File No. 811-3700
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 39 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 40 [ ]
(Check appropriate box or boxes.)
THE DREYFUS/LAUREL TAX FREE MUNICIPAL FUNDS
(formerly The Laurel Tax-Free Municipal Funds)
___________________________________________________
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
John E. Pelletier
Secretary
The Dreyfus/Laurel Tax-Free
Municipal Funds
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
X 60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
The registrant has previously filed a declaration of indefinite
registration of its shares under the Securities Act of 1933
pursuant to Rule 24f-2 under the investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended June 30,
1995, relating to Massachusetts Tax-Free Money Fund, New York
Tax-Free Money Fund and California Tax-Free Money Fund, was filed
on August 31, 1995.
Dreyfus BASIC MA Municipal Money Market Fund
Cross-Reference Sheet Pursuant to Rule 495(a)
________________________________________________________
Items in
Part A of
Form N-1A Caption Prospectus
Caption
________ _______ __________
1 Cover Page Cover Page
Expense Summary
2 Synopsis Expense Summary
3 Condensed Financial Financial Highlights
Information
4 General Description of Investment Objective and
Registrant Policies; Further
Information About The Fund
5 Management of the Fund Further Information About
The Funds; Management
5(a) Management's Discussion Management's Discussion
of Fund's Performance of Fund's Performance
6 Capital Stock and Cover Page; Investor
Other Securities Line; Distribution; Taxes;
7 Purchase of Securities Expense Summary;
Being Offered Alternative Purchase
Methods; Special
Shareholder Services; How
to invest in The
Dreyfus/Laurel Funds;
Distribution and Service
Plans; How to Exchange
your Investment From One
Fund to Another;
8 Redemption or How to Redeem Shares
Repurchase
9 Pending Legal N.A.
Proceedings
Dreyfus BASIC MA Municipal Money Market Fund
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
________________________________________________________
Items in
Part B of Statement of Additional
Form N-1A Information Caption
- ---------
10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information Management of the Trust
and History
13 Investment Objectives Investment Policies
and Policies
14 Management of the Fund Management of the Trust;
Trustees and Officers of
the Trust
15 Control Persons and Management of the Trust;
Principal Holders of
Securities
16 Investment Advisory Management of the Trust;
and Other Services Investment Manager;
Shareholder Services
17 Brokerage Allocation Investment Policies
and Other Practices Portfolio Transactions
18 Capital Stock and Description of the Trust;
Other Securities See Prospectus -- "Cover
Page"; "How to Redeem
Fund Shares"; "Further
Information About The
Funds; The Dreyfus/Laurel Tax
Free Municipal Funds"
19 Purchase, Redemption Purchase of Shares;
and Pricing of Distribuion and Service Plans;
Securities Being Offered Redemption of Shares;
Valuation of Shares
20 Tax Status Taxes
21 Underwriters Purchase of Shares;
Distribution and
Service Plans; Amounts
Expended
22 Calculation of Performance Data
Performance Data
Dreyfus BASIC MA Tax-Free Money Market Fund
Cross-Reference Sheet Pursuant to Rule 495(a) (Continued)
_______________________________________________________
Items in
Part C of
Form N-1A
_________
23 Financial Statements Financial Statements
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-4
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-12
30 Location of Accounts and Records C-15
31 Management Services C-15
32 Undertakings C-15
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
CONTENTS OF POST-EFFECTIVE AMENDMENT
This post-effective amendment to the registration statement of The
Dreyfus/Laurel Tax-Free Municipal Funds contains the following documents:
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendent
Part A - Prospectus
Incorporated by reference to Post-Effective Amendment Nos.
38 and 39.
Part B - Statement of Additional Information Incorporated by
reference to Post-Effective Amendment Nos. 38 and 39.
Part C- Other Information
Signature Page - The Dreyfus/Laurel Tax-Free Municipal Funds
Exhibits
-------------------------------------------------------------------------------
PROSPECTUS FEBRUARY 29, 1996
DREYFUS BASIC MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
THE DREYFUS BASIC MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
(FORMERLY, THE DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND) (THE "FUND")
IS A SEPARATE, NON-DIVERSIFIED PORTFOLIO OF THE DREYFUS/LAUREL TAX-FREE
MUNICIPAL FUNDS (FORMERLY, THE LAUREL TAX-FREE MUNICIPAL FUNDS AND
PREVIOUSLY, THE BOSTON COMPANY TAX-FREE MUNICIPAL FUNDS) (THE "TRUST"), AN
OPEN-END MANAGEMENT INVESTMENT COMPANY KNOWN AS A MUTUAL FUND. THE FUND SEEKS
TO PROVIDE A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAXES
AND MASSACHUSETTS PERSONAL INCOME TAXES TO THE EXTENT CONSISTENT WITH THE
PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY BY INVESTING IN HIGH
QUALITY, SHORT-TERM MUNICIPAL SECURITIES.
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING THE DREYFUS TELET
RANSFER PRIVILEGE.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT MANAGER. THE
DREYFUS CORPORATION IS REFERRED TO AS "DREYFUS."
