurance | |||
Company | Company | |||||
CIFG | CDC Ixis Financial Guaranty | CMAC | Capital Market Assurance | |||
Corporation | ||||||
COP | Certificate of Participation | CP | Commercial Paper | |||
EDR | Economic Development Revenue | EIR | Environmental Improvement | |||
Revenue | ||||||
FGIC | Financial Guaranty Insurance | |||||
Company | FHA | Federal Housing Administration | ||||
FHLB | Federal Home Loan Bank | FHLMC | Federal Home Loan Mortgage | |||
Corporation | ||||||
FNMA | Federal National | |||||
Mortgage Association | FSA | Financial Security Assurance | ||||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract | |||
GNMA | Government National | |||||
Mortgage Association | GO | General Obligation | ||||
HR | Hospital Revenue | IDB | Industrial Development Board | |||
IDC | Industrial Development Corporation | IDR | Industrial Development Revenue | |||
LOC | Letter of Credit | LOR | Limited Obligation Revenue | |||
LR | Lease Revenue | MBIA | Municipal Bond Investors Assurance | |||
Insurance Corporation | ||||||
MFHR | Multi-Family Housing Revenue | MFMR | Multi-Family Mortgage Revenue | |||
PCR | Pollution Control Revenue | PILOT | Payment in Lieu of Taxes | |||
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes | |||
RAW | Revenue Anticipation Warrants | RRR | Resources Recovery Revenue | |||
SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement | |||
SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue | |||
SONYMA | State of New York Mortgage Agency | SWDR | Solid Waste Disposal Revenue | |||
TAN | Tax Anticipation Notes | TAW | Tax Anticipation Warrants | |||
TRAN | Tax and Revenue Anticipation Notes | XLCA | XL Capital Assurance |
12
Summary of Combined Ratings (Unaudited) | ||||||||
Fitch | or Moody’s or | Standard & Poor’s | Value (%) † | |||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 97.6 | |||||
AAA,AA,A c | Aaa,Aa,A c | AAA,AA,A c | 2.4 | |||||
100.0 | ||||||||
† | Based on total investments. | |||||||
c | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. | |||||||
See notes to financial statements. |
The Fund 13
STATEMENT OF ASSETS AND LIABILITIES June 30, 2007 |
Cost | Value | |||
Assets ($): | ||||
Investment in securities—See Statement of Investments | 154,522,244 | 154,522,244 | ||
Cash | 6,822,903 | |||
Interest receivable | 1,148,375 | |||
162,493,522 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2 | 50,831 | |||
Dividend payable | 379,549 | |||
Interest payable—Note 3 | 1,477 | |||
Payable for shares of Beneficial Interest redeemed | 106 | |||
431,963 | ||||
Net Assets ($) | 162,061,559 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 162,060,509 | |||
Accumulated net realized gain (loss) on investments | 1,050 | |||
Net Assets ($) | 162,061,559 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 162,071,594 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 |
See notes to financial statements.
14
STATEMENT OF OPERATIONS Year Ended June 30, 2007 |
Investment Income ($): | ||
Interest Income | 4,921,074 | |
Expenses: | ||
Management fee—Note 2 | 610,950 | |
Interest expense—Note 3 | 7,231 | |
Total Expenses | 618,181 | |
Investment Income-Net | 4,302,893 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 1,050 | |
Net Increase in Net Assets Resulting from Operations | 4,303,943 |
See notes to financial statements.
The Fund 15
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30, | ||||
2007 | 2006 | |||
Operations ($): | ||||
Investment income—net | 4,302,893 | 3,280,762 | ||
Net realized gain (loss) on investments | 1,050 | — | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 4,303,943 | 3,280,762 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (4,302,893) | (3,280,762) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 351,391,108 | 423,751,536 | ||
Dividends reinvested | 752,420 | 605,282 | ||
Cost of shares redeemed | (320,369,276) | (425,233,021) | ||
Increase (Decrease) in Net Assets | ||||
from Beneficial Interest Transactions | 31,774,252 | (876,203) | ||
Total Increase (Decrease) in Net Assets | 31,775,302 | (876,203) | ||
Net Assets ($): | ||||
Beginning of Period | 130,286,257 | 131,162,460 | ||
End of Period | 162,061,559 | 130,286,257 |
See notes to financial statements.
16
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.
Year Ended June 30, | ||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Investment Operations: | ||||||||||
Investment income—net | .032 | .024 | .013 | .005 | .009 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.032) | (.024) | (.013) | (.005) | (.009) | |||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Total Return (%) | 3.21 | 2.48 | 1.34 | .53 | .87 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .46 | .46 | .45 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||
to average net assets | 3.17 | 2.46 | 1.33 | .53 | .87 | |||||
Net Assets, end of period ($ x 1000) | 162,062 | 130,286 | 131,162 | 141,930 | 162,730 |
See notes to financial statements.
The Fund 17
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus BASIC Massachusetts Municipal Money Market Fund (the “fund”) is a separate non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the “Trust”) which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering three series including the fund.The fund’s investment objective is to provide a high level of current income exempt from federal and Massachusetts state income taxes to the extent 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. During the reporting period, the Manager was a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”). During the reporting period, Dreyfus Service Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, served as the distributor of the fund’s shares, which are sold to the public without a sales charge. Effective June 30, 2007, the Distributor became known as MBSC Securities Corporation.
On July 1, 2007, Mellon Financial and The Bank of New York Company, Inc. merged, forming The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.
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.
(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.
It is the fund’s policy to maintain a continuous net asset value per share of $1.00 for the fund; the fund has adopted certain investment, port-
18
folio 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.
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. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the commonwealth and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian,Mellon Bank,N.A.
(d) 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, if any, it is the policy of the fund not to distribute such gain.
The Fund 19
NOTES TO FINANCIAL STATEMENTS (continued)
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain 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 beginning after December 15, 2006. Management believes that the application of this standard will not have a material impact on the financial statements of the fund.
At June 30, 2007 the component of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.
The tax character of distributions paid to shareholders during the fiscal periods ended June 30, 2007 and June 30, 2006, were all tax exempt income.
At June 30, 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—Investment Management Fee And Other Transactions With Affiliates:
Pursuant to an Investment Management Agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund
20
accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Each Trustee receives $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses.With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chair of the compensation committee receives $900 per meetings and, with respect to audit committee meetings, the Chair of the audit committee receives $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund. These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.
The Fund 21
NOTES TO FINANCIAL STATEMENTS (continued)
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $50,831.
NOTE 3—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding under the line of credit during the period ended June 30, 2007 was approximately $123,900 with a related weighted average annualized interest rate of 5.84% .
22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Board of Trustees and Shareholders of The Dreyfus/Laurel Tax-Free Municipal Funds: |
We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC Massachusetts Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended.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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2007, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.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 Massachusetts Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York August 6, 2007 |
The Fund 23
IMPORTANT TAX INFORMATION ( U n a u d i t e d )
In accordance with federal tax law, the fund hereby designates all the dividends paid from investment income-net during the fiscal year ended June 30, 2007 as “exempt-interest dividends” (not subject to regular federal and, for individuals who are Massachusetts residents, Massachusetts personal income taxes). As required by federal tax law rules, shareholders will receive notification of their portion of the fund’s exempt-interest dividends paid for the 2007 calendar year on Form 1099-INT, which will be mailed by January 31, 2008.
