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: | 6/30 | |
Date of reporting period: | 12/31/2008 |
FORM N-CSR |
Item 1. | Reports to Stockholders. |
Dreyfus BASIC California Municipal Money Market Fund
SEMIANNUAL REPORT December 31, 2008
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured Not Bank-Guaranteed May Lose Value
Contents | |
THE FUND | |
2 | A Letter from the CEO |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
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 |
FOR MORE INFORMATION | |
Back Cover | |
Dreyfus BASIC California Municipal Money Market Fund |
The Fund |
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A LETTER FROM THE CEO Dear Shareholder: |
We are pleased to present this semiannual report for Dreyfus BASIC California Municipal Money Market Fund, covering the six-month period from July 1, 2008, through December 31, 2008.
The second half of 2008 was one of the most difficult periods in decades for the financial markets.A credit crunch that began in 2007 exploded in mid-2008 into a global financial crisis, resulting in the failures of major financial institutions, a deep and prolonged recession and lower investment values across a broad range of asset classes. Governments and regulators throughout the world moved aggressively to curtail the damage, implementing unprecedented reductions of short-term interest rates, massive injections of liquidity into the banking system, government bailouts of struggling companies and plans for massive economic stimulus programs. Money market funds were not immune to the downturn, and several U.S. money market funds were unable to maintain a stable net asset value.The federal government subsequently stepped in with a program for guaranteeing participating funds’ assets at stated levels, while others received financial support from their sponsors.
Although we expect the U.S. and global economies to remain weak until longstanding imbalances have worked their way out of the system, the financial markets currently appear to have priced in investors’ generally low expectations. In previous recessions, however, the markets have tended to anticipate economic improvement before it occurs, potentially leading to major rallies when few expected them. That’s why it makes sense to remain disciplined, maintain a long-term perspective and adopt a consistent asset allocation strategy that reflects one’s future goals and attitudes toward risk. As always, we urge you to consult with your financial advisor, who can recommend the course of action that is right for you. 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.
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Jonathan R. Baum Chief Executive Officer The Dreyfus Corporation January 15, 2009 |
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2008, through December 31, 2008, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2008, Dreyfus BASIC California Municipal Money Market Fund produced an annualized yield of 1.66% . Taking into account the effects of compounding, the fund produced an annualized effective yield of 1.68% .1
Tax-exempt money market instruments were influenced by a faltering U.S. economy, an intensifying financial crisis and sharply lower short-term interest rates during the reporting period.
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.
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 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.
The Fund |
3 |
DISCUSSION OF FUND PERFORMANCE (continued) |
Economic Slump and Financial Crisis Roiled Money Markets
Economic conditions already had begun to deteriorate by the start of the reporting period as a result of weakness in housing markets, rising unemployment and declining consumer confidence. In response, the Federal Reserve Board (the “Fed”) had implemented several reductions in the overnight federal funds rate, which began the reporting period at 2%.
Meanwhile, a credit crisis intensified as mortgage foreclosure rates surged and institutional investors continued to de-lever their portfolios, selling their more liquid and creditworthy holdings to meet margin calls resulting from severe losses in mortgage- and asset-backed securities. Despite efforts by regulators to contain the credit crunch, it mushroomed into a global financial crisis over the summer of 2008, leading to the failures and government bailouts of several major financial institutions.The Fed also intervened with massive injections of liquidity into the banking system and additional rate cuts, which drove its target for the federal funds rate to a record low of 0% to 0.25% .
The money markets were not immune to the financial crisis, as credit concerns caused dislocations among short-term money market instruments, including tax-exempt variable rate demand notes (“VRDNs”), and a surge in redemptions from some funds. In an effort to shore up investor confidence and help restore stability to the financial system, the U.S. Department of the Treasury initiated several remedial measures, including the Temporary Guarantee Program specifically for money market funds.
With the Fed and U.S.Treasury supporting banks and short-term lending, short-term credit markets appeared to stabilize by the reporting period’s end. Although liquidity concerns regarding VRDNs pushed their yields higher in September, liquidity and yields subsequently returned to normalized levels.
The financial crisis and economic downturn put pressure on the fiscal condition of the state of California, which was undermined by severe tax
4
revenue shortfalls.As of the reporting period’s end, the state was in danger of running out of cash as the Governor and Legislature negotiated potential spending cuts and tax hikes designed to bridge its budget gaps.
Independent Research Helps Avoid Credit Problems
As always, we have invested exclusively in direct, high-quality municipal obligations that have been independently approved by our credit analysts. In light of the issues confronting the market, we maintained a conservative credit selection strategy, including increased credit surveillance of the fund’s holdings.
Early in the reporting period, we set the fund’s weighted average maturity in a range that was longer than industry averages to capture higher yields for as long as we deemed practical while interest rates fell. However, we later shortened the fund’s weighted average maturity to weather the dislocations caused by the financial crisis. This enabled us to take greater advantage of the outsized yields offered by VRDNs at the time.
Maintaining a Conservative Investment Posture
We intend to maintain the fund’s conservative credit selection strategy and generally neutral weighted average maturity until we are confident that the crisis has passed.
January 15, 2009
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 | Annualized 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 July 1, 2008 to December 31, 2008. 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 December 31, 2008
Expenses paid per $1,000† | $ 2.38 | |
Ending value (after expenses) | $1,008.40 |
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 December 31, 2008
Expenses paid per $1,000† | $ 2.40 | |
Ending value (after expenses) | $1,022.84 |
- Expenses are equal to the fund’s annualized expense ratio of .47%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS | ||||||||||
December 31, 2008 (Unaudited) | ||||||||||
Short-Term | Coupon | Maturity | Principal | |||||||
Investments—99.3% | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California—94.4% | ||||||||||
ABAG Finance Authority for | ||||||||||
Nonprofit Corporations, | ||||||||||
Revenue (Grauer Foundation for | ||||||||||
Education Project) (LOC; | ||||||||||
Comerica Bank) | 1.25 | 1/7/09 | 3,760,000 | a | 3,760,000 | |||||
ABAG Finance Authority for | ||||||||||
Nonprofit Corporations, | ||||||||||
Revenue (Northbay Healthcare | ||||||||||
Group) (LOC; JPMorgan Chase | ||||||||||
Bank) | 1.25 | 1/7/09 | 7,000,000 | a | 7,000,000 | |||||
Alameda County Industrial | ||||||||||
Development Authority, Revenue | ||||||||||
(P.J.’s Lumber, Inc. Project) | ||||||||||
(LOC; Comerica Bank) | 1.75 | 1/7/09 | 2,005,000 | a | 2,005,000 | |||||
Auburn Union School District, | ||||||||||
GO Notes, TRAN | 2.00 | 9/9/09 | 1,400,000 | 1,403,591 | ||||||
California, | ||||||||||
Economic Recovery Bonds | 5.00 | 1/1/09 | 4,220,000 | 4,220,000 | ||||||
California, | ||||||||||
Economic Recovery Bonds | 5.00 | 1/1/09 | 300,000 | 300,000 | ||||||
California, | ||||||||||
Economic Recovery Bonds | 3.50 | 7/1/09 | 100,000 | 100,733 | ||||||
California, | ||||||||||
Economic Recovery Bonds | 5.00 | 7/1/09 | 1,000,000 | 1,016,212 | ||||||
California, | ||||||||||
Economic Recovery Bonds | 5.00 | 7/1/09 | 5,500,000 | 5,590,874 | ||||||
California, | ||||||||||
Economic Recovery Bonds | ||||||||||
(Insured; FSA and Liquidity | ||||||||||
Facility; Dexia Credit Locale) | 2.00 | 1/7/09 | 3,900,000 | a | 3,900,000 | |||||
California, | ||||||||||
GO Notes | 5.00 | 3/1/09 | 250,000 | 251,073 | ||||||
California, | ||||||||||
GO Notes | ||||||||||
(Kindergarten-University) | ||||||||||
(LOC: Citibank NA, National | ||||||||||
Australia Bank and State | ||||||||||
Street Bank and Trust Co.) | 0.68 | 1/7/09 | 5,500,000 | a | 5,500,000 |
The Fund |
7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
California, | ||||||||||
GO Notes (Various Purpose) | 4.00 | 2/1/09 | 300,000 | 300,565 | ||||||
California, | ||||||||||
GO Notes (Various Purpose) | 4.50 | 2/1/09 | 150,000 | 150,267 | ||||||
California, | ||||||||||
GO Notes (Various Purpose) | 5.00 | 2/1/09 | 700,000 | 701,683 | ||||||
California Department of Water | ||||||||||
Resources, Power Supply | ||||||||||
Revenue (Insured; FSA and | ||||||||||
Liquidity Facility; Dexia | ||||||||||
Credit Locale) | 3.00 | 1/7/09 | 9,000,000 | a | 9,000,000 | |||||
California Department of Water | ||||||||||
Resources, Power Supply | ||||||||||
Revenue (Insured; FSA and | ||||||||||
Liquidity Facility; JPMorgan | ||||||||||
Chase Bank) | 3.00 | 1/7/09 | 400,000 | a | 400,000 | |||||
California Department of Water | ||||||||||
Resources, Power Supply | ||||||||||
Revenue (LOC; State Street | ||||||||||
Bank and Trust Co.) | 0.83 | 1/7/09 | 3,500,000 | a | 3,500,000 | |||||
California Department of Water | ||||||||||
Resources, Water Revenue, CP | ||||||||||
(Liquidity Facility; | ||||||||||
Landesbank Hessen-Thuringen | ||||||||||
Girozentrale) | 0.90 | 1/9/09 | 999,000 | 999,000 | ||||||
California Educational Facilities | ||||||||||
Authority, Revenue (Chapman | ||||||||||
University) (LOC; Bank of | ||||||||||
America) | 0.85 | 1/1/09 | 2,000,000 | a | 2,000,000 | |||||
California Educational Facilities | ||||||||||
Authority, Revenue, Refunding | ||||||||||
(Art Center College of Design) | ||||||||||
(LOC; Allied Irish Banks) | 1.10 | 1/7/09 | 3,750,000 | a | 3,750,000 | |||||
California Health Facilities | ||||||||||
Financing Authority, Health | ||||||||||
Facility Revenue (Catholic | ||||||||||
Healthcare West) (LOC; Bank of | ||||||||||
America) | 0.40 | 1/7/09 | 6,000,000 | a | 6,000,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
California Housing | ||||||||||
Finance Agency, | ||||||||||
Home Mortgage Revenue | 3.15 | 2/1/09 | 100,000 | 100,000 | ||||||
California Housing | ||||||||||
Finance Agency, | ||||||||||
Home Mortgage Revenue | ||||||||||
(Insured; FSA) | 3.75 | 2/1/09 | 125,000 | 125,045 | ||||||
California Infrastructure and | ||||||||||
Economic Development Bank, IDR | ||||||||||
(Bonny Doon Winery, Inc. | ||||||||||
Project) (LOC; Comerica Bank) | 1.85 | 1/7/09 | 2,955,000 | a | 2,955,000 | |||||
California Infrastructure and | ||||||||||
Economic Development Bank, IDR | ||||||||||
(Hydro System, Inc. Project) | ||||||||||
(LOC; Comerica Bank) | 1.85 | 1/7/09 | 1,960,000 | a | 1,960,000 | |||||
