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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| Janette E. Farragher, 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: | 12/31/11 |
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Save time. Save paper. View your next shareholder report online as soon as it’s available. Log into www.dreyfus.com and sign up for Dreyfus eCommunications. It’s simple and only takes a few minutes.
The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
Contents | |
THE FUND | |
2 | A Letter from the 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
California Municipal
Money Market Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We present to you this semiannual report for Dreyfus BASIC California Municipal Money Market Fund, covering the six-month period from July 1, 2011, through December 31, 2011. 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.
U.S. financial markets were significantly impacted by a “flight to quality” sentiment in which investors fled riskier assets due to adverse macroeconomic developments ranging from an unprecedented downgrade of long-term U.S. debt securities to the resurgence of a sovereign debt crisis in Europe. Ironically, despite the rating downgrade, long-term U.S. Treasury securities ended the reporting period with double-digit total returns. Meanwhile, the day-to-day movements of the stock market were often tumultuous, even as U.S. corporations achieved record-setting profits and market valuations dropped below historical norms.
Our economic forecast calls for a mild acceleration of the U.S. recovery as the domestic banking system regains strength, credit conditions loosen and housing markets begin a long-awaited convalescence. Under other circumstances a stronger recovery might be expected to lift short-term interest rates, but the Federal Reserve Board has indicated that it is likely to keep rates low for some time to come in the absence of meaningful inflation. Of course, we encourage you to talk with your financial adviser to help ensure that your investment objectives are properly aligned with your risk tolerance in pursuing potential market opportunities in 2012.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 17, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2011, through December 31, 2011, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2011, 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
Tax-exempt money market yields remained stable at historically low levels during the reporting period as short-term interest rates were unchanged in a faltering U.S. economy.
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 liq-uidity.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)
Yields Stay Steady Despite Shifting Economic Sentiment
The second half of 2011 began amid mounting concerns about the U.S. and global economies. A sovereign debt crisis in Europe was escalating as Greece appeared headed for default and financial instability spread to other members of the European Union. In the United States, high unemployment and weak housing markets threatened the economic recovery, and a contentious political debate regarding U.S. government spending and borrowing intensified.
Volatility in stock and bond markets was especially severe in August and September, after Standard & Poor’s downgraded its credit rating on long-term U.S. debt securities. Ironically, U.S. government securities rallied strongly during a “flight to quality” in the wake of the downgrade. However, the final quarter of the year saw a partial reversal of this trend, as riskier securities that were punished in late summer rebounded and traditional safe havens gave back some of their previous gains when some macroeconomic concerns seemed to ease.
Throughout the reporting period, and as it has since December 2008, the Federal Reserve Board (the “Fed”) maintained an aggressively accommodative policy stance, leaving the overnight federal funds rate in a range between 0% and 0.25%. Consequently, municipal money market yields remained near zero percent.
The supply of newly issued municipal money market instruments remained relatively meager during the reporting period, in part due to political pressure to reduce government spending and borrowing. Meanwhile, demand remained steadily robust from individuals seeking to shelter income from rising state taxes and institutional investors searching for alternatives to low yielding taxable money market instruments.
From a credit-quality perspective, California has reduced spending, but tax receipts have fallen short of budgeted projections, potentially triggering additional cuts in spending on education, health and human services.
A Credit-Conscious Investment Posture
As we have for some time, we maintained a conservative investment posture during the reporting period, emphasizing direct, high-quality
4
municipal obligations and commercial paper deemed creditworthy by our analysts. We favored instruments backed by pledged tax appropriations or dedicated revenues, but we generally shied away from California’s general obligation debt and instruments issued by localities that depend heavily on state aid.
Outlook Clouded by Economic Uncertainty
As of year-end, we are cautiously optimistic regarding the prospects for economic growth in 2012.The U.S. and California economies appear to have gained a degree of momentum, particularly with respect to a recovering labor market. However, the outlook for the New Year remains cloudy due to the persistence of the European debt crisis and uncertainty regarding upcoming U.S. elections and their impact on the nation’s fiscal policies. In light of the subpar recovery, the Fed has signaled that it is prepared to maintain short-term interest rates near current levels “at least through mid-2013.” With money market yields likely to remain near historical lows, we believe that the prudent course continues to be an emphasis on preservation of capital and liquidity.
January 17, 2012
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, 2011 to December 31, 2011. 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, 2011 | ||
Expenses paid per $1,000† | $ | 1.36 |
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, 2011 | ||
Expenses paid per $1,000† | $ | 1.37 |
Ending value (after expenses) | $ | 1,023.78 |
† Expenses are equal to the fund’s annualized expense ratio of .27%, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS |
December 31, 2011 (Unaudited) |
Short-Term | Coupon | Maturity | Principal | ||
Investments—99.9% | Rate (%) | Date | Amount ($) | Value ($) | |
California—97.3% | |||||
Alameda County Industrial | |||||
Development Authority, Revenue | |||||
(PlyProperties Project) (LOC; | |||||
Wells Fargo Bank) | 0.18 | 1/7/12 | 310,000 | a | 310,000 |
California, | |||||
GO Notes | |||||
(Kindergarten-University) | |||||
(LOC: California State | |||||
Teachers Retirement System and | |||||
Citibank NA) | 0.05 | 1/1/12 | 3,600,000 | a | 3,600,000 |
California, | |||||
GO Notes | |||||
(Kindergarten-University) | |||||
(LOC: California State | |||||
Teachers Retirement System and | |||||
State Street Bank and Trust Co.) | 0.03 | 1/1/12 | 2,000,000 | a | 2,000,000 |
California, | |||||
GO Notes | |||||
(Kindergarten-University) | |||||
(LOC; Citibank NA) | 0.09 | 1/7/12 | 1,200,000 | a | 1,200,000 |
California Department of Water | |||||
Resources, Power Supply Revenue | 5.25 | 5/1/12 | 985,000 | 1,000,597 | |
California Enterprise Development | |||||
Authority, IDR (JBR, Inc. | |||||
Project) (LOC; U.S. Bank NA) | 0.11 | 1/7/12 | 6,000,000 | a | 6,000,000 |
California Enterprise Development | |||||
Authority, Recovery Zone | |||||
Facility Revenue (Regional | |||||
Properties, Inc. Project) | |||||
(LOC; FHLB) | 0.11 | 1/7/12 | 1,600,000 | a | 1,600,000 |
California Health Facilities | |||||
Financing Authority, Revenue | |||||
(Saint Joseph Health System) | |||||
(LOC; Northern Trust Co.) | 0.05 | 1/1/12 | 1,000,000 | a | 1,000,000 |
California Infrastructure and | |||||
Economic Development Bank, IDR | |||||
(Bonny Doon Winery, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.30 | 1/7/12 | 2,785,000 | a | 2,785,000 |
The Fund | 7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
California Infrastructure and | |||||
Economic Development Bank, | |||||
Revenue (7/11 Materials, Inc. | |||||
Project) (LOC; California State | |||||
Teachers Retirement System) | 0.18 | 1/7/12 | 1,650,000 | a | 1,650,000 |
California Infrastructure and | |||||
Economic Development Bank, | |||||
Revenue (Goodwill Industries | |||||
of Orange County, California) | |||||
(LOC; Wells Fargo Bank) | 0.19 | 1/7/12 | 900,000 | a | 900,000 |
California Infrastructure and | |||||
Economic Development | |||||
Bank, Revenue (Southern | |||||
California Public Radio | |||||
Project) (LOC; | |||||
JPMorgan Chase Bank) | 0.11 | 1/1/12 | 2,810,000 | a | 2,810,000 |
California Municipal Finance | |||||
Authority, PCR, Refunding | |||||
(Chevron U.S.A. Inc. Project) | 0.03 | 1/1/12 | 6,800,000 | a,b | 6,800,000 |
California Pollution Control | |||||
Financing Authority, EIR (Air | |||||
Products and Chemicals, Inc./ | |||||
Wilmington Facility) | 0.05 | 1/1/12 | 2,300,000 | a,b | 2,300,000 |
California Pollution Control | |||||
Financing Authority, PCR, | |||||
Refunding (Pacific Gas and | |||||
Electric Company) (LOC; | |||||
