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 | |||||
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| The Dreyfus/Laurel Tax-Free Municipal Funds |
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| (Exact name of Registrant as specified in charter) |
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c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
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| (Address of principal executive offices) (Zip code) |
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| Michael A. Rosenberg, Esq. 200 Park Avenue New York, New York 10166 |
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| (Name and address of agent for service) |
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Registrant's telephone number, including area code: | (212) 922-6000 | |||||
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Date of fiscal year end:
| 6/30 |
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Date of reporting period: | 12/31/10 |
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Dreyfus BASIC |
California Municipal |
Money Market Fund |
SEMIANNUAL REPORT December 31, 2010
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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.
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Contents | |
THE FUND | |
2 | A Letter from the Chairman and CEO |
3 | Discussion of Fund Performance |
6 | Understanding Your Fund’s Expenses |
6 | Comparing Your Fund’s Expenses With Those of Other Funds |
7 | Statement of Investments |
14 | Statement of Assets and Liabilities |
15 | Statement of Operations |
16 | Statement of Changes in Net Assets |
17 | Financial Highlights |
18 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus BASIC |
California Municipal |
Money Market Fund |
The Fund
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A LETTER FROM THE CHAIRMAN AND 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, 2010, through December 31, 2010.
Although 2010 proved to be a volatile year for many longer-term assets, such as stocks and bonds, the reporting period ended with many asset categories producing respectable, positive returns. Investors’ early concerns regarding sovereign debt issues in Europe and stubbornly high unemployment in the United States later gave way to optimism that massive economic stimulus programs, robust growth in the world’s emerging markets, a strong holiday retail season and rising corporate earnings signaled better economic times ahead.
Although U.S. GDP growth was positive throughout the reporting period, the economic recovery has been milder than historical averages. Therefore, we are guardedly optimistic regarding the U.S. economy’s prospects in 2011, and many experts believe inflationary pressures and short-term interest rates should remain low over the near term, potentially preventing any significant rise in money market yields.What does this mean for your investment portfolio? We suggest talking to your financial advisor, who can help you review your allocations and your current liquid asset needs, and identify potential opportunities suitable for your individual needs and risk tolerance in today’s market environment.
For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Thank you for your continued confidence and support.
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Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 18, 2011
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2010, through December 31, 2010, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2010, Dreyfus BASIC California Municipal Money Market Fund produced an annualized yield of 0.00%. Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.00%.1
Money market yields remained at historical lows as the U.S. economy continued to recover sluggishly from recession, and the Federal Reserve Board (the “Fed”) left short-term interest rates unchanged.
The Fund’s Investment Approach
The fund seeks to provide a high level of current income exempt from federal and California state personal income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity. To pursue its goal, the fund normally invests substantially all of its assets in short-term, high quality municipal bond obligations that provide income exempt from federal and California state personal income taxes.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, if they become available.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)
Low Yields Persisted in a Subpar Recovery
The U.S. economy continued to recover from recession over the second half of 2010. Manufacturing activity, consumer spending and corporate earnings increased and reduced earlier fears of a double-dip recession. Nonetheless, the recovery remained slower than historical averages, as unemployment remained stubbornly high and many regional housing markets have not yet improved meaningfully.
Like most states, California remained under fiscal pressure throughout the reporting period. The benefits of California’s large and diverse economic base have been offset by the state government’s difficulties in budgeting effectively and building reserves, resulting in financial challenges that are expected to persist for some time.
In this economic environment, and as it has since December 2008, the Fed maintained its target for the overnight federal funds rate in a range between 0% and 0.25%. In early September, the Fed announced a new round of quantitative easing, which is designed to stimulate credit markets through the purchase of $600 billion of U.S.Treasury securities.Although longer-term financial assets generally rallied on this news as investors looked forward to a more robust recovery, money market yields generally remained anchored by the historically low federal funds rate, and tax-exempt money market instruments continued to provide yields of little more than zero percent.
Supply-and-demand influences in the tax-exempt money markets generally remained favorable during the reporting period. Despite heavier borrowing needs nationally, the supply of newly issued municipal money market instruments remained relatively low, primarily due to the federally subsidized Build America Bonds program, which shifted a portion of municipal issuance to the taxable bond market. Meanwhile, demand for municipal money market instruments proved robust, including from non-traditional investors seeking alternatives to taxable money market instruments.This supply-and-demand dynamic began to change near year-end as the expiration of the Build America Bonds program approached, sparking heightened volatility among longer-term municipal bonds.
4
Focus on Liquidity and Capital Preservation
During the reporting period, we maintained a conservative investment posture, emphasizing direct, high-quality municipal obligations and commercial paper that were deemed creditworthy by our analysts.We also favored instruments backed by pledged tax appropriations or dedicated revenues.We generally shied away from securities issued by entities that depend heavily on state aid. Finally, we maintained the fund’s weighted average maturity in a range that was roughly in line with industry averages.
Increased Supply Could Lift Yields
Despite ongoing signs of economic recovery, inflation has been negligible, and the Fed appears set to maintain its aggressively accommodative monetary policy for some time to come.Therefore, we believe the prudent course continues to be an emphasis on preservation of capital and liquidity. However, we currently expect the supply of newly issued tax-exempt money market instruments to trend higher in 2011 after the Build America Bonds program expires, which could support higher yields.As always, we are prepared to adjust the fund’s strategies should economic and market conditions change.
January 18, 2011
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. | |
Short-term municipal securities holdings, while rated in the highest rating category by one or more | |
NRSRO (or unrated, if deemed of comparable quality by Dreyfus), involve credit and liquidity | |
risks and risk of principal loss. | |
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.Yields provided reflect the absorption of certain fund | |
expenses by The Dreyfus Corporation pursuant to an undertaking in effect that may be extended, | |
terminated or modified at any time. Had these expenses not been absorbed, fund yields would | |
have been lower, and in some cases, 7-day yields during the reporting period would have been | |
negative absent the expense absorption. |
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, 2010 to December 31, 2010. 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, 2010
Expenses paid per $1,000† | $ 2.02 |
Ending value (after expenses) | $1,000.00 |
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, 2010
Expenses paid per $1,000† | $ 2.04 |
Ending value (after expenses) | $1,023.19 |
† Expenses are equal to the fund’s annualized expense ratio of .40%, multiplied by the average account value over the |
period, multiplied by 184/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS | |||||
December 31, 2010 (Unaudited) | |||||
Short-Term | Coupon | Maturity | Principal | ||
Investments—99.7% | Rate (%) | Date | Amount ($) | Value ($) | |
California—95.2% | |||||
Alameda Unified School District, | |||||
GO Notes, TRAN | 2.00 | 6/30/11 | 1,000,000 | 1,004,881 | |
California Enterprise Development | |||||
Authority, Recovery Zone | |||||
Facility Revenue (Regional | |||||
Properties, Inc. Project) | |||||
(LOC; FHLB) | 0.39 | 1/7/11 | 5,000,000 | a | 5,000,000 |
California Infrastructure and | |||||
Economic Development Bank, IDR | |||||
(Bonny Doon Winery, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.49 | 1/7/11 | 2,850,000 | a | 2,850,000 |
California Infrastructure and | |||||
Economic Development Bank, | |||||