California Infrastructure and | ||||||||||
Economic Development Bank, IDR | ||||||||||
(Starter and Alternator | ||||||||||
Exchange, Inc. Project) (LOC; | ||||||||||
California State Teachers | ||||||||||
Retirement System) | 1.59 | 1/7/09 | 1,100,000 | a | 1,100,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, PCR | ||||||||||
(Southdown, Inc. Project) | ||||||||||
(LOC; Wachovia Bank) | 1.25 | 1/30/09 | 9,800,000 | a | 9,800,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(CR&R Inc. Project) (LOC; Bank | ||||||||||
of the West) | 1.48 | 1/7/09 | 6,000,000 | a | 6,000,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(GreenWaste Recovery, Inc. | ||||||||||
Project) (LOC; Comerica Bank) | 1.50 | 1/7/09 | 6,800,000 | a | 6,800,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Metropolitan Recycling Inc.) | ||||||||||
(LOC; Comerica Bank) | 1.50 | 1/7/09 | 2,885,000 | a | 2,885,000 |
The Fund |
9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Metropolitan Recycling Inc.) | ||||||||||
(LOC; Comerica Bank) | 1.50 | 1/7/09 | 970,000 | a | 970,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Northern Recycling and Waste | ||||||||||
Services, LLC Project) (LOC; | ||||||||||
Union Bank of California) | 1.50 | 1/7/09 | 3,335,000 | a | 3,335,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Pena’s Disposal, Inc. | ||||||||||
Project) (LOC; Comerica Bank) | 1.50 | 1/7/09 | 2,510,000 | a | 2,510,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Rainbow Disposal Company Inc. | ||||||||||
Project) (LOC; Union Bank of | ||||||||||
California) | 1.50 | 1/7/09 | 3,910,000 | a | 3,910,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(South Tahoe Refuse Company | ||||||||||
Project) (LOC; Union Bank of | ||||||||||
California) | 1.05 | 1/7/09 | 5,540,000 | a | 5,540,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Sunset Waste Paper, Inc. | ||||||||||
Project) (LOC; Comerica Bank) | 1.05 | 1/7/09 | 3,800,000 | a | 3,800,000 | |||||
California Pollution Control | ||||||||||
Financing Authority, SWDR | ||||||||||
(Valley Vista Services, Inc. | ||||||||||
Project) (LOC; Comerica Bank) | 1.50 | 1/7/09 | 2,000,000 | a | 2,000,000 | |||||
California School Boards | ||||||||||
Association Finance | ||||||||||
Corporation, COP, TRAN | ||||||||||
(California School Cash | ||||||||||
Reserve Program) (LOC; U.S. | ||||||||||
Bank NA) | 3.00 | 7/6/09 | 6,000,000 | 6,040,749 |
10
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Adventist Health System/West) | ||||||||||
(Insured; Assured Guaranty and | ||||||||||
Liquidity Facility; Wells Fargo Bank) | 0.67 | 1/7/09 | 7,000,000 | a | 7,000,000 | |||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Kaiser Permanente) | 0.35 | 1/7/09 | 7,150,000 | a | 7,150,000 | |||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Kaiser Permanente) | 0.35 | 1/7/09 | 6,200,000 | a | 6,200,000 | |||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Rady Children’s Hospital— | ||||||||||
San Diego) (LOC; Wachovia Bank) | 0.95 | 1/1/09 | 3,000,000 | a | 3,000,000 | |||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Rady Children’s Hosptial— | ||||||||||
San Diego) (LOC; Wachovia Bank) | 1.10 | 1/7/09 | 10,550,000 | a | 10,550,000 | |||||
Concord, | ||||||||||
MFMR (Arcadian Apartments) | ||||||||||
(LOC; FNMA) | 0.60 | 1/7/09 | 1,550,000 | a | 1,550,000 | |||||
Deutsche Bank Spears/Lifers Trust | ||||||||||
(Anaheim Redevelopment Agency, | ||||||||||
Tax Allocation Revenue, | ||||||||||
Refunding (Anaheim Merged | ||||||||||
Redevelopment Project Area)) | ||||||||||
(Liquidity Facility; Deutsche | ||||||||||
Bank AG and LOC; Deutsche | ||||||||||
Bank AG) | 1.20 | 1/7/09 | 5,200,000 | a,b | 5,200,000 | |||||
Irvine Ranch Water District, | ||||||||||
GO (Improvement District | ||||||||||
Numbers 105, 140, 240 and 250) | ||||||||||
(LOC; Bank of America) | 0.95 | 1/1/09 | 5,525,000 | a | 5,525,000 | |||||
Kern County Board of Education, | ||||||||||
TRAN | 2.00 | 9/8/09 | 1,000,000 | 1,002,830 |
The Fund |
11 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
Loomis Union School District, | ||||||||||
GO Notes, TRAN | 2.00 | 9/9/09 | 2,300,000 | 2,305,900 | ||||||
Los Angeles County Housing | ||||||||||
Authority, MFHR, Refunding | ||||||||||
(Meadowridge Apartments | ||||||||||
Project) (LOC; FNMA) | 1.15 | 1/7/09 | 1,760,000 | a | 1,760,000 | |||||
Los Angeles County School and | ||||||||||
Community College Districts, | ||||||||||
COP, TRAN (Los Angeles County | ||||||||||
Schools Pooled Financing | ||||||||||
Program) (Insured; FSA) | 3.50 | 6/30/09 | 2,860,000 | 2,885,655 | ||||||
Los Angeles Department of | ||||||||||
Airports, Senior Revenue, | ||||||||||
Refunding (Los Angeles | ||||||||||
International Airport) | 3.00 | 5/15/09 | 545,000 | 545,782 | ||||||
Los Angeles Municipal Improvement | ||||||||||
Corporation, LR, CP (LOC; Bank | ||||||||||
of America) | 0.95 | 3/17/09 | 4,800,000 | 4,800,000 | ||||||
Los Angeles Unified School | ||||||||||
District, GO Notes, TRAN | 3.00 | 7/30/09 | 5,000,000 | 5,042,029 | ||||||
Manteca Redevelopment Agency, | ||||||||||
Subordinate Tax Allocation | ||||||||||
Revenue, Refunding (Amended | ||||||||||
Merged Project Area) (LOC; | ||||||||||
State Street Bank and Trust Co.) | 1.20 | 1/1/09 | 2,000,000 | a | 2,000,000 | |||||
Metropolitan Water District of | ||||||||||
Southern California, Water | ||||||||||
Revenue, Refunding | 3.00 | 7/1/09 | 1,000,000 | 1,006,362 | ||||||
Metropolitan Water District of | ||||||||||
Southern California, | ||||||||||
Waterworks GO Notes, Refunding | 8.00 | 3/1/09 | 2,000,000 | 2,020,115 | ||||||
Orange County Fire Authority, | ||||||||||
GO Notes, TRAN | 3.00 | 6/30/09 | 4,000,000 | 4,027,259 | ||||||
Pittsburg Redevelopment Agency, | ||||||||||
Subordinate Tax Allocation | ||||||||||
Revenue (Los Medanos Community | ||||||||||
Development Project) | ||||||||||
(Liquidity Facility: | ||||||||||
California State Teachers | ||||||||||
Retirement System and State | ||||||||||
Street Bank and Trust Co.) | 1.20 | 1/1/09 | 14,800,000 | a | 14,800,000 |
12
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California (continued) | ||||||||||
Puttable Floating Option Tax | ||||||||||
Exempt Receipts (California | ||||||||||
Statewide Communities | ||||||||||
Development Authority, MFHR | ||||||||||
(La Mision Village Apartments | ||||||||||
Project)) (Liquidity Facility; | ||||||||||
FHLMC and LOC; FHLMC) | 1.43 | 1/7/09 | 6,205,000 | a,b | 6,205,000 | |||||
Richmond, | ||||||||||
Wastewater Revenue, Refunding | ||||||||||
(LOC; Union Bank of California) | 1.00 | 1/7/09 | 755,000 | a | 755,000 | |||||
San Diego County, | ||||||||||
COP (Friends of Chabad | ||||||||||
Lubavitch) (LOC; Comerica Bank) | 0.89 | 1/7/09 | 1,500,000 | a | 1,500,000 | |||||
San Jose Financing Authority, | ||||||||||
LR (Civic Center Garage | ||||||||||
Refunding Project) (LOC: Bank | ||||||||||
of America and California | ||||||||||
State Teachers | ||||||||||
Retirement System) | 1.00 | 1/7/09 | 8,290,000 | a | 8,290,000 | |||||
San Pablo Redevelopment Agency, | ||||||||||
Subordinate Tax Allocation | ||||||||||
Revenue (Tenth Township | ||||||||||
Redevelopment Project) (LOC; | ||||||||||
Union Bank of California) | 1.25 | 1/1/09 | 2,000,000 | a | 2,000,000 | |||||
Santa Clara Unified School | ||||||||||
District, GO Notes, TRAN | 2.00 | 6/29/09 | 1,800,000 | 1,803,036 | ||||||
Sequoia Union High School | ||||||||||
District, GO Notes | 3.00 | 7/1/09 | 1,900,000 | 1,912,090 | ||||||
Tahoe Forest Hospital District, | ||||||||||
Revenue (LOC; U.S. Bancorp) | 1.20 | 1/1/09 | 5,900,000 | a | 5,900,000 | |||||
Tustin Community Redevelopment | ||||||||||
Agency, Revenue (Liquidity | ||||||||||
Facility; Citigroup NA and | ||||||||||
LOC; Citigroup NA) | 1.35 | 1/7/09 | 645,000 | a,b | 645,000 | |||||
University of California Regents, | ||||||||||
General Revenue (Insured; FSA) | 4.00 | 5/15/09 | 500,000 | 503,616 | ||||||
West Covina Public Financing | ||||||||||
Authority, LR, Refunding | ||||||||||
(Public Facilities Project) | ||||||||||
(LOC; California State | ||||||||||
Teachers Retirement System) | 1.22 | 1/7/09 | 2,600,000 | a | 2,600,000 |
The Fund |
13 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
U.S. Related—4.9% | ||||||||||
Puerto Rico Commonwealth, | ||||||||||
Public Improvement GO Notes, | ||||||||||
Refunding (Insured; FSA and | ||||||||||
Liquidity Facility; Dexia | ||||||||||
Credit Locale) | 3.35 | 1/7/09 | 8,100,000 | a | 8,100,000 | |||||
Puttable Floating Option Tax | ||||||||||
Exempt Receipts (Puerto Rico | ||||||||||
Highways and Transportation | ||||||||||
Authority, Highway Revenue) | ||||||||||
(Liquidity Facility; Dexia | ||||||||||
Credit Locale and LOC; Dexia | ||||||||||
Credit Locale) | 3.52 | 1/7/09 | 4,480,000 | a,b | 4,480,000 | |||||
Total Investments (cost $254,744,466) | 99.3% | 254,744,466 | ||||||||
Cash and Receivables (Net) | .7% | 1,876,511 | ||||||||
Net Assets | 100.0% | 256,620,977 |
a | Variable rate demand note—rate shown is the interest rate in effect at December 31, 2008. Maturity date represents the next demand date, or the ultimate maturity date if earlier. |
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 December 31, 2008, these securities amounted to $16,530,000 or 6.4% of net assets. |
14
Summary of Abbreviations | ||||||
ABAG | Association of Bay Area Governments | ACA | American Capital Access | |||
AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company | |||
AMBAC | American Municipal Bond | |||||
Assurance Corporation | ARRN | Adjustable Rate Receipt Notes | ||||
BAN | Bond Anticipation Notes | BIGI | Bond Investors Guaranty Insurance | |||
BPA | Bond Purchase Agreement | CGIC | Capital Guaranty Insurance Company | |||
CIC | Continental Insurance 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 | FNMA | Federal National | |||
Corporation | 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 | |||
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 (Unaudited) (continued) | ||||||||||||
Summary of Combined Ratings (Unaudited) | ||||||||||||
Fitch | or | Moody’s | or | Standard & Poor’s | Value (%)† | |||||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 92.6 | |||||||||
AAA,AA,A c | Aaa,Aa,A c | AAA,AA,A c | 7.4 | |||||||||
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. |
16
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008 (Unaudited)
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments | 254,744,466 | 254,744,466 | ||
Cash | 1,015,803 | |||
Interest receivable | 1,078,259 | |||
Prepaid expenses | 37,412 | |||
256,875,940 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2 | 81,762 | |||
Dividend payable | 171,268 | |||
Payable for shares of Beneficial Interest redeemed | 1,933 | |||
254,963 | ||||
Net Assets ($) | 256,620,977 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 256,613,412 | |||
Accumulated net realized gain (loss) on investments | 7,565 | |||
Net Assets ($) | 256,620,977 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 256,613,412 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 | |||
See notes to financial statements. |
The Fund |
17 |
STATEMENT OF OPERATIONS Six Months Ended December 31, 2008 (Unaudited) |
Investment Income ($): | ||
Interest Income | 2,812,748 | |
Expenses: | ||
Management fee—Note 2 | 600,676 | |
Treasury insurance expense—Note 1(f) | 32,487 | |
Trustees’ fees—Note 2 | 11,097 | |
Total Expenses | 644,260 | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (11,097) | |
Net Expenses | 633,163 | |
Investment Income—Net | 2,179,585 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 803 | |
Net Increase in Net Assets Resulting from Operations | 2,180,388 | |
See notes to financial statements. |
18
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2008 | Year Ended | |||
(Unaudited) | June 30, 2008 | |||