JPMorgan Chase Bank) | 0.03 | 1/1/12 | 3,500,000 | a,b | 3,500,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Athens Services Project) | |||||
(LOC; Wells Fargo Bank) | 0.10 | 1/7/12 | 6,100,000 | a,b | 6,100,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Crown Disposal Company, Inc. | |||||
Project) (LOC; Union Bank NA) | 0.13 | 1/7/12 | 2,825,000 | a,b | 2,825,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(GreenWaste Recovery, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.17 | 1/7/12 | 1,900,000 | a,b | 1,900,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Northern Recycling and Waste | |||||
Services, LLC Project) (LOC; | |||||
Union Bank NA) | 0.17 | 1/7/12 | 2,430,000 | a,b | 2,430,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Pena’s Disposal, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.17 | 1/7/12 | 1,920,000 | a,b | 1,920,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(South Tahoe Refuse Company, | |||||
Inc. Project) (LOC; Union Bank NA) | 0.17 | 1/7/12 | 955,000 | a,b | 955,000 |
California Pollution Control | |||||
Financing Authority, SWDR | |||||
(Valley Vista Services, Inc. | |||||
Project) (LOC; Comerica Bank) | 0.17 | 1/7/12 | 1,800,000 | a,b | 1,800,000 |
California School Cash Reserve | |||||
Program Authority, Revenue | 2.50 | 1/31/12 | 5,000,000 | 5,006,093 | |
California School Cash Reserve | |||||
Program Authority, Revenue | 2.50 | 1/31/12 | 200,000 | 200,292 | |
California School Cash Reserve | |||||
Program Authority, Revenue | 2.00 | 2/1/12 | 2,100,000 | 2,102,374 | |
California Statewide Communities | |||||
Development Authority, MFHR | |||||
(Olen Jones Senior Apartments | |||||
Project) (LOC; Citibank NA) | 0.22 | 1/7/12 | 860,000 | a | 860,000 |
California Statewide Communities | |||||
Development Authority, Revenue | |||||
(Goodwill of Santa Cruz) (LOC; | |||||
Wells Fargo Bank) | 0.14 | 1/7/12 | 700,000 | a | 700,000 |
California Statewide Communities | |||||
Development Authority, Revenue | |||||
(John Muir Health) (LOC; Wells | |||||
Fargo Bank) | 0.05 | 1/1/12 | 5,300,000 | a | 5,300,000 |
California Statewide Communities | |||||
Development Authority, Revenue | |||||
(Tiger Woods Learning Center | |||||
Foundation) (LOC; Bank of America) | 0.49 | 1/7/12 | 2,450,000 | a | 2,450,000 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
California Statewide Communities | |||||
Development Authority, | |||||
Revenue, CP (Kaiser Permanente) | 0.26 | 2/16/12 | 2,000,000 | 2,000,000 | |
California Statewide Communities | |||||
Development Authority, | |||||
Revenue, CP (Kaiser Permanente) | 0.30 | 2/16/12 | 2,400,000 | 2,400,000 | |
California Statewide Communities | |||||
Development Authority, | |||||
Revenue, CP (Kaiser Permanente) | 0.25 | 5/24/12 | 2,000,000 | 2,000,000 | |
Golden State Tobacco | |||||
Securitization Corporation, | |||||
Enhanced Tobacco Settlement | |||||
Asset-Backed Bonds (Insured; | |||||
Berkshire Hathaway Assurance | |||||
Corporation and Liquidity | |||||
Facility; Citibank NA) | 0.11 | 1/7/12 | 2,305,000 | a,c,d | 2,305,000 |
Irvine Assessment District Number | |||||
03-19, Limited Obligation | |||||
Improvement Bonds (LOC: | |||||
California State Teachers | |||||
Retirement System and | |||||
U.S. Bank NA) | 0.09 | 1/1/12 | 1,600,000 | a | 1,600,000 |
Irvine Assessment District Number | |||||
03-19, Limited Obligation | |||||
Improvement Bonds (LOC: | |||||
California State Teachers | |||||
Retirement System and | |||||
U.S. Bank NA) | 0.09 | 1/1/12 | 1,518,000 | a | 1,518,000 |
Irvine Reassessment District | |||||
Number 05-21, Limited | |||||
Obligation Improvement Bonds | |||||
(LOC: California State | |||||
Teachers Retirement System and | |||||
U.S. Bank NA) | 0.09 | 1/1/12 | 3,325,000 | a | 3,325,000 |
Puttable Floating Option Tax | |||||
Exempt Receipts (California | |||||
Statewide Communities | |||||
Development Authority, MFHR | |||||
(La Mision Village Apartments | |||||
Project)) (Liquidity Facility; | |||||
FHLMC and LOC; FHLMC) | 0.34 | 1/7/12 | 2,250,000 | a,c,d | 2,250,000 |
10
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
California (continued) | |||||
Puttable Floating Option Tax | |||||
Exempt Receipts (Sacramento | |||||
City Financing Authority, | |||||
Revenue, Refunding (Master | |||||
Lease Program Facilities) | |||||
(Liquidity Facility; Bank of | |||||
America and LOC; | |||||
Bank of America) | 0.36 | 1/7/12 | 2,815,000 | a,c,d | 2,815,000 |
Sacramento County Housing | |||||
Authority, MFHR, Refunding | |||||
(Stonebridge Apartments) | |||||
(LOC; FNMA) | 0.21 | 1/7/12 | 3,900,000 | a | 3,900,000 |
San Diego County, | |||||
COP (Burnham Institute for | |||||
Medical Research) (LOC; | |||||
Bank of America) | 0.13 | 1/7/12 | 1,090,000 | a | 1,090,000 |
San Diego County and San Diego | |||||
County School Districts, | |||||
Program Note | |||||
Participations,TRAN | 2.00 | 4/30/12 | 3,300,000 | 3,315,397 | |
San Francisco Bay Area Rapid | |||||
Transit District, Sales Tax | |||||
Revenue, Refunding | 5.00 | 7/1/12 | 125,000 | 127,798 | |
San Jose Redevelopment | |||||
Agency, MFHR | |||||
(101 San Fernando | |||||
Apartments) (Liquidity | |||||
Facility; Citibank NA and LOC; | |||||
Citibank NA) | 0.20 | 1/7/12 | 4,225,000 | a,c,d | 4,225,000 |
Vacaville, | |||||
MFMR (Quail Run Apartments) | |||||
(Liquidity Facility; FNMA and | |||||
LOC; FNMA) | 0.11 | 1/7/12 | 400,000 | a | 400,000 |
West Covina Public Financing | |||||
Authority, LR, Refunding | |||||
(Public Facilities Project) | |||||
(LOC; California State | |||||
Teachers Retirement System) | 0.10 | 1/7/12 | 935,000 | a | 935,000 |
Western Placer Unified School | |||||
District, GO Notes, TRAN | 2.00 | 10/4/12 | 1,000,000 | 1,010,298 |
The Fund | 11 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
U.S. Related—2.6% | |||||
Puttable Floating Option Tax | |||||
Exempt Receipts (Puerto Rico | |||||
Electric Power Authority, | |||||
Power Revenue) (Liquidity | |||||
Facility; Bank of America and | |||||
LOC; Bank of America) | 0.46 | 1/7/12 | 2,800,000 a,c,d | 2,800,000 | |
Total Investments (cost $110,020,849) | 99.9% | 110,020,849 | |||
Cash and Receivables (Net) | .1% | 135,678 | |||
Net Assets | 100.0% | 110,156,527 |
a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2011. Maturity date represents |
the next demand date, or the ultimate maturity date if earlier. |
b At December 31, 2011, the fund had $30,530,000 or 27.7% of net assets invested in securities whose payment of |
principal and interest is dependent upon revenues generated from Pollution Control. |
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, 2011, these |
securities amounted to $14,395,000 or 13.1% of net assets. |
d The fund does not directly own the municipal security indicated; the fund owns an interest in a special purpose entity |
that, in turn, owns the underlying municipal security.The special purpose entity permits the fund to own interests in |
underlying assets, but in a manner structured to provide certain advantages not inherent in the underlying bonds (e.g., |
enhanced liquidity, yields linked to short-term rates). |
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 |
The Fund | 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 | 99.0 | ||
AAA,AA,Ae | Aaa,Aa,Ae | AAA,AA,Ae | 1.0 | |||
100.0 |
† | Based on total investments. |
e | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
See notes to financial statements. |
14
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2011 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 110,020,849 | 110,020,849 |
Interest receivable | 185,508 | |
110,206,357 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 20,476 | |
Cash overdraft due to Custodian | 29,193 | |
Dividend payable | 161 | |
49,830 | ||
Net Assets ($) | 110,156,527 | |
Composition of Net Assets ($): | ||
Paid-in capital | 110,156,054 | |
Accumulated net realized gain (loss) on investments | 473 | |
Net Assets ($) | 110,156,527 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 110,156,054 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
The Fund | 15 |
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2011 (Unaudited) |
Investment Income ($): | ||
Interest Income | 126,928 | |
Expenses: | ||
Management fee—Note 2 | 214,090 | |
Trustees’ fees—Note 2 | 3,796 | |
Total Expenses | 217,886 | |
Less—reduction in expenses due to undertaking—Note 2 | (87,178) | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (3,796) | |
Net Expenses | 126,912 | |
Investment Income—Net | 16 | |
Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 298 | |
Net Increase in Net Assets Resulting from Operations | 314 | |
See notes to financial statements. |
16
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2011 | Year Ended | |||
(Unaudited) | June 30, 2011 | |||
Operations ($): | ||||
Investment income—net | 16 | 5,091 | ||
Net realized gain (loss) on investments | 298 | 175 | ||
Net Increase (Decrease) in Net Assets | ||||
Resulting from Operations | 314 | 5,266 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (16) | (5,091) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 165,809,672 | 273,610,145 | ||
Dividends reinvested | 16 | 1,536 | ||
Cost of shares redeemed | (141,707,362) | (283,472,096) | ||
Increase (Decrease) in Net Assets from | ||||
Beneficial Interest Transactions | 24,102,326 | (9,860,415) | ||
Total Increase (Decrease) in Net Assets | 24,102,624 | (9,860,240) | ||
Net Assets ($): | ||||
Beginning of Period | 86,053,903 | 95,914,143 | ||