Revenue (California Academy of | |||||
Sciences, San Francisco, | |||||
California) (LOC; Wells Fargo Bank) | 0.26 | 1/1/11 | 3,110,000 | a | 3,110,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Athens Services Project) | |||||
(LOC; Wells Fargo Bank) | 0.32 | 1/7/11 | 3,165,000 | a | 3,165,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Crown Disposal Company, Inc. | |||||
Project) (LOC; Union Bank NA) | 0.35 | 1/7/11 | 2,825,000 | a | 2,825,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(GreenWaste Recovery, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.42 | 1/7/11 | 2,200,000 | a | 2,200,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Metropolitan Recycling Inc.) | |||||
(LOC; Comerica Bank) | 0.42 | 1/7/11 | 2,495,000 | a | 2,495,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Northern Recycling and Waste | |||||
Services, LLC Project) (LOC; | |||||
Union Bank NA) | 0.39 | 1/7/11 | 2,730,000 | a | 2,730,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Pena’s Disposal, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.42 | 1/7/11 | 2,125,000 | a | 2,125,000 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(South Tahoe Refuse Company, Inc. | |||||
Project) (LOC; Union Bank NA) | 0.39 | 1/7/11 | 1,055,000 | a | 1,055,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Sunset Waste Paper, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.42 | 1/7/11 | 3,000,000 | a | 3,000,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Valley Vista Services, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.42 | 1/7/11 | 2,000,000 | a | 2,000,000 |
California School Cash Reserve | |||||
Program Authority, Revenue | 2.00 | 6/1/11 | 3,100,000 | 3,114,717 | |
California Statewide Communities | |||||
Development Authority, Revenue | |||||
(Goodwill of Santa Cruz) (LOC; | |||||
Wells Fargo Bank) | 0.38 | 1/7/11 | 700,000 | a | 700,000 |
California Statewide Communities | |||||
Development Authority, TRAN | |||||
(County of Yolo) | 2.00 | 6/30/11 | 2,300,000 | 2,311,226 | |
Concord, | |||||
MFMR (Arcadian Apartments) | |||||
(LOC; FNMA) | 0.37 | 1/7/11 | 3,400,000 | a | 3,400,000 |
Deutsche Bank Spears/Lifers Trust | |||||
(Anaheim Redevelopment Agency, | |||||
Tax Allocation Revenue, | |||||
Refunding (Anaheim Merged | |||||
Redevelopment Project Area)) | |||||
(Liquidity Facility; Deutsche | |||||
Bank AG and LOC; | |||||
Deutsche Bank AG) | 0.34 | 1/7/11 | 5,900,000 | a,b | 5,900,000 |
Dublin Unified School District, | |||||
GO Notes, TRAN | 2.00 | 8/31/11 | 1,000,000 | 1,006,582 | |
Golden State Tobacco | |||||
Securitization Corporation, | |||||
Enhanced Tobacco Settlement | |||||
Asset-Backed Bonds (Insured; | |||||
Berkshire Hathaway Assurance | |||||
Corporation and Liquidity | |||||
Facility; Citibank NA) | 0.34 | 1/7/11 | 5,505,000 | a,b | 5,505,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
Irvine Assessment District Number | |||||
03-19, Limited Obligation | |||||
Improvement Bonds (LOC: | |||||
California State Teachers | |||||
Retirement System and | |||||
U.S. Bank NA) | 0.28 | 1/1/11 | 4,000,000 | a | 4,000,000 |
Irvine Assessment District Number | |||||
93-14, Limited Obligation | |||||
Improvement Bonds (LOC; | |||||
Bank of America) | 0.27 | 1/1/11 | 2,600,000 | a | 2,600,000 |
Irvine Assessment District Number | |||||
97-17, Limited Obligation | |||||
Improvement Bonds (LOC; State | |||||
Street Bank and Trust Co.) | 0.28 | 1/1/11 | 7,600,000 | a | 7,600,000 |
Los Angeles, | |||||
GO Notes, TRAN | 2.00 | 6/30/11 | 4,900,000 | 4,933,119 | |
Poway Unified School District | |||||
Public Financing Authority, LR | |||||
(Insured; Assured Guaranty | |||||
Municipal Corp. and Liquidity | |||||
Facility; Dexia Credit Locale) | 0.55 | 1/7/11 | 2,000,000 | a | 2,000,000 |
Puttable Floating Option Tax | |||||
Exempt Receipts (California | |||||
Statewide Communities | |||||
Development Authority, | |||||
MFHR (La Mision Village | |||||
Apartments Project)) | |||||
(Liquidity Facility; | |||||
FHLMC and LOC; FHLMC) | 0.50 | 1/7/11 | 2,250,000 | a,b | 2,250,000 |
Ravenswood City School District, | |||||
GO Notes, TRAN | 1.75 | 7/1/11 | 1,600,000 | 1,605,491 | |
Roseville Joint Union High School | |||||
District, COP (Insured; | |||||
Assured Guaranty | |||||
Municipal Corp. and | |||||
Liquidity Facility; | |||||
Dexia Credit Locale) | 0.55 | 1/7/11 | 1,300,000 | a | 1,300,000 |
Sacramento County Housing | |||||
Authority, MFHR, Refunding | |||||
(Stonebridge Apartments) | |||||
(LOC; FNMA) | 0.40 | 1/7/11 | 400,000 | a | 400,000 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
San Jose Redevelopment Agency, | |||||
MFHR (101 San Fernando | |||||
Apartments) (Liquidity | |||||
Facility; Citibank NA and LOC; | |||||
Citibank NA) | 0.42 | 1/7/11 | 4,225,000 | a,b | 4,225,000 |
San Pablo Redevelopment Agency, | |||||
Subordinate Tax Allocation | |||||
Revenue (Tenth Township | |||||
Redevelopment Project) (LOC; | |||||
Union Bank NA) | 0.32 | 1/1/11 | 3,000,000 | a | 3,000,000 |
Southern California Public Power | |||||
Authority, Transmission | |||||
Project Revenue, Refunding | |||||
(Southern Transmission | |||||
Project) (Insured; Assured | |||||
Guaranty Municipal Corp. and | |||||
Liquidity Facility; Dexia | |||||
Credit Locale) | 0.39 | 1/7/11 | 550,000 | a | 550,000 |
Tahoe Forest Hospital District, | |||||
Revenue (LOC; U.S. Bancorp) | 0.32 | 1/1/11 | 1,960,000 | a | 1,960,000 |
Vacaville, | |||||
MFMR (Quail Run Apartments) | |||||
(Liquidity Facility; FNMA and | |||||
LOC; FNMA) | 0.35 | 1/7/11 | 400,000 | a | 400,000 |
West Covina Public Financing | |||||
Authority, LR, Refunding | |||||
(Public Facilities Project) | |||||
(LOC; California State | |||||
Teachers Retirement System) | 0.37 | 1/7/11 | 1,000,000 | a | 1,000,000 |
10
Short-Term | Coupon | Maturity | Principal | |
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) |
U.S. Related—4.5% | ||||
Puttable Floating Option Tax | ||||
Exempt Receipts (Puerto Rico | ||||
Highways and Transportation | ||||
Authority, Highway Revenue) | ||||
(Liquidity Facility; Dexia | ||||
Credit Locale and LOC; Dexia | ||||
Credit Locale) | 0.47 | 1/7/11 | 4,440,000 a,b | 4,440,000 |
Total Investments (cost $97,761,016) | 99.7% | 97,761,016 | ||
Cash and Receivables (Net) | .3% | 340,783 | ||
Net Assets | 100.0% | 98,101,799 |
a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2010. 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, 2010, these |
securities amounted to $22,320,000 or 22.8% of net assets. |
The Fund | 11 |
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 | ARRN | Adjustable Rate Receipt Notes |
Assurance Corporation | |||
BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
CIFG | CDC Ixis Financial Guaranty | 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 | ||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract |
GNMA | Government National | GO | General Obligation |
Mortgage Association | |||
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 | PUTTERS Puttable Tax-Exempt Receipts | |
RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes |
RAW | Revenue Anticipation Warrants | RRR | Resources Recovery Revenue |
SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement |
SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue |
SONYMA | State of New York Mortgage Agency | SWDR | Solid Waste Disposal Revenue |
TAN | Tax Anticipation Notes | TAW | Tax Anticipation Warrants |
TRAN | Tax and Revenue Anticipation Notes | XLCA | XL Capital Assurance |
12
Summary of Combined Ratings (Unaudited) | |||||
Fitch | or | Moody’s | or | Standard & Poor’s | Value (%)† |
F1+,F1 | VMIG1,MIG1,P1 | SP1+,SP1,A1+,A1 | 100.0 | ||
† Based on total investments. | |||||
See notes to financial statements. |
The Fund | 13 |
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2010 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 97,761,016 | 97,761,016 |
Cash | 234,808 | |
Interest receivable | 171,009 | |
98,166,833 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 38,478 | |
Payable for shares of Beneficial Interest redeemed | 26,188 | |
Dividend payable | 368 | |
65,034 | ||
Net Assets ($) | 98,101,799 | |
Composition of Net Assets ($): | ||
Paid-in capital | 98,101,799 | |
Net Assets ($) | 98,101,799 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 98,101,799 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
14
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2010 (Unaudited) |
Investment Income ($): | |
Interest Income | 223,578 |
Expenses: | |
Management fee—Note 2 | 252,650 |
Trustees’ fees—Note 2 | 3,201 |
Total Expenses | 255,851 |
Less—reduction in expenses due to undertaking—Note 2 | (30,766) |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (3,201) |
Net Expenses | 221,884 |
Investment Income—Net, representing net increase | |
in net assets resulting from operations | 1,694 |
See notes to financial statements. |
The Fund | 15 |
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||
December 31, 2010 | Year Ended | |
(Unaudited) | June 30, 2010 | |
Operations ($): | ||
Investment Income-Net, representing net | ||
increase in net assets resulting | ||
from operations | 1,694 | 22,986 |
Dividends to Shareholders from ($): | ||
Investment income—net | (1,694) | (23,789) |
Beneficial Interest Transactions ($1.00 per share): | ||
Net proceeds from shares sold | 145,564,457 | 374,184,052 |
Dividends reinvested | 536 | 6,788 |
Cost of shares redeemed | (143,377,337) | (473,061,222) |
Increase (Decrease) in Net Assets from | ||
Beneficial Interest Transactions | 2,187,656 | (98,870,382) |
Total Increase (Decrease) in Net Assets | 2,187,656 | (98,871,185) |
Net Assets ($): | ||
Beginning of Period | 95,914,143 | 194,785,328 |
End of Period | 98,101,799 | 95,914,143 |
See notes to financial statements. |
16
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund’s financial statements.