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ CAREFULLY BEFORE YOU
INVEST AND RETAINED FOR FUTURE REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION ("SAI") DATED FEBRUARY 29,
1996, WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION
OF CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF
INTEREST TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") AND IS INCORPORATED HEREIN BY REFERENCE. FOR A
FREE COPY, WRITE TO THE FUND AT 144 GLENNCURTISS BOULEVARD, UNIONDALE, NEW
YORK 11556-0144, OR CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR
144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
ALL MONEY MARKET FUNDS INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THE FEES TO WHICH THE FUND IS SUBJECT ARE SUMMARIZED IN THE "EXPENSE
SUMMARY" SECTION OF THE FUND'S PROSPECTUS. THE FUND PAYS AN AFFILIATE OF
MELLON BANK, N.A. ("MELLON BANK") TO BE ITS INVESTMENT MANAGER. MELLON BANK
OR AN AFFILIATE MAY BE PAID FOR PERFORMING OTHER SERVICES FOR THE FUND, SUCH
AS CUSTODIAN, TRANSFER AGENT OR FUND ACCOUNTANT SERVICES. THE FUND IS
DISTRIBUTED BY PREMIER MUTUAL FUND SERVICES, INC.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
Page 1
TABLE OF CONTENTS
EXPENSE SUMMARY................................. 4
FINANCIAL HIGHLIGHTS............................ 5
DESCRIPTION OF THE FUND......................... 6
MANAGEMENT OF THE FUND.......................... 9
HOW TO BUY FUND SHARES.......................... 10
FUND EXCHANGES.................................. 12
HOW TO REDEEM FUND SHARES....................... 13
PERFORMANCE INFORMATION......................... 15
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES........ 16
GENERAL INFORMATION............................. 17
(Page 2)
[This Page Intentionally Left Blank]
(Page 3)
EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> C>
Exchange Fee.......................................... $5.00
Account Closeout Fee.................................. $5.00
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee (after expense reimbursement).......... .35%
Other Expenses (after expense reimbursement).......... .00%
-------
Total Fund Operating Expenses (after expense reimbursement) .35%
EXAMPLE:
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year $ 9
3 Years $ 16
5 Years $ 25
10 Years $ 49
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESEN-
TATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN,
THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. Effective February 22, 1996, a portion of the Fund's assets equal in
value to the aggregate net asset value of the interest in the Fund held by
the Fund's Investor shareholders was transferred to Dreyfus Massachusetts
Municipal Money Market Fund (the "Acquiring Fund"), the Fund's Investor class
of shares was terminated, and holders of the Fund's Investor shares became
shareholders of the Acquiring Fund receiving in exchange for their Investor
shares, shares of the Acquiring Fund having an aggregate net asset value
equal in value to the aggregate value of the assets transferred to the
Acquiring Fund. In addition, the Fund's "Class R" designation was eliminated
and the Fund became a single class fund. The information in the foregoing
table has been restated to reflect the termination, effective February 22,
1996, of the Fund's Rule 12b-1 distribution plan (the "Distribution Plan"),
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act") and attributable only to its then existing Investor
shares. Also effective February 22, 1996, the Fund adopted a new Investment
Management Agreement pursuant to which it pays Dreyfus a fee at the annual
rate of .45 of 1% of the value of the Fund's average daily net assets.
Dreyfus has agreed until February 21, 1997, to limit its management fee or to
reimburse the Fund for its expenses, in order to ensure that the Fund's total
operating expenses do not exceed .35 of 1% of the value of the Fund's average
daily net assets. The expenses noted above, without reimbursement, would be:
Management Fees_.45%; Other Expenses_.00%; and Total Fund Operating
Expenses_.45%; and the amount of expenses that an investor would pay,
assuming redemption after one, three, five and ten years, would be $10, $19,
$30 and $62, respectively. In addition, unlike certain other funds in the
Dreyfus Family of Funds, the Fund will charge your account $2.00 for each
redemption check you write; you also will be charged $5.00 for each wire
redemption you make and a $5.00 account closeout fee. These charges will be
paid to the Fund's transfer agent. See "How to Buy Fund Shares" and "How to
Redeem Fund Shares."
(Page 4
FINANCIAL HIGHLIGHTS
The following tables are based upon a single share outstanding
throughout each fiscal year and should be read in conjunction with the
financial statements and related notes that appear in the Fund's Annual
Report dated June 30, 1995, which is incorporated by reference into the SAI.
The financial statements and related notes, as well as the information in the
tables below insofar as it relates to the fiscal period ended June 30, 1994
and June 30, 1995, have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report. The
information in the tables below for the fiscal years prior to the fiscal
period ended June 30, 1994, has been audited by other independent auditors.
DREYFUS BASIC MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994# 1995##
------- ------- ------- ------- ------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
Beginning of year.......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- ------- ------- -------- ------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income***... 0.047 0.039 0.042 0.055 0.056 0.051 0.03 40.019 0.018 0.029
Less distributions:
Distributions from
net investment income..........(0.047) (0.039) (0.042) (0.055) (0.056) (0.051) (0.034) (0.019) (0.018) (0.029)
----- ------- ------- ------- ------- ------- ------- ------- -------- ------- ---------
Net Asset Value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= ======= ======= ======== ======== ========
TOTAL RETURN++................. 4.69% 3.97% 4.12% 5.62% 5.56% 4.93% 3.36% 1.94% 1.83% 2.99%
------- ------- ------- ------- ------- ------- ------- -------- ------- ---------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets,end of year
(in 000's).................$111,095 $137,295 $146,592 $134,941 $159,551 $160,392 $149,679 $68,952 $86,505 $75,746
Ratios of operating expenses
to average net assets+.... 0.50% 0.47% 0.65% 0.67% 0.65% 0.64% 0.67% 0.68% 0.70% 0.60%
Ratios of net
investment income
to average net assets..... 4.71% 3.92% 4.25% 5.45% 5.64% 5.07% 3.38% 1.98% 1.80% 2.94%
* The Fund commenced operations on July 27, 1983. On February 1, 1993,
existing shares of the Fund were designated the Retail Class and the
Fund began offering the Institutional Class and Investment Class of
shares. Effective April 4, 1994, the Retail and Institutional Classes were
reclassified as a single class of shares known as Investor shares and
the Investment Class was reclassified as the Trust shares. Effective
October 17, 1994, Trust shares were redesignated Class R shares. The
Financial Highlights for the year ended June 30, 1995, were calculated
using the performance of a Trust share outstanding from July 1, 1994 to
October 16, 1994, and the performance of a Class R share outstanding from
October 17, 1994 to June 30, 1995. The Financial Highlights for the year
ended June 30, 1994, were calculated using the performance of an Investment
share outstanding from July 1, 1993 to April 3, 1994, and the performance
of a Trust share outstanding from April 4, 1994 to June 30, 1994. The
Financial Highlights for the year ended June 30, 1993, are based upon a
Retail share outstanding. The Financial Highlights do not reflect the
effect of the implementation of the new Investment Management Agreement,
effective February 22, 1996. See "Management of the Fund_Investment Manager."