End of Period | 110,156,527 | 86,053,903 | ||
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, 2011 | Year Ended June 30, | |||||||||||
(Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .000 | a | .000 | a | .000 | a | .010 | .027 | .032 | |||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.000) | a | (.000) | a | (.000) | a | (.010) | (.027) | (.032) | |||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | .00 | b,c | .00 | b | .02 | 1.04 | 2.72 | 3.21 | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .46 | c | .45 | .47 | .49 | .46 | .45 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | .27 | c | .40 | .41 | .49 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | .00 | b,c | .00 | b | .02 | 1.08 | 2.57 | 3.16 | ||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 110,157 | 86,054 | 95,914 | 194,785 | 259,683 | 107,993 |
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 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 seeks to provide a high level of current income exempt from federal and California state income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary ofThe Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
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 not obtained from a quoted price in an active market, such securities are reflected within Level 2 of the fair value hierarchy.
20
The following is a summary of the inputs used as of December 31, 2011 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | — |
Level 2—Other Significant Observable Inputs | 110,020,849 |
Level 3—Significant Unobservable Inputs | — |
Total | 110,020,849 |
† See Statement of Investments for additional detailed categorizations. |
In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”)” (“ASU 2011-04”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements.The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
(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.
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 are maintained with the Custodian,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(d) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net; such dividends are paid monthly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended, (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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, 2011, 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, 2011 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, 2011 was as follows: tax-exempt income $5,091. The tax character of current year distributions will be determined at the end of the current fiscal year.
22
At December 31, 2011, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee and Other Transactions with Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Prior to January 1, 2012 each Trustee who is not an “interested person” of the Trust (as defined in the Act) received $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 were not held in conjunction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that were conducted by telephone. The Board Group Open-End Funds also reimbursed 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 Chair of the Board received 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 served as Chair of the Board,
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
received $1,350 per applicable committee meeting. In the event that there was an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus High Yield Strategies Fund (“DHF”), the $2,500 was allocated between the Board Group Open-End Funds and DHF.
Effective January 1, 2012, the Board Group Open-End Funds and DHF (collectively, the “Board Group Funds”) will pay each Trustee their respective allocated portions of an annual retainer of $85,000 and a fee of $10,000 for each regularly scheduled Board meeting attended ($75,000 and $8,000, respectively, in the aggregate, prior to January 1, 2012).With respect to the annual retainer and Board meetings of the Board Group Funds, the Chair of the Board will receive an additional 25% of such compensation (with the exception of reimbursable amounts). Each Trustee will receive $2,500 for any separate in-person committee meetings attended, which are not held in conjunction with a regularly scheduled Board meeting, such amount to be allocated among the Board Group Funds, as applicable. In the event that there is a joint telephone meeting of the Board Group Funds, a fee of $2,000 will be allocated among the applicable Board Group Funds, accordingly (prior to January 1, 2012, the fee allocated was $2,500 if the meeting included DHF).The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, will receive $1,500 per applicable committee meeting. Each Emeritus Trustee is entitled to receive an annual retainer of one-half the amount paid as a retainer at the time the Trustee became Emeritus and a per meeting attended fee of one-half the amount paid to Trustees. The Board Group Funds also reimburse each Independent Trustee and Emeritus Trustees for travel and out-of-pocket expenses.
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 Manager has undertaken to waive receipt of the management fee and/or reimburse operating expenses in order to facilitate a daily yield
24
at or above a certain level which may change from time to time.This undertaking is voluntary and not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $87,178 during the period ended December 31, 2011.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $39,848, which are offset against an expense reimbursement currently in effect in the amount of $19,372.
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 of Trustees.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), commonTrustees and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2011, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $80,299,000 and $59,774,000, respectively.
NOTE 4—Other Matters:
At the October 27, 2011 Board meeting, the Board of theTrust approved a proposal to have shareholders consider the election of Francine J. Bovich as an additionalTrustee of theTrust, and also consider the election of Joseph S. DiMartino and Benaree Pratt Wiley, current Trustees of the Trust not previously proposed to shareholders of the fund.A proxy statement was mailed, on December 1, 2011, to shareholders of record as of the close of business on November 1, 2011 asking shareholders to consider these elections at a special joint meeting of shareholders to be held on Wednesday, February 8, 2012. At the February 8, 2012 special joint meeting of shareholders, Ms. Bovich, Mr. DiMartino and Ms.Wiley were each elected as Trustees by shareholders of the Trust.
The Fund | 25 |
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
Contents | |
THE FUND | |
2 | A Letter from the 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
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We present to you this semiannual report for Dreyfus BASIC Massachusetts Municipal Money Market Fund, covering the six-month period from July 1, 2011, through December 31, 2011. 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.
U.S. financial markets were significantly impacted by a “flight to quality” sentiment in which investors fled riskier assets due to adverse macroeconomic developments ranging from an unprecedented downgrade of long-term U.S. debt securities to the resurgence of a sovereign debt crisis in Europe. Ironically, despite the rating downgrade, long-term U.S. Treasury securities ended the reporting period with double-digit total returns. Meanwhile, the day-to-day movements of the stock market were often tumultuous, even as U.S. corporations achieved record-setting profits and market valuations dropped below historical norms.
Our economic forecast calls for a mild acceleration of the U.S. recovery as the domestic banking system regains strength, credit conditions loosen and housing markets begin a long-awaited convalescence. Under other circumstances a stronger recovery might be expected to lift short-term interest rates, but the Federal Reserve Board has indicated that it is likely to keep rates low for some time to come in the absence of meaningful inflation. Of course, we encourage you to talk with your financial adviser to help ensure that your investment objectives are properly aligned with your risk tolerance in pursuing potential market opportunities in 2012.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 17, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2011, through December 31, 2011, as provided by Bill Vasiliou, Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2011, 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
Tax-exempt money market yields remained stable at historically low levels during the reporting period as short-term interest rates were unchanged in a faltering U.S. economy.
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)
Yields Stay Steady Despite Shifting Economic Sentiment
The second half of 2011 began amid mounting concerns about the U.S. and global economies. A sovereign debt crisis in Europe was escalating as Greece appeared headed for default and financial instability spread to other members of the European Union. In the United States, high unemployment and weak housing markets threatened the economic recovery, and a contentious political debate regarding U.S. government spending and borrowing intensified.