Six Months Ended | ||||||
December 31, 2010 | Year Ended June 30, | |||||
(Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | |
Per Share Data ($): | ||||||
Net asset value, | ||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Investment Operations: | ||||||
Investment income—net | .000a | .000a | .010 | .027 | .032 | .025 |
Distributions: | ||||||
Dividends from | ||||||
investment income—net | (.000)a (.000)a | (.010) | (.027) | (.032) | (.025) | |
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Total Return (%) | .00b,c | .02 | 1.04 | 2.72 | 3.21 | 2.50 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | ||||||
to average net assets | .46c | .47 | .49 | .46 | .45 | .45 |
Ratio of net expenses | ||||||
to average net assets | .40c | .41 | .49 | .45 | .45 | .45 |
Ratio of net investment income | ||||||
to average net assets | .00b,c | .02 | 1.08 | 2.57 | 3.16 | 2.49 |
Net Assets, end of period | ||||||
($ x 1,000) | 98,102 | 95,914 | 194,785 | 259,683 | 107,993 | 72,067 |
a | Amount represents less than $.001 per share. |
b | Amount represents less than .01%. |
c | Annualized. |
See notes to financial statements.
The Fund | 17 |
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 seeks to provide a high level of current income exempt from federal and California state personal 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 “Distribut or”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants.The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
18
(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 fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, 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,
The Fund | 19 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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, 2010 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | — |
Level 2—Other Significant Observable Inputs | 97,761,016 |
Level 3—Significant Unobservable Inputs | — |
Total | 97,761,016 |
† | See Statement of Investments for additional detailed categorizations. |
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian,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
20
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 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, 2010, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain 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, 2010 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, 2010 was as follows: tax-exempt income $23,789. The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2010, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee and Other Transactions With Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 who is not an “interested person” of the Trust (as defined in the Act) receives $60,000 per annum, plus $7,000 per joint Board meeting of the Trust,The Dreyfus/Laurel Funds, Inc.,The Dreyfus/Laurel Funds Trust, Dreyfus Investment Funds and Dreyfus Funds, Inc. (collecti vely, the “Board Group Open-End Funds”) attended, $2,500 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that are conducted by telephone. The Board Group Open-End Funds also reimburse each Trustee who is not an “interested person” of the Trust (as defined in the Act) 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). The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, receives $1,350 per applicable committee meeting. In the event that there is an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund, the $2,500 or $2,000 fee, as applicable, is allocated between the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund.The Trust’s portion of 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.
22
The Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level. Such expense limitations may fluctuate daily, are voluntary and not contractual and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $30,766 during the period ended December 31, 2010.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $43,270, which are offset against an expense reimbursement currently in effect in the amount of $4,792.
NOTE 3—Securities Transactions:
The fund is permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board ofTrustees.The procedures have been designed to ensure that any purchase or sale of securities by the fund from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment adviser), commonTrustee and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2010, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $20,300,000 and $72,400,000, respectively.
The Fund | 23 |
NOTES
For More Information
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Ticker Symbol: DCLXX
Telephone 1-800-645-6561
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 E-mail Send your request to info@dreyfus.com Internet Information can be viewed online or downloaded at: http://www.dreyfus.com
The fund will disclose daily, on www.dreyfus.com, the fund’s complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings.
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
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© 2011 MBSC Securities Corporation
Dreyfus BASIC |
Massachusetts Municipal |
Money Market Fund |
SEMIANNUAL REPORT December 31, 2010
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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.
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Contents | |
THE FUND | |
2 | A Letter from the Chairman and 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 |
13 | Statement of Assets and Liabilities |
14 | Statement of Operations |
15 | Statement of Changes in Net Assets |
16 | Financial Highlights |
17 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus BASIC |
Massachusetts Municipal |
Money Market Fund |
The Fund
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A LETTER FROM THE CHAIRMAN AND 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, 2010, through December 31, 2010.
Although 2010 proved to be a volatile year for many longer-term assets, such as stocks and bonds, the reporting period ended with many asset categories producing respectable, positive returns. Investors’ early concerns regarding sovereign debt issues in Europe and stubbornly high unemployment in the United States later gave way to optimism that massive economic stimulus programs, robust growth in the world’s emerging markets, a strong holiday retail season and rising corporate earnings signaled better economic times ahead.
Although U.S. GDP growth was positive throughout the reporting period, the economic recovery has been milder than historical averages. Therefore, we are guardedly optimistic regarding the U.S. economy’s prospects in 2011, and many experts believe inflationary pressures and short-term interest rates should remain low over the near-term, potentially preventing any significant rise in money market yields. What does this mean for your investment portfolio? We suggest talking to your financial advisor, who can help you review your allocations and your current liquid asset needs, and identify potential opportunities suitable for your individual needs and risk tolerance in today’s market environment.
For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSRS/0000717341-11-000015/bmammmncsrx4x2.jpg)
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 18, 2011
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2010, through December 31, 2010, as provided by Bill Vasiliou, Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2010, Dreyfus BASIC Massachusetts Municipal Money Market Fund produced an annualized yield of 0.00%.Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.00%.1
Money market yields remained at historical lows as the U.S. economy continued to recover sluggishly from recession, and the Federal Reserve Board (the “Fed”) left short-term interest rates unchanged.
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, the fund normally invests substantially all of its assets in short-term high quality municipal obligations that provide income exempt from federal and Massachusetts state personal income taxes. We also actively manage the fund’s weighted average maturity in anticipation of interest-rate and supply-and-demand changes in Massachusetts’ 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, if they become available.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)
Low Yields Persisted in a Subpar Recovery
The U.S. economy continued to recover from recession over the second half of 2010. Manufacturing activity, consumer spending and corporate earnings increased, supporting the expansion. Earlier fears of a double-dip recession subsided. Nonetheless, the recovery remained slower than historical averages, as unemployment remained stubbornly high and many regional housing markets have not yet improved meaningfully.
Although Massachusetts carries one of the heavier debt loads in the nation, it weathered the downturn better than most other states.The state government has closed budget gaps quickly through spending cuts and revenue enhancements, and it has maintained a cushion against unexpected revenue shortfalls.
In this economic environment, and as it has since December 2008, the Fed maintained its target for the overnight federal funds rate in a range between 0% and 0.25%. In early September, the Fed announced a new round of quantitative easing, which is designed to stimulate credit markets through the purchase of $600 billion of U.S. Treasury securities. Although longer-term financial assets generally rallied on this news as investors looked forward to a more robust recovery, money market yields generally remained anchored by the historically low federal funds rate, and tax-exempt money market instruments continued to provide yields of little more than zero percent.