Operations ($): | ||||
Investment income—net | 2,179,585 | 5,253,002 | ||
Net realized gain (loss) on investments | 803 | 6,762 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 2,180,388 | 5,259,764 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (2,179,585) | (5,292,379) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 314,730,137 | 785,737,822 | ||
Dividends reinvested | 441,035 | 1,230,486 | ||
Cost of shares redeemed | (318,233,730) | (635,245,659) | ||
Increase (Decrease) in Net Assets | ||||
from Beneficial Interest Transactions | (3,062,558) | 151,722,649 | ||
Total Increase (Decrease) in Net Assets | (3,061,755) | 151,690,034 | ||
Net Assets ($): | ||||
Beginning of Period | 259,682,732 | 107,992,698 | ||
End of Period | 256,620,977 | 259,682,732 | ||
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.
Six Months Ended | ||||||||||||
December 31, 2008 | Year Ended June 30, | |||||||||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .008 | .027 | .032 | .025 | .014 | .005 | ||||||
Distributions: | ||||||||||||
Dividends from investment | ||||||||||||
income—net | (.008) | (.027) | (.032) | (.025) | (.014) | (.005) | ||||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | 1.67a | 2.72 | 3.21 | 2.50 | 1.34 | .53 | ||||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .48a | .46 | .45 | .45 | .46 | .45 | ||||||
Ratio of net expenses | ||||||||||||
to average net assets | .47a | .45 | .45 | .45 | .45 | .45 | ||||||
Ratio of net investment income | ||||||||||||
to average net assets | 1.63a | 2.57 | 3.16 | 2.49 | 1.37 | .52 | ||||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 256,621 | 259,683 | 107,993 | 72,067 | 72,141 | 57,791 | ||||||
a Annualized. | ||||||||||||
See notes to financial statements. |
20
NOTES TO FINANCIAL STATEMENTS ( U n a u d i t e d )
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 and California income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary ofThe Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
Effective July 1, 2008, BNY Mellon reorganized and consolidated a number of its banking and trust company subsidiaries.As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of NewYork Mellon (formerly,The Bank of NewYork).
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 $1.00.
The fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Trustees to represent the fair value of the fund’s investments.
The Fund |
21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The fund adopted Statement of Financial Accounting Standards No. 157 “FairValue Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the fund’s investments relating to FAS 157.These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical securities. Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
The following is a summary of the inputs used as of December 31, 2008 in valuing the fund’s investments carried at fair value:
Investments in | ||
Valuation Inputs | Securities ($) | |
Level 1—Quoted Prices | 0 | |
Level 2—Other Significant Observable Inputs | 254,744,466 | |
Level 3—Significant Unobservable Inputs | 0 | |
Total | 254,744,466 |
(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.
22
Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
In March 2008, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.
(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,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(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 gains, 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 gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(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
The Fund |
23 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Code, and to make distributions of income and net realized capital gain, sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended December 31, 2008, the fund did not have any liabilities for any unrecognized tax positions. The fund recognizes interest and penalties, if any, related to unrecognized tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended June 30, 2008 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended June 30, 2008 was all tax-exempt income.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2008, 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).
(f) Treasury’s Temporary Guarantee Program: The fund has entered into a Guarantee Agreement with the United States Department of the Treasury (the “Treasury”) to participate in the Treasury’s Temporary Guarantee Program for Money Market Funds (the “Program”).
Under the Program, the Treasury guarantees the share price of shares of the fund held by shareholders as of September 19, 2008 at $1.00 per share if the fund’s net asset value per share falls below $0.995 (a “Guarantee Event”) and the fund liquidates. Recovery under the Program is subject to certain conditions and limitations.
Fund shares acquired by investors after September 19, 2008 that increase the number of fund shares the investor held at the close of business on September 19, 2008 are not eligible for protection under the Program. In addition, fund shares acquired by investors who did
24
not hold fund shares at the close of business on September 19, 2008 are not eligible for protection under the Program.
The Program, which was originally set to expire on December 18, 2008, has been extended by the Treasury until April 30, 2009, after which the Secretary of theTreasury will review the need for, and terms of, the Program. Participation in the initial term and the extended period of the Program required a payment to the Treasury in the amount of .01% and .015%, respectively, of the fund’s shares outstanding as of September 19, 2008 (valued at $1.00 per share).
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, The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) and Dreyfus Investment 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 tele-
The Fund |
25 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
phone 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 Chairman of the compensation committee receives $900 per meeting and, with respect to audit committee meetings prior to April 12, 2008, the Chair of the audit committee received $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, Dreyfus Investment Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds, Dreyfus Investment 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 Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level.This undertaking is voluntary and not contractual and may be terminated at any time. During the period ended December 31, 2008, there was no expense reimbursement pursuant to the undertaking.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $81,762.
26
NOTE 3—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. The terms of the line of credit agreement limit the amount of individual fund borrowings. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Effective October 15, 2008 the $300 million unsecured line of credit was terminated. During the period ended December 31, 2008, the fund did not borrow under the lines of credit.
The Fund |
27 |
NOTES
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Dreyfus BASIC Massachusetts Municipal Money Market Fund
SEMIANNUAL REPORT December 31, 2008
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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 |
16 | Statement of Assets and Liabilities |
17 | Statement of Operations |
18 | Statement of Changes in Net Assets |
19 | Financial Highlights |
20 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover | |
Dreyfus BASIC Massachusetts Municipal Money Market Fund |
The Fund |
![](https://capedge.com/proxy/N-CSR/0000717341-09-000005/bmammmncsrx4x1.jpg)
A LETTER FROM THE CEO Dear Shareholder: |
We are pleased to present this semiannual report for Dreyfus BASIC Massachusetts Municipal Money Market Fund, covering the six-month period from July 1, 2008, through December 31, 2008.
The second half of 2008 was one of the most difficult periods in decades for the financial markets.A credit crunch that began in 2007 exploded in mid-2008 into a global financial crisis, resulting in the failures of major financial institutions, a deep and prolonged recession and lower investment values across a broad range of asset classes. Governments and regulators throughout the world moved aggressively to curtail the damage, implementing unprecedented reductions of short-term interest rates, massive injections of liquidity into the banking system, government bailouts of struggling companies and plans for massive economic stimulus programs. Money market funds were not immune to the downturn, and several U.S. money market funds were unable to maintain a stable net asset value. The federal government subsequently stepped in with a program for guaranteeing participating funds’ assets at stated levels, while others received financial support from their sponsors.
Although we expect the U.S. and global economies to remain weak until longstanding imbalances have worked their way out of the system, the financial markets currently appear to have priced in investors’ generally low expectations. In previous recessions, however, the markets have tended to anticipate economic improvement before it occurs, potentially leading to major rallies when few expected them.That’s why it makes sense to remain disciplined, maintain a long-term perspective and adopt a consistent asset allocation strategy that reflects one’s future goals and attitudes toward risk.As always, we urge you to consult with your financial advisor, who can recommend the course of action that is right for you.
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.
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Jonathan R. Baum Chief Executive Officer The Dreyfus Corporation January 15, 2009 |
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2008, through December 31, 2008, as provided by J. Christopher Nicholl, Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2008, Dreyfus BASIC Massachusetts Municipal Money Market Fund produced an annualized yield of 1.69% . Taking into account the effects of compounding, the fund also produced an annualized effective yield of 1.70% .1
The money markets proved to be volatile during the reporting period, as an intensifying financial crisis produced dislocations that caused yields of some tax-exempt instruments to spike temporarily. By the reporting period’s end, yields had subsided to historically low levels commensurate with the Federal Reserve Board’s (the “Fed”) unprecedented low target for short-term interest rates.
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
The Fund |
3 |
DISCUSSION OF FUND PERFORMANCE (continued) |
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 weighted average maturity to maintain current yields for as long as practical.At other times, we try to maintain a neutral weighted average maturity.
Financial Crisis Produced Heightened Volatility
The second half of 2008 was a time of unprecedented challenges in the global financial markets. Soon after the reporting period began, a credit crunch originating in the U.S. sub-prime mortgage market mushroomed into a full-blown, global financial crisis. A wave of credit-rating downgrades over the summer of 2008 arising from massive sub-prime related losses culminated with the failures of several major financial institutions. When Lehman Brothers declared bankruptcy in September,lenders grew reluctant to extend credit to even their best customers, sharply limiting the availability of financing for many businesses. Faced with potentially dire economic consequences, government officials and central banks intervened with massive injections of liquidity for the banking system, rescue packages for corporations and record-low short-term interest to thaw frozen credit markets.