Volatility in stock and bond markets was especially severe in August and September, after Standard & Poor’s downgraded its credit rating on long-term U.S. debt securities. Ironically, U.S. government securities rallied strongly during a “flight to quality” in the wake of the downgrade. However, the final quarter of the year saw a partial reversal of this trend, as riskier securities that were punished in late summer rebounded and traditional safe havens gave back some of their previous gains when some macroeconomic concerns seemed to ease.
Throughout the reporting period, and as it has since December 2008, the Federal Reserve Board (the “Fed”) maintained an aggressively accommodative policy stance, leaving the overnight federal funds rate in a range between 0% and 0.25%. Consequently, municipal money market yields remained near zero percent.
The supply of newly issued municipal money market instruments remained relatively meager during the reporting period, in part due to political pressure to reduce government spending and borrowing. Meanwhile, demand remained steadily robust from individuals seeking to shelter income from rising state taxes and institutional investors searching for alternatives to low yielding taxable money market instruments.
Massachusetts’s fiscal condition has continued to be stronger than many other states. Tax revenues have increased, and the state cut spending to pass a balanced budget for its current fiscal year.
A Credit-Conscious Investment Posture
As we have for some time, we maintained a conservative investment posture during the reporting period, emphasizing direct, high-quality municipal obligations deemed creditworthy by our analysts.We favored
4
instruments backed by pledged tax appropriations or dedicated revenues, but we generally shied away from instruments issued by localities that depend heavily on state aid.We maintained the fund’s weighted average maturity in a range that is roughly in line with industry averages.
Outlook Clouded by Economic Uncertainty
As of year-end, we are cautiously optimistic regarding the prospects for economic growth in 2012.The U.S. and Massachusetts economies appear to have gained a degree of momentum, particularly with respect to a recovering labor market. However, the outlook for the NewYear remains cloudy due to the persistence of the European debt crisis and uncertainty regarding upcoming U.S. elections and their impact on the nation’s fiscal policies. In light of the subpar recovery, the Fed has signaled that it is prepared to maintain short-term interest rates near current levels “at least through late-2014.” With money market yields likely to remain near historical lows, we believe that the prudent course continues to be an emphasis on preservation of capital and liquidity.
January 17, 2012
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, 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 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. |
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, 2011 to December 31, 2011. 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, 2011 | |||
Expenses paid per $1,000† | $ | .96 | |
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, 2011 | |||
Expenses paid per $1,000† | $ | .97 | |
Ending value (after expenses) | $ | 1,024.18 |
† Expenses are equal to the fund’s annualized expense ratio of .19%, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS |
December 31, 2011 (Unaudited) |
Short-Term | Coupon | Maturity | Principal | ||
Investments—95.8% | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts—90.6% | |||||
Boston, | |||||
GO Notes | 5.00 | 1/1/12 | 100,000 | 100,023 | |
Boston Water and Sewer Commission, | |||||
General Revenue (LOC; State | |||||
Street Bank and Trust Co.) | 0.06 | 1/7/12 | 1,000,000 | a | 1,000,000 |
Cambridge, | |||||
GO Notes, Refunding | 4.00 | 2/1/12 | 250,000 | 250,747 | |
Holyoke, | |||||
GO Notes, BAN | 1.25 | 2/24/12 | 3,300,000 | 3,302,647 | |
Massachusetts, | |||||
GO Notes (Central Artery/Ted | |||||
Williams Tunnel Infrastructure | |||||
Loan Act of 2000) (Liquidity | |||||
Facility; State Street Bank | |||||
and Trust Co.) | 0.03 | 1/1/12 | 1,000,000 | a | 1,000,000 |
Massachusetts, | |||||
GO Notes (Consolidated Loan) | 5.00 | 3/1/12 | 125,000 | 125,942 | |
Massachusetts, | |||||
GO Notes (Consolidated Loan) | |||||
(LOC; Bank of America) | 0.07 | 1/1/12 | 3,000,000 | a | 3,000,000 |
Massachusetts, | |||||
GO Notes, Refunding | 5.00 | 7/1/12 | 185,000 | 189,110 | |
Massachusetts, | |||||
GO Notes, Refunding (Liquidity | |||||
Facility; State Street Bank | |||||
and Trust Co.) | 0.08 | 1/7/12 | 6,300,000 | a | 6,300,000 |
Massachusetts Bay Transportation | |||||
Authority, General | |||||
Transportation System GO Notes | 5.50 | 3/1/12 | 200,000 | 201,616 | |
Massachusetts Department of | |||||
Transportation, Metropolitan | |||||
Highway System Senior Revenue | |||||
(LOC; Wells Fargo Bank) | 0.06 | 1/7/12 | 4,000,000 | a | 4,000,000 |
Massachusetts Development Finance | |||||
Agency, Education Revenue (The | |||||
Tabor Academy Issue) (LOC; FHLB) | 0.10 | 1/7/12 | 1,400,000 | a,b | 1,400,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Babson | |||||
College Issue) (LOC; FHLB) | 0.05 | 1/7/12 | 9,830,000 | a,b | 9,830,000 |
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 (Boston | |||||
University Issue) (LOC; FHLB) | 0.04 | 1/7/12 | 2,345,000 | a,b | 2,345,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Boston | |||||
University Issue) (LOC; | |||||
JPMorgan Chase Bank) | 0.07 | 1/1/12 | 350,000 | a,b | 350,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Exploration | |||||
School, Inc. Issue) | |||||
(LOC; TD Bank) | 0.09 | 1/7/12 | 2,500,000 | a,b | 2,500,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (Fay School | |||||
Issue) (LOC; TD Bank) | 0.09 | 1/7/12 | 3,800,000 | a,b | 3,800,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (New Bedford | |||||
Whaling Museum Issue) (LOC; | |||||
Bank of America) | 0.36 | 1/7/12 | 500,000 | a | 500,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (The Institute | |||||
of Contemporary Art Issue) | |||||
(LOC; Bank of America) | 0.36 | 1/7/12 | 650,000 | a | 650,000 |
Massachusetts Development Finance | |||||
Agency, Revenue (The Marine | |||||
Biological Laboratory Issue) | |||||
(LOC; JPMorgan Chase Bank) | 0.09 | 1/7/12 | 2,630,000 | a | 2,630,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Great | |||||
Brook Valley Health Center | |||||
Issue) (LOC; TD Bank) | 0.10 | 1/7/12 | 2,445,000 | a | 2,445,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Harvard | |||||
University Issue) | 0.02 | 1/1/12 | 3,320,000 | a,b | 3,320,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Hebrew | |||||
Rehabilitation Center Issue) | |||||
(LOC; Bank of America) | 0.18 | 1/7/12 | 2,500,000 | a | 2,500,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts (continued) | |||||
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Hillcrest | |||||
Extended Care Services Issue) | |||||
(LOC; Bank of America) | 0.18 | 1/7/12 | 2,925,000 | a | 2,925,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue | |||||
(Partners HealthCare | |||||
System Issue) (Liquidity Facility; | |||||
U.S. Bank NA) | 0.06 | 1/7/12 | 2,500,000 | a | 2,500,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Partners | |||||
HealthCare System, Capital | |||||
Asset Program Issue) | |||||
(Liquidity Facility; JPMorgan | |||||
Chase Bank) | 0.05 | 1/7/12 | 4,000,000 | a | 4,000,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Stonehill | |||||
College Issue) (LOC; | |||||
Bank of America) | 0.09 | 1/1/12 | 1,000,000 | a,b | 1,000,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Wellesley | |||||
College Issue) | 0.04 | 1/1/12 | 2,220,000 | a,b | 2,220,000 |
Massachusetts Health and | |||||
Educational Facilities | |||||
Authority, Revenue (Wellesley | |||||
College Issue) | 0.04 | 1/1/12 | 1,940,000 | a,b | 1,940,000 |
Massachusetts Water Pollution | |||||
Abatement Trust (Pool Program) | 4.00 | 8/1/12 | 125,000 | 127,536 | |
Massachusetts Water Resources | |||||
Authority, Subordinated | |||||
General Revenue, Refunding | |||||
(Liquidity Facility; Bank of | |||||
Nova Scotia) | 0.05 | 1/7/12 | 3,900,000 | a | 3,900,000 |
North Andover, | |||||
GO Notes (Municipal Purpose Loan) | 3.00 | 1/15/12 | 375,000 | 375,383 |
The Fund | 9 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
Massachusetts (continued) | |||||
Northampton, | |||||
GO Notes, BAN | 1.50 | 2/10/12 | 1,380,100 | 1,381,368 | |
Norwood, | |||||
GO Notes, BAN | 1.50 | 1/18/12 | 2,200,000 | 2,201,020 | |
Randolph, | |||||
GO Notes, BAN | 1.25 | 2/1/12 | 1,254,155 | 1,254,993 | |
Randolph, | |||||
GO Notes, BAN | 1.50 | 8/30/12 | 1,140,000 | 1,145,985 | |
Reading, | |||||
GO Notes | 5.00 | 2/1/12 | 130,000 | 130,488 | |
University of Massachusetts | |||||
Building Authority, Revenue, | |||||
Refunding (Liquidity Facility; | |||||
Wells Fargo Bank) | 0.04 | 1/7/12 | 2,500,000 | a,b | 2,500,000 |
U.S. Related—5.2% | |||||
JPMorgan Chase Putters/Drivers | |||||
Trust (Puerto Rico | |||||
Commonwealth, Public | |||||
Improvement GO Notes) | |||||
(Liquidity Facility; JPMorgan | |||||
Chase Bank and LOC; | |||||
JPMorgan Chase Bank) | 0.07 | 1/1/12 | 1,085,000 | a,c,d | 1,085,000 |
Puerto Rico Sales Tax Financing | |||||
Corporation, Sales Tax Revenue | |||||
(Liquidity Facility; Citibank NA) | 0.10 | 1/7/12 | 3,500,000 | a,c,d | 3,500,000 |