24
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Trustees held on January 31 and February 1, 2007, the Board considered the re-approval for an annual period of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.
Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information.The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement. The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund.The Board also reviewed the number of shareholder accounts in the fund, as well as the fund’s asset size.
The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.
The Fund 25
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) |
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and placed significant emphasis on comparisons to a group of retail, no-load Massachusetts tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional Massachusetts tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data.The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended November 30, 2006, and noted that the fund’s total return performance was the top performer in the Performance Group and above the Performance Universe medians for each of the periods.
The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper.The Board noted that the fund was the only fund in the Expense Group with a “unitary fee” structure. The Board also noted that the fund’s management fee and expense ratio were at or below the Expense Group and Expense Universe medians.
Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”). They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.The Board analyzed differences in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager’s performance and the services provided, noting the fund’s “unitary fee”structure.The Board members considered
26
the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the services provided.
Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund, including the recent decline in assets, and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.
It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that
The Fund 27
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) |
the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
- The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
- The Board was satisfied with the fund’s performance.
- The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
- The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2008.
28
BOARD MEMBERS INFORMATION ( U n a u d i t e d )
Joseph S. DiMartino (63) |
Chairman of the Board (1999) |
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
- Senior Advisor to Ivory Investment Management, L.P., a registered investment adviser to three private funds.
No. of Portfolios for which Board Member Serves: 165 ———————
James M. Fitzgibbons (72) |
Board Member (1983) |
Principal Occupation During Past 5 Years: |
• Chairman of the Board, Davidson Cotton Company (1998-2002) |
Other Board Memberships and Affiliations: |
• Bill Barrett Company, an oil and gas exploration company, Director |
No. of Portfolios for which Board Member Serves: 24 ———————
J. Tomlinson Fort (79) |
Board Member (1994) |
Principal Occupation During Past 5 Years: |
• Retired; Of Counsel, Reed Smith LLP (1998-present) |
Other Board Memberships and Affiliations: |
• Allegheny College, Emeritus Trustee |
• Pittsburgh Ballet Theatre,Trustee |
• American College of Trial Lawyers, Fellow |
No. of Portfolios for which Board Member Serves: 24 ———————
Kenneth A. Himmel (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years: |
• President and CEO, Related Urban Development, a real estate development company |
(1996-present) |
• President and CEO, Himmel & Company, a real estate development company (1980-present) |
• CEO, American Food Management, a restaurant company (1983-present) |
No. of Portfolios for which Board Member Serves: 24
The Fund 29
BOARD MEMBERS INFORMATION (Unaudited) (continued)
Stephen J. Lockwood (60) |
Board Member (1993) |
Principal Occupation During Past 5 Years:
- Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company (2000-present)
No. of Portfolios for which Board Member Serves: 24
———————
Roslyn M. Watson (57) |
Board Member (1992) |
Principal Occupation During Past 5 Years: |
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) |
Other Board Memberships and Affiliations:
- American Express Centurion Bank, Director
- The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee
- National Osteoporosis Foundation,Trustee
No. of Portfolios for which Board Member Serves: 24
———————
Benaree Pratt Wiley (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years:
- Principal,The Wiley Group, a firm specializing in strategy and business development (2005-present)
- President and CEO,The Partnership, an organization dedicated to increasing the representation of African Americans in positions of leadership, influence and decision-making in Boston, MA (1991-2005)
Other Board Memberships and Affiliations:
- Boston College,Trustee
- Blue Cross Blue Shield of Massachusetts, Director
- Commonwealth Institute, Director
- Efficacy Institute, Director
- PepsiCo African-American, Advisory Board
- The Boston Foundation, Director
- Harvard Business School Alumni Board, Director
No. of Portfolios for which Board Member Serves: 33
———————
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.
Francis P. Brennan, Emeritus Board Member
30
OFFICERS OF THE FUND ( U n a u d i t e d )
J. DAVID OFFICER, President since |
December 2006. |
Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 83 investment companies (comprised of 165 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1998.
PHILLIP N. MAISANO, Executive Vice |
President since July 2007. |
Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 83 investment companies (compromised of 165 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or board member of certain other investment management subsidiaries of The Bank of New York Mellon Corperation, each of which is an affiliate of the Manager. He is 60 years old and has been employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.
MARK N. JACOBS, Vice President since |
March 2000. |
Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 61 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since February 1991.
The Fund 31
OFFICERS OF THE FUND (Unaudited) (continued)
ROBERT R. MULLERY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 42 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1985.
ROBERT ROBOL, Assistant Treasurer |
since December 2002. |
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer |
since July 2007. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer |
since August 2005. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 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 84 investment companies (comprised of 181 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 (84 investment companies, comprised of 181 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 50 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 |
July 2002. |
Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 80 investment companies (comprised of 177 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Distributor since October 1998.
32
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbmmmmfx36x1.jpg)
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, 2007, is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
© 2007 MBSC Securities Corporation
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbnymmmfx1x1.jpg)
Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
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 | |
17 | Statement of Assets and Liabilities | |
18 | Statement of Operations | |
19 | Statement of Changes in Net Assets | |
20 | Financial Highlights | |
21 | Notes to Financial Statements | |
26 | Report of Independent Registered | |
Public Accounting Firm | ||
27 | Important Tax Information | |
28 | Information About the Review and | |
Approval of the Fund’s Investment | ||
Management Agreement | ||
32 | Board Members Information | |
34 | Officers of the Fund | |
FOR MORE INFORMATION | ||
Back Cover |
The Fund
Dreyfus BASIC New York Municipal Money Market Fund |
A LETTER FROM THE CEO
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC New York Municipal Money Market Fund, covering the 12-month period from July 1, 2006, through June 30, 2007.
The U.S. economy produced mixed signals over the first half of 2007, causing investor sentiment to swing from concerns regarding a domestic economic slowdown stemming from slumping housing markets to worries about mounting inflationary pressures in an environment of robust global growth. However, more recent data have provided stronger signals that a “soft landing” is likely for the U.S. economy.The rate of decline in residential construction is becoming less severe, the industrial inventory slowdown is fading and capital goods orders have strengthened.What’s more, a generally rising stock market has helped to offset any negative “wealth effect” from the weak housing market.
Should these trends persist, we expect U.S. economic growth to hover slightly below long-term averages during the second half of 2007. A moderate economic growth rate and gradually receding inflationary pressures may keep the Federal Reserve Board on the sidelines and help to support yields of money market instruments near current levels. As always, your financial advisor can help you position your investments for these and other developments.
For information about how the fund performed during the reporting period, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund’s Portfolio Manager.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbnymmmfx4x2.jpg)
2
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbnymmmfx5x1.jpg)
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2006, through June 30, 2007, as provided by Joseph Irace, Portfolio Manager
Market and Fund Performance Overview
Yields of money market instruments remained in a relatively narrow trading range as the Federal Reserve Board (the “Fed”) left short-term interest rates unchanged throughout the reporting period in a generally slowing economic environment.