The crisis led to challenging liquidity conditions in some segments of the municipal money markets, including variable-rate demand notes (VRDNs). Unlike the effects of turmoil in the taxable commercial paper market on some prime money market funds, dislocations in the VRDN market did not threaten municipal money market funds’ net asset values, but they caused yields on these short-term instruments to skyrocket briefly.To shore up investor confidence, the U.S. government implemented theTemporary Guarantee Program specifically for money market funds, and the affected markets began to stabilize.
Meanwhile, an ongoing economic slowdown gained momentum as unemployment rates climbed and housing prices continued to fall. Due to slackening demand for energy and building materials, commodity prices retreated sharply from record highs. In late November, the National Bureau of Economic Research confirmed that the U.S. economy has been mired in a recession since late 2007.
4
Like many other states, Massachusetts saw its fiscal outlook deteriorate along with economic conditions. The state is faced with projected budget deficits in upcoming fiscal years, and is exploring ways to bridge the gap.
A More Defensive Posture
We responded to the financial crisis by intensifying our focus on credit research. We pared down the list of approved banks with which the fund will do business, and we shortened the fund’s weighted average maturity to maintain ready liquidity. Still, whenever possible, we took advantage of robust tax-exempt yields on VRDNs, which trended as high as 6% due to temporary imbalances between supply and demand.
When markets began to calm, we lengthened the fund’s weighted average maturity to capture higher yields among longer-dated instruments. However, we remained cautious through year-end, maintaining the fund’s weighted average maturity in a range we consider modestly shorter than industry averages.
Focus on Safety and Liquidity
As 2009 begins, the economy has continued to weaken and financial markets have remained fragile. Therefore, we have continued to emphasize credit quality and liquidity over income, even as yields of municipal money market instruments have declined to levels commensurate with the Fed’s 0% to 0.25% target for the federal funds rate, the lowest level on record.
January 15, 2009
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 | Annualized 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 July 1, 2008 to December 31, 2008. 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 December 31, 2008
Expenses paid per $1,000† | $ 2.38 | |
Ending value (after expenses) | $1,008.50 |
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 December 31, 2008
Expenses paid per $1,000† | $ 2.40 | |
Ending value (after expenses) | $1,022.84 |
- Expenses are equal to the fund’s annualized expense ratio of .47%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS | ||||||||||
December 31, 2008 (Unaudited) | ||||||||||
Short-Term | Coupon | Maturity | Principal | |||||||
Investments—99.0% | Rate (%) | Date | Amount ($) | Value ($) | ||||||
California—3.4% | ||||||||||
California, | ||||||||||
GO Notes | ||||||||||
(Kindergarten-University) | ||||||||||
(LOC: Citibank NA, National | ||||||||||
Australia Bank and State | ||||||||||
Street Bank and Trust Co.) | 0.85 | 1/1/09 | 1,600,000 | a | 1,600,000 | |||||
California Statewide Communities | ||||||||||
Development Authority, Revenue | ||||||||||
(Chabad of California) (LOC; | ||||||||||
Comerica Bank) | 0.89 | 1/7/09 | 2,785,000 | a | 2,785,000 | |||||
Irvine Assessment District Number | ||||||||||
97-16, Limited Obligation | ||||||||||
Improvement Bonds (LOC; State | ||||||||||
Street Bank and Trust Co.) | 0.85 | 1/1/09 | 1,500,000 | a | 1,500,000 | |||||
Iowa—3.5% | ||||||||||
Iowa Finance Authority, | ||||||||||
Health Facilities Revenue | ||||||||||
(Iowa Health System) (Insured; | ||||||||||
Assured Guaranty and Liquidity | ||||||||||
Facility Landesbank | ||||||||||
Baden-Wurttemberg) | 0.95 | 1/7/09 | 6,000,000 | a | 6,000,000 | |||||
Massachusetts—80.6% | ||||||||||
Boston, | ||||||||||
GO Notes | 5.00 | 4/1/09 | 6,360,000 | 6,405,579 | ||||||
Braintree, | ||||||||||
GO Notes, BAN | 2.50 | 8/14/09 | 3,700,000 | 3,720,313 | ||||||
Massachusetts, | ||||||||||
Consolidated Loan (Liquidity | ||||||||||
Facility; Dexia Credit Locale) | 1.20 | 1/1/09 | 2,200,000 | a | 2,200,000 | |||||
Massachusetts, | ||||||||||
Consolidated Loan (LOC; Bank | ||||||||||
of America) | 1.15 | 1/1/09 | 1,500,000 | a | 1,500,000 | |||||
Massachusetts, | ||||||||||
CP (LOC; JPMorgan Chase Bank) | 1.52 | 1/5/09 | 2,500,000 | 2,500,000 | ||||||
Massachusetts Development Finance | ||||||||||
Agency, Higher Education | ||||||||||
Revenue, Refunding (Smith | ||||||||||
College Issue) | 0.75 | 1/7/09 | 5,000,000 | a | 5,000,000 |
The Fund |
7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
Massachusetts (continued) | ||||||||||
Massachusetts Development Finance | ||||||||||
Agency, Multi-Mode Revenue | ||||||||||
(Worcester Academy Project) | ||||||||||
(LOC; Allied Irish Banks) | 1.25 | 1/7/09 | 2,500,000 | a | 2,500,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Beaver | ||||||||||
Country Day School Issue) | ||||||||||
(LOC; Allied Irish Banks) | 1.50 | 1/7/09 | 4,400,000 | a | 4,400,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Boston | ||||||||||
Children’s Museum Issue) (LOC; | ||||||||||
Royal Bank of Scotland PLC) | 0.70 | 1/7/09 | 3,365,000 | a | 3,365,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Boston | ||||||||||
University Issue) (LOC; Bank | ||||||||||
of America) | 0.90 | 1/1/09 | 3,000,000 | a | 3,000,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Boston | ||||||||||
University Issue) (LOC; BNP | ||||||||||
Paribas) | 0.65 | 1/7/09 | 5,000,000 | a | 5,000,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Boston | ||||||||||
University Issue) (LOC; Royal | ||||||||||
Bank of Scotland PLC) | 0.70 | 1/1/09 | 1,400,000 | a | 1,400,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Elderhostel, | ||||||||||
Inc. Issue) (LOC; Royal Bank | ||||||||||
of Scotland PLC) | 1.25 | 1/7/09 | 2,920,000 | a | 2,920,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Exploration | ||||||||||
School, Inc. Issue) (LOC; TD | ||||||||||
Banknorth NA) | 1.25 | 1/7/09 | 2,680,000 | a | 2,680,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Fay School | ||||||||||
Issue) (LOC; TD Banknorth NA) | 1.25 | 1/7/09 | 4,300,000 | a | 4,300,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
Massachusetts (continued) | ||||||||||
Massachusetts Development | ||||||||||
Finance Agency, | ||||||||||
Revenue (Harvard | ||||||||||
University Issue) | 0.70 | 1/7/09 | 6,000,000 | a | 6,000,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Saint | ||||||||||
Peter-Marian Issue) | ||||||||||
(LOC; Bank of America) | 0.80 | 1/7/09 | 1,010,000 | a | 1,010,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Smith College | ||||||||||
Issue) (Liquidity Facility; | ||||||||||
JPMorgan Chase Bank) | 2.00 | 1/7/09 | 2,500,000 | a | 2,500,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Sophia Snow | ||||||||||
House, Inc. Project) (LOC; | ||||||||||
Bank of America) | 0.70 | 1/7/09 | 1,355,000 | a | 1,355,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Worcester | ||||||||||
Academy Issue) (LOC; Allied | ||||||||||
Irish Banks) | 1.43 | 1/7/09 | 3,000,000 | a | 3,000,000 | |||||
Massachusetts Development Finance | ||||||||||
Agency, Revenue (Worcester | ||||||||||
Polytechnic Institute) (LOC; | ||||||||||
TD Banknorth NA) | 1.15 | 1/7/09 | 2,500,000 | a | 2,500,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Bentley | ||||||||||
College Issue) (LOC; JPMorgan | ||||||||||
Chase Bank) | 0.65 | 1/7/09 | 4,500,000 | a | 4,500,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Capital | ||||||||||
Asset Program Issue) (LOC; | ||||||||||
Bank of America) | 1.55 | 1/1/09 | 2,400,000 | a | 2,400,000 |
The Fund |
9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
Massachusetts (continued) | ||||||||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Great | ||||||||||
Brook Valley Health Center | ||||||||||
Issue) (LOC; TD Banknorth NA) | 0.90 | 1/7/09 | 1,600,000 | a | 1,600,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Hillcrest | ||||||||||
Extended Care Services Issue) | ||||||||||
(LOC; Bank of America) | 0.75 | 1/7/09 | 3,200,000 | a | 3,200,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Museum of | ||||||||||
Fine Arts Issue) (Liquidity | ||||||||||
Facility; Bank of America) | 0.80 | 1/1/09 | 3,000,000 | a | 3,000,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Partners | ||||||||||
HealthCare System—Capital | ||||||||||
Asset Program Issue) (Insured; | ||||||||||
FSA and Liquidity Facility: | ||||||||||
Bayerische Landesbank and | ||||||||||
JPMorgan Chase Bank) | 2.75 | 1/7/09 | 2,900,000 | a | 2,900,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Partners | ||||||||||
HealthCare System Issue) | 0.80 | 1/1/09 | 1,300,000 | a | 1,300,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Partners | ||||||||||
HealthCare System Issue) (LOC; | ||||||||||
Citibank NA) | 0.95 | 1/7/09 | 6,000,000 | a | 6,000,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Peabody | ||||||||||
Essex Museum Issue) (LOC; Bank | ||||||||||
of America) | 1.15 | 1/7/09 | 760,000 | a | 760,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Tufts | ||||||||||
University Issue) | 0.80 | 1/1/09 | 3,200,000 | a | 3,200,000 |
10
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
Massachusetts (continued) | ||||||||||
Massachusetts Health and Educational | ||||||||||
Facilities Authority, Revenue | ||||||||||
(Tufts University Issue) (Liquidity | ||||||||||
Facility; Bank of America) | 0.70 | 1/1/09 | 800,000 | a | 800,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (University | ||||||||||
of Massachusetts Issue) (LOC; | ||||||||||
Dexia Credit Locale) | 1.90 | 1/7/09 | 4,600,000 | a | 4,600,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Wellesley | ||||||||||
College Issue) | 0.75 | 1/1/09 | 2,000,000 | a | 2,000,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Wellesley | ||||||||||
College Issue) | 0.25 | 1/7/09 | 4,275,000 | a | 4,275,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Williams | ||||||||||
College Issue) | 0.75 | 1/7/09 | 3,484,000 | a | 3,484,000 | |||||
Massachusetts Health and | ||||||||||
Educational Facilities | ||||||||||
Authority, Revenue (Williams | ||||||||||
College Issue) | 0.80 | 1/7/09 | 2,900,000 | a | 2,900,000 | |||||
Massachusetts Housing Finance | ||||||||||
Agency, Housing Revenue | ||||||||||
(Insured; FSA and Liquidity | ||||||||||
Facility; Dexia Credit Locale) | 3.00 | 1/7/09 | 3,500,000 | a | 3,500,000 | |||||
Massachusetts Industrial Finance | ||||||||||
Agency, Higher Education | ||||||||||
Revenue (Southern New England | ||||||||||
School of Law Issue) (LOC; | ||||||||||
Bank of America) | 0.70 | 1/7/09 | 1,125,000 | a | 1,125,000 | |||||
Massachusetts Industrial Finance | ||||||||||
Agency, IDR, Refunding (Nova | ||||||||||
Realty Trust) (LOC; Bank of America) | 1.22 | 1/7/09 | 3,000,000 | a,b | 3,000,000 | |||||
Massachusetts School Building | ||||||||||
Authority, CP (LOC; Bank of | ||||||||||
Nova Scotia) | 1.55 | 2/11/09 | 2,000,000 | 2,000,000 |
The Fund |
11 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
Massachusetts (continued) | ||||||||||
Massachusetts Water Resources | ||||||||||
Authority, Multi-Modal | ||||||||||
Subordinated General Revenue, | ||||||||||
Refunding (LOC; Landesbank | ||||||||||
Hessen-Thuringen Girozentrale) | 0.90 | 1/1/09 | 640,000 | a | 640,000 | |||||