Total Investments (cost $83,926,858) | 95.8 | % | 83,926,858 | ||
Cash and Receivables (Net) | 4.2 | % | 3,656,286 | ||
Net Assets | 100.0 | % | 87,583,144 |
a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2011. Maturity date represents |
the next demand date, or the ultimate maturity date if earlier. |
b At December 31, 2011, the fund had $31,205,000 or 35.6% 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, 2011, these |
securities amounted to $4,585,000 or 5.2% of net assets. |
d The fund does not directly own the municipal security indicated; the fund owns an interest in a special purpose entity |
that, in turn, owns the underlying municipal security.The special purpose entity permits the fund to own interests in |
underlying assets, but in a manner structured to provide certain advantages not inherent in the underlying bonds (e.g., |
enhanced liquidity, yields linked to short-term rates). |
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 | 95.3 | ||
AAA,AA,Ae | Aaa,Aa,Ae | AAA,AA,Ae | 1.8 | |||
Not Ratedf | Not Ratedf | Not Ratedf | 2.9 | |||
100.0 |
† | Based on total investments. |
e | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
f | 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, 2011 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 83,926,858 | 83,926,858 |
Cash | 3,553,326 | |
Interest receivable | 114,066 | |
87,594,250 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 11,104 | |
Dividend payable | 2 | |
11,106 | ||
Net Assets ($) | 87,583,144 | |
Composition of Net Assets ($): | ||
Paid-in capital | 87,583,144 | |
Net Assets ($) | 87,583,144 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 87,594,229 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
The Fund | 13 |
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2011 (Unaudited) |
Investment Income ($): | ||
Interest Income | 74,713 | |
Expenses: | ||
Management fee—Note 2 | 176,671 | |
Trustees’ fees—Note 2 | 3,019 | |
Total Expenses | 179,690 | |
Less—reduction in expenses due to undertaking—Note 2 | (101,971) | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (3,019) | |
Net Expenses | 74,700 | |
Investment Income—Net, representing net increase | ||
in net assets resulting from operations | 13 | |
See notes to financial statements. |
14
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2011 | Year Ended | |||
(Unaudited) | June 30, 2011 | |||
Operations ($): | ||||
Investment Income-Net, representing | ||||
net increase in net assets | ||||
resulting from operations | 13 | 27 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (13) | (27) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 102,298,770 | 233,177,042 | ||
Dividends reinvested | 1 | 1 | ||
Cost of shares redeemed | (92,664,604) | (248,014,228) | ||
Increase (Decrease) in Net Assets from | ||||
Beneficial Interest Transactions | 9,634,167 | (14,837,185) | ||
Total Increase (Decrease) in Net Assets | 9,634,167 | (14,837,185) | ||
Net Assets ($): | ||||
Beginning of Period | 77,948,977 | 92,786,162 | ||
End of Period | 87,583,144 | 77,948,977 | ||
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, 2011 | Year Ended June 30, | |||||||||||
(Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .000 | a | .000 | a | .000 | a | .009 | .026 | .032 | |||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.000 | )a | (.000) | a | (.000) | a | (.009) | (.026) | (.032) | |||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | .00 | b,c | .00 | b | .00 | b | .95 | 2.59 | 3.21 | |||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .46 | c | .46 | .47 | .49 | .46 | .46 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | .19 | c | .27 | .32 | .47 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | .00 | b,c | .00 | b | .00 | b | .96 | 2.51 | 3.17 | |||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 87,583 | 77,949 | 92,786 | 132,807 | 179,231 | 162,062 |
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 “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 | 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 within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of December 31, 2011 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | — |
Level 2—Other Significant Observable Inputs | 83,926,858 |
Level 3—Significant Unobservable Inputs | — |
Total | 83,926,858 |
† See Statement of Investments for additional detailed categorizations. |
In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common FairValue Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”)” (“ASU 2011-04”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements.The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
The Fund | 19 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 are maintained with the Custodian,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(d) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net; such dividends are paid monthly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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, 2011, 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.
20
Each of the tax years in the three-year period ended June 30, 2011 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, 2011 was as follows: tax exempt income $27.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2011, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee And Other Transactions With Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Prior to January 1, 2012 eachTrustee who is not an “interested person” of the Trust (as defined in the Act) received $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-
The Fund | 21 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
person committee meetings attended which were not held in conjunction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that were conducted by telephone.The Board Group Open-End Funds also reimbursed 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 Chair of the Board received 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 served as Chair of the Board, received $1,350 per applicable committee meeting. In the event that there was an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund (“DHF”), the $2,500 was allocated between the Board Group Open-End Funds and DHF.
Effective January 1, 2012, the Board Group Open-End Funds and DHF (collectively, the “Board Group Funds”) will pay each Trustee their respective allocated portions of an annual retainer of $85,000 and a fee of $10,000 for each regularly scheduled Board meeting attended ($75,000 and $8,000, respectively, in the aggregate, prior to January 1, 2012).With respect to the annual retainer and Board meetings of the Board Group Funds, the Chair of the Board will receive an additional 25% of such compensation (with the exception of reimbursable amounts). Each Trustee will receive $2,500 for any separate in-person committee meetings attended, which are not held in conjunction with a regularly scheduled Board meeting, such amount to be allocated among the Board Group Funds, as applicable. In the event that there is a joint telephone meeting of the Board Group Funds, a fee of $2,000 will be allocated among the applicable Board Group Funds, accordingly (prior to January 1, 2012, the fee allocated was $2,500 if the meeting included DHF).The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, will receive $1,500 per applicable committee meeting. Each EmeritusTrustee is entitled to receive an annual retainer of one-half the amount paid as a retainer at
22
the time the Trustee became Emeritus and a per meeting attended fee of one-half the amount paid to Trustees.The Board Group Funds also reimburse each Independent Trustee and Emeritus Trustees for travel and out-of-pocket expenses.
TheTrust’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 Manager has undertaken to waive receipt of the management fee and/or reimburse operating expenses in order to facilitate a daily yield at or above a certain level which may change from time to time.This undertaking is voluntary and not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $101,971 during the period ended December 31, 2011.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $30,755, which is offset against an expense reimbursement currently in effect in the amount of $19,651.
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 of Trustees.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), commonTrustees and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2011, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $15,070,000 and $18,320,000, respectively.
The Fund | 23 |
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
NOTE 4—Other Matters:
At the October 27, 2011 Board meeting, the Board of theTrust approved a proposal to have shareholders consider the election of Francine J. Bovich as an additionalTrustee of theTrust, and also consider the election of Joseph S. DiMartino and Benaree Pratt Wiley, current Trustees of the Trust not previously proposed to shareholders of the fund.A proxy statement was mailed, on December 1, 2011, to shareholders of record as of the close of business on November 1, 2011 asking shareholders to consider these elections at a special joint meeting of shareholders to be held on Wednesday, February 8, 2012. At the February 8, 2012 special joint meeting of shareholders, Ms. Bovich, Mr. DiMartino and Ms.Wiley were each elected as Trustees by shareholders of the Trust.