For the 12-month period ended June 30, 2007, Dreyfus BASIC New York Municipal Money Market Fund produced a yield of 3.20% and, taking into account the effects of compounding, an effective yield of 3.25% .1
The Fund’s Investment Approach
The fund seeks to provide a high level of current income exempt from federal, New York state and New York city income taxes to the extent consistent with the preservation of capital and the maintenance of liq-uidity.To pursue this objective, we attempt to add value by selecting the individual tax-exempt money market instruments from high-quality New York-exempt issuers that we believe are most likely to provide high tax-exempt current income.We also actively manage the fund’s weighted average maturity in anticipation of interest-rate and supply-and-demand changes in New York’s short-term municipal marketplace.
Rather than focusing on economic or market trends, we search for securities that, in our opinion, will help us enhance the fund’s yield.
The management of the fund’s weighted average maturity uses a more tactical approach. If we expect the supply of securities to increase temporarily, we may reduce the fund’s weighted average maturity to make cash available for the purchase of higher yielding securities.This is due to the fact that yields tend to rise temporarily if issuers are competing for investor interest. If we expect demand to surge at a time when we anticipate little issuance and therefore lower yields, we may increase the
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
fund’s weighted average maturity to maintain current yields for as long as we deem practical. At other times, we try to maintain a neutral weighted average maturity.
Interest Rates Stabilized as U.S. Economic Growth Moderated
In late June 2006, just days before the start of the reporting period, the Fed implemented its sixteenth consecutive increase of short term interest rates in its ongoing attempt to forestall inflationary pressures in a growing U.S. economy. As a result, the overnight federal funds rate rose to 5.25% . Over the summer of 2006, however, weakness in the housing and automotive sectors contributed to a more moderate rate of U.S. economic growth. In addition, inflationary pressures appeared to subside as energy prices retreated from their record highs.
Investors generally responded to these developments with expectations that a slower economy and lower inflation might prompt the Fed to begin reducing short-term interest rates sometime during 2007. The Fed lent credence to this view when it stopped raising interest rates and held them steady throughout the reporting period as it evaluated the impact of its previous rate hikes on the economy and inflation. In its public comments, the Fed repeatedly stated that it believed inflation was likely to moderate along with economic growth. With the Fed on hold, investor sentiment vacillated between expectations of a rate cut due to the economic slowdown and anticipation that stubborn inflation would cause the Fed to remain on the sidelines longer than previously expected.
For both the state and city of New York, tax revenues have continued to increase in an expanding economy, helping to support balanced operating budgets and prices of municipal securities.
Supply-and-Demand Forces Boosted Short-Term Yields
As short-term interest rates stabilized, tax-exempt money market yields traded within a relatively narrow range. However, variable-rate demand notes (“VRDNs”), on which yields are reset daily or weekly, provided
4
higher yields than longer-term instruments at times during the reporting period.This relatively unusual phenomenon, known as an “inverted yield curve,” was primarily the result of supply-and-demand forces.
When the yield curve was inverted, we allocated a large percentage of the fund’s assets to VRDNs, with the remainder invested in municipal notes and seasoned municipal bonds.As yield differences subsequently began to normalize, we reduced the fund’s exposure to VRDNs and increased its holdings of tax-exempt commercial paper with maturities in the three- to five-month range.As a result, the fund’s weighted average maturity increased from a relatively short position to one that was slightly longer than industry averages.
Fund Remains Positioned for an Unchanged Fed Policy
After the Fed’s meeting in June 2007, it continued to assert that its “predominant policy concern remains the risk that inflation will fail to moderate as expected.”These remarks, together with mixed economic and inflation data, suggest to us that the Fed is unlikely either to raise or lower short-term interest rates anytime soon. In addition, we purchased some one-year municipal notes in June, which typically is a heavy month of issuance in New York. We therefore intend to maintain the fund’s slightly longer-than-average duration position until we see evidence that the Fed is ready to adjust monetary policy one way or the other.
July 16, 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. Income may be subject to state and local taxes for | ||
non-New York residents, and some income may be subject to the federal alternative minimum tax | ||
(AMT) for certain investors. |
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 New York Municipal Money Market Fund from January 1, 2007 to June 30, 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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.25 | |
Ending value (after expenses) | $1,016.30 |
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 June 30, 2007 | ||
Expenses paid per $1,000 † | $ 2.26 | |
Ending value (after expenses) | $1,022.56 | |
† Expenses are equal to the fund’s annualized expense ratio of .45%; multiplied by the average account value over the | ||
period, multiplied by 181/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS June 30, 2007 |
Short-Term | Coupon | Maturity | Principal | |||||
Investments—98.7% | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York—96.7% | ||||||||
Albany Housing Authority, | ||||||||
Revenue (Nutgrove Garden | ||||||||
Apartments Project) (LOC; | ||||||||
Citizens Bank of Massachusetts) | 3.76 | 7/7/07 | 1,545,000 a | 1,545,000 | ||||
Albany Industrial Development | ||||||||
Agency, Civic Facility Revenue | ||||||||
(Albany College of Pharmacy | ||||||||