Nantucket, | ||||||||||
GO Notes, BAN | 2.25 | 2/27/09 | 5,500,000 | 5,500,835 | ||||||
Somerville, | ||||||||||
GO Notes, BAN | 2.00 | 12/18/09 | 4,400,000 | 4,432,157 | ||||||
Woburn, | ||||||||||
GO Notes, BAN | 2.25 | 7/24/09 | 4,000,000 | 4,013,843 | ||||||
Missouri—5.0% | ||||||||||
Missouri Health and Educational | ||||||||||
Facilities Authority, Health | ||||||||||
Facilities Revenue (Bethesda | ||||||||||
Health Group, Inc.) (LOC; U.S. | ||||||||||
Bancorp) | 1.15 | 1/1/09 | 2,495,000 | a | 2,495,000 | |||||
Missouri Health and Educational | ||||||||||
Facilities Authority, Health | ||||||||||
Facilities Revenue (SSM Health | ||||||||||
Care) (Insured; FSA and | ||||||||||
Liquidity Facility; Citigroup) | 1.75 | 1/7/09 | 6,000,000 | a | 6,000,000 | |||||
New Hampshire—1.3% | ||||||||||
New Hampshire Health and Education | ||||||||||
Facilities Authority, Revenue | ||||||||||
(New London Hospital Issue) | ||||||||||
(LOC; Fortis Bank) | 4.75 | 1/7/09 | 2,300,000 | a | 2,300,000 | |||||
New York—3.7% | ||||||||||
Long Island Power Authority, | ||||||||||
Electric System Subordinated | ||||||||||
Revenue (LOC; Bayerische | ||||||||||
Landesbank) | 1.10 | 1/1/09 | 800,000 | a | 800,000 | |||||
New York City Municipal Water | ||||||||||
Finance Authority, Water and | ||||||||||
Sewer System Second General | ||||||||||
Resolution Revenue (Liquidity | ||||||||||
Facility; Fortis Bank) | 0.80 | 1/1/09 | 4,500,000 | a | 4,500,000 |
12
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
New York City Transitional Finance | ||||||||||
Authority, Revenue (New York | ||||||||||
City Recovery) (Liquidity | ||||||||||
Facility; Citigroup Global | ||||||||||
Market Holdings) | 1.00 | 1/1/09 | 1,000,000 | a | 1,000,000 | |||||
Texas—1.5% | ||||||||||
Austin, | ||||||||||
Water and Wastewater System | ||||||||||
Revenue, Refunding (Insured; | ||||||||||
FSA and Liquidity Facility; | ||||||||||
Landesbank Baden-Wurttemberg) | 3.00 | 1/7/09 | 2,500,000 | a | 2,500,000 | |||||
Total Investments (cost $169,866,727) | 99.0% | 169,866,727 | ||||||||
Cash and Receivables (Net) | 1.0% | 1,731,276 | ||||||||
Net Assets | 100.0% | 171,598,003 |
a | Variable rate demand note—rate shown is the interest rate in effect at December 31, 2008. Maturity date represents the next demand date, or the ultimate maturity date if earlier. |
b | Security exempt from registration under Rule 144A of the Securities Act of 1933.This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2008, this security amounted to $3,000,000 or 1.7% of net assets. |
The Fund |
13 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Summary of Abbreviations | ||||||
ABAG | Association of Bay Area Governments | ACA | American Capital Access | |||
AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company | |||
AMBAC | American Municipal Bond | |||||
Assurance Corporation | ARRN | Adjustable Rate Receipt Notes | ||||
BAN | Bond Anticipation Notes | BIGI | Bond Investors Guaranty Insurance | |||
BPA | Bond Purchase Agreement | CGIC | Capital Guaranty Insurance Company | |||
CIC | Continental Insurance 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 | FNMA | Federal National | |||
Corporation | 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 | |||
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 |
14
Summary of Combined Ratings (Unaudited) | ||||||||||
Fitch | or | Moody’s | or | Standard & Poor’s | Value (%)† | |||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 89.2 | |||||||
AAA,AA,A c | Aaa,Aa,A c | AAA,AA,A c | 9.0 | |||||||
Not Rated d | Not Rated d | Not Rated d | 1.8 | |||||||
100.0 | ||||||||||
† Based on total investments. |
c | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
d | 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. |
The Fund |
15 |
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008 (Unaudited)
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments | 169,866,727 | 169,866,727 | ||
Cash | 1,635,794 | |||
Interest receivable | 386,231 | |||
Prepaid expenses | 94,226 | |||
171,982,978 | ||||
Liabilities ($): | ||||
Dividend payable | 104,588 | |||
Payable for shares of Beneficial Interest redeemed | 280,387 | |||
384,975 | ||||
Net Assets ($) | 171,598,003 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 171,564,998 | |||
Accumulated net realized gain (loss) on investments | 33,005 | |||
Net Assets ($) | 171,598,003 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 171,576,083 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 | |||
See notes to financial statements. |
16
STATEMENT OF OPERATIONS Six Months Ended December 31, 2008 (Unaudited) |
Investment Income ($): | ||
Interest Income | 1,910,052 | |
Expenses: | ||
Management fee—Note 2 | 402,220 | |
Treasury insurance expense—Note 1(f) | 18,904 | |
Trustees’ fees—Note 2 | 7,431 | |
Total Expenses | 428,555 | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (7,431) | |
Net Expenses | 421,124 | |
Investment Income—Net | 1,488,928 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 15 | |
Net Increase in Net Assets Resulting from Operations | 1,488,943 | |
See notes to financial statements. |
The Fund |
17 |
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2008 | Year Ended | |||
(Unaudited) | June 30, 2008 | |||
Operations ($): | ||||
Investment income—net | 1,488,928 | 4,376,085 | ||
Net realized gain (loss) on investments | 15 | 32,990 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 1,488,943 | 4,409,075 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (1,488,928) | (4,377,135) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 192,270,756 | 464,381,058 | ||
Dividends reinvested | 207,179 | 622,358 | ||
Cost of shares redeemed | (200,111,017) | (447,865,845) | ||
Increase (Decrease) in Net Assets | ||||
from Beneficial Interest Transactions | (7,633,082) | 17,137,571 | ||
Total Increase (Decrease) in Net Assets | (7,633,067) | 17,169,511 | ||
Net Assets ($): | ||||
Beginning of Period | 179,231,070 | 162,061,559 | ||
End of Period | 171,598,003 | 179,231,070 | ||
See notes to financial statements. |
18
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||||||||
December 31, 2008 | Year Ended June 30, | |||||||||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .008 | .026 | .032 | .024 | .013 | .005 | ||||||
Distributions: | ||||||||||||
Dividends from investment | ||||||||||||
income—net | (.008) | (.026) | (.032) | (.024) | (.013) | (.005) | ||||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | 1.69a | 2.59 | 3.21 | 2.48 | 1.34 | .53 | ||||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .48a | .46 | .46 | .46 | .45 | .45 | ||||||
Ratio of net expenses | ||||||||||||
to average net assets | .47a | .45 | .45 | .45 | .45 | .45 | ||||||
Ratio of net investment income | ||||||||||||
to average net assets | 1.67a | 2.51 | 3.17 | 2.46 | 1.33 | .53 | ||||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 171,598 | 179,231 | 162,062 | 130,286 | 131,162 | 141,930 | ||||||
a Annualized. | ||||||||||||
See notes to financial statements. |
The Fund |
19 |
NOTES TO FINANCIAL STATEMENTS ( U n a u d i t e d )
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”), a wholly-owned subsidiary ofThe Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
Effective July 1, 2008, BNY Mellon reorganized and consolidated a number of its banking and trust company subsidiaries.As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of NewYork Mellon (formerly,The Bank of NewYork).
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 $1.00.
The fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Trustees to represent the fair value of the fund’s investments.
20
The fund adopted Statement of Financial Accounting Standards No. 157 “FairValue Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the fund’s investments relating to FAS 157.These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical securities. Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
The following is a summary of the inputs used as of December 31, 2008 in valuing the fund’s investments carried at fair value:
Investments in | ||
Valuation Inputs | Securities ($) | |
Level 1—Quoted Prices | 0 | |
Level 2—Other Significant Observable Inputs | 169,866,727 | |
Level 3—Significant Unobservable Inputs | 0 | |
Total | 169,866,727 |
(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.
The Fund |
21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
In March 2008, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.
(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,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(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 gains, 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 gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(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
22
Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended December 31, 2008, the fund did not have any liabilities for any unrecognized tax positions. The fund recognizes interest and penalties, if any, related to unrecognized tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended June 30, 2008 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended June 30, 2008 was all tax-exempt income.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2008, 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).
(f) Treasury’s Temporary Guarantee Program: The fund has entered into a Guarantee Agreement with the United States Department of the Treasury (the “Treasury”) to participate in the Treasury’s Temporary Guarantee Program for Money Market Funds (the “Program”).
Under the Program, the Treasury guarantees the share price of shares of the fund held by shareholders as of September 19, 2008 at $1.00 per share if the fund’s net asset value per share falls below $0.995 (a “Guarantee Event”) and the fund liquidates. Recovery under the Program is subject to certain conditions and limitations.
Fund shares acquired by investors after September 19, 2008 that increase the number of fund shares the investor held at the close of business on September 19, 2008 are not eligible for protection under
The Fund |
23 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
the Program. In addition, fund shares acquired by investors who did not hold fund shares at the close of business on September 19, 2008 are not eligible for protection under the Program.
The Program, which was originally set to expire on December 18, 2008, has been extended by the Treasury until April 30, 2009, after which the Secretary of theTreasury will review the need for, and terms of, the Program. Participation in the initial term and the extended period of the Program required a payment to the Treasury in the amount of .01% and .015%, respectively, of the fund’s shares outstanding as of September 19, 2008 (valued at $1.00 per share).
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, The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) and Dreyfus Investment 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 tele-
24
phone 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 Chairman of the compensation committee received $900 per meeting and, with respect to audit committee meetings prior to April 12, 2008, 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, Dreyfus Investment Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds, Dreyfus Investment 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 Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level.This undertaking is voluntary and not contractual and may be terminated at any time. During the period ended December 31, 2008, there was no expense reimbursement pursuant to the undertaking.