Supply-and-demand influences in the tax-exempt money markets generally remained favorable during the reporting period. Despite heavier borrowing needs nationally, the supply of newly issued municipal money market instruments remained relatively low, primarily due to the federally subsidized Build America Bonds program, which shifted a portion of municipal issuance to the taxable bond market. Meanwhile, demand for municipal money market instruments proved robust, including from non-traditional investors seeking alternatives to taxable money market instruments.This supply-and-demand dynamic began to change near year-end as the expiration of the Build America Bonds program approached, sparking heightened volatility among longer-term municipal bonds.
4
Focus on Liquidity and Capital Preservation
During the reporting period, we maintained a conservative investment posture, emphasizing direct, high-quality municipal obligations and commercial paper that were deemed creditworthy by our analysts. We also favored instruments backed by pledged tax appropriations or dedicated revenues.We generally shied away from securities issued by entities that depend heavily on state aid. Finally, we maintained the fund’s weighted average maturity in a range that was roughly in line with industry averages.
Increased Supply Could Lift Yields
Despite ongoing signs of economic recovery, inflation has been negligible, and the Fed appears set to maintain its aggressively accommodative monetary policy for some time to come. Therefore, we believe the prudent course continues to be an emphasis on preservation of capital and liquidity. However, we currently expect the supply of newly issued tax-exempt money market instruments to trend higher in 2011 after the Build America Bonds program expires, which could support higher yields.As always, we are prepared to adjust the fund’s strategies should economic and market conditions change.
January 18, 2011
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. | |
Short-term municipal securities holdings (as applicable), while rated in the highest rating category | |
by one or more NRSRO (or unrated, if deemed of comparable quality by Dreyfus), involve credit | |
and liquidity risks and risk of principal loss. | |
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.Yields provided reflect the absorption of | |
certain fund expenses by The Dreyfus Corporation pursuant to an agreement in which | |
shareholders will be given at least 90 days’ notice prior to the time such absorption may be | |
terminated. Had these expenses not been absorbed, fund yields would have been lower, and in | |
some cases, 7-day yields during the reporting period would have been negative absent the | |
expense absorption. |
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, 2010 to December 31, 2010. 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, 2010
Expenses paid per $1,000† | $ 1.46 |
Ending value (after expenses) | $1,000.00 |
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, 2010
Expenses paid per $1,000† | $ 1.48 |
Ending value (after expenses) | $1,023.74 |
† Expenses are equal to the fund’s annualized expense ratio of .29%, multiplied by the average account value over the |
period, multiplied by 184/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS |
December 31, 2010 (Unaudited) |
Short-Term | Coupon | Maturity | Principal | ||
Investments—99.5% | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts—96.1% | |||||
Boston, | |||||
GO Notes, Refunding | 5.00 | 2/1/11 | 300,000 | 301,144 | |
Holyoke, | |||||
GO Notes, BAN | 1.50 | 2/25/11 | 697,530 | 698,485 | |
Hull, | |||||
GO Notes, BAN | 1.25 | 2/15/11 | 2,900,000 | 2,902,716 | |
Massachusetts, | |||||
Consolidated Loan (Liquidity | |||||
Facility; Dexia Credit Locale) | 0.37 | 1/1/11 | 2,500,000 | a | 2,500,000 |
Massachusetts, | |||||
GO Notes (Central Artery/Ted | |||||
Williams Tunnel Infrastructure | |||||
Loan Act of 2000) (Liquidity | |||||
Facility; State Street Bank | |||||
and Trust Co.) | 0.28 | 1/1/11 | 3,000,000 | a | 3,000,000 |
Massachusetts, | |||||
GO Notes, Refunding (Liquidity | |||||
Facility; State Street Bank | |||||
and Trust Co.) | 0.32 | 1/7/11 | 300,000 | a | 300,000 |
Massachusetts Bay Transportation | |||||
Authority, GO Notes (General | |||||
Transportation System) | |||||
(Liquidity Facility; Dexia | |||||
Credit Locale) | 0.35 | 1/7/11 | 4,000,000 | a | 4,000,000 |
Massachusetts Department of | |||||
Transportation, Metropolitan | |||||
Highway System Senior Revenue | |||||
(LOC; Wells Fargo Bank) | 0.30 | 1/7/11 | 6,000,000 | a | 6,000,000 |
Massachusetts Department of | |||||
Transportation, Metropolitan | |||||
Highway System Subordinated | |||||
Revenue (Commonwealth Contract | |||||
Assistance Secured) (Liquidity | |||||
Facility; Barclays Bank PLC) | 0.28 | 1/7/11 | 3,300,000 | a | 3,300,000 |
Massachusetts Development Finance | |||||
Agency, Education Revenue (The | |||||
Tabor Academy Issue) (LOC; FHLB) | 0.32 | 1/7/11 | 3,500,000 | a,b | 3,500,000 |
Massachusetts Development Finance | |||||
Agency, Higher Education | |||||
Revenue, Refunding (Smith | |||||
College Issue) | 0.31 | 1/7/11 | 3,600,000 | a,b | 3,600,000 |
The Fund | 7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($)�� | |
Massachusetts (continued) | |||||
Massachusetts Development Finance | |||||
Agency, Revenue (Babson | |||||
College Issue) (LOC; FHLB) | 0.29 | 1/7/11 | 1,900,000 | a,b | 1,900,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Boston University | |||||
Issue) (LOC; BNP Paribas) | 0.30 | 1/7/11 | 6,000,000 | a,b | 6,000,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Boston | |||||
University Issue) (LOC; FHLB) | 0.29 | 1/7/11 | 1,460,000 | a,b | 1,460,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Exploration | |||||
School, Inc. Issue) (LOC; TD Bank) | 0.32 | 1/7/11 | 2,500,000 | a,b | 2,500,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Fay School | |||||
Issue) (LOC; TD Bank) | 0.32 | 1/7/11 | 3,800,000 | a,b | 3,800,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Justice | |||||
Resource Institute Issue) | |||||
(LOC; Bank of America) | 0.42 | 1/7/11 | 1,920,000 | a | 1,920,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (New Bedford | |||||
Whaling Museum Issue) (LOC; | |||||
Bank of America) | 0.95 | 1/7/11 | 1,200,000 | a | 1,200,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Saint | |||||
Peter-Marian Issue) | |||||
(LOC; Bank of America) | 0.58 | 1/7/11 | 1,750,000 | a | 1,750,000 |
Massachusetts Development Finance | |||||
Agency, Revenue, Refunding | |||||
(College of The Holy Cross | |||||
Issue) (LOC; Bank of America) | 0.30 | 1/1/11 | 3,700,000 | a,b | 3,700,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue | |||||
(Children’s Hospital Issue) | |||||
(LOC; JPMorgan Chase Bank) | 0.29 | 1/1/11 | 2,035,000 | a | 2,035,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Great | |||||
Brook Valley Health Center | |||||
Issue) (LOC; TD Bank) | 0.32 | 1/7/11 | 2,445,000 | a | 2,445,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts (continued) | |||||
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue | |||||
(Massachusetts Institute of | |||||
Technology Issue) | 0.27 | 1/7/11 | 3,800,000 | a,b | 3,800,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Partners | |||||
HealthCare System Issue) | |||||
(LOC; Citibank NA) | 0.31 | 1/7/11 | 3,300,000 | a | 3,300,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Peabody | |||||
Essex Museum Issue) | |||||
(LOC; Bank of America) | 0.42 | 1/7/11 | 2,135,000 | a | 2,135,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue | |||||
(Williams College Issue) | 0.45 | 4/7/11 | 1,500,000 | b | 1,500,000 |
Massachusetts Water Pollution | |||||
Abatement Trust, | |||||
Pool Program Bonds | 5.00 | 8/1/11 | 250,000 | 255,923 | |
Massachusetts Water Pollution | |||||
Abatement Trust, | |||||
Pool Program Bonds | 5.50 | 8/1/11 | 525,000 | 539,433 | |
Massachusetts Water Resources | |||||
Authority, Multi-Modal | |||||
Subordinated General Revenue, | |||||
Refunding (LOC; Landesbank | |||||
Baden-Wurttemberg) | 0.32 | 1/1/11 | 2,000,000 | a | 2,000,000 |
Massachusetts Water Resources | |||||
Authority, Subordinated | |||||
General Revenue (LOC; | |||||
Landesbank Hessen-Thuringen | |||||
Girozentrale) | 0.40 | 1/7/11 | 800,000 | a | 800,000 |
Nantucket, | |||||
GO Notes, RAN | 1.10 | 2/25/11 | 3,200,000 | 3,202,958 | |
Stoughton, | |||||
GO Notes, BAN | 1.50 | 5/13/11 | 2,500,000 | 2,508,087 | |
Stoughton, | |||||
GO Notes, RAN | 1.65 | 1/14/11 | 4,000,000 | 4,001,620 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts (continued) | |||||
Wells Fargo Stage Trust | |||||
(Massachusetts Development | |||||
Finance Agency, Revenue | |||||
(Harvard University Issue)) | |||||
(Liquidity Facility; Wells | |||||
Fargo Bank) | 0.33 | 1/7/11 | 2,000,000 | a,b,c | 2,000,000 |
U.S. Related—3.4% | |||||
Puerto Rico Commonwealth, | |||||
Public Improvement GO Notes, | |||||
Refunding (Insured; Assured | |||||
Guaranty Municipal Corp. and | |||||
Liquidity Facility; Dexia | |||||
Credit Locale) | 0.33 | 1/7/11 | 1,000,000 | a | 1,000,000 |
Puerto Rico Sales Tax Financing | |||||
Corporation, Sales Tax Revenue | |||||
(Liquidity Facility; Citibank NA) | 0.35 | 1/7/11 | 2,000,000 | a,c | 2,000,000 |
Total Investments (cost $87,855,366) | 99.5% | 87,855,366 | |||
Cash and Receivables (Net) | .5% | 461,973 | |||
Net Assets | 100.0% | 88,317,339 |