#Prior to April 4, 1994, The Boston Company Advisors, Inc.
served as the Fund's investment manager. From April 4, 1994 through
October 16, 1994, Mellon Bank, N.A., served as the Fund's investment
manager.
##Effective October 17, 1994, The Dreyfus Corporation began serving
as the Fund's investment manager.
*** Net investment income per share before waiver of fees and/or
reimbursement of expenses by the investment manager and/or custodian
and/or transfer agent for the years ended June 30, 1994, 1993, 1989, 1987
and 1986 were $0.017, $0.019, $0.055, $0.038 and $0.044, respectively.
+ Annualized expense ratios before voluntary waiver of
fees and/or reimbursement of expenses by investment manager and/or
custodian and/or transfer agent for the years ended June 30, 1994, 1993,
1989, 1987 and1986 would have been 0.78%, 0.69%, 0.70%, 0.64% and 0.79%,
respectively.
++ Total return represents aggregate total return for the periods
indicated.
</TABLE>
(Page 5)
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to provide a higher level of current income exempt
from Federal income taxes and Massachusetts personal income taxes to the
extent consistent with the preservation of capital and the maintenance of
liquidity. The Fund seeks to achieve its objective by investing in debt
obligations issued by the Commonwealth of Massachusetts, its political
subdivisions, municipalities, and public authorities and in municipal
obligations issued by other governmental entities if, in the opinion of
counsel to the respective issuers, the interest from such obligations is
excluded from gross income for Federal and Massachusetts personal income tax
purposes ("Massachusetts Municipal Obligations").
Under normal market conditions, the Fund attempts to invest 100%, and
will invest a minimum of 80%, of its total assets in Massachusetts Municipal
Obligations. When, in the opinion of Dreyfus, adverse market conditions exist
for Massachusetts Municipal Obligations, and a "defensive" investment posture
is warranted, the Fund may temporarily invest more than 20% of its total
assets in money market instruments having maturity and quality
characteristics comparable to those (discussed below) for Massachusetts
Municipal Obligations, but which produce income exempt from Federal but not
Massachusetts personal income taxes for resident shareholders of
Massachusetts, or more than 20% of its total assets in taxable obligations
(including obligations the interest on which is included in the calculation
of alternative minimum tax for individuals). Periods when a defensive posture
is warranted include those periods when the Fund's monies available for
investment exceed the Massachusetts Municipal Obligations available for
purchase to meet the Fund's rating, maturity and other investment criteria.
The Fund does not anticipate that it will find it necessary to make any
investments in securities the interest from which is not exempt from Federal
and Massachusetts personal income taxes. The Fund's policy of investing a
minimum of 80% of its total assets in Massachusetts Municipal Obligations is
a fundamental policy of the Fund.
The Fund pursues its objective by investing in a varied portfolio of
high quality, short-term Massachusetts Municipal Obligations.
The Massachusetts Municipal Obligations purchased by the Fund consist
of: (1) municipal bonds; (2) municipal notes; and (3) municipal commercial
paper. The Fund will limit its portfolio investments to securities that, at the
time of acquisition, (i) are rated in the two highest categories by at least
two nationally recognized statistical rating organizations (or by one
organization if only one organization has rated the security), (ii) if not
rated, are obligations of an issuer whose other outstanding short-term debt
obligations are so rated, or (iii) if not rated, are of comparable quality, as
determined by Dreyfus in accordance with procedures established by the Board of
Trustees. The Fund will limit its investments to securities that present
minimal credit risk, as determined by Dreyfus under procedures established by
the Board of Trustees.
The Fund invests only in securities that have remaining maturities of
thirteen months or less at the date of purchase. Floating rate or variable
rate obligations (described below) which are payable on demand under
conditions established by the SEC, may have a stated maturity in excess of
thirteen months; these securities will be deemed to have remaining maturities
of thirteen months or less. The Fund maintains a dollar-weighted average
portfolio maturity of 90 days or less and seeks to maintain a constant net ass
et value of $1.00 per share, although there is no assurance it can do so on a
continuing basis.
OTHER INVESTMENT POLICIES AND RISK FACTORS.
FLOATING RATE AND VARIABLE RATE OBLIGATIONS. The Fund may purchase
floating rate and variable rate obligations. These obligations bear interest
at rates that are not fixed, but vary with changes in specified market rates
or indices. Some of these obligations may carry a demand feature that permits
the Fund to receive the par value upon demand prior to maturity. The Fund may
invest in floating rate and variable rate obligations carrying stated
maturities in excess of thirteen months at the date of purchase if these
obligations carry demand features that comply with conditions established by
the SEC. The Fund will limit its purchases
(Page 6)
of floating rate and variable rate Massachusetts Municipal Obligations to
those meeting the quality standards applicable to the Fund. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. The quality of the underlying creditor or the
bank, as determined by Dreyfus under the supervision of the Trustees must
also be equivalent to the quality standards applicable to the Fund. In
addition, Dreyfus monitors the earning power, cash flow and other liquidity
ratios of the issuers of such obligations, as well as the creditworthiness of
the institution responsible for paying the principal amount of the
obligations under the demand feature.
The Fund may invest in participation interests purchased from banks
in floating or variable rate Massachusetts Municipal Obligations owned by
banks. Participation interests carry a demand feature permitting the Fund to
tender them back to the bank. Each participation is backed by an irrevocable
letter of credit or guarantee of a bank which Dreyfus under the supervision
of the Trustees has determined meets the prescribed quality standards for the
Fund.
Other types of tax-exempt instruments that may become available in
the future may be purchased by the Fund as long as Dreyfus believes the
quality of these instruments meets the Fund's quality standards.