Project) (LOC; TD Banknorth, N.A.) | 3.75 | 7/7/07 | 3,700,000 a | 3,700,000 | ||||
Albany Industrial Development | ||||||||
Agency, Civic Facility Revenue | ||||||||
(CHF Holland Suites, L.L.C. | ||||||||
Project) (LOC; TD Banknorth, N.A.) | 3.76 | 7/7/07 | 6,390,000 a | 6,390,000 | ||||
Albany Industrial Development | ||||||||
Agency, Civic Facility Revenue | ||||||||
(Corning Preserve/Hudson | ||||||||
Riverfront Development | ||||||||
Project) (LOC; Key Bank) | 3.75 | 7/7/07 | 1,355,000 a | 1,355,000 | ||||
Albany Industrial Development | ||||||||
Agency, Civic Facility Revenue | ||||||||
(University at Albany | ||||||||
Foundation Student Housing | ||||||||
Corporation—Empire Commons | ||||||||
East Project) (Insured; AMBAC | ||||||||
and Liquidity Facility; Key Bank) | 3.75 | 7/7/07 | 4,245,000 a | 4,245,000 | ||||
Amsterdam Enlarged City School | ||||||||
District, GO Notes, BAN | 4.00 | 7/3/08 | 1,346,000 b | 1,349,230 | ||||
Auburn Industrial Development | ||||||||
Authority, IDR (Fat Tire LLC | ||||||||
Project) (LOC; Citizens Bank | ||||||||
of Pennsylvania) | 3.87 | 7/7/07 | 1,300,000 a | 1,300,000 | ||||
Avoca Central School District, | ||||||||
GO Notes, BAN | 4.00 | 6/26/08 | 2,000,000 | 2,003,798 | ||||
Burnt Hills-Ballston Lake Central | ||||||||
School District, GO Notes, TAN | 4.50 | 7/6/07 | 1,500,000 | 1,500,128 | ||||
Chautauqua County, | ||||||||
GO Notes, TAN | 4.00 | 12/21/07 | 1,170,000 | 1,172,148 | ||||
Cincinnatus Central School | ||||||||
District, GO Notes, BAN | 4.00 | 6/18/08 | 3,100,000 | 3,107,176 |
The Fund 7
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
Clinton County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Champlain | ||||||||
Valley Physicians Hospital | ||||||||
Medical Center Project) | ||||||||
(Insured; Radian and Liquidity | ||||||||
Facility; Key Bank) | 3.76 | 7/7/07 | 1,900,000 a | 1,900,000 | ||||
Colonie, | ||||||||
GO Notes, BAN | 4.00 | 4/4/08 | 1,500,000 | 1,502,761 | ||||
Colonie, | ||||||||
GO Notes, BAN | 4.25 | 4/4/08 | 7,000,000 | 7,023,006 | ||||
East Syracuse-Minoa Central School | ||||||||
District, GO Notes, BAN | 4.65 | 7/20/07 | 1,220,000 | 1,220,487 | ||||
Glens Falls City School District, | ||||||||
GO Notes, RAN | 4.25 | 6/18/08 | 1,000,000 | 1,004,639 | ||||
Hudson Yards Infrastructure | ||||||||
Corporation, Hudson Yards | ||||||||
Senior Revenue (Insured; FGIC | ||||||||
and Liquidity Facility; | ||||||||
Landesbank Hessen-Thuringen | ||||||||
Girozentrale) | 3.78 | 7/7/07 | 21,800,000 a,c | 21,800,000 | ||||
Lancaster Industrial Development | ||||||||
Agency, IDR (Jiffy-Tite | ||||||||
Company, Inc. Project) (LOC; | ||||||||
Key Bank) | 3.87 | 7/7/07 | 1,095,000 a | 1,095,000 | ||||
Metropolitan Transportation | ||||||||
Authority, Dedicated Tax Fund, | ||||||||
Refunding (Insured; XLCA and | ||||||||
Liquidity Facility; Citibank NA) | 3.73 | 7/7/07 | 3,000,000 a | 3,000,000 | ||||
Metropolitan Transportation | ||||||||
Authority, Transportation | ||||||||
Revenue (Insured; AMBAC | ||||||||
and Liquidity Facility; PB | ||||||||
Finance Inc.) | 3.80 | 7/7/07 | 6,790,000 a,c | 6,790,000 | ||||
Metropolitan Transportation | ||||||||
Authority, Transportation | ||||||||
Revenue, CP (LOC; ABN-AMRO) | 3.65 | 7/10/07 | 6,500,000 | 6,500,000 | ||||
Monroe County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (YMCA of | ||||||||
Greater Rochester Project) | ||||||||
(LOC; M&T Bank) | 3.78 | 7/7/07 | 2,500,000 a | 2,500,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
Monroe County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (YMCA of | ||||||||
Greater Rochester Project) | ||||||||
(LOC; M&T Bank) | 3.78 | 7/7/07 | 5,345,000 a | 5,345,000 | ||||
Nassau County, | ||||||||
GO Notes, TAN | 4.25 | 9/30/07 | 5,000,000 | 5,008,821 | ||||
Nassau County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (North Shore | ||||||||
Hebrew Academy High School | ||||||||
Project) (LOC; Comerica Bank) | 3.77 | 7/7/07 | 11,730,000 a | 11,730,000 | ||||
New York City, | ||||||||
CP (Insured; MBIA and | ||||||||
Liquidity Facility; Landesbank | ||||||||
Hessen-Thuringen Girozentrale) | 3.68 | 7/12/07 | 4,500,000 | 4,500,000 | ||||
New York City, | ||||||||
GO Notes, | 5.00 | 8/1/07 | 3,000,000 | 3,003,481 | ||||
New York City, | ||||||||
GO Notes | 5.00 | 8/1/07 | 3,835,000 | 3,839,483 | ||||
New York City, | ||||||||
GO Notes | 5.00 | 8/1/07 | 500,000 | 500,482 | ||||
New York City, | ||||||||
GO Notes | 5.25 | 8/1/07 | 400,000 | 400,518 | ||||
New York City, | ||||||||
GO Notes | 5.63 | 8/1/07 | 3,000,000 | 3,004,903 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Abraham | ||||||||
Joshua Heschel High School | ||||||||
Project) (LOC; Allied Irish Banks) | 3.75 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Birch Wathen | ||||||||
Lenox School Project) (LOC; | ||||||||
Allied Irish Banks) | 3.77 | 7/7/07 | 5,250,000 a | 5,250,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Columbia | ||||||||
Grammar and Preparatory School | ||||||||
Project) (LOC; Allied Irish Banks) | 3.77 | 7/7/07 | 3,400,000 a | 3,400,000 |
The Fund 9
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Hewitt | ||||||||
School Project) (LOC; Allied | ||||||||
Irish Banks) | 3.77 | 7/7/07 | 1,570,000 a | 1,570,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Mercy | ||||||||
College Project) (LOC; Key Bank) | 3.75 | 7/7/07 | 4,300,000 a | 4,300,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Sephardic | ||||||||
Community Youth Center, Inc. | ||||||||
Project) (LOC; M&T Bank) | 3.78 | 7/7/07 | 5,000,000 a | 5,000,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue | ||||||||
(Spence-Chapin, Services to | ||||||||
Families and Children Project) | ||||||||
(LOC; Allied Irish Banks) | 3.77 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (The | ||||||||
Allen-Stevenson School | ||||||||
Project) (LOC; Allied Irish Banks) | 3.77 | 7/7/07 | 3,105,000 a | 3,105,000 | ||||
New York City Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue, Refunding | ||||||||
(Federation of Protestant | ||||||||
Welfare Agencies Inc. Project) | ||||||||
(LOC; Allied Irish Banks) | 3.77 | 7/7/07 | 3,000,000 a | 3,000,000 | ||||
New York City Industrial | ||||||||
Development Agency, Special | ||||||||
Facility Revenue (Air Express | ||||||||
International Corporation | ||||||||