24
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
Contents | |
THE FUND | |
2 | A Letter from the 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
New York Municipal
Money Market Fund
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We present to you this semiannual report for Dreyfus BASIC NewYork Municipal Money Market Fund, covering the six-month period from July 1, 2011, through December 31, 2011. 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.
U.S. financial markets were significantly impacted by a “flight to quality” sentiment in which investors fled riskier assets due to adverse macroeconomic developments ranging from an unprecedented downgrade of long-term U.S. debt securities to the resurgence of a sovereign debt crisis in Europe. Ironically, despite the rating downgrade, long-term U.S. Treasury securities ended the reporting period with double-digit total returns. Meanwhile, the day-to-day movements of the stock market were often tumultuous, even as U.S. corporations achieved record-setting profits and market valuations dropped below historical norms.
Our economic forecast calls for a mild acceleration of the U.S. recovery as the domestic banking system regains strength, credit conditions loosen and housing markets begin a long-awaited convalescence. Under other circumstances a stronger recovery might be expected to lift short-term interest rates, but the Federal Reserve Board has indicated that it is likely to keep rates low for some time to come in the absence of meaningful inflation. Of course, we encourage you to talk with your financial adviser to help ensure that your investment objectives are properly aligned with your risk tolerance in pursuing potential market opportunities in 2012.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
January 17, 2012
2
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2011, through December 31, 2011, as provided by Joseph Irace, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2011, 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
Tax-exempt money market yields remained stable at historically low levels during the reporting period as short-term interest rates were unchanged in a faltering U.S. economy.
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 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, New York state and New York 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)
Yields Stay Steady Despite Shifting Economic Sentiment
The second half of 2011 began amid mounting concerns about the U.S. and global economies.A sovereign debt crisis in Europe escalated as Greece appeared headed for default and financial instability spread to other members of the European Union. In the United States, high unemployment and weak housing markets threatened the economic recovery, and a contentious political debate regarding U.S. government spending and borrowing intensified.
Volatility in stock and bond markets was especially severe in August and September, after Standard & Poor’s downgraded its credit rating on long-term U.S. debt securities. Ironically, U.S. government securities rallied strongly during a “flight to quality” in the wake of the downgrade. However, the final quarter of the year saw a partial reversal of this trend, as riskier securities that were punished in late summer rebounded and traditional safe havens gave back some of their previous gains when some macroeconomic concerns seemed to ease.
Throughout the reporting period, and as it has since December 2008, the Federal Reserve Board (the “Fed”) maintained an aggressively accommodative policy stance, leaving the overnight federal funds rate in a range between 0% and 0.25%. Consequently, municipal money market yields remained near zero percent.
The supply of newly issued municipal money market instruments remained relatively meager during the reporting period, in part due to political pressure to reduce government spending and borrowing. Meanwhile, demand remained steadily robust from individuals seeking to shelter income from rising state taxes and institutional investors searching for alternatives to low yielding taxable money market instruments.
From a credit-quality perspective, New York has cut spending, and a recent overhaul of the state’s tax code is expected to help reduce future budget shortfalls.
4
A Credit-Conscious Investment Posture
As we have for some time, we maintained a conservative investment posture during the reporting period, emphasizing direct, high-quality municipal deemed creditworthy by our analysts. We favored instruments backed by pledged tax appropriations or dedicated revenues, but we generally shied away from NewYork’s general obligation debt and instruments issued by localities that depend heavily on state aid.
Outlook Clouded by Economic Uncertainty
As of year-end, we are cautiously optimistic regarding the prospects for economic growth in 2012.The U.S. and New York economies appear to have gained a degree of momentum, particularly with respect to a recovering labor market. However, the outlook for the New Year remains cloudy due to the persistence of the European debt crisis and uncertainty regarding upcoming U.S. elections and their impact on the nation’s fiscal policies. In light of the subpar recovery, the Fed has signaled that it is prepared to maintain short-term interest rates near current levels “at least through mid-2013.” With money market yields likely to remain near historical lows, we believe that the prudent course continues to be an emphasis on preservation of capital and liquidity.
January 17, 2012
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, 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 a voluntary undertaking that may be extended, | |
terminated or modified at any time. Had these expenses not been absorbed, fund yields would | |
have been lower. |
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, 2011 to December 31, 2011. 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, 2011 | ||
Expenses paid per $1,000† | $ | 1.26 |
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, 2011 | ||
Expenses paid per $1,000† | $ | 1.27 |
Ending value (after expenses) | $ | 1,023.88 |
Expenses are equal to the fund’s annualized expense ratio of .25%, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
6
STATEMENT OF INVESTMENTS |
December 31, 2011 (Unaudited) |
Short-Term | Coupon | Maturity | Principal | ||
Investments—99.9% | Rate (%) | Date | Amount ($) | Value ($) | |
New York—96.7% | |||||
Albany County, | |||||
GO Notes, TAN | 1.00 | 5/10/12 | 2,300,000 | 2,305,566 | |
Albany Housing Authority, | |||||
Revenue (Nutgrove Garden | |||||
Apartments Project) | |||||
(LOC; RBS Citizens NA) | 0.27 | 1/7/12 | 1,270,000 | a | 1,270,000 |
Albany Industrial Development | |||||
Agency, Civic Facility Revenue | |||||
(Renaissance Corporation of | |||||
Albany Project) (LOC; M&T Trust) | 0.15 | 1/7/12 | 1,900,000 | a | 1,900,000 |
Brewster Central School District, | |||||
GO Notes, BAN | 1.00 | 2/14/12 | 2,000,000 | 2,001,599 | |
Broome County Industrial | |||||
Development Agency, IDR | |||||
(Parlor City Paper Box | |||||
Company, Inc. Facility) | |||||
(LOC; U.S. Bank NA) | 0.25 | 1/7/12 | 2,165,000 | a | 2,165,000 |
Cortland Enlarged City School | |||||
District, GO Notes, BAN | 1.50 | 7/27/12 | 2,800,000 | 2,814,280 | |
East Quogue Union Free School | |||||
District, GO Notes, TAN | 1.25 | 6/27/12 | 1,300,000 | 1,304,092 | |
East Rochester Housing Authority, | |||||
Housing Revenue (Park Ridge | |||||
Nursing Home, Inc. Project) | |||||
(LOC; JPMorgan Chase Bank) | 0.11 | 1/7/12 | 4,270,000 | a | 4,270,000 |
Elmira City School District, | |||||
GO Notes, BAN | 1.75 | 2/15/12 | 4,000,000 | 4,002,900 | |
Erie County Industrial Development | |||||
Agency, IDR (Luminescent | |||||
System, Inc. Project) | |||||
(LOC; HSBC Bank USA) | 0.40 | 1/7/12 | 2,245,000 | a | 2,245,000 |
Evans-Brant Central School | |||||
District, GO Notes, BAN | 1.50 | 6/29/12 | 2,300,000 | 2,310,142 | |
Medina Central School District, | |||||
GO Notes, BAN | 1.50 | 6/22/12 | 2,600,000 | 2,607,909 | |
Monroe County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (YMCA of | |||||
Greater Rochester Project) | |||||
(LOC; M&T Trust) | 0.15 | 1/7/12 | 2,300,000 | a | 2,300,000 |
The Fund | 7 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
Monroe County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (YMCA of | |||||
Greater Rochester Project) | |||||
(LOC; M&T Trust) | 0.15 | 1/7/12 | 4,925,000 | a | 4,925,000 |
Nassau County Industrial | |||||
Development Agency, Housing | |||||
Revenue (Rockville Centre | |||||
Housing Associates, L.P. | |||||
Project) (LOC; M&T Trust) | 0.20 | 1/7/12 | 4,700,000 | a | 4,700,000 |
New York City, | |||||
GO Notes (LOC; Bank of America) | 0.13 | 1/7/12 | 9,000,000 | a | 9,000,000 |
New York City, | |||||
GO Notes (LOC; California Public | |||||
Employees Retirement System) | 0.04 | 1/1/12 | 6,000,000 | a | 6,000,000 |