OTHER INVESTMENT COMPANIES. The Fund may invest in securities issued
by other investment companies to the extent that such investments are
consistent with its investment objective and policies and permissible under
the 1940 Act. As a shareholder of another investment company, the Fund would
bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would
be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations.
TENDER OPTION BONDS. The Fund may invest up to 10% of the value of
its assets in tender option bonds. A tender option bond is a municipal
obligation (generally held pursuant to a custodial arrangement) having a
relatively long maturity and bearing interest at a fixed-rate substantially
higher than prevailing short-term tax-exempt rates, that has been coupled
with the agreement of a third party, such as a bank, broker-dealer or other
financial institution, pursuant to which such institution grants the security
holders the option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees equal
to the difference between the municipal obligation's fixed coupon rate and
the rate, as determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities, coupled with
the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt rate.
Dreyfus, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying municipal obligation, of any
custodian and the third-party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be terminable
in the event of a default in payment of principal or interest on the
underlying municipal obligation and for other reasons. The Fund will not
invest more than 10% of the value of the Fund's net assets in illiquid
securities, which would include tender option bonds for which the required
notice to exercise the tender feature is more than seven days if there is no
secondary market available for these obligations.
WHEN-ISSUED SECURITIES. The Fund may purchase Massachusetts Municipal
Obligations on a "when-issued" basis (i.e., delivery of and payment for the
Massachusetts Municipal Obligations normally take place within 45 days after
the date of the purchase commitment). The payment obligation and the interest
rate on such securities are fixed at the time of the purchase commitment.
Although the Fund generally will purchase Massachusetts Municipal Obligations
on a when-issued basis with the intention of acquiring the securities, the
Fund may sell such securities before the settlement date. Massachusetts
Municipal Obligations purchased on a when-issued basis, like other
investments made by the Fund, may decline or appreciate in value prior to
their actual delivery to the Fund.
(Page 7)
CERTAIN RISK CONSIDERATIONS REGARDING THE COMMONWEALTH OF MASSACHUSETTS.
You should consider carefully the special risks inherent in the Fund's
investment in Massachusetts Municipal Obligations. Massachusetts' economic
difficulties and fiscal problems in the late 1980s and early 1990s caused
several rating agencies to lower their ratings of Massachusetts Municipal
Obligations. Although Massachusetts' economic and fiscal difficulties appear
to have abated, a return of persistent serious financial difficulties could
adversely affect the market values and marketability of, or result in default
in payment on, outstanding Massachusetts Municipal Obligations. You should
obtain and review a copy of the SAI which more fully sets forth these and other
risk factors. Other considerations relating to the Fund's investment in
Massachusetts Municipal Obligations are summarized in the SAI.
LIMITING INVESTMENT RISKS AND CERTAIN RISK CONSIDERATIONS. The Fund
is subject to a number of investment limitations. Certain limitations are
matters of fundamental policy and may not be changed without the affirmative
vote of the holders of a majority of the Fund's outstanding shares. The SAI
describes all of the Fund's fundamental and non-fundamental investment
restrictions.
The investment objective, policies, restrictions, practices and
procedures of the Fund, unless otherwise specified, may be changed without
shareholder approval. If the Fund's investment objective, policies,
restrictions, practices or procedures change, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current position and needs.
In order to permit the sale of the Fund's shares in certain states,
the Fund may make commitments more restrictive than the investment policies
and restrictions described in this Prospectus and the SAI. Should the Fund
determine that any such commitment is no longer in the best interests of the
Fund, it may consider terminating sales of its shares in the states involved.
The Fund is classified as a "non-diversified" investment company, as
defined under the 1940 Act, and therefore, the Fund could invest all of its
assets in the obligations of a single issuer or relatively few issuers.
However, the Fund intends to conduct its operations so that it will qualify
under the Internal Revenue Code of 1986 (the "Code") as a "regulated
investment company." To continue to qualify, among other requirements, the
Fund will be required to limit its investments so that, at the close of each
quarter of the taxable year, with respect to at least 50% of its total
assets, not more than 5% of such assets will be invested in the securities of
a single issuer. In addition, not more than 25% of the value of the Fund's
total assets may be invested in the securities of a single issuer at the
close of each quarter of the taxable year. The provisions of the Code place
limits on the extent to which the Fund's portfolio may be non-diversified.
The ability of the Fund to meet its investment objective is subject
to the ability of municipal issuers to meet their payment obligations. In
addition, the Fund's portfolio will be affected by general changes in
interest rates which may result in increases or decreases in the value of
Fund holdings. Investors should recognize that, in periods of declining
interest rates, the Fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates, the Fund's
yield will tend to be somewhat lower. Also, when interest rates are falling,
the influx of new money to the Fund will likely be invested in portfolio
instruments producing lower yields than the balance of the Fund's portfolio,
thereby reducing the Fund's current yield. In periods of rising interest
rates, the opposite can be expected to occur.
The Fund may invest without limit in Massachusetts Municipal
Obligations which are repayable out of revenue streams generated from
economically related projects or facilities or whose issuers are located in
Massachusetts. Sizable investments in these obligations could increase risk
to the Fund should any of the related projects or facilities experience
financial difficulties. To the extent the Fund may invest in private activity
bonds, the Fund may invest only up to 5% of its total assets in bonds where
payment of principal and interest are the responsibility of a company with
less than three years operating history. The Fund is authorized to borrow up
to 10% of its total assets for temporary or emergency purposes and to pledge
its assets to the same extent in connection with such borrowings.
(Page 8)
MASTER/FEEDER OPTION. The Trust may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to the Fund.