Project) (LOC; Citibank NA) | 3.79 | 7/7/07 | 5,000,000 a | 5,000,000 | ||||
New York City Municipal Water | ||||||||
Finance Authority, Water and | ||||||||
Sewer System Revenue (Insured; | ||||||||
FGIC and Liquidity Facility; | ||||||||
DEPFA Bank PLC) | 3.87 | 7/1/07 | 2,250,000 a | 2,250,000 |
10
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
New York City Municipal Water | ||||||||
Finance Authority, Water and | ||||||||
Sewer System Second General | ||||||||
Resolution Revenue (Liquidity | ||||||||
Facility: California State | ||||||||
Teachers Retirement System | ||||||||
and State Street Bank and | ||||||||
Trust Co.) | 3.88 | 7/1/07 | 8,200,000 a | 8,200,000 | ||||
New York Counties Tobacco Trust | ||||||||
IV, Tobacco Settlement | ||||||||
Pass-Through Bonds (Liquidity | ||||||||
Facility; Merrill Lynch | ||||||||
Capital Services and LOC; | ||||||||
Merrill Lynch) | 3.78 | 7/7/07 | 18,080,000 a,c | 18,080,000 | ||||
New York State Dormitory | ||||||||
Authority, Insured LR (State | ||||||||
Judicial Institute at Pace | ||||||||
University) (Insured; AMBAC) | 4.75 | 7/1/07 | 155,000 | 155,000 | ||||
New York State Dormitory | ||||||||
Authority, Revenue (Park Ridge | ||||||||
Hospital Inc.) (LOC; JPMorgan | ||||||||
Chase Bank) | 3.75 | 7/7/07 | 10,000,000 a | 10,000,000 | ||||
New York State Energy Research and | ||||||||
Development Authority, Revenue | ||||||||
(Consolidated Edison Company | ||||||||
of New York, Inc. Project) | ||||||||
(LOC; Citibank NA) | 3.75 | 7/7/07 | 5,000,000 a | 5,000,000 | ||||
New York State Housing Finance | ||||||||
Agency, Housing Revenue (250 | ||||||||
West 93rd Street) (LOC; Bank | ||||||||
of America) | 3.76 | 7/7/07 | 5,900,000 a | 5,900,000 | ||||
New York State Housing Finance | ||||||||
Agency, Housing Revenue | ||||||||
(Gateway to New Cassel) (LOC; | ||||||||
JPMorgan Chase Bank) | 3.75 | 7/7/07 | 2,300,000 a | 2,300,000 | ||||
New York State Housing Finance | ||||||||
Agency, Housing Revenue (Rip | ||||||||
Van Winkle House) (Insured; | ||||||||
FHLMC and Liquidity | ||||||||
Facility; FHLMC) | 3.75 | 7/7/07 | 4,600,000 a | 4,600,000 |
The Fund 11
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
New York State Housing Finance | ||||||||
Agency, Revenue (Worth Street) | ||||||||
(LOC; FNMA) | 3.78 | 7/7/07 | 9,400,000 a | 9,400,000 | ||||
New York State Urban Development | ||||||||
Corporation, State Personal | ||||||||
Income Tax Revenue (State | ||||||||
Facilities and Equipment) | ||||||||
(Liquidity Facility; Morgan | ||||||||
Stanley Bank) | 3.78 | 7/7/07 | 3,200,000 a,c | 3,200,000 | ||||
Newburgh Industrial Development | ||||||||
Agency, Civic Facility Revenue | ||||||||
(Community Development | ||||||||
Properties Dubois Street II, | ||||||||
Inc. Project) (LOC; Key Bank) | 3.75 | 7/7/07 | 10,730,000 a | 10,730,000 | ||||
Newburgh Industrial Development | ||||||||
Agency, MFHR (Belvedere | ||||||||
Housing Project) (Liquidity | ||||||||
Facility; Merrill Lynch) | 3.84 | 7/7/07 | 3,080,000 a,c | 3,080,000 | ||||
Niagara County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Niagara | ||||||||
University Project) (Insured; | ||||||||
Radian and Liquidity Facility; | ||||||||
HSBC Bank U.S.A) | 3.76 | 7/7/07 | 5,000,000 a | 5,000,000 | ||||
North Syracuse Central School | ||||||||
District, GO Notes, RAN | 4.00 | 6/19/08 | 1,200,000 | 1,202,786 | ||||
Olean, | ||||||||
GO Notes, RAN | 4.50 | 8/30/07 | 1,300,000 | 1,301,449 | ||||
Ontario County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Friends of | ||||||||
the Finger Lakes Performing | ||||||||
Arts Center, Inc. Civic | ||||||||
Facility) (LOC; Citizens Bank | ||||||||
of Massachusetts) | 3.77 | 7/7/07 | 3,395,000 a | 3,395,000 | ||||
Otsego County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Noonan | ||||||||
Community Service Corporation | ||||||||
Project) (LOC; FHLB) | 3.76 | 7/7/07 | 1,365,000 a | 1,365,000 |
12
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
Port Authority of New York and | ||||||||
New Jersey, CP (Liquidity | ||||||||
Facility; Landesbank | ||||||||
Hessen-Thuringen Girozentrale) | 3.73 | 9/12/07 | 2,500,000 | 2,500,000 | ||||
Putnam County, | ||||||||
GO Notes, TAN | 4.00 | 11/15/07 | 2,800,000 | 2,804,078 | ||||
Putnam County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (United | ||||||||
Cerebral Palsy of Putnam and | ||||||||
Southern Dutchess Project) | ||||||||
(LOC; Commerce Bank N.A.) | 3.78 | 7/7/07 | 8,025,000 a | 8,025,000 | ||||
Rockland County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Dominican | ||||||||
College of Blauvelt Project) | ||||||||
(LOC; Commerce Bank N.A.) | 3.77 | 7/7/07 | 2,000,000 a | 2,000,000 | ||||
Saint Lawrence County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue | ||||||||
(Canton-Potsdam Hospital | ||||||||
Project) (LOC; Key Bank) | 3.75 | 7/7/07 | 10,910,000 a | 10,910,000 | ||||
South Country Central School | ||||||||
District at Brookhaven, GO | ||||||||
Notes, BAN | 4.25 | 1/18/08 | 1,000,000 | 1,002,384 | ||||
Syracuse Industrial Development | ||||||||
Agency, Civic Facility | ||||||||
Revenue, Refunding (Crouse | ||||||||
Health Hospital, Inc. Project) | ||||||||
(LOC; M&T Bank) | 3.77 | 7/7/07 | 4,000,000 a | 4,000,000 | ||||
Tompkins County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Cortland | ||||||||
College) (LOC; Citizens Bank | ||||||||
of Massachusetts) | 3.76 | 7/7/07 | 4,150,000 a | 4,150,000 | ||||
TSASC Inc. of New York, | ||||||||
Tobacco Settlement | ||||||||
Asset-Backed Bonds (Liquidity | ||||||||
Facility; Merrill Lynch) | 3.79 | 7/7/07 | 4,610,000 a,c | 4,610,000 |
The Fund 13
STATEMENT OF INVESTMENTS (continued)
Short-Term | Coupon | Maturity | Principal | |||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
New York (continued) | ||||||||
Westchester County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Mercy | ||||||||
College Project) (LOC; Key Bank) | 3.75 | 7/7/07 | 3,100,000 a | 3,100,000 | ||||
Westchester County Industrial | ||||||||
Development Agency, Civic | ||||||||
Facility Revenue (Northern | ||||||||
Westchester Hospital | ||||||||
Association Civic Facility) | ||||||||
(LOC; Commerce Bank N.A.) | 3.76 | 7/7/07 | 6,800,000 a | 6,800,000 | ||||
Westchester Tobacco Asset | ||||||||
Securitization Corporation, | ||||||||
Tobacco Settlement | ||||||||