New York City, | |||||
GO Notes (LOC; California State | |||||
Teachers Retirement System) | 0.04 | 1/1/12 | 8,000,000 | a | 8,000,000 |
New York City, | |||||
GO Notes (LOC; JPMorgan | |||||
Chase Bank) | 0.05 | 1/1/12 | 1,400,000 | a | 1,400,000 |
New York City, | |||||
GO Notes (LOC; JPMorgan | |||||
Chase Bank) | 0.05 | 1/1/12 | 1,200,000 | a | 1,200,000 |
New York City, | |||||
GO Notes (LOC; JPMorgan | |||||
Chase Bank) | 0.08 | 1/1/12 | 1,100,000 | a | 1,100,000 |
New York City, | |||||
GO Notes (LOC; JPMorgan | |||||
Chase Bank) | 0.08 | 1/1/12 | 1,400,000 | a | 1,400,000 |
New York City, | |||||
GO Notes (LOC; State Street | |||||
Bank and Trust Co.) | 0.07 | 1/1/12 | 1,000,000 | a | 1,000,000 |
New York City Capital Resource | |||||
Corporation, Recovery Zone | |||||
Facility Revenue (Arverne by | |||||
the Sea Project) (LOC; TD Bank) | 0.10 | 1/7/12 | 3,100,000 | a | 3,100,000 |
8
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
New York City Capital Resource | |||||
Corporation, Revenue (Loan | |||||
Enhanced Assistance Program— | |||||
Cobble Hill Health Center, Inc.) | |||||
(LOC; Bank of America) | 0.20 | 1/7/12 | 7,500,000 | a | 7,500,000 |
New York City Housing Development | |||||
Corporation, MFHR (Liquidity | |||||
Facility; Citibank NA) | 0.12 | 1/7/12 | 6,700,000 | a,b,c | 6,700,000 |
New York City Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Birch Wathen | |||||
Lenox School Project) | |||||
(LOC; TD Bank) | 0.18 | 1/7/12 | 2,900,000 | a | 2,900,000 |
New York City Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Hewitt | |||||
School Project) (LOC; TD Bank) | 0.18 | 1/7/12 | 3,700,000 | a | 3,700,000 |
New York City Industrial | |||||
Development Agency, IDR | |||||
(Novelty Crystal Corporation | |||||
Project) (LOC; TD Bank) | 0.26 | 1/7/12 | 2,745,000 | a | 2,745,000 |
New York City Industrial | |||||
Development Agency, IDR | |||||
(Super-Tek Products, Inc. | |||||
Project) (LOC; Citibank NA) | 0.26 | 1/7/12 | 4,055,000 | a | 4,055,000 |
New York City Municipal Water | |||||
Finance Authority, Water and | |||||
Sewer System Revenue | |||||
(Liquidity Facility; Mizuho | |||||
Corporate Bank Ltd.) | 0.02 | 1/1/12 | 12,000,000 | a | 12,000,000 |
New York City Municipal Water | |||||
Finance Authority, Water and | |||||
Sewer System Second General | |||||
Resolution Revenue (Liquidity | |||||
Facility: California State Teachers | |||||
Retirement System and State | |||||
Street Bank and Trust Co.) | 0.05 | 1/1/12 | 13,400,000 | a | 13,400,000 |
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; JPMorgan Chase Bank) | 0.07 | 1/1/12 | 1,900,000 | a | 1,900,000 |
New York City Trust for Cultural | |||||
Resources, Revenue (The | |||||
Solomon R. Guggenheim | |||||
Foundation) (LOC; | |||||
Bank of America) | 0.10 | 1/7/12 | 100,000 | a | 100,000 |
New York State Dormitory | |||||
Authority, City University | |||||
System Consolidated Fifth | |||||
General Resolution Revenue | |||||
(LOC; Bank of America) | 0.09 | 1/7/12 | 100,000 | a | 100,000 |
New York State Thruway Authority, | |||||
General Revenue, BAN | 2.00 | 7/12/12 | 200,000 | 201,471 | |
New York State Thruway Authority, | |||||
Second General Highway and | |||||
Bridges Trust Fund Revenue | |||||
(Liquidity Facility; Citibank NA) | 0.10 | 1/7/12 | 2,000,000 | a,b,c | 2,000,000 |
Niagara County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Niagara | |||||
University Project) | |||||
(LOC; HSBC Bank USA) | 0.08 | 1/7/12 | 1,000,000 | a | 1,000,000 |
Otsego County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Noonan | |||||
Community Service Corporation | |||||
Project) (LOC; FHLB) | 0.33 | 1/7/12 | 2,010,000 | a | 2,010,000 |
Otsego County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Saint James | |||||
Retirement Community Project) | |||||
(LOC; M&T Trust) | 0.15 | 1/7/12 | 1,690,000 | a | 1,690,000 |
Patchogue-Medford Union Free | |||||
School District, GO Notes, TAN | 1.50 | 6/21/12 | 3,000,000 | 3,010,514 | |
Port Authority of New York and New | |||||
Jersey, Equipment Notes | 0.16 | 1/7/12 | 4,000,000 | a | 4,000,000 |
Port Jefferson Union Free School | |||||
District, GO Notes, TAN | 1.50 | 6/28/12 | 1,800,000 | 1,809,220 |
10
Short-Term | Coupon | Maturity | Principal | ||
Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
New York (continued) | |||||
Rockland County Industrial | |||||
Development Agency, IDR | |||||
(Intercos America, Inc. Project) | |||||
(LOC; HSBC Bank USA) | 0.40 | 1/7/12 | 3,000,000 | a | 3,000,000 |
Rockland County Industrial | |||||
Development Authority, Revenue | |||||
(Northern Manor Multicare | |||||
Center, Inc. Project) | |||||
(LOC; M&T Trust) | 0.20 | 1/7/12 | 2,380,000 | a | 2,380,000 |
Salina, | |||||
GO Notes, BAN | 1.50 | 6/22/12 | 1,500,000 | 1,505,133 | |
Tompkins County Industrial | |||||
Development Agency, Civic | |||||
Facility Revenue (Tompkins | |||||
Cortland Community College | |||||
Foundation, Inc. Project) | |||||
(LOC; RBS Citizens NA) | 0.16 | 1/7/12 | 3,295,000 | a | 3,295,000 |
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) | 0.20 | 1/7/12 | 4,400,000 | a | 4,400,000 |
Puerto Rico Sales Tax Financing | |||||
Corporation, Sales Tax Revenue | |||||
(Liquidity Facility; Citibank NA) | 0.10 | 1/7/12 | 675,000 | a,b,c | 675,000 |
Total Investments (cost $159,397,826) | 99.9 | % | 159,397,826 | ||
Cash and Receivables (Net) | .1 | % | 199,927 | ||
Net Assets | 100.0 | % | 159,597,753 |
a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2011. 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, 2011, these |
securities amounted to $9,375,000 or 5.9% of net assets. |
c The fund does not directly own the municipal security indicated; the fund owns an interest in a special purpose entity |
that, in turn, owns the underlying municipal security.The special purpose entity permits the fund to own interests in |
underlying assets, but in a manner structured to provide certain advantages not inherent in the underlying bonds (e.g., |
enhanced liquidity, yields linked to short-term rates). |
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 | 77.3 | ||
AAA,AA,Ad | Aaa,Aa,Ad | AAA,AA,Ad | 5.9 | |||
Not Ratede | Not Ratede | Not Ratede | 16.8 | |||
100.0 |
† | Based on total investments. |
d | Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
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. |
The Fund | 13 |
STATEMENT OF ASSETS AND LIABILITIES |
December 31, 2011 (Unaudited) |
Cost | Value | |
Assets ($): | ||
Investments in securities—See Statement of Investments | 159,397,826 | 159,397,826 |
Cash | 78,755 | |
Interest receivable | 161,352 | |
159,637,933 | ||
Liabilities ($): | ||
Due to The Dreyfus Corporation and affiliates—Note 2 | 30,177 | |
Dividend payable | 3 | |
Payable for shares of Beneficial Interest redeemed | 10,000 | |
40,180 | ||
Net Assets ($) | 159,597,753 | |
Composition of Net Assets ($): | ||
Paid-in capital | 159,597,753 | |
Net Assets ($) | 159,597,753 | |
Shares Outstanding | ||
(unlimited number of shares of Beneficial Interest authorized) | 159,597,764 | |
Net Asset Value, offering and redemption price per share ($) | 1.00 | |
See notes to financial statements. |
14
STATEMENT OF OPERATIONS |
Six Months Ended December 31, 2011 (Unaudited) |
Investment Income ($): | ||
Interest Income | 214,621 | |
Expenses: | ||
Management fee—Note 2 | 378,894 | |
Trustees’ fees—Note 2 | 5,501 | |
Total Expenses | 384,395 | |
Less—reduction in expenses due to undertaking—Note 2 | (164,283) | |
Less—Trustees’ fees reimbursed by the Manager—Note 2 | (5,501) | |
Net Expenses | 214,611 | |
Investment Income—Net, representing net increase | ||
in net assets resulting from operations | 10 | |
See notes to financial statements. |
The Fund | 15 |
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended | ||||
December 31, 2011 | Year Ended | |||
(Unaudited) | June 30, 2011 | |||
Operations ($): | ||||
Investment income—Net, representing | ||||
net increase in net assets | ||||
resulting from operations | 10 | 5,424 | ||
Dividends to Shareholders from ($): | ||||
Investment income—net | (10) | (5,424) | ||
Beneficial Interest Transactions ($1.00 per share): | ||||
Net proceeds from shares sold | 101,679,146 | 210,379,233 | ||
Dividends reinvested | 8 | 4,373 | ||
Cost of shares redeemed | (111,573,976) | (262,513,036) | ||
Increase (Decrease) in Net Assets | ||||
from Beneficial Interest Transactions | (9,894,822) | (52,129,430) | ||
Total Increase (Decrease) in Net Assets | (9,894,822) | (52,129,430) | ||
Net Assets ($): | ||||
Beginning of Period | 169,492,575 | 221,622,005 | ||
End of Period | 159,597,753 | 169,492,575 | ||
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, 2011 | Year Ended June 30, | |||||||||||
(Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||
Per Share Data ($): | ||||||||||||
Net asset value, | ||||||||||||
beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Investment Operations: | ||||||||||||