NOTE 3—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. The terms of the line of credit agreement limit the amount of individual fund borrowings. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Effective October 15, 2008 the $300 million unsecured line of credit was terminated. During the period ended December 31, 2008, the fund did not borrow under the lines of credit.
The Fund |
25 |
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured Not Bank-Guaranteed May Lose Value
Contents | |
THE FUND | |
2 | A Letter from the CEO |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
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 |
FOR MORE INFORMATION | |
Back Cover | |
The Fund |
Dreyfus BASIC New York Municipal Money Market Fund |
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A LETTER FROM THE CEO Dear Shareholder: |
We are pleased to present this semiannual report for Dreyfus BASIC New York Municipal Money Market Fund, covering the six-month period from July 1, 2008, through December 31, 2008.
The second half of 2008 was one of the most difficult periods in decades for the financial markets.A credit crunch that began in 2007 exploded in mid-2008 into a global financial crisis, resulting in the failures of major financial institutions, a deep and prolonged recession and lower investment values across a broad range of asset classes. Governments and regulators throughout the world moved aggressively to curtail the damage, implementing unprecedented reductions of short-term interest rates, massive injections of liquidity into the banking system, government bailouts of struggling companies and plans for massive economic stimulus programs. Money market funds were not immune to the downturn, and several U.S. money market funds were unable to maintain a stable net asset value. The federal government subsequently stepped in with a program for guaranteeing participating funds’ assets at stated levels, while others received financial support from their sponsors.
Although we expect the U.S. and global economies to remain weak until longstanding imbalances have worked their way out of the system, the financial markets currently appear to have priced in investors’ generally low expectations. In previous recessions, however, the markets have tended to anticipate economic improvement before it occurs, potentially leading to major rallies when few expected them. That’s why it makes sense to remain disciplined, maintain a long-term perspective and adopt a consistent asset allocation strategy that reflects one’s future goals and attitudes toward risk. As always, we urge you to consult with your financial advisor, who can recommend the course of action that is right for you. 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.
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Jonathan R. Baum Chief Executive Officer The Dreyfus Corporation January 15, 2009 |
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2008, through December 31, 2008, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2008, Dreyfus BASIC New York Municipal Money Market Fund produced an annualized yield of 2.00% . Taking into account the effects of compounding, the fund produced an annualized effective yield of 2.02% .1
Tax-exempt money market instruments were influenced by a faltering U.S. economy, an intensifying financial crisis and sharply lower short-term interest rates during the reporting period.
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 NewYork-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 NewYork’s short-term municipal marketplace.
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’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.
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued) |
Economic Slump and Financial Crisis Roiled Money Markets
Economic conditions already had begun to deteriorate by the start of the reporting period as a result of weakness in housing markets, rising unemployment and declining consumer confidence. In response, the Federal Reserve Board (the “Fed”) had implemented several reductions in the overnight federal funds rate, which began the reporting period at 2%.
Meanwhile, a credit crisis intensified as mortgage foreclosure rates surged and institutional investors continued to de-lever their portfolios, selling their more liquid and creditworthy holdings to meet margin calls resulting from severe losses in mortgage- and asset-backed securities. Despite efforts by regulators to contain the credit crunch, it mushroomed into a global financial crisis over the summer of 2008, leading to the failures and government bailouts of several major financial institutions.The Fed also intervened with massive injections of liquidity into the banking system and additional rate cuts, which drove its target for the federal funds rate to a record low of 0% to 0.25% .
The money markets were not immune to the financial crisis, as credit concerns caused dislocations among short-term money market instruments, including tax-exempt variable rate demand notes (“VRDNs”), and a surge in redemptions from some funds. In an effort to shore up investor confidence and help restore stability to the financial system, the U.S. Department of the Treasury initiated several remedial measures, including the Temporary Guarantee Program specifically for money market funds.
With the Fed and U.S.Treasury supporting banks and short-term lending, short-term credit markets appeared to stabilize by the reporting period’s end. Although liquidity concerns regarding VRDNs pushed their yields higher in September, liquidity and yields subsequently returned to normalized levels.
The financial crisis and economic downturn put pressure on the fiscal conditions of the state and city of NewYork, which were undermined
4
by massive job losses on Wall Street. As of the reporting period’s end, both the state and city were discussing ways to bridge projected revenue shortfalls.
Independent Research Helps Avoid Credit Problems
As always, we have invested exclusively in direct, high-quality municipal obligations that have been independently approved by our credit analysts. In light of the issues confronting the market, we maintained a conservative credit selection strategy, including increased credit surveillance of the fund’s holdings.
Early in the reporting period, we set the fund’s weighted average maturity in a range that was longer than industry averages to capture higher yields for as long as we deemed practical while interest rates fell. However, we later shortened the fund’s weighted average maturity to weather the dislocations caused by the financial crisis. This enabled us to take greater advantage of the outsized yields offered by VRDNs at the time.
Maintaining a Conservative Investment Posture
We intend to maintain the fund’s conservative credit selection strategy and generally neutral weighted average maturity until we are confident that the crisis has passed.
January 15, 2009
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 | Annualized 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-NewYork 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 NewYork Municipal Money Market Fund from July 1, 2008 to December 31, 2008. 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 December 31, 2008
Expenses paid per $1,000† | $ 2.38 | |
Ending value (after expenses) | $1,010.10 |
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 December 31, 2008
Expenses paid per $1,000† | $ 2.40 | |
Ending value (after expenses) | $1,022.84 |
- Expenses are equal to the fund’s annualized expense ratio of .47%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS | ||||||||||
December 31, 2008 (Unaudited) | ||||||||||
Short-Term | Coupon | Maturity | Principal | |||||||
Investments—98.9% | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York—97.5% | ||||||||||
Albany County Airport Authority, | ||||||||||
Airport Revenue, Refunding | ||||||||||
(LOC; Bank of America) | 1.35 | 1/7/09 | 4,300,000 | a | 4,300,000 | |||||
Albany Housing Authority, | ||||||||||
Revenue (Nutgrove Garden | ||||||||||
Apartments Project) (LOC; | ||||||||||
Citizens Bank of Massachusetts) | 1.70 | 1/7/09 | 1,445,000 | a | 1,445,000 | |||||
Albany Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(Albany College of Pharmacy | ||||||||||
Project) (LOC; TD Banknorth NA) | 1.10 | 1/7/09 | 3,300,000 | a | 3,300,000 | |||||
Albany Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(CHF Holland Suites, L.L.C. | ||||||||||
Project) (LOC; TD Banknorth NA) | 1.23 | 1/7/09 | 6,390,000 | a | 6,390,000 | |||||
Albany Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(CHF-Holland Suites II, L.L.C. | ||||||||||
Project) (LOC; TD Banknorth NA) | 1.10 | 1/7/09 | 3,000,000 | a | 3,000,000 | |||||
Albany Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(Corning Preserve/Hudson | ||||||||||
Riverfront Development | ||||||||||
Project) (LOC; Key Bank) | 2.70 | 1/7/09 | 1,245,000 | a | 1,245,000 | |||||
Amherst Industrial Development | ||||||||||
Agency, Multi-Mode Civic | ||||||||||
Facility Revenue (Daemen | ||||||||||
College Project) (LOC; | ||||||||||
Wachovia Bank) | 2.90 | 1/7/09 | 4,400,000 | a | 4,400,000 | |||||
Avoca Central School District, | ||||||||||
GO Notes, BAN | 3.00 | 6/26/09 | 4,000,000 | 4,016,047 | ||||||
Briarcliff Manor, | ||||||||||
GO Notes, BAN | 2.75 | 9/11/09 | 1,468,800 | 1,475,774 | ||||||
Broome County Industrial | ||||||||||
Development Agency, Continuing | ||||||||||
Care Retirement Community | ||||||||||
Revenue (Good Shepherd Village | ||||||||||
at Endwell, Inc. Project) | ||||||||||
(LOC; M&T Bank) | 1.30 | 1/7/09 | 4,110,000 | a | 4,110,000 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
Dutchess County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue, Refunding | ||||||||||
(Lutheran Center at | ||||||||||
Poughkeepsie, Inc. Project) | ||||||||||
(LOC; Key Bank) | 2.70 | 1/7/09 | 1,900,000 | a | 1,900,000 | |||||
East Hampton, | ||||||||||
GO Notes, BAN | 2.00 | 6/4/09 | 1,600,000 | 1,601,323 | ||||||
East Rochester Housing Authority, | ||||||||||
Housing Revenue (Park Ridge | ||||||||||
Nursing Home, Inc. Project) | ||||||||||
(LOC; JPMorgan Chase Bank) | 1.25 | 1/7/09 | 4,375,000 | a | 4,375,000 | |||||
East Rockaway Union Free School | ||||||||||
District, GO Notes, TAN | 2.75 | 6/24/09 | 1,500,000 | 1,504,901 | ||||||
Erie County Industrial Development | ||||||||||
Agency, IDR (Luminescent | ||||||||||
System, Inc. Project) (LOC; | ||||||||||
HSBC Bank USA) | 1.25 | 1/7/09 | 3,295,000 | a | 3,295,000 | |||||
Erwin, | ||||||||||
GO Notes, BAN | 2.75 | 9/17/09 | 2,955,000 | 2,967,300 | ||||||
Hamburg Central School District, | ||||||||||
GO Notes, BAN | 3.35 | 7/2/09 | 4,400,000 | 4,424,024 | ||||||
Hudson Yards Infrastructure | ||||||||||
Corporation, Hudson Yards | ||||||||||
Senior Revenue (LOC; Citibank | ||||||||||
NA and Liquidity Facility; | ||||||||||
Citibank NA) | 1.32 | 1/7/09 | 5,000,000 | a,b | 5,000,000 | |||||
Lancaster Industrial Development | ||||||||||
Agency, IDR (Jiffy-Tite | ||||||||||
Company, Inc. Project) | ||||||||||
(LOC; Key Bank) | 2.20 | 1/7/09 | 1,080,000 | a | 1,080,000 | |||||
Laurens Central School District, | ||||||||||
GO Notes, BAN | 2.10 | 6/25/09 | 1,446,475 | 1,447,155 | ||||||
Long Island Power Authority, | ||||||||||