Asset-Backed Bonds (Liquidity | ||||||||
Facility; Merrill Lynch | ||||||||
Capital Services and LOC; | ||||||||
Merrill Lynch) | 3.78 | 7/7/07 | 8,330,000 a,c | 8,330,000 | ||||
U.S. Related—2.0% | ||||||||
Puerto Rico Aqueduct and Sewer | ||||||||
Authority, Revenue (Liquidity | ||||||||
Facility; Citibank NA and LOC; | ||||||||
Citibank NA) | 3.79 | 7/7/07 | 2,000,000 a,c | 2,000,000 | ||||
Puerto Rico Industrial Tourist | ||||||||
Educational Medical and | ||||||||
Environmental Control | ||||||||
Facilities Financing | ||||||||
Authority, Environmental | ||||||||
Control Facilities Revenue | ||||||||
(Bristol-Myers Squibb | ||||||||
Company Project) | 3.78 | 7/7/07 | 4,400,000 a | 4,400,000 | ||||
Total Investments (cost $317,751,758) | 98.7% | 317,751,758 | ||||||
Cash and Receivables (Net) | 1.3% | 4,141,171 | ||||||
Net Assets | 100.0% | 321,892,929 |
a Securities payable on demand.Variable interest rate—subject to periodic change. |
b Purchased on a delayed delivery basis. |
c Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in |
transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2007, these securities |
amounted to $67,890,000 or 21.1% of net assets. |
14
Summary of Abbreviations | ||||||
ACA | American Capital Access | AGC | ACE Guaranty Corporation | |||
AGIC | Asset Guaranty Insurance | AMBAC | American Municipal Bond | |||
Company | Assurance Corporation | |||||
ARRN | Adjustable Rate Receipt Notes | BAN | Bond Anticipation Notes | |||
BIGI | Bond Investors Guaranty Insurance | BPA | Bond Purchase Agreement | |||
CGIC | Capital Guaranty Insurance | CIC | Continental Insurance | |||
Company | Company | |||||
CIFG | CDC Ixis Financial Guaranty | CMAC | Capital Market Assurance | |||
Corporation | ||||||
COP | Certificate of Participation | CP | Commercial Paper | |||
EDR | Economic Development Revenue | EIR | Environmental Improvement | |||
Revenue | ||||||
FGIC | Financial Guaranty Insurance | |||||
Company | FHA | Federal Housing Administration | ||||
FHLB | Federal Home Loan Bank | FHLMC | Federal Home Loan Mortgage | |||
Corporation | ||||||
FNMA | Federal National | |||||
Mortgage Association | FSA | Financial Security Assurance | ||||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract | |||
GNMA | Government National | |||||
Mortgage Association | GO | General Obligation | ||||
HR | Hospital Revenue | IDB | Industrial Development Board | |||
IDC | Industrial Development Corporation | IDR | Industrial Development Revenue | |||
LOC | Letter of Credit | LOR | Limited Obligation Revenue | |||
LR | Lease Revenue | MBIA | Municipal Bond Investors Assurance | |||
Insurance Corporation | ||||||
MFHR | Multi-Family Housing Revenue | MFMR | Multi-Family Mortgage Revenue | |||
PCR | Pollution Control Revenue | PILOT | Payment in Lieu of Taxes | |||
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes | |||
RAW | Revenue Anticipation Warrants | RRR | Resources Recovery Revenue | |||
SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement | |||
SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue | |||
SONYMA | State of New York Mortgage Agency | SWDR | Solid Waste Disposal Revenue | |||
TAN | Tax Anticipation Notes | TAW | Tax Anticipation Warrants | |||
TRAN | Tax and Revenue Anticipation Notes | XLCA | XL Capital Assurance |
The Fund 15
STATEMENT OF INVESTMENTS (continued)
Summary of Combined Ratings (Unaudited) | ||||||||
Fitch | or Moody’s or | Standard & Poor’s | Value (%) † | |||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 84.6 | |||||
AAA,AA,A d | Aaa,Aa,A d | AAA,AA,A d | 5.5 | |||||
Not Rated e | Not Rated e | Not Rated e | 9.9 | |||||
100.0 | ||||||||
† | Based on total investments. | |||||||
d | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. | |||||||
e | Securities which, while not rated by Fitch, Moody’s and Standard & Poor’s, have been determined by the Manager to | |||||||
be of comparable quality to those rated securities in which the fund may invest. | ||||||||
See notes to financial statements. |
16
STATEMENT OF ASSETS AND LIABILITIES June 30, 2007 |
Cost | Value | |||
Assets ($): | ||||
Investment in securities—See Statement of Investments | 317,751,758 | 317,751,758 | ||
Cash | 9,731,967 | |||
Interest receivable | 1,778,608 | |||
329,262,333 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2 | 86,455 | |||
Payable for investment securities purchased | 6,361,973 | |||
Dividends payable | 868,504 | |||
Payable for shares of Beneficial Interest redeemed | 52,342 | |||
Interest payable—Note 3 | 130 | |||
7,369,404 | ||||
Net Assets ($) | 321,892,929 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 321,888,428 | |||
Accumulated net realized gain (loss) on investments | 4,501 | |||
Net Assets ($) | 321,892,929 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 321,888,438 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 |
See notes to financial statements.
The Fund 17
STATEMENT OF OPERATIONS Year Ended June 30, 2007 |
Investment Income ($): | ||
Interest Income | 11,301,984 | |
Expenses: | ||
Management fee—Note 2 | 1,391,052 | |
Interest expense—Note 3 | 429 | |
Total Expenses | 1,391,481 | |
Investment Income—Net | 9,910,503 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 4,501 | |
Net Increase in Net Assets Resulting from Operations | 9,915,004 |
See notes to financial statements.
18
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30, | ||||
2007 | 2006 | |||
Operations ($): | ||||
Investment income—net | 9,910,503 | 6,950,020 | ||
Net realized gain (loss) on investments | 4,501 | — | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 9,915,004 | 6,950,020 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (9,910,503) | (6,950,020) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 294,839,753 | 197,373,427 | ||
Dividends reinvested | 8,588,102 | 6,258,560 | ||
Cost of shares redeemed | (268,532,909) | (224,960,449) | ||
Increase (Decrease) in Net Assets from | ||||
Beneficial Interest Transactions | 34,894,946 | (21,328,462) | ||
Total Increase (Decrease) in Net Assets | 34,899,447 | (21,328,462) | ||
Net Assets ($): | ||||
Beginning of Period | 286,993,482 | 308,321,944 | ||
End of Period | 321,892,929 | 286,993,482 |
See notes to financial statements.
The Fund 19
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.