Shareholders of the Fund will be given at least 30 days' prior notice of any
such investment. Such investment would be made only if the Trustees determine
it to be in the best interest of the Fund and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although the Fund believes that the Trustees will not approve an
arrangement that is likely to result in higher costs, no assurance is given
that costs will be materially reduced if this option is implemented.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER. Dreyfus, located at 200 Park Avenue, New York,
New York 10166, was formed in 1947. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). As of November 30, 1995, Dreyfus managed or administered
approximately $83 billion in assets for more than 1.7 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager pursuant to an
Investment Management Agreement with the Fund dated February 22, 1996 (the
"Investment Management Agreement"). Prior thereto, Dreyfus provided
investment advisory services to the Fund pursuant to a prior investment
management agreement (the "Prior Management Agreement"). Under the Investment
Management Agreement, Dreyfus supervises and assists in the overall
management of the Fund's affairs subject to the overall authority of the
Board of Trustees of the Trust in accordance with Massachusetts law. Pursuant
to the Investment Management Agreement, Dreyfus provides, or arranges for one
or more third parties to provide, investment advisory, administrative,
custody, fund accounting and transfer agency services to the Fund. As the
Fund's investment manager, Dreyfus manages the Fund by making investment
decisions based on the Fund's investment objective, policies and
restrictions.
Under the terms of the Prior Management Agreement, which was
terminated on February 22, 1996, the Fund agreed to pay Dreyfus a fee,
computed daily and paid monthly, at the annual rate of .35% of the Fund's
average daily net assets. Under the Investment Management Agreement, the Fund
pays a fee, computed daily and paid monthly, at the annual rate of .45% of
the Fund's average daily net assets less certain expenses described below.
Dreyfus has agreed to limit its management fee, or to reimburse the Fund for
its expenses, in order to ensure that the Fund's total operating expenses do
not exceed .35% of the Fund's average daily net assets for the period from
February 22, 1996 through February 21, 1997. In addition, the Investment
Management Agreement provides that certain redemption, exchange and account
closeout charges are payable directly by the Fund's shareholders to the
Fund's transfer agent and that the fee payable by the Fund to Dreyfus is not
reduced by the amount of these charges payable to the transfer agent. Under
the Investment Management Agreement, Dreyfus pays all of the expenses of the
Fund except brokerage fees, taxes, interest, Rule 12b-1 fees (if applicable)
and extraordinary expenses. From time to time, Dreyfus may waive (either volu
ntarily or pursuant to applicable state limitations) additional investment
management fees payable by the Fund. From April 4, 1994 to October 17, 1994,
the Fund was advised by Mellon Bank under the Prior Management Agreement.
For the fiscal year ended June 30, 1995, the Fund paid Mellon Bank or
Dreyfus .35% of its average daily net assets in investment management fees,
less fees and expenses of the non-interested Trustees (including counsel
fees) pursuant to the Prior Management Agreement.
For the fiscal year ended June 30, 1995, total operating expenses
(excluding Rule 12b-1 fees) of the Fund were 0.35% of the Fund's average
daily net assets.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Bank Holding Company
Act of 1956, as amended. Mellon provides a
(Page 9)
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit
Corporation and a number of companies known as Mellon Financial Services
Corporations. Through its subsidiaries, including Dreyfus, Mellon managed
approximately $209 billion in assets as of September 30, 1995, including $80
billion in mutual fund assets. As of September 30, 1995, Mellon, through
various subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $717 billion in assets, including
approximately $55 billion in mutual fund assets.
Dreyfus may pay the distributor for shareholder services from
Dreyfus' own assets, including past profits but not including the management
fee paid by the Fund. The distributor may use part or all of such payments to
pay securities dealers and others in respect of these services.
Dreyfus is authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, in the
case of agency transactions, financial institutions that are affiliated with
Dreyfus or Mellon Bank or that have sold shares of the Fund, if Dreyfus
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified brokerage firms. From
time to time, to the extent consistent with its investment objective, policies
and restrictions, the Fund may invest in securities of companies with which
Mellon Bank has a lending relationship.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"). The Distributor is located at One Exchange Place, Boston,
Massachusetts 02109. The Distributor is a wholly-owned subsidiary of FDI
Distribution Services, Inc., a provider of mutual fund administration
services, which in turn is a wholly-owned subsidiary of FDI Holding Inc., the
parent company of which is Boston Institutional Group, Inc.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND
SUB-ADMINISTRATOR -- Mellon Bank (One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258) is the Fund's custodian. Dreyfus Transfer, Inc. (One
American Express Plaza, Providence, Rhode Island 02903), a wholly-owned
subsidiary of Dreyfus, serves as the Fund's Transfer and Dividend Disbursing
Agent (the "Transfer Agent"). The Transfer Agent will receive the $5.00
exchange fee, the $5.00 account closeout fee, the $5.00 wire and Dreyfus TELET
RANSFER redemption fees and the $2.00 checkwriting charge, described below.
A sufficient number of your shares will be redeemed automatically to pay
these amounts. These payments will not reduce the management fee payable by
the Fund to Dreyfus. By purchasing Fund shares, you are deemed to have
consented to this procedure. Premier Mutual Fund Services, Inc. is the Fund's
sub-administrator and, pursuant to a Sub-Administration Agreement with
Dreyfus, provides various administrative and corporate secretarial services
to the Fund.
HOW TO BUY FUND SHARES
GENERAL -- You can purchase Fund shares without a sales charge if you
purchase them directly from the Distributor; you may be charged a nominal fee
if you effect transactions in Fund shares through a securities dealer or
broker, bank or other financial institution (collectively, "Agents"). Share
certificates are issued only upon your written request. No certificates are
issued for fractional shares. It is not recommended that the Fund be used as
a vehicle for Keogh, IRA or other qualified plans. The Fund reserves the
right to reject any purchase order.