a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2010. Maturity date represents |
the next demand date, or the ultimate maturity date if earlier. |
b At December 31, 2010, the fund had $33,760,000 or 38.2% of net assets invested in securities whose payment of |
principal and interest is dependent upon revenues generated from education. |
c Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in |
transactions exempt from registration, normally to qualified institutional buyers.At December 31, 2010, these |
securities amounted to $4,000,000 or 4.5% of net assets. |
10
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 | ARRN | Adjustable Rate Receipt Notes |
Assurance Corporation | |||
BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
CIFG | CDC Ixis Financial Guaranty | 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 | ||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract |
GNMA | Government National | GO | General Obligation |
Mortgage Association | |||
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 | PUTTERS Puttable Tax-Exempt Receipts | |
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 | 11 |
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 | 79.1 | ||
AAA,AA,Ad | Aaa,Aa,Ad | AAA,AA,Ad | 12.7 | ||
Not Ratede | Not Ratede | Not Ratede | 8.2 | ||
100.0 |
† Based on total investments. |
d Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
e Securities which, while not rated by Fitch, Moody’s and Standard & Poor’s, have been determined by the Manager to |
be of comparable quality to those rated securities in which the fund may invest. |
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2010 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 87,855,366 | 87,855,366 |
Cash | 369,150 | |
Interest receivable | 117,011 | |
88,341,527 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 24,185 | |
Dividend payable | 3 | |
24,188 | ||
Net Assets ($) | 88,317,339 | |
Composition of Net Assets ($): | ||
Paid-in capital | 88,317,339 | |
Net Assets ($) | 88,317,339 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 88,328,424 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
The Fund | 13 |
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2010 (Unaudited) |
Investment Income ($): | |
Interest Income | 123,366 |
Expenses: | |
Management fee—Note 2 | 193,450 |
Trustees’ fees—Note 2 | 2,882 |
Total Expenses | 196,332 |
Less—reduction in expenses due to undertaking—Note 2 | (70,098) |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (2,882) |
Net Expenses | 123,352 |
Investment Income—Net, representing net increase | |
in net assets resulting from operations | 14 |
See notes to financial statements. |
14
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||
December 31, 2010 | Year Ended | |
(Unaudited) | June 30, 2010 | |
Operations ($): | ||
Investment Income-Net, representing net increase | ||
in net assets resulting from operations | 14 | 34 |
Dividends to Shareholders from ($): | ||
Investment income—net | (14) | (49) |
Beneficial Interest Transactions ($1.00 per share): | ||
Net proceeds from shares sold | 96,560,609 | 214,114,794 |
Dividends reinvested | 1 | 3 |
Cost of shares redeemed | (101,029,433) | (254,135,177) |
Increase (Decrease) in Net Assets from | ||
Beneficial Interest Transactions | (4,468,823) | (40,020,380) |
Total Increase (Decrease) in Net Assets | (4,468,823) | (40,020,395) |
Net Assets ($): | ||
Beginning of Period | 92,786,162 | 132,806,557 |
End of Period | 88,317,339 | 92,786,162 |
See notes to financial statements. |
The Fund | 15 |
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, 2010 | Year Ended June 30, | |||||
(Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | |
Per Share Data ($): | ||||||
Net asset value, | ||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Investment Operations: | ||||||
Investment income—net | .000a | .000a | .009 | .026 | .032 | .024 |
Distributions: | ||||||
Dividends from | ||||||
investment income—net | (.000)a (.000)a | (.009) | (.026) | (.032) | (.024) | |
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Total Return (%) | .00b,c | .00b | .95 | 2.59 | 3.21 | 2.48 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | ||||||
to average net assets | .46c | .47 | .49 | .46 | .46 | .46 |
Ratio of net expenses | ||||||
to average net assets | .29c | .32 | .47 | .45 | .45 | .45 |
Ratio of net investment income | ||||||
to average net assets | .00b,c | .00b | .96 | 2.51 | 3.17 | 2.46 |
Net Assets, end of period | ||||||
($ x 1,000) | 88,317 | 92,786 | 132,807 | 179,231 | 162,062 | 130,286 |
a | Amount represents less than $.001 per share. |
b | Amount represents less than .01%. |
c | Annualized. |
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 seeks to provide a high level of current income exempt from federal and Massachusetts state personal 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 “Di stributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Fund | 17 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, 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
18
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, 2010 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | - |
Level 2—Other Significant Observable Inputs | 87,855,366 |
Level 3—Significant Unobservable Inputs | - |
Total | 87,855,366 |
† | See Statement of Investments for additional detailed categorizations. |
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the commonwealth and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian,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 Fund | 19 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
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 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, 2010, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain 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, 2010 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, 2010 was as follows: tax exempt income $34 and ordinary income $15. The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2010, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee And Other Transactions With Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is con-
20
tractually 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 who is not an “interested person” of the Trust (as defined in the Act) receives $60,000 per annum, plus $7,000 per joint Board meeting of the Trust,The Dreyfus/Laurel Funds, Inc.,The Dreyfus/Laurel Funds Trust, Dreyfus Investment Funds and Dreyfus Funds, Inc. (collectively, the “Board Group Open-End Funds”) attended, $2,500 for separate in-person committee meetings attended which are not held in conjunction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that are conducted by telephone. The Board Group Open-End Funds also reimburse each Trustee who is not an “interested person” of the Trust (as defined in the Act) 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). The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, receives $1,350 per applicable committee meeting. In the event that there is an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund, the $2,500 or $2,000 fee, as applicable, is allocated between the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund.The TrustR 17;s portion of these fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level. Such expense limitations may fluctuate daily, are voluntary and not contractual and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $70,098 during the period ended December 31, 2010.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $32,222, which is offset against an expense reimbursement currently in effect in the amount of $8,037.
NOTE 3—Securities Transactions:
The fund is permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board ofTrustees.The procedures have been designed to ensure that any purchase or sale of securities by the fund from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment adviser), commonTrustee and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2010, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $17,235,000 and $9,000,000, respectively.
22
NOTES
For More Information
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Telephone 1-800-645-6561
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 E-mail Send your request to info@dreyfus.com Internet Information can be viewed online or downloaded at: http://www.dreyfus.com
The fund will disclose daily, on www.dreyfus.com, the fund’s complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings.
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
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© 2011 MBSC Securities Corporation
Dreyfus BASIC |
New York Municipal |
Money Market Fund |
SEMIANNUAL REPORT December 31, 2010
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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.
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Contents | |
THE FUND | |
2 | A Letter from the Chairman and 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 |
15 | Statement of Assets and Liabilities |
16 | Statement of Operations |
17 | Statement of Changes in Net Assets |
18 | Financial Highlights |
19 | Notes to Financial Statements |
FOR MORE INFORMATION | |
Back Cover |
Dreyfus BASIC
New York Municipal
Money Market Fund
The Fund
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A LETTER FROM THE CHAIRMAN AND 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, 2010, through December 31, 2010.