Electric System General | ||||||||||
Revenue (Insured; FSA and | ||||||||||
Liquidity Facility; Dexia | ||||||||||
Credit Locale) | 3.00 | 1/7/09 | 4,000,000 | a | 4,000,000 |
8
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
Metropolitan Transportation | ||||||||||
Authority, Dedicated Tax Fund | ||||||||||
Bonds (Insured; FSA and | ||||||||||
Liquidity Facility; Dexia | ||||||||||
Credit Locale) | 3.50 | 1/7/09 | 13,000,000 | a | 13,000,000 | |||||
Metropolitan Transportation | ||||||||||
Authority, Transportation | ||||||||||
Revenue, Refunding (Insured; | ||||||||||
FSA and Liquidity Facility; | ||||||||||
Dexia Credit Locale) | 5.00 | 1/7/09 | 1,000,000 | a | 1,000,000 | |||||
Monroe County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (YMCA of | ||||||||||
Greater Rochester Project) | ||||||||||
(LOC; M&T Bank) | 1.20 | 1/7/09 | 2,500,000 | a | 2,500,000 | |||||
Monroe County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (YMCA of | ||||||||||
Greater Rochester Project) | ||||||||||
(LOC; M&T Bank) | 1.20 | 1/7/09 | 5,150,000 | a | 5,150,000 | |||||
Monroe County Industrial | ||||||||||
Development Agency, IDR | ||||||||||
(2883 Associates LP) | ||||||||||
(LOC; HSBC Bank USA) | 1.25 | 1/7/09 | 625,000 | a | 625,000 | |||||
Monroe County Industrial | ||||||||||
Development Agency, IDR | ||||||||||
(Mercury Print Productions, | ||||||||||
Inc. Facility) (LOC; M&T Bank) | 2.65 | 1/7/09 | 165,000 | a | 165,000 | |||||
Naples Central School District, | ||||||||||
GO Notes, BAN | 2.25 | 6/16/09 | 1,700,000 | 1,702,652 | ||||||
Nassau County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (North Shore | ||||||||||
Hebrew Academy High School | ||||||||||
Project) (LOC; Comerica Bank) | 1.30 | 1/7/09 | 4,580,000 | a | 4,580,000 | |||||
Nassau County Industrial Development | ||||||||||
Agency, Revenue (Rockville Centre | ||||||||||
Housing Project) (LOC; M&T Bank) | 1.35 | 1/7/09 | 8,000,000 | a | 8,000,000 |
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
New York City, | ||||||||||
GO Notes | 3.65 | 4/1/09 | 100,000 | 100,156 | ||||||
New York City, | ||||||||||
GO Notes (LOC; Bank of America) | 0.69 | 1/7/09 | 11,350,000 | a | 11,350,000 | |||||
New York City, | ||||||||||
GO Notes (LOC; JPMorgan | ||||||||||
Chase Bank) | 1.05 | 1/1/09 | 1,600,000 | a | 1,600,000 | |||||
New York City Housing Development | ||||||||||
Corporation, MFHR (Liquidity | ||||||||||
Facility; Dexia Credit Locale) | 2.50 | 1/7/09 | 9,370,000 | a | 9,370,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Abraham | ||||||||||
Joshua Heschel High School | ||||||||||
Project) (LOC; Allied Irish Banks) | 1.40 | 1/7/09 | 3,850,000 | a | 3,850,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Columbia | ||||||||||
Grammar and Preparatory School | ||||||||||
Project) (LOC; Allied Irish Banks) | 1.30 | 1/7/09 | 4,500,000 | a | 4,500,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Convent of the | ||||||||||
Sacred Heart School of New York | ||||||||||
Project) (LOC; Wachovia Bank) | 3.45 | 1/7/09 | 7,400,000 | a | 7,400,000 | |||||
New York City Industrial | ||||||||||
Development Agency, | ||||||||||
Civic Facility Revenue | ||||||||||
(Grace Church School | ||||||||||
Project) (LOC; Wachovia Bank) | 3.45 | 1/7/09 | 5,000,000 | a | 5,000,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Hewitt | ||||||||||
School Project) (LOC; Allied | ||||||||||
Irish Banks) | 1.30 | 1/7/09 | 1,570,000 | a | 1,570,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Sephardic | ||||||||||
Community Youth Center, Inc. | ||||||||||
Project) (LOC; M&T Bank) | 1.30 | 1/7/09 | 7,500,000 | a | 7,500,000 |
10
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Spence-Chapin, | ||||||||||
Services to Families and Children | ||||||||||
Project) (LOC; Allied Irish Banks) | 1.30 | 1/7/09 | 3,850,000 | a | 3,850,000 | |||||
New York City Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(The Allen-Stevenson School | ||||||||||
Project) (LOC; Allied Irish Banks) | 1.30 | 1/7/09 | 2,905,000 | a | 2,905,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue, Refunding | ||||||||||
(Federation of Protestant | ||||||||||
Welfare Agencies, Inc. Project) | ||||||||||
(LOC; Allied Irish Banks) | 1.30 | 1/7/09 | 2,755,000 | a | 2,755,000 | |||||
New York City Industrial | ||||||||||
Development Agency, IDR (Novelty | ||||||||||
Crystal Corporation Project) | ||||||||||
(LOC; Commerce Bank N.A.) | 1.40 | 1/7/09 | 3,475,000 | a | 3,475,000 | |||||
New York City Industrial | ||||||||||
Development Agency, IDR | ||||||||||
(Super-Tek Products, Inc. | ||||||||||
Project) (LOC; Citibank NA) | 1.35 | 1/7/09 | 4,890,000 | a | 4,890,000 | |||||
New York City Industrial | ||||||||||
Development Agency, Special | ||||||||||
Facility Revenue (Air Express | ||||||||||
International Corporation | ||||||||||
Project) (LOC; Citibank NA) | 1.10 | 1/7/09 | 5,000,000 | a | 5,000,000 | |||||
New York City Transitional Finance | ||||||||||
Authority, Future Tax Secured | ||||||||||
Revenue | 5.50 | 2/1/09 | 500,000 | 501,350 | ||||||
New York City Transitional Finance | ||||||||||
Authority, Future Tax Secured | ||||||||||
Revenue (Liquidity Facility; | ||||||||||
Citibank NA) | 1.15 | 1/1/09 | 1,400,000 | a | 1,400,000 | |||||
New York City Transitional Finance | ||||||||||
Authority, Revenue (New York | ||||||||||
City Recovery) (Liquidity | ||||||||||
Facility; Landesbank | ||||||||||
Hessen-Thuringen Girozentrale) | 1.05 | 1/1/09 | 4,000,000 | a | 4,000,000 |
The Fund 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
New York City Transitional Finance | ||||||||||
Authority, Revenue (New York | ||||||||||
City Recovery) (Liquidity | ||||||||||
Facility; Royal Bank of Canada) | 1.15 | 1/1/09 | 1,900,000 | a | 1,900,000 | |||||
New York State Dormitory | ||||||||||
Authority, Revenue (Mental | ||||||||||
Health Facilities Improvement) | ||||||||||
(Insured; FSA and Liquidity | ||||||||||
Facility; Dexia Credit Locale) | 5.00 | 1/7/09 | 2,800,000 | a | 2,800,000 | |||||
New York State Dormitory | ||||||||||
Authority, Revenue (Mount | ||||||||||
Saint Mary College) (LOC; | ||||||||||
JPMorgan Chase Bank) | 1.45 | 1/7/09 | 8,900,000 | a | 8,900,000 | |||||
New York State Dormitory | ||||||||||
Authority, Revenue (Park Ridge | ||||||||||
Hospital, Inc.) (LOC; JPMorgan | ||||||||||
Chase Bank) | 1.25 | 1/7/09 | 4,000,000 | a | 4,000,000 | |||||
New York State Dormitory | ||||||||||
Authority, State Personal | ||||||||||
Income Tax Revenue (Education) | 5.00 | 3/15/09 | 220,000 | 221,303 | ||||||
New York State Housing Finance | ||||||||||
Agency, Housing Revenue | ||||||||||
(Baisley Park Gardens) (LOC; | ||||||||||
Citibank NA) | 0.82 | 1/7/09 | 4,700,000 | a | 4,700,000 | |||||
New York State Housing Finance | ||||||||||
Agency, Housing Revenue | ||||||||||
(Gateway to New Cassel) (LOC; | ||||||||||
JPMorgan Chase Bank) | 1.04 | 1/7/09 | 7,500,000 | a | 7,500,000 | |||||
New York State Urban Development | ||||||||||
Corporation, COP (James A. | ||||||||||
Farley Post Office Project) | ||||||||||
(Liquidity Facility; Citigroup | ||||||||||
Inc. and LOC; Citigroup Inc.) | 1.39 | 1/7/09 | 5,000,000 | a,b | 5,000,000 | |||||
Newburgh Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(Community Development | ||||||||||
Properties Dubois Street II, | ||||||||||
Inc. Project) (LOC; Key Bank) | 2.70 | 1/7/09 | 10,310,000 | a | 10,310,000 | |||||
Newfane Central School District | ||||||||||
GO Notes, BAN | 2.75 | 7/10/09 | 2,500,000 | 2,506,994 | ||||||
North Greenbush, | ||||||||||
GO Notes, BAN | 2.75 | 4/17/09 | 2,000,000 | 2,001,967 |
12
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
Otsego County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Noonan | ||||||||||
Community Service Corporation | ||||||||||
Project) (LOC; FHLB) | 1.60 | 1/7/09 | 1,235,000 | a | 1,235,000 | |||||
Plattsburgh, | ||||||||||
BAN (Municipal Lighting) | 2.50 | 6/19/09 | 2,100,000 | 2,105,241 | ||||||
Port Authority of New York and New | ||||||||||
Jersey, Equipment Notes | 1.31 | 1/7/09 | 4,000,000 | a | 4,000,000 | |||||
Port Byron School District, | ||||||||||
GO Notes, BAN | 2.75 | 6/26/09 | 2,000,000 | 2,004,706 | ||||||
Putnam County Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(United Cerebral Palsy of Putnam | ||||||||||
and Southern Dutchess Project) | ||||||||||
(LOC; Commerce Bank N.A.) | 1.20 | 1/7/09 | 7,900,000 | a | 7,900,000 | |||||
Rensselaer County Industrial | ||||||||||
Development Agency, Civic Facility | ||||||||||
Revenue (The Sage Colleges | ||||||||||
Project) (LOC; M&T Bank) | 2.30 | 1/7/09 | 2,300,000 | a | 2,300,000 | |||||
Rockland County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Dominican | ||||||||||
College of Blauvelt Project) | ||||||||||
(LOC; Commerce Bank N.A.) | 1.43 | 1/7/09 | 6,230,000 | a | 6,230,000 | |||||
Rockland County Industrial | ||||||||||
Development Agency, IDR | ||||||||||
(Intercos America, Inc. | ||||||||||
Project) (LOC; HSBC Bank USA) | 1.25 | 1/7/09 | 3,600,000 | a | 3,600,000 | |||||
Rockland County Industrial | ||||||||||
Development Authority, Revenue | ||||||||||
(Northern Manor Multicare Center, | ||||||||||
Inc. Project) (LOC; M&T Bank) | 1.35 | 1/7/09 | 3,100,000 | a | 3,100,000 | |||||
Rome City School District, | ||||||||||
RAN | 2.25 | 6/25/09 | 3,900,000 | 3,906,414 | ||||||
Sackets Harbor Central School | ||||||||||
District, GO Notes, BAN | 3.00 | 7/2/09 | 2,594,437 | 2,603,284 | ||||||
Saint Lawrence County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Canton-Potsdam | ||||||||||
Hospital Project) (LOC; Key Bank) | 2.70 | 1/7/09 | 10,285,000 | a | 10,285,000 |
The Fund 13
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | |||||||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||||
New York (continued) | ||||||||||
Sayville Union Free School | ||||||||||
District, GO Notes, BAN | 2.75 | 6/26/09 | 3,000,000 | 3,010,660 | ||||||
Seaford Union Free School | ||||||||||
District, GO Notes, BAN | 2.75 | 7/17/09 | 1,000,000 | 1,003,967 | ||||||
Syracuse Industrial Development | ||||||||||
Agency, Civic Facility Revenue | ||||||||||
(Crouse Health Hospital, Inc. | ||||||||||
Project) (LOC; Key Bank) | 2.34 | 1/7/09 | 3,925,000 | a | 3,925,000 | |||||
Tobacco Settlement Financing | ||||||||||
Corporation, Asset-Backed | ||||||||||
Revenue Bonds (State | ||||||||||
Contingency Contract Secured) | 5.00 | 6/1/09 | 350,000 | 353,396 | ||||||
Tompkins County Industrial | ||||||||||
Development Agency, Civic | ||||||||||
Facility Revenue (Cortland | ||||||||||
College) (LOC; HSBC Bank USA) | 1.48 | 1/7/09 | 3,945,000 | a | 3,945,000 | |||||
Westchester County Health Care | ||||||||||
Corporation, CP (Liquidity | ||||||||||
Facility; Landesbank | ||||||||||
Hessen-Thuringen Girozentrale | ||||||||||
and LOC; Westchester County) | 2.50 | 1/12/09 | 5,000,000 | 5,000,000 | ||||||
U.S. Related—1.4% | ||||||||||
Puerto Rico Industrial Tourist | ||||||||||
Educational Medical and | ||||||||||
Environmental Control | ||||||||||
Facilities Financing Authority, | ||||||||||
Environmental Control Facilities | ||||||||||
Revenue (Bristol-Myers | ||||||||||
Squibb Company Project) | 1.30 | 1/7/09 | 4,400,000 | a | 4,400,000 | |||||
Total Investments (cost $303,763,614) | 98.9% | 303,763,614 | ||||||||
Cash and Receivables (Net) | 1.1% | 3,502,310 | ||||||||