The minimum initial investment is $25,000. The Fund may waive its
minimum initial investment requirement for new Fund accounts opened through
an Agent whenever Dreyfus Institutional Services Division ("DISD") determines
for the initial account opened through such Agent which is below the Fund's
minimum initial investment requirement that the existing accounts in the Fund
opened through that Agent have an average account size, or the Agent has
adequate intent and access to funds to result in maintenance of accounts in
the Fund opened through that Agent with an average account size, in an amount
equal to or
(Page 10)
in excess of $25,000. DISD will periodically review the average size of the
accounts opened through each Agent and, if necessary, to reevaluate the
Agent's intent and access to funds. DISD will discontinue the waiver as to
new accounts to be opened through an Agent if DISD determines that the
average size of accounts opened through that Agent is less than $25,000 and
the Agent does not have the requisite intent and access to funds. Subsequent
investments must be at least $1,000 (or at least $100 in the case of persons
who have held Fund shares as of February 22, 1996). The initial investment
must be accompanied by the Fund's Account Application.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds." Payments to open new accounts which are mailed
should be sent to The Dreyfus Family of Funds, P.O. Box 9387, Providence,
Rhode Island 02940-9387, together with your Account Application. For
subsequent investments, your Fund account number should appear on the check
and an investment slip should be enclosed and sent to The Dreyfus Family of
Funds, P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor subseq
uent investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. THESE ORDERS WILL BE
FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center, please call the
telephone number listed under "General Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to Boston Safe Deposit and Trust Company, DDA # 043389
Dreyfus BASIC Massachusetts Municipal Money Market Fund, for purchase of Fund
shares in your name. The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable. If your
initial purchase of Fund shares is by wire, you should call 1-800-645-6561
after completing your wire payment in order to obtain your Fund account
number. Please include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fund, as no
redemptions will be permitted until the Account Application is received. You
may obtain further information about remitting funds in this manner from your
bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House ("ACH") member. You must
direct the institution to transmit immediately available funds through the
ACH System to Boston Safe Deposit and Trust Company with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and Fund account number PRECEDED BY THE DIGITS "4750."
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Other Distributions and
Taxes" and the Fund's Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
Net Asset Value Per Share ("NAV") _ An investment portfolio's NAV
refers to the worth of one share. The NAV for Fund shares, which are offered
on a continuous basis, is calculated on the basis of amortized cost, which
involves initially valuing a portfolio instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. The Fund intends to maintain a constant NAV of $1.00,
although there is no assurance that this can be done on a continuing basis.
(Page 11)
The offering price of Fund shares is their NAV. Investments and
requests to exchange or redeem shares received by the Fund before 4 p.m.,
Eastern time, on each day that the New York Stock Exchange is open
(a "business day") are effective on, and will receive the price next
determined, that business day. The NAV of the Fund is calculated two times
each business day, at 12 noon and 4 p.m., Eastern time. Investment, exchange
or redemption requests received after 4 p.m., Eastern time are effective on,
and receive the first share price determined, the next business day.
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase Fund shares
(minimum $1,000 and maximum $150,000 per day) without charge by telephone if
you have checked the appropriate box and supplied the necessary information
on the Fund's Account Application or have filed a Shareholder Services Form
with the Transfer Agent. The proceeds will be transferred between the bank
account designated in one of these documents and your Fund account. Only a
bank account maintained in a domestic financial institution which is an ACH
member may be so designated. The Fund may modify or terminate this Privilege
at any time or charge a service fee upon notice to shareholders. No fee is
contemplated for purchases of Fund shares pursuant to this Privilege.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452.
FUND EXCHANGES
You may purchase up to four times a calendar year, in exchange for
shares of the Fund, (a) shares (however the same may be named) of other funds
managed or administered by Dreyfus, which you would otherwise be eligible to
purchase; (b) shares of funds managed or administered by Dreyfus which do not
have separate share classes; and (c) shares of other funds specified from
time to time, to the extent such shares are offered for sale in your state of
residence. These funds have different investment objectives which may be of
interest to you. If you desire to use this service, please call
1-800-645-6561 to determine if it is available and whether any conditions are
imposed on its use. You will be charged a $5.00 fee for each exchange you
make out of the Fund (unless you have held Fund shares as of February 22,
1996). This fee will be deducted from your account and paid to the Transfer
Agent.
To request an exchange, you or your Agent acting on your behalf must
give exchange instructions to the Transfer Agent in writing or by telephone.
Before any exchange, you must obtain and should review a copy of the current
prospectus of the fund into which the exchange is being made. Prospectuses
may be obtained by calling 1-800-645-6561. The shares being exchanged must
have a current value of at least $1,000; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value of at least
the minimum initial investment required for the fund into which the exchange
is being made. The ability to issue exchange instructions by telephone is
given to all Fund shareholders automatically, unless you check the relevant
"No" box on the Account Application, indicating that you specifically refuse
this Privilege. The Telephone Exchange Privilege may be established for an
existing account by written request, signed by all shareholders on the
account, or by a separate Shareholder Services Form, also available by
calling 1-800-645-6561. If you previously have established the Telephone
Exchange Privilege, you may telephone exchange instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. See "How to Redeem
Fund Shares_Procedures." Upon an exchange, the following shareholder services
and privileges, as applicable and where available, will be automatically
carried over to the fund into which the exchange is made: Telephone Exchange
Privilege, Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege and the dividends and
distributions payment option (except for Dividend Sweep) selected by the
investor.
Shares will be exchanged at the next determined NAV; however, a sales
load may be charged with respect to exchanges into funds sold with a sales
load. If you are exchanging into a fund that charges a
(Page 12)
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or other distributions paid with
respect to the foregoing categories of shares. To qualify, at the time of the
exchange you must notify the Transfer Agent or your Agent must notify the
Distributor. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Fund Exchanges" in the
SAI. The Fund reserves the right to reject any exchange request in whole or
in part. The availability of fund exchanges may be modified or terminated at
any time upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
HOW TO REDEEM FUND SHARES
GENERAL--You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined NAV as described below.