Although 2010 proved to be a volatile year for many longer-term assets, such as stocks and bonds, the reporting period ended with many asset categories producing respectable, positive returns. Investors’ early concerns regarding sovereign debt issues in Europe and stubbornly high unemployment in the United States later gave way to optimism that massive economic stimulus programs, robust growth in the world’s emerging markets, a strong holiday retail season and rising corporate earnings signaled better economic times ahead.
Although U.S. GDP growth was positive throughout the reporting period, the economic recovery has been milder than historical averages. Therefore, we are guardedly optimistic regarding the U.S. economy’s prospects in 2011, and many experts believe inflationary pressures and short-term interest rates should remain low over the near-term, potentially preventing any significant rise in money market yields.What does this mean for your investment portfolio? We suggest talking to your financial advisor, who can help you review your allocations and your current liquid asset needs, and identify potential opportunities suitable for your individual needs and risk tolerance in today’s market environment.
For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Thank you for your continued confidence and support.
![](https://capedge.com/proxy/N-CSRS/0000717341-11-000015/bnymmmncsrx4x2.jpg)
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 18, 2011
2
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DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2010, through December 31, 2010, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2010, Dreyfus BASIC New York Municipal Money Market Fund produced an annualized yield of 0.00%. Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.00%.1
Money market yields remained at historical lows as the U.S. economy continued to recover sluggishly from recession, and the Federal Reserve Board (the “Fed”) left short-term interest rates unchanged.
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, the fund normally invests substantially all of its assets in short-term high quality municipal obligations that provide income exempt from federal, NewYork state and NewYork city personal income taxes. 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, if such securities become available.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)
Low Yields Persisted in a Subpar Recovery
The U.S. economy continued to recover from recession over the second half of 2010. Manufacturing activity, consumer spending and corporate earnings increased reducing earlier fears of a double-dip recession. Nonetheless, the recovery remained slower than historical averages, as unemployment remained stubbornly high and many regional housing markets have not yet improved meaningfully.
Like most states, NewYork has remained under fiscal pressure.Although conditions on Wall Street have improved since the 2008 financial crisis, state tax revenues have continued to fall short of budgeted projections, resulting in financial challenges for NewYork and its localities that may persist for some time.
In this economic environment, and as it has since December 2008, the Fed maintained its target for the overnight federal funds rate in a range between 0% and 0.25%. In early September, the Fed announced a new round of quantitative easing, which is designed to stimulate credit markets through the purchase of $600 billion of U.S. Treasury securities. Although longer-term financial assets generally rallied on this news as investors looked forward to a more robust recovery, money market yields generally remained anchored by the historically low federal funds rate, and tax-exempt money market instruments continued to provide yields of little more than zero percent.
Supply-and-demand influences in the tax-exempt money markets generally remained favorable during the reporting period. Despite heavier borrowing needs nationally, the supply of newly issued municipal money market instruments remained relatively low, primarily due to the federally subsidized Build America Bonds program, which shifted a portion of municipal issuance to the taxable bond market. Meanwhile, demand for municipal money market instruments proved robust, including from non-traditional investors seeking alternatives to taxable money market instruments.This supply-and-demand dynamic began to change near year-end as the expiration of the Build America Bonds program approached, sparking heightened volatility among longer-term municipal bonds.
4
Focus on Liquidity and Capital Preservation
During the reporting period, we maintained a conservative investment posture, emphasizing direct, high-quality municipal obligations and commercial paper that were deemed creditworthy by our analysts.We also favored instruments backed by pledged tax appropriations or dedicated revenues.We generally shied away from securities issued by entities that depend heavily on state aid. Finally, we maintained the fund’s weighted average maturity in a range that was roughly in line with industry averages.
Increased Supply Could Lift Yields
Despite ongoing signs of economic recovery, inflation has been negligible, and the Fed appears set to maintain its aggressively accommodative monetary policy for some time to come. Therefore, we believe the prudent course continues to be an emphasis on preservation of capital and liquidity. However, we currently expect the supply of newly issued tax-exempt money market instruments to trend higher in 2011, after the Build America Bonds program expires, which could support higher yields.As always, we are prepared to adjust the fund’s strategies should economic and market conditions change.
January 18, 2011
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. | |
Short-term municipal securities holdings, while rated in the highest rating category by one or more | |
NRSRO (or unrated, if deemed of comparable quality by Dreyfus), involve credit and liquidity | |
risks and risk of principal loss. | |
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.Yields provided reflect the absorption of certain fund | |
expenses by The Dreyfus Corporation pursuant to an undertaking in effect that may be extended, | |
terminated or modified at any time. Had these expenses not been absorbed, fund yields would | |
have been lower, and in some cases, 7-day yields during the reporting period would have been | |
negative absent the expense absorption. |
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, 2010 to December 31, 2010. 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, 2010
Expenses paid per $1,000† | $ 2.17 |
Ending value (after expenses) | $1,000.00 |
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, 2010
Expenses paid per $1,000† | $ 2.19 |
Ending value (after expenses) | $1,023.04 |
† Expenses are equal to the fund’s annualized expense ratio of .43%, multiplied by the average account value over the |
period, multiplied by 184/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS |
December 31, 2010 (Unaudited) |
Short-Term | Coupon | Maturity | Principal | ||
Investments—99.9% | Rate (%) | Date | Amount ($) | Value ($) | |
New York—96.7% | |||||
Albany Housing Authority, | |||||
Revenue (Nutgrove Garden | |||||
Apartments Project) | |||||
(LOC; RBS Citizens NA) | 0.50 | 1/7/11 | 1,330,000 | a | 1,330,000 |
Albany Industrial Development | |||||
Agency, Civic Facility Revenue | |||||
(Renaissance Corporation of | |||||
Albany Project) (LOC; M&T Trust) | 0.39 | 1/7/11 | 2,000,000 | a | 2,000,000 |
Belfast Central School District, | |||||
GO Notes, BAN | 1.75 | 5/17/11 | 1,660,000 | 1,663,968 | |
Broome County Industrial | |||||
Development Agency, IDR | |||||
(Parlor City Paper Box | |||||
Company, Inc. Facility) | |||||
(LOC; U.S. Bank NA) | 0.47 | 1/7/11 | 2,535,000 | a | 2,535,000 |
East Rochester Housing Authority, | |||||
Housing Revenue (Park Ridge | |||||
Nursing Home, Inc. Project) | |||||
(LOC; JPMorgan Chase Bank) | 0.35 | 1/7/11 | 4,375,000 | a | 4,375,000 |
Elmira City School District, | |||||
GO Notes, BAN | 1.50 | 6/30/11 | 2,200,000 | 2,203,754 | |
Erie County Industrial Development | |||||
Agency, IDR (Luminescent | |||||
System, Inc. Project) (LOC; | |||||
HSBC Bank USA) | 0.45 | 1/7/11 | 2,595,000 | a | 2,595,000 |
Evans, | |||||
GO Notes, BAN | 1.25 | 10/6/11 | 1,000,000 | 1,001,500 | |
Forestville Central School | |||||
District, GO Notes, BAN | 2.00 | 7/14/11 | 1,400,000 | 1,406,398 | |
Long Island Power Authority, | |||||
Electric System Subordinated | |||||
Revenue (LOC: Bayerische | |||||
Landesbank and | |||||
Westdeutsche Landesbank) | 0.31 | 1/1/11 | 1,850,000 | a | 1,850,000 |
Metropolitan Transportation | |||||
Authority, Dedicated Tax Fund | |||||
Revenue (Insured; Assured | |||||
Guaranty Municipal Corp. and | |||||
Liquidity Facility; Dexia | |||||
Credit Locale) | 0.39 | 1/7/11 | 5,000,000 | a | 5,000,000 |
The Fund | 7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