Year Ended June 30, | ||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||
Per Share Data ($): | ||||||||||
Net asset value, beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Investment Operations: | ||||||||||
Investment income—net | .032 | .025 | .013 | .005 | .009 | |||||
Distributions: | ||||||||||
Dividends from investment income—net | (.032) | (.025) | (.013) | (.005) | (.009) | |||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||||
Total Return (%) | 3.25 | 2.52 | 1.34 | .52 | .86 | |||||
Ratios/Supplemental Data (%): | ||||||||||
Ratio of total expenses | ||||||||||
to average net assets | .45 | .45 | .45 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||
to average net assets | 3.21 | 2.49 | 1.33 | .52 | .86 | |||||
Net Assets, end of period ($ x 1000) | 321,893 | 286,993 | 308,322 | 302,652 | 340,089 |
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus BASIC New York Municipal Money Market Fund (the “fund”) is a separate non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the “Trust”) which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company, currently offering three series including the fund.The fund’s investment objective is to provide a high level of current income exempt from federal, New York state and New York city income taxes to the extent 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. During the reporting period, the Manager was a wholly-owned subsidiary of Mellon Financial Corporation (“Mellon Financial”). During the reporting period, Dreyfus Service Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, served as the distributor of the fund’s shares, which are sold to the public without a sales charge. Effective June 30, 2007, the Distributor became known as MBSC Securities Corporation.
On July 1, 2007, Mellon Financial and The Bank of New York Company, Inc. merged, forming The Bank of New York Mellon Corporation. As part of this transaction, Dreyfus became a wholly-owned subsidiary of The Bank of New York Mellon Corporation.
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.
(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.
The Fund 21
NOTES TO FINANCIAL STATEMENTS (continued)
It is the fund’s policy to maintain a continuous net asset value per share of $1.00 for the fund; 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.
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. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian, Mellon Bank, N.A.
(d) 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
22
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, if any, it is the policy of the fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain, if any, 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 beginning after December 15, 2006. Management believes that the application of this standard will not have a material impact on the financial statements of the fund.
At June 30, 2007, the components of accumulated earnings on a tax basis were substantially the same as for financial reporting purposes.
The tax character of distributions paid to shareholders during the periods ended June 30, 2007 and June 30, 2006, were all tax exempt income.
At June 30,2007,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).
The Fund 23
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2—Investment Management Fee and Other Transactions with Affiliates:
Pursuant to an Investment Management Agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Each Trustee receives $45,000 per year, plus $6,000 for each joint Board meeting of The Dreyfus/Laurel Funds, Inc., the Trust and The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) attended, $2,000 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $1,500 for Board meetings and separate committee meetings attended that are conducted by telephone and is reimbursed for travel and out-of-pocket expenses.With respect to Board meetings, the Chairman of the Board receives an additional 25% of such compensation (with the exception of reimbursable amounts). With respect to compensation committee meetings, the Chair of the compensation committee receives $900 per meetings and, with respect to audit committee meetings, the Chair of the audit committee receives $1,350 per meeting. In the event that there is an in-person joint committee or a joint telephone meeting of the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund, the
24
$2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies Fund. These fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $86,455.
NOTE 3—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowings.
The average daily amount of borrowings outstanding under the line of credit during the period ended June 30, 2007, was approximately $7,300 with a related weighted average annualized interest rate of 5.84% .
The Fund 25
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Board of Trustees and Shareholders of The Dreyfus/Laurel Tax-Free Municipal Funds: |
We have audited the accompanying statement of assets and liabilities of Dreyfus BASIC New York Municipal Money Market Fund (the “Fund”) of The Dreyfus/Laurel Tax-Free Municipal Funds, including the statement of investments, as of June 30, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 New York Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
New York, New York August 6, 2007 |
26
IMPORTANT TAX INFORMATION ( U n a u d i t e d )
In accordance with federal tax law, the fund hereby designates all the dividends paid from investment income-net during the fiscal year ended June 30, 2007 as “exempt-interest dividends” (not subject to regular federal and, for individuals who are New York residents, New York State and New York City personal income taxes). As required by federal tax law rules, shareholders will receive notification of their portion of the fund’s exempt-interest dividends paid for the 2007 calendar year on Form 1099-INT, which will be mailed by January 31, 2008.
The Fund 27
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Trustees held on January 31 and February 1, 2007, the Board considered the re-approval for an annual period of the fund’s Investment Management Agreement (“Management Agreement”), pursuant to which the Manager provides the fund with investment advisory and administrative services. The Board members, none of whom are “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Manager.
Analysis of Nature, Extent and Quality of Services Provided to the Fund.The Board members considered information previously provided to them in a presentation from representatives of the Manager regarding services provided to the fund and other funds in the Dreyfus fund complex, and representatives of the Manager confirmed that there had been no material changes in this information.The Board also discussed the nature, extent and quality of the services provided to the fund pursuant to its Management Agreement. The Manager’s representatives reviewed the fund’s distribution of accounts and the relationships the Manager has with various intermediaries and the different needs of each.The Manager’s representatives noted the distribution channels for the fund as well as the diversity of distribution among the funds in the Dreyfus fund complex, and the Manager’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including those of the fund.The Board also reviewed the number of shareholder accounts in the fund, as well as the fund’s asset size.
The Board members also considered the Manager’s research and portfolio management capabilities and that the Manager also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board members also considered the Manager’s extensive administrative, accounting and compliance infrastructure.
28
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board members reviewed the fund’s performance and placed significant emphasis on comparisons to a group of retail, no-load New York tax-exempt money market funds (the “Performance Group”) and to a larger universe of funds, consisting of all retail and institutional New York tax-exempt money market funds (the “Performance Universe”) selected and provided by Lipper, Inc., an independent provider of investment company data.The Board was provided with a description of the methodology Lipper used to select the Performance Group and Performance Universe, as well as the Expense Group and Expense Universe (discussed below). The Board members discussed the results of the comparisons for various periods ended November 30, 2006, and noted that the fund’s total return performance was the top performer in the Performance Group and above the Performance Universe medians for each of the periods.
The Board members also discussed the fund’s management fee and expense ratio and reviewed the range of management fees and expense ratios of a comparable group of funds (the “Expense Group”) and a broader group of funds (the “Expense Universe”), each selected and provided by Lipper.The Board noted that the fund was the only fund in the Expense Group with a “unitary fee” structure. The Board also noted that the fund’s management fee was above the Expense Group and Expense Universe medians and the expense ratio was below the Expense Group and Expense Universe medians.
Representatives of the Manager reviewed with the Board members the fees paid to the Manager or its affiliates by mutual funds managed by the Manager or its affiliates with similar investment objectives, policies and strategies, and included in the same Lipper category as the fund (the “Similar Funds”). They also noted that there were no other accounts managed by the Manager or its affiliates with similar investment objectives, policies and strategies as the fund.The Board analyzed differences
The Fund 29
INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT MANAGEMENT AGREEMENT (Unaudited) (continued) |
in fees paid to the Manager and discussed the relationship of the fees paid in light of the Manager’s performance and the services provided, noting the fund’s “unitary fee”structure.The Board members considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness and reasonableness of the fund’s management fee.The Board acknowledged that differences in fees paid by the Similar Funds seemed to be consistent with the services provided.
Analysis of Profitability and Economies of Scale. The Manager’s representatives reviewed the dollar amount of expenses allocated and profit received by the Manager and the method used to determine such expenses and profit. The Board previously had been provided with information prepared by an independent consulting firm regarding the Manager’s approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus mutual fund complex.The Board also was informed that the methodology had also been reviewed by an independent registered public accounting firm which, like the consultant, found the methodology to be reasonable. The consulting firm also analyzed where any economies of scale might emerge in connection with the management of the fund.The Board members evaluated the profitability analysis in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. The Board members also considered potential benefits to the Manager from acting as investment adviser and noted that there were no soft dollar arrangements with respect to trading the fund’s portfolio.