Net Assets | 100.0% | 307,265,924 |
a | Variable rate demand note—rate shown is the interest rate in effect at December 31, 2008. Maturity date represents the next demand date, or the ultimate maturity date if earlier. |
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 December 31, 2008, these securities amounted to $10,000,000 or 3.3% of net assets. |
14
Summary of Abbreviations | ||||||
ABAG | Association of Bay Area Governments | ACA | American Capital Access | |||
AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company | |||
AMBAC | American Municipal Bond | |||||
Assurance Corporation | ARRN | Adjustable Rate Receipt Notes | ||||
BAN | Bond Anticipation Notes | BIGI | Bond Investors Guaranty Insurance | |||
BPA | Bond Purchase Agreement | CGIC | Capital Guaranty Insurance Company | |||
CIC | Continental Insurance 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 | FNMA | Federal National | |||
Corporation | 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 | |||
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 (Unaudited) (continued)
Summary of Combined Ratings (Unaudited) | ||||||||||
Fitch | or | Moody’s | or | Standard & Poor’s | Value (%)† | |||||
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 86.0 | |||||||
AAA,AA,Ac | Aaa,Aa,Ac | AAA,AA,Ac | 1.8 | |||||||
Not Ratedd | Not Ratedd | Not Ratedd | 12.2 | |||||||
100.0 | ||||||||||
† Based on total investments. |
c | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
d | 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
December 31, 2008 (Unaudited)
Cost | Value | |||
Assets ($): | ||||
Investments in securities—See Statement of Investments | 303,763,614 | 303,763,614 | ||
Cash | 2,978,164 | |||
Interest receivable | 959,002 | |||
Prepaid expenses | 46,291 | |||
307,747,071 | ||||
Liabilities ($): | ||||
Due to The Dreyfus Corporation and affiliates—Note 2 | 56,251 | |||
Dividend payable | 283,505 | |||
Payable for shares of Beneficial Interest redeemed | 141,391 | |||
481,147 | ||||
Net Assets ($) | 307,265,924 | |||
Composition of Net Assets ($): | ||||
Paid-in capital | 307,241,435 | |||
Accumulated net realized gain (loss) on investments | 24,489 | |||
Net Assets ($) | 307,265,924 | |||
Shares Outstanding | ||||
(unlimited number of shares of Beneficial Interest authorized) | 307,241,445 | |||
Net Asset Value, offering and redemption price per share ($) | 1.00 | |||
See notes to financial statements. |
The Fund 17
STATEMENT OF OPERATIONS | ||
Six Months Ended December 31, 2008 (Unaudited) | ||
Investment Income ($): | ||
Interest Income | 4,205,356 | |
Expenses: | ||
Management fee—Note 2 | 765,960 | |
Treasury insurance expense—Note 1(f) | 40,180 | |
Trustees’ fees—Note 2 | 13,284 | |
Total Expenses | 819,424 | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (13,284) | |
Net Expenses | 806,140 | |
Investment Income—Net, representing net increase | ||
in net assets resulting from operations | 3,399,216 | |
See notes to financial statements. |
18
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2008 | Year Ended | |||
(Unaudited) | June 30, 2008 | |||
Operations ($): | ||||
Investment income—net | 3,399,216 | 9,088,802 | ||
Net realized gain (loss) on investments | — | 24,489 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 3,399,216 | 9,113,291 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (3,399,216) | (9,093,303) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 185,203,744 | 382,586,890 | ||
Dividends reinvested | 2,540,610 | 7,621,024 | ||
Cost of shares redeemed | (244,599,255) | (348,000,006) | ||
Increase (Decrease) in Net Assets from | ||||
Beneficial Interest Transactions | (56,854,901) | 42,207,908 | ||
Total Increase (Decrease) in Net Assets | (56,854,901) | 42,227,896 | ||
Net Assets ($): | ||||
Beginning of Period | 364,120,825 | 321,892,929 | ||
End of Period | 307,265,924 | 364,120,825 | ||
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.
Six Months Ended | ||||||||||||
December 31, 2008 | Year Ended June 30, | |||||||||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .010 | .026 | .032 | .025 | .013 | .005 | ||||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.010) | (.026) | (.032) | (.025) | (.013) | (.005) | ||||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | 2.00a | 2.67 | 3.25 | 2.52 | 1.34 | .52 | ||||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .48a | .46 | .45 | .45 | .45 | .45 | ||||||
Ratio of net expenses | ||||||||||||
to average net assets | .47a | .45 | .45 | .45 | .45 | .45 | ||||||
Ratio of net investment income | ||||||||||||
to average net assets | 2.00a | 2.61 | 3.21 | 2.49 | 1.33 | .52 | ||||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 307,266 | 364,121 | 321,893 | 286,993 | 308,322 | 302,652 | ||||||
a Annualized. | ||||||||||||
See notes to financial statements. |
20
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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, NewYork state and NewYork city income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
Effective July 1, 2008, BNY Mellon reorganized and consolidated a number of its banking and trust company subsidiaries.As a result of the reorganization, any services previously provided to the fund by Mellon Bank, N.A. or Mellon Trust of New England, N.A. are now provided by The Bank of NewYork Mellon (formerly,The Bank of NewYork).
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 $1.00.
The fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
determined by the Board of Trustees to represent the fair value of the fund’s investments.
The fund adopted Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS 157”). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the fund’s investments relating to FAS 157.These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical securities. Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
The following is a summary of the inputs used as of December 31, 2008 in valuing the fund’s investments carried at fair value:
Investments in | ||
Valuation Inputs | Securities ($) | |
Level 1—Quoted Prices | 0 | |
Level 2—Other Significant Observable Inputs | 303,763,614 | |
Level 3—Significant Unobservable Inputs | 0 | |
Total | 303,763,614 |
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Interest income, adjusted for
22
accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
In March 2008, the Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008.At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements and the accompanying notes has not yet been determined.
(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,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(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 gains, 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 gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
The Fund 23
NOTES TO FINANCIAL STATEMENTS (Unaudited) (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.
As of and during the period ended December 31, 2008, the fund did not have any liabilities for any unrecognized tax positions. The fund recognizes interest and penalties, if any, related to unrecognized tax positions as income tax expense in the Statement of Operations. During the period, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended June 30, 2008 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended June 30, 2008 was all tax-exempt income.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2008, 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).
(f) Treasury’s Temporary Guarantee Program: The fund has entered into a Guarantee Agreement with the United States Department of the Treasury (the “Treasury”) to participate in the Treasury’s Temporary Guarantee Program for Money Market Funds (the “Program”).
Under the Program, the Treasury guarantees the share price of shares of the fund held by shareholders as of September 19, 2008 at $1.00 per share if the fund’s net asset value per share falls below $0.995 (a “Guarantee Event”) and the fund liquidates. Recovery under the Program is subject to certain conditions and limitations.
24
Fund shares acquired by investors after September 19, 2008 that increase the number of fund shares the investor held at the close of business on September 19, 2008 are not eligible for protection under the Program. In addition, fund shares acquired by investors who did not hold fund shares at the close of business on September 19, 2008 are not eligible for protection under the Program.
The Program, which was originally set to expire on December 18, 2008, has been extended by the Treasury until April 30, 2009, after which the Secretary of theTreasury will review the need for, and terms of, the Program. Participation in the initial term and the extended period of the Program required a payment to the Treasury in the amount of .01% and .015%, respectively, of the fund’s shares outstanding as of September 19, 2008 (valued at $1.00 per share).
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
The Fund 25
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
Dreyfus/Laurel Funds, Inc., the Trust, The Dreyfus/Laurel Funds Trust (collectively, the “Dreyfus/Laurel Funds”) and Dreyfus Investment 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 meeting and, with respect to audit committee meetings prior to April 12, 2008, the Chair of the audit committee received $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, Dreyfus Investment Funds and Dreyfus High Yield Strategies Fund, the $2,000 or $1,500 fee, as applicable, will be allocated between the Dreyfus/Laurel Funds, Dreyfus Investment 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 Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level.This undertaking is voluntary and not contractual and may be terminated at any time. During the period ended December 31, 2008, there was no expense reimbursement pursuant to the undertaking.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $56,251.
26
NOTE 3—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in a $300 million unsecured line of credit primarily to be utilized for temporary or emergency purposes, including the financing of redemptions. The terms of the line of credit agreement limit the amount of individual fund borrowings. Interest is charged to the fund based on prevailing market rates in effect at the time of borrowing. Effective October 15, 2008 the $300 million unsecured line of credit was terminated. During the period ended December 31, 2008, the fund did not borrow under the lines of credit.
The Fund 27
NOTES
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Item 2. | Code of Ethics. | |
Not applicable. | ||
Item 3. | Audit Committee Financial Expert. | |
Not applicable. | ||
Item 4. | Principal Accountant Fees and Services. | |
Not applicable. | ||
Item 5. | Audit Committee of Listed Registrants. | |
Not applicable. | ||
Item 6. | Investments. | |
(a) | 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) Not applicable.
(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: | February 23, 2009 |
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: | February 23, 2009 | |
By: | /s/ James Windels | |
James Windels | ||
Treasurer | ||
Date: | February 23, 2009 |
EXHIBIT INDEX |
(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)