Metropolitan Transportation | |||||
Authority, Transportation | |||||
Revenue, Refunding (Insured; | |||||
Assured Guaranty Municipal | |||||
Corp. and Liquidity Facility; | |||||
Dexia Credit Locale) | 0.33 | 1/7/11 | 2,000,000 | a | 2,000,000 |
Metropolitan Transportation | |||||
Authority, Transportation | |||||
Revenue, Refunding (Insured; | |||||
Assured Guaranty Municipal | |||||
Corp. and Liquidity Facility; | |||||
Westdeutsche Landesbank) | 0.37 | 1/7/11 | 15,500,000 | a | 15,500,000 |
Monroe County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (YMCA of | |||||
Greater Rochester Project) | |||||
(LOC; M&T Trust) | 0.39 | 1/7/11 | 2,400,000 | a | 2,400,000 |
Monroe County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (YMCA of | |||||
Greater Rochester Project) | |||||
(LOC; M&T Trust) | 0.39 | 1/7/11 | 4,925,000 | a | 4,925,000 |
Monroe County Industrial | |||||
Development Agency, IDR | |||||
(Mercury Print Productions, Inc. | |||||
Facility) (LOC; M&T Trust) | 1.32 | 1/7/11 | 45,000 | a | 45,000 |
Nassau County Industrial | |||||
Development Agency, Housing | |||||
Revenue (Rockville Centre | |||||
Housing Associates, L.P. | |||||
Project) (LOC; M&T Trust) | 0.44 | 1/7/11 | 8,000,000 | a | 8,000,000 |
New York City, | |||||
GO Notes | 5.00 | 8/1/11 | 250,000 | 255,996 | |
New York City, | |||||
GO Notes (Liquidity Facility; | |||||
Landesbank Hessen-Thuringen | |||||
Girozentrale) | 0.33 | 1/1/11 | 500,000 | a | 500,000 |
New York City, | |||||
GO Notes (LOC; Bank of America) | 0.33 | 1/1/11 | 1,100,000 | a | 1,100,000 |
New York City, | |||||
GO Notes (LOC; Bank of America) | 0.36 | 1/7/11 | 11,000,000 | a | 11,000,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
New York City, | |||||
GO Notes (LOC; | |||||
Bayerische Landesbank) | 0.33 | 1/1/11 | 4,800,000 | a | 4,800,000 |
New York City, | |||||
GO Notes (LOC; Union Bank NA) | 0.36 | 1/7/11 | 3,000,000 | a | 3,000,000 |
New York City, | |||||
GO Notes (LOC; | |||||
Westdeutsche Landesbank) | 0.30 | 1/1/11 | 2,900,000 | a | 2,900,000 |
New York City Capital Resource | |||||
Corporation, Recovery Zone | |||||
Facility Revenue (Arverne by | |||||
the Sea Project) (LOC; TD Bank) | 0.34 | 1/7/11 | 3,100,000 | a | 3,100,000 |
New York City Housing Development | |||||
Corporation, MFHR (Liquidity | |||||
Facility; Citibank NA) | 0.38 | 1/7/11 | 6,700,000 | a,b | 6,700,000 |
New York City Industrial | |||||
Development Agency, Civic Facility | |||||
Revenue (Birch Wathen Lenox | |||||
School Project) (LOC; TD Bank) | 0.39 | 1/7/11 | 3,000,000 | a | 3,000,000 |
New York City Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Hewitt | |||||
School Project) (LOC; TD Bank) | 0.39 | 1/7/11 | 3,800,000 | a | 3,800,000 |
New York City Industrial | |||||
Development Agency, IDR | |||||
(Novelty Crystal Corporation | |||||
Project) (LOC; Commerce Bank NA) | 0.54 | 1/7/11 | 3,190,000 | a | 3,190,000 |
New York City Industrial | |||||
Development Agency, IDR | |||||
(Super-Tek Products, Inc. | |||||
Project) (LOC; Citibank NA) | 0.54 | 1/7/11 | 4,340,000 | a | 4,340,000 |
New York City Transitional Finance | |||||
Authority, Revenue (New York | |||||
City Recovery) (Liquidity | |||||
Facility; Bayerische Landesbank) | 0.33 | 1/1/11 | 1,815,000 | a | 1,815,000 |
New York City Transitional Finance | |||||
Authority, Revenue (New York | |||||
City Recovery) (Liquidity | |||||
Facility; Landesbank | |||||
Baden-Wurttemberg) | 0.33 | 1/1/11 | 1,000,000 | a | 1,000,000 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
New York City Transitional Finance | |||||
Authority, Revenue (New York | |||||
City Recovery) (Liquidity | |||||
Facility; Landesbank | |||||
Hessen-Thuringen Girozentrale) | 0.26 | 1/1/11 | 1,000,000 | a | 1,000,000 |
New York Liberty Development | |||||
Corporation, Liberty Revenue | |||||
(World Trade Center Project) | 0.32 | 5/15/11 | 10,000,000 | 10,000,000 | |
New York Liberty Development | |||||
Corporation, Recovery Zone | |||||
Revenue (3 World Trade | |||||
Center Project) | 0.42 | 1/19/12 | 4,000,000 | 4,000,000 | |
New York Local Government | |||||
Assistance Corporation, GO | |||||
Notes (LOC; Landesbank | |||||
Hessen-Thuringen Girozentrale) | 0.33 | 1/7/11 | 3,000,000 | a | 3,000,000 |
New York State Dormitory | |||||
Authority, Revenue (Mount | |||||
Saint Mary College) (LOC; | |||||
JPMorgan Chase Bank) | 0.33 | 1/7/11 | 3,600,000 | a | 3,600,000 |
New York State Dormitory | |||||
Authority, Revenue | |||||
(University of Rochester) | |||||
(LOC; Bank of America) | 0.30 | 1/7/11 | 4,000,000 | a | 4,000,000 |
New York State Housing Finance | |||||
Agency, Housing Revenue | |||||
(Baisley Park Gardens) | |||||
(LOC; Citibank NA) | 0.33 | 1/7/11 | 4,700,000 | a | 4,700,000 |
New York State Housing Finance | |||||
Agency, Housing Revenue | |||||
(Gateway to New Cassel Project) | |||||
(LOC; JPMorgan Chase Bank) | 0.34 | 1/7/11 | 3,800,000 | a | 3,800,000 |
New York State Thruway Authority, | |||||
General Revenue, BAN | 3.00 | 7/15/11 | 2,200,000 | 2,226,087 | |
New York State Thruway Authority, | |||||
General Revenue, BAN | 4.00 | 7/15/11 | 350,000 | 355,600 | |
Olean, | |||||
GO Notes, BAN | 1.50 | 8/11/11 | 1,700,000 | 1,701,980 |
10
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
Otsego County Industrial | |||||
Development Agency, | |||||
Civic Facility Revenue | |||||
(Noonan Community | |||||
Service Corporation | |||||
Project) (LOC; FHLB) | 0.39 | 1/7/11 | 1,685,000 | a | 1,685,000 |
Otsego County Industrial | |||||
Development Agency, | |||||
Civic Facility Revenue | |||||
(Saint James Retirement | |||||
Community Project) | |||||
(LOC; M&T Trust) | 0.39 | 1/7/11 | 1,820,000 | a | 1,820,000 |
Port Authority of New York and | |||||
New Jersey, Equipment Notes | 0.40 | 1/7/11 | 4,000,000 | a | 4,000,000 |
Rockland County Industrial | |||||
Development Agency, IDR | |||||
(Intercos America, Inc. | |||||
Project) (LOC; HSBC Bank USA) | 0.45 | 1/7/11 | 3,200,000 | a | 3,200,000 |
Rockland County Industrial | |||||
Development Authority, Revenue | |||||
(Northern Manor Multicare | |||||
Center, Inc. Project) | |||||
(LOC; M&T Trust) | 0.44 | 1/7/11 | 2,715,000 | a | 2,715,000 |
Rome, | |||||
GO Notes, BAN | 1.25 | 1/20/11 | 1,500,000 | 1,500,193 | |
Sag Harbor Union Free School | |||||
District, GO Notes, TAN | 1.50 | 6/23/11 | 1,400,000 | 1,402,620 | |
Schenectady | |||||
GO Notes, BAN | 1.50 | 5/20/11 | 5,000,000 | 5,004,679 | |
Springs Union Free School | |||||
District, GO Notes, TAN | 1.50 | 6/30/11 | 1,100,000 | 1,104,866 | |
Sullivan County, | |||||
GO Notes, BAN | 1.50 | 3/10/11 | 2,295,000 | 2,297,970 | |
Sullivan County, | |||||
GO Notes, TAN | 1.00 | 3/10/11 | 1,600,000 | 1,601,492 | |
Ticonderoga Central School | |||||
District, GO Notes, BAN | 2.00 | 6/24/11 | 2,100,000 | 2,108,393 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
Tompkins County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Tompkins | |||||
Cortland Community College | |||||
Foundation, Inc. Project) | |||||
(LOC; RBS Citizens NA) | 0.48 | 1/7/11 | 3,520,000 | a | 3,520,000 |
Triborough Bridge and Tunnel | |||||
Authority, General Revenue | |||||
(Liquidity Facility; Dexia | |||||
Credit Locale) | 0.39 | 1/7/11 | 2,200,000 | a | 2,200,000 |
U.S. Related—3.2% | |||||
Puerto Rico Industrial, Tourist, | |||||
Educational, Medical and | |||||
Environmental Control | |||||
Facilities Financing Authority, | |||||
Environmental Control Facilities | |||||
Revenue (Bristol-Myers | |||||
Squibb Company Project) | 0.44 | 1/7/11 | 4,400,000 | a | 4,400,000 |
Puerto Rico Sales Tax Financing | |||||
Corporation, Sales Tax Revenue | |||||
(Liquidity Facility; Citibank NA) | 0.35 | 1/7/11 | 1,550,000 | a,b | 1,550,000 |
Total Investments (cost $187,825,496) | 99.9% | 187,825,496 | |||
Cash and Receivables (Net) | .1% | 180,868 | |||
Net Assets | 100.0% | 188,006,364 |
a | Variable rate demand note—rate shown is the interest rate in effect at December 31, 2010. 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, 2010, these securities amounted to $8,250,000 or 4.4% of net assets. |
12
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 | ARRN | Adjustable Rate Receipt Notes |
Assurance Corporation | |||
BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
CIFG | CDC Ixis Financial Guaranty | 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 | ||
GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract |
GNMA | Government National | GO | General Obligation |
Mortgage Association | |||
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 | PUTTERS | Puttable Tax-Exempt Receipts |
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 |
TheFund 13
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 | 76.5 | ||
AAA,AA,Ac | Aaa,Aa,Ac | AAA,AA,Ac | 8.1 | ||
Not Ratedd | Not Ratedd | Not Ratedd | 15.4 | ||
100.0 |
† Based on total investments. |
c Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
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.