You will be charged $5.00 when you redeem all shares in your account
or your account is otherwise closed out (unless you have held Fund shares as
of February 22, 1996). The fee will be deducted from your redemption proceeds
and paid to the Transfer Agent. The account closeout fee does not apply to
exchanges out of the Fund or to wire or Dreyfus TELETRANSFER redemptions, for
each of which a $5.00 fee applies. Agents may charge a nominal fee for
effecting redemptions of Fund shares. Any certificates representing Fund
shares being redeemed must be submitted with the redemption request. The
value of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then current NAV.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the SEC. HOWEVER, IF YOU HAVE
PURCHASED FUND SHARES BY CHECK OR BY THE DREYFUS TELETRANSFER PRIVILEGE AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK OR DREYFUS TELETRANSFER PURCHASE ORDER, WHICH MAY TAKE
UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR
REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE OR PURSUANT TO THE DREYFUS
TELETRANSFER PRIVILEGE FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY
THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE DREYFUS TELETRANSFER PURCHASE
ORDER AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT
APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE
A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION
REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH
SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL
OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until
the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if the net asset value of your account
is $10,000 or less ($500 or less in the case of Fund shareholders as of
February 22, 1996) and remains at or below such amount during the notice
period. The $5.00 account closeout fee would be charged in such case.
PROCEDURES--You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, the Check Redemption
Privilege, the Wire Redemption Privilege, the Telephone Redemption Privilege
or through the Dreyfus TELETRANSFER Privilege. Other redemption procedures
may
(Page 13)
be in effect for clients of certain Agents and institutions. The Fund makes
available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or Telephone Exchange Privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you, or a
representative of your Agent, and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if it does not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or an exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may
be delivered in person only to a Dreyfus Financial Center. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest financial center, please call the
telephone number listed under "General Information." Redemption requests must
be signed by each shareholder, including each owner of a joint account, and
each signature must be guaranteed. The Transfer Agent has adopted standards
and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations, as well as from participants in
the New York Stock Exchange Medallion Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges
Medallion Program. For more information with respect to signature-guarantees,
please call the telephone number listed under "General Information."
Redemption proceeds of at least $5,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may request on the Account
Application, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks drawn on the Fund's account. Redemption Checks
may be made payable to the order of any person in the amount of $1,000 or
more. Redemption Checks should not be used to close your account. Your
account will be charged $2.00 for each Redemption Check you write (unless you
have held Fund shares as of February 22, 1996). In addition, the Transfer
Agent will impose a fee for stopping payment of a Redemption Check upon your
request or if the Transfer Agent cannot honor the Redemption Check due to
insufficient funds or other valid reason. The Fund may return an unpaid
Redemption Check that would draw your account balance below $5.00 and you may
be subject to extra charges. You should date your Redemption Checks with the
current date when you write them. Please do not postdate your Redemption
Checks. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all postdated Redemption Checks which
are dated within six months of presentment for payment, if they are otherwise
in good order. Shares for which certificates have been issued may not be
redeemed by Redemption Check. This Privilege may be modified or terminated at
any time by the Fund or the Transfer Agent upon notice to shareholders.
(Page 14)
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $5,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You will be charged a $5.00 wire redemption fee for each
wire redemption (unless you have held Fund shares as of February 22, 1996),
which will be deducted from your account and paid to the Transfer Agent. To
establish the Wire Redemption Privilege, you must check the appropriate box
and supply the necessary information on the Fund's Account Application or file
a Shareholder Services Form with the Transfer Agent. You may direct that
redemption proceeds be paid by check (maximum $150,000 per day) made out to
the owners of record and mailed to your address. Redemption proceeds of less
than $5,000 will be paid automatically by check. Holders of jointly registered
Fund or bank accounts may have redemption proceeds of only up to $250,000
wired within any 30-day period. You may telephone redemption requests by
calling 1-800-645-6561 or, if calling from overseas, 1-516-794-5452. The Fund
reserves the right to refuse any redemption request, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. This Privilege may be modified or terminated at any
time by the Transfer Agent or the Fund. The Fund's SAI sets forth instructions
for transmitting redemption requests by wire. Shares for which certificates
have been issued are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE. You may redeem Fund shares (maximum
$150,000 per day) by telephone if you checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if calling from overseas, 516-794-5452. The Fund reserves
the right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. This Privilege may be modified or terminated at any
time by the Transfer Agent or the Fund. Shares for which certificates have
been issued are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE. You may redeem Fund shares (minimum
$1,000 per day) by telephone if you have checked the appropriate box and
supplied the necessary information on the Fund's Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between your Fund account and the bank account designated in
one of these documents. Only such an account maintained in a domestic
financial institution which is an ACH member may be so designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request or, at your request, paid by
check (maximum $150,000 per day) and mailed to your address. Holders of
jointly registered Fund or bank accounts may redeem through the Dreyfus TELETR
ANSFER Privilege for transfer to their bank account only up to $250,000
within any 30-day period. The Fund reserves the right to refuse any request
made by telephone, including requests made shortly after a change of address,
and may limit the amount involved or the number of such requests. The Fund
may modify or terminate this Privilege at any time. Your account will be
charged $5.00 for each redemption effected pursuant to this Privilege (unless
you have held Fund shares as of February 22, 1996).
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of Fund shares by telephoning
1-800-645-6561 or, if calling from overseas, 516-794-5452. Shares issued in
certificate form are not eligible for this Privilege.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its yield and
tax-equivalent yield. YIELD AND TAX-EQUIVALENT YIELD FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. It
can be expected that these yield figures will fluctuate substantially.
The Fund's "yield" refers to the income generated by an investment in
the Fund over a seven-day period identified in the advertisement. This income
is then "annualized." That is, the amount of income
(Page 15)
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly, but, when annualized, the
income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The Fund's "yield" and
"effective yield" may reflect absorbed expenses pursuant to any undertaking
that may be in effect. See "Management of the Fund." Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in the Fund
with bank deposits, savings accounts, and similar investment alternatives
which often provide an agreed-upon or guaranteed fixed yield for a stated
period of time, or other investment companies which may use a different
method of computing yield. The Fund's tax-equivalent yield shows the level of
taxable yield needed to produce an after-tax equivalent to the Fund's
tax-free yield. This is done by increasing the Fund's yield by the amount
necessary to reflect the payment of federal income tax (and state income tax,
if applicable) at a stated tax rate.