It was noted that the Board members should consider the Manager’s profitability with respect to the fund as part of their evaluation of whether the fees under the Management Agreement bear a reasonable relationship to the mix of services provided by the Manager, including the nature, extent and quality of such services and that a discussion of economies of scale is predicated on increasing assets and that, if a fund’s assets had been decreasing, the possibility that the Manager may have realized any economies of scale would be less. It also was noted that
30
the profitability percentage for managing the fund was within the range determined by appropriate court cases to be reasonable given the services rendered and generally superior service levels provided by the Manager.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to continuation of the fund’s Management Agreement. Based on the discussions and considerations as described above, the Board made the following conclusions and determinations.
- The Board concluded that the nature, extent and quality of the ser- vices provided by the Manager are adequate and appropriate.
- The Board was satisfied with the fund’s performance.
- The Board concluded that the fee paid by the fund to the Manager was reasonable in light of the services provided, comparative perfor- mance, expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by the Manager from its relationship with the fund.
- The Board determined that the economies of scale which may accrue to the Manager and its affiliates in connection with the man- agement of the fund had been adequately considered by the Manager in connection with the management fee rate charged to the fund and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
The Board members considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year, and, without any one factor being dispositive, the Board determined that re-approval of the fund’s Management Agreement was in the best interests of the fund and its shareholders and that the Management Agreement would be renewed through April 4, 2008.
The Fund 31
BOARD MEMBERS INFORMATION ( U n a u d i t e d )
Joseph S. DiMartino (63) |
Chairman of the Board (1999) |
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
- Senior Advisor to Ivory Investment Management, L.P., a registered investment adviser to three private funds.
No. of Portfolios for which Board Member Serves: 165 ———————
James M. Fitzgibbons (72) |
Board Member (1983) |
Principal Occupation During Past 5 Years: |
• Chairman of the Board, Davidson Cotton Company (1998-2002) |
Other Board Memberships and Affiliations: |
• Bill Barrett Company, an oil and gas exploration company, Director |
No. of Portfolios for which Board Member Serves: 24 ———————
J. Tomlinson Fort (79) |
Board Member (1994) |
Principal Occupation During Past 5 Years: |
• Retired; Of Counsel, Reed Smith LLP (1998-present) |
Other Board Memberships and Affiliations: |
• Allegheny College, Emeritus Trustee |
• Pittsburgh Ballet Theatre,Trustee |
• American College of Trial Lawyers, Fellow |
No. of Portfolios for which Board Member Serves: 24 ———————
Kenneth A. Himmel (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years: |
• President and CEO, Related Urban Development, a real estate development company |
(1996-present) |
• President and CEO, Himmel & Company, a real estate development company (1980-present) |
• CEO, American Food Management, a restaurant company (1983-present) |
No. of Portfolios for which Board Member Serves: 24
32
Stephen J. Lockwood (60) |
Board Member (1993) |
Principal Occupation During Past 5 Years: |
• Chairman of the Board, Stephen J. Lockwood and Company LLC, an investment company |
(2000-present) |
No. of Portfolios for which Board Member Serves: 24
———————
Roslyn M. Watson (57) |
Board Member (1992) |
Principal Occupation During Past 5 Years: |
• Principal,Watson Ventures, Inc., a real estate investment company (1993-present) |
Other Board Memberships and Affiliations: |
• American Express Centurion Bank, Director |
• The Hyams Foundation Inc., a Massachusetts Charitable Foundation,Trustee |
• National Osteoporosis Foundation,Trustee |
No. of Portfolios for which Board Member Serves: 24
———————
Benaree Pratt Wiley (61) |
Board Member (1998) |
Principal Occupation During Past 5 Years: |
• Principal,The Wiley Group, a firm specializing in strategy and business development |
(2005-present) |
• President and CEO,The Partnership, an organization dedicated to increasing the |
representation of African Americans in positions of leadership, influence and decision-making |
in Boston, MA (1991-2005) |
Other Board Memberships and Affiliations:
- Boston College,Trustee
- Blue Cross Blue Shield of Massachusetts, Director
- Commonwealth Institute, Director
- Efficacy Institute, Director
- PepsiCo African-American, Advisory Board
- The Boston Foundation, Director
- Harvard Business School Alumni Board, Director
No. of Portfolios for which Board Member Serves: 33
———————
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.
Francis P. Brennan, Emeritus Board Member
The Fund 33
OFFICERS OF THE FUND ( U n a u d i t e d )
J. DAVID OFFICER, President since |
December 2006. |
Chief Operating Officer,Vice Chairman and a Director of the Manager, and an officer of 83 investment companies (comprised of 165 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since April 1998.
PHILLIP N. MAISANO, Executive Vice |
President since July 2007. |
Chief Investment Officer,Vice Chair and a director of the Manager, and an officer of 83 investment companies (compromised of 165 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or board member of certain other investment management subsidiaries of The Bank of New York Mellon Corperation, each of which is an affiliate of the Manager. He is 60 years old and has been employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004, and served as Chief Executive Officer of Evaluation Associates, a leading institutional investment consulting firm, from 1988 until 2004.
MARK N. JACOBS, Vice President since |
March 2000. |
Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 61 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since February 1991.
34
ROBERT R. MULLERY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 55 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and |
Assistant Secretary since August 2005. |
Associate General Counsel of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 42 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 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since April 1985.
ROBERT ROBOL, Assistant Treasurer |
since December 2002. |
Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since October 1988.
ROBERT SALVIOLO, Assistant Treasurer |
since July 2007. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since June 1989.
ROBERT SVAGNA, Assistant Treasurer |
since August 2005. |
Senior Accounting Manager – Equity Funds of the Manager, and an officer of 84 investment companies (comprised of 181 portfolios) managed by the Manager. He is 40 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 84 investment companies (comprised of 181 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 (84 investment companies, comprised of 181 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 50 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 |
July 2002. |
Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 80 investment companies (comprised of 177 portfolios) managed by the Manager. He is 36 years old and has been an employee of the Distributor since October 1998.
The Fund 35
NOTES
![](https://capedge.com/proxy/N-CSR/0000717341-07-000006/gbnymmmfx40x1.jpg)
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, 2007, is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
© 2007 MBSC Securities 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"). Joseph S. 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 $72,480 in 2006 and $74,550 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 $6,000 in 2006 and $6,150 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 $6,075 in 2006 and $6,270 in 2007. These services consisted of review or preparation of U.S. federal, state, local and excise tax returns.
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 $0 in 2006 and $0 in 2007.
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 $1,582,000 in 2006 and $3,669,000 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.
The Dreyfus/Laurel Tax-Free Municipal Funds | ||
By: | /s/ J. David Officer | |
J. David Officer | ||
President | ||
Date: | August 27, 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: | August 27, 2007 | |
By: | /s/ James Windels | |
James Windels | ||
Treasurer | ||
Date: | August 27, 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) |