14
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2010 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 187,825,496 | 187,825,496 |
Interest receivable | 271,020 | |
188,096,516 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 70,297 | |
Cash overdraft due to Custodian | 19,240 | |
Dividend payable | 608 | |
Payable for shares of Beneficial Interest redeemed | 7 | |
90,152 | ||
Net Assets ($) | 188,006,364 | |
Composition of Net Assets ($): | ||
Paid-in capital | 188,006,364 | |
Net Assets ($) | 188,006,364 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 188,006,374 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
The Fund | 15 |
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2010 (Unaudited) |
Investment Income ($): | |
Interest Income | 447,346 |
Expenses: | |
Management fee—Note 2 | 467,774 |
Trustees’ fees—Note 2 | 6,134 |
Total Expenses | 473,908 |
Less—reduction in expenses due to undertaking—Note 2 | (22,781) |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (6,134) |
Net Expenses | 444,993 |
Investment Income—Net, representing net increase | |
in net assets resulting from operations | 2,353 |
See notes to financial statements. |
16
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||
December 31, 2010 | Year Ended | |
(Unaudited) | June 30, 2010 | |
Operations ($): | ||
Investment Income-Net, representing | ||
net increase in net assets | ||
resulting from operations | 2,353 | 206,310 |
Dividends to Shareholders from ($): | ||
Investment income—net | (2,353) | (206,310) |
Beneficial Interest Transactions ($1.00 per share): | ||
Net proceeds from shares sold | 96,790,346 | 216,031,548 |
Dividends reinvested | 1,914 | 155,963 |
Cost of shares redeemed | (130,407,901) | (298,004,079) |
Increase (Decrease) in Net Assets from | ||
Beneficial Interest Transactions | (33,615,641) | (81,816,568) |
Total Increase (Decrease) in Net Assets | (33,615,641) | (81,816,568) |
Net Assets ($): | ||
Beginning of Period | 221,622,005 | 303,438,573 |
End of Period | 188,006,364 | 221,622,005 |
See notes to financial statements. |
The Fund | 17 |
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, 2010 | Year Ended June 30, | |||||
(Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | |
Per Share Data ($): | ||||||
Net asset value, | ||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Investment Operations: | ||||||
Investment income—net | .000a | .001 | .013 | .026 | .032 | .025 |
Distributions: | ||||||
Dividends from | ||||||
investment income—net | (.000)a | (.001) | (.013) | (.026) | (.032) | (.025) |
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Total Return (%) | .00b,c | .07 | 1.35 | 2.67 | 3.25 | 2.52 |
Ratios/Supplemental Data (%): | ||||||
Ratio of total expenses | ||||||
to average net assets | .46c | .47 | .49 | .46 | .45 | .45 |
Ratio of net expenses | ||||||
to average net assets | .43c | .43 | .48 | .45 | .45 | .45 |
Ratio of net investment income | ||||||
to average net assets | .00b,c | .07 | 1.37 | 2.61 | 3.21 | 2.49 |
Net Assets, end of period | ||||||
($ x 1,000) | 188,006 221,622 | 303,439 | 364,121 | 321,893 | 286,993 |
a | Amount represents less than $.001 per share. |
b | Amount represents less than .01%. |
c | Annualized. |
See notes to financial statements.
18
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 seeks to provide a high level of current income exempt from federal, New York state and New York city personal 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 R 20;Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions.Actual results could differ from those estimates.
The Fund | 19 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, 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
20
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, 2010 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | — |
Level 2—Other Significant Observable Inputs | 187,825,496 |
Level 3—Significant Unobservable Inputs | — |
Total | 187,825,496 |
† | See Statement of Investments for additional detailed categorizations. |
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund.
All cash balances were maintained with the Custodian,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 | 21 |
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, 2010, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain 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, 2010 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, 2010 was as follows: tax-exempt income $206,310.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2010, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee and Other Transactions With Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid
22
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 who is not an “interested person” of the Trust (as defined in the Act) receives $60,000 per annum, plus $7,000 per joint Board meeting of the Trust,The Dreyfus/Laurel Funds, Inc.,The Dreyfus/Laurel Funds Trust, Dreyfus Investment Funds and Dreyfus Funds, Inc. (collectively, the “Board Group Open-End Funds”) attended, $2,500 for separate in-person committee meetings attended which are not held in con junction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that are conducted by telephone. The Board Group Open-End Funds also reimburse each Trustee who is not an “interested person” of the Trust (as defined in the Act) 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). The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, receives $1,350 per applicable committee meeting. In the event that there is an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund, the $2,500 or $2,000 fee, as applicable, is allocated between the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund.The Trust’s portion of these fees and expenses are charged and allocated to each series based on net assets. Amounts required to be paid by the Trust directly to the non-interested Trustees, that would be applied to offset a portion of the management fee payable to the Manager, are in fact paid directly by the Manager to the non-interested Trustees.
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The Manager has undertaken to reimburse expenses in the event that current yields drop below a certain level. Such expense limitations may fluctuate daily, are voluntary and not contractual and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $22,781 during the period ended December 31, 2010.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $74,601, which are offset against an expense reimbursement currently in effect in the amount of $4,304.
NOTE 3—Securities Transactions:
The fund is permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board ofTrustees.The procedures have been designed to ensure that any purchase or sale of securities by the fund from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment adviser), commonTrustee and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2010, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $42,300,000 and $52,825,000, respectively.
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For More Information
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Telephone 1-800-645-6561
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 E-mail Send your request to info@dreyfus.com Internet Information can be viewed online or downloaded at: http://www.dreyfus.com
The fund will disclose daily, on www.dreyfus.com, the fund’s complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings.
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund's Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
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© 2011 MBSC Securities Corporation
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. [CLOSED END FUNDS ONLY]
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
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/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
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Date: | February 23, 2011 |
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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/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
| |
Date: | February 23, 2011 |
| |
By: /s/ James Windels | |
James Windels, Treasurer
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Date: | February 23, 2011 |
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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)