Any fees charged by an Agent directly to its customers' account in
connection with investments in the Fund will not be included in calculations
of yield.
The Fund may compare its performance with various industry standards
of performance including Lipper Analytical Services, Inc. ratings.
Performance rankings as reported in CHANGING TIMES, BUSINESS WEEK,
INSTITUTIONAL INVESTOR, THE WALL STREET JOURNAL, IBC/DONOGHUE'S MONEY FUND
REPORT, MUTUAL FUND FORECASTER, NO LOAD INVESTOR, MONEY MAGAZINE, MORNINGSTAR
MUTUAL FUND VALUES, U.S. NEWS AND WORLD REPORT, FORBES, FORTUNE, BARRON'S and
similar publications may also be used in comparing the Fund's performance.
Furthermore, the Fund may quote its yields in advertisements or in
shareholder reports.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The Fund declares daily and pays monthly (on the first business day
of the following month) dividends from its net investment income, if any, and
distributes any net long-term capital gains on an annual basis. The Board of
Trustees may elect not to distribute capital gains in whole or in part to
take advantage of capital loss carryovers.
Unless you choose to receive dividend and/or capital gains
distributions in cash, your distributions will be automatically reinvested in
additional shares at NAV. You may change the method of receiving
distributions at any time by writing to the Fund. Checks which are sent to
shareholders who have requested distributions to be paid in cash and which
are subsequently returned by the United States Postal Service as not
deliverable or which remain uncashed for six months or more will be
reinvested in additional Fund shares in the shareholder's account at the then
current NAV. Subsequent Fund distributions will be automatically reinvested
in additional Fund shares in the shareholder's account.
Shares purchased on a day on which the Fund calculates its NAV will
not begin to accrue dividends until the following business day. Except as
provided below, redemption orders effected on any particular day will receive
all dividends declared through the day of redemption. However, if immediately
available funds are received by the Transfer Agent prior to 12:00 noon,
Eastern time, you may receive the dividend declared on the day of purchase.
You will not receive the dividends declared on the day of redemption if the
redemption order is placed prior to 12:00 noon, Eastern time.
It is expected that the Fund will qualify for treatment as a
regulated investment company under the Code so that it will be relieved of
Federal income tax on that part of its investment company taxable income
(consisting generally of taxable net investment income and net short-term
capital gain) and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that is distributed to its shareholders. In
addition, the Fund intends to continue to qualify to pay "exempt-interest"
dividends, which requires, among other things, that at the close of each
quarter of its taxable year at least 50% of the value of its total assets
must consist of municipal securities.
(Page 16)
Dividends from the Fund's investment company taxable income are taxable
to you as ordinary income, to the extent of the Fund's earnings and profits.
Distributions by the Fund that are designated by it as "exempt-interest
dividends" generally may be excluded by you from your gross income.
Distributions by the Fund of net capital gain, when designated as such, are
taxable to you as long-term capital gains, regardless of the length of time
you have owned your shares.
Interest on indebtedness incurred or continued to purchase or carry
shares of the Fund will not be deductible for Federal income tax purposes to
the extent that the Fund's distributions (other than capital gains
distributions) consist of exempt-interest dividends. The Fund may invest in
"private activity bonds," the interest on which is treated as a tax
preference item for shareholders in determining their liability for the
alternative minimum tax. Proposals may be introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal securities. If such a proposal were enacted, the
availability of such securities for investment by the Fund and the value of
its portfolio would be affected. In such event, the Fund would reevaluate its
investment objective and policies.
Dividends and other distributions, to the extent taxable, are taxable
to you regardless of whether they are received in cash or reinvested in
additional Fund shares, even if the value of your shares is below your cost.
If you purchase shares shortly before a taxable distribution (i.e., any
distribution other than an exempt-interest dividend paid by the Fund), you
must pay income taxes on the distribution, even though the value of your
investment (plus cash received, if any) remains the same. In addition, the
share price at the time you purchase shares may include unrealized gains in
the securities held in the Fund. If these portfolio securities are
subsequently sold and the gains are realized, they will, to the extent not
offset by capital losses, be paid to you as a capital gain distribution and
will be taxable to you.
In January of each year, the Fund will send you a Form 1099-DIV
notifying you of the status for Federal income tax purposes of your
distributions for the preceding year. The Fund also will advise shareholders
of the percentage, if any, of the dividends paid by the Fund that are exempt
from Federal income tax and the portion, if any, of those dividends that is a
tax preference item for purposes of the alternative minimum tax.
You must furnish the Fund with your taxpayer identification number
("TIN") and state whether you are subject to withholding for prior
under-reporting, certified under penalties of perjury as prescribed by the
Code and the regulations thereunder. Unless previously furnished, investments
received without such a certification will be returned. The Fund is required
to withhold a portion of all dividends, capital gains distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct TIN; withholding
from dividends and capital gains distributions also is required for such
shareholders who otherwise are subject to backup withholding.
In addition, in order to avoid the application of a 4% nondeductible
excise tax on certain undistributed amounts of ordinary income and capital
gains, the Fund may make an additional distribution shortly before December
31 in each year of any undistributed ordinary (taxable) income or capital
gains and expects to pay any other dividends and distributions necessary to
avoid the application of this tax.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Fund and its shareholders; see the SAI
for a further discussion. There may be other federal, state or local tax
considerations applicable to a particular investor; for example, the Fund's
dividends may be wholly or partly taxable under state and/or local laws. You
therefore are urged to consult your own tax adviser.
GENERAL INFORMATION
The Trust offers shares of beneficial interest of separate investment
portfolios without par value (each a "fund"). The Trust was organized as a
Massachusetts business