Investment income—net | .000 | a | .000 | a | .001 | .013 | .026 | .032 | ||||
Distributions: | ||||||||||||
Dividends from | ||||||||||||
investment income—net | (.000 | )a | (.000 | )a | (.001) | (.013) | (.026) | (.032) | ||||
Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
Total Return (%) | .00 | b,c | .00 | b | .07 | 1.35 | 2.67 | 3.25 | ||||
Ratios/Supplemental Data (%): | ||||||||||||
Ratio of total expenses | ||||||||||||
to average net assets | .46 | c | .46 | .47 | .49 | .46 | .45 | |||||
Ratio of net expenses | ||||||||||||
to average net assets | .25 | c | .42 | .43 | .48 | .45 | .45 | |||||
Ratio of net investment income | ||||||||||||
to average net assets | .00 | b,c | .00 | b | .07 | 1.37 | 2.61 | 3.21 | ||||
Net Assets, end of period | ||||||||||||
($ x 1,000) | 159,598 169,493 | 221,622 | 303,439 | 364,121 | 321,893 |
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 NewYork 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 seeks to provide a high level of current income exempt from federal, NewYork state and New York city income taxes to the extent consistent with the preservation of capital and the maintenance of liquidity. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of NewYork Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
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.
(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.
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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 not obtained from a quoted price in an active market, such securities are reflected within Level 2 of the fair value hierarchy.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The following is a summary of the inputs used as of December 31, 2011 in valuing the fund’s investments:
Short-Term | |
Valuation Inputs | Investments ($)† |
Level 1—Unadjusted Quoted Prices | - |
Level 2—Other Significant Observable Inputs | 159,397,826 |
Level 3—Significant Unobservable Inputs | - |
Total | 159,397,826 |
† See Statement of Investments for additional detailed categorizations. |
In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common FairValue Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”)” (“ASU 2011-04”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements.The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
(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.
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(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 are maintained with the Custodian,The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus.
(d) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net; such dividends are paid monthly. Dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended, (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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, 2011, 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, 2011 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, 2011 was as follows: tax-exempt income $5,424.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2011, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee and Other Transactions with Affiliates:
Pursuant to an investment management agreement with the Manager, the Manager provides or arranges for one or more third parties and/or affiliates to provide investment advisory, administrative, custody, fund accounting and transfer agency services to the fund.The Manager also directs the investments of the fund in accordance with its investment objective, policies and limitations. For these services, the fund is contractually obligated to pay the Manager a fee, calculated daily and paid monthly, at the annual rate of .45% of the value of the fund’s average daily net assets. Out of its fee, the Manager pays all of the expenses of the fund except brokerage fees, taxes, interest, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Manager is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). Prior to January 1, 2012 each Trustee who is not an “interested person” of the Trust (as defined in the Act) received $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 were not held in conjunction with a regularly scheduled Board meeting and $2,000 for Board meetings and separate committee meetings attended that were conducted by telephone. The Board Group Open-End Funds also reimbursed 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
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meetings, the Chair of the Board received 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 served as Chair of the Board, received $1,350 per applicable committee meeting. In the event that there was an in-person joint committee meeting or a joint telephone meeting of the Board Group Open-End Funds and Dreyfus HighYield Strategies Fund (“DHF”), the $2,500 was allocated between the Board Group Open-End Funds and DHF.
Effective January 1, 2012, the Board Group Open-End Funds and DHF (collectively, the “Board Group Funds”) will pay each Trustee their respective allocated portions of an annual retainer of $85,000 and a fee of $10,000 for each regularly scheduled Board meeting attended ($75,000 and $8,000, respectively, in the aggregate, prior to January 1, 2012).With respect to the annual retainer and Board meetings of the Board Group Funds, the Chair of the Board will receive an additional 25% of such compensation (with the exception of reimbursable amounts). Each Trustee will receive $2,500 for any separate in-person committee meetings attended, which are not held in conjunction with a regularly scheduled Board meeting, such amount to be allocated among the Board Group Funds, as applicable. In the event that there is a joint telephone meeting of the Board Group Funds, a fee of $2,000 will be allocated among the applicable Board Group Funds, accordingly (prior to January 1, 2012, the fee allocated was $2,500 if the meeting included DHF).The Chair of each of the Board’s committees, unless the Chair also serves as Chair of the Board, will receive $1,500 per applicable committee meeting. Each EmeritusTrustee is entitled to receive an annual retainer of one-half the amount paid as a retainer at the time the Trustee became Emeritus and a per meeting attended fee of one-half the amount paid to Trustees.The Board Group Funds also reimburse each Independent Trustee and Emeritus Trustees for travel and out-of-pocket expenses.
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NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
TheTrust’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 Manager has undertaken to waive receipt of the management fee and/or reimburse operating expenses in order to facilitate a daily yield at or above a certain level which may change from time to time.This undertaking is voluntary and not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $164,283 during the period ended December 31, 2011.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $60,437, which are offset against an expense reimbursement currently in effect in the amount of $30,260.
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 of Trustees.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), commonTrustees and/or common officers, complies with Rule 17a-7 of the Act. During the period ended December 31, 2011, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $51,860,000 and $53,775,000, respectively.
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NOTE 4—Other Matters:
At the October 27, 2011 Board meeting, the Board of theTrust approved a proposal to have shareholders consider the election of Francine J. Bovich as an additionalTrustee of theTrust, and also consider the election of Joseph S. DiMartino and Benaree Pratt Wiley, current Trustees of the Trust not previously proposed to shareholders of the fund.A proxy statement was mailed, on December 1, 2011, to shareholders of record as of the close of business on November 1, 2011 asking shareholders to consider these elections at a special joint meeting of shareholders to be held on Wednesday, February 8, 2012. At the February 8, 2012 special joint meeting of shareholders, Ms. Bovich, Mr. DiMartino and Ms.Wiley were each elected as Trustees by shareholders of the Trust.
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Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
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, 2012 |
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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. | |
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By: /s/ Bradley J. Skapyak | |
Bradley J. Skapyak, President
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Date: | February 23, 2012 |
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By: /s/ James Windels | |
James Windels, Treasurer
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Date: | February 23, 2012 |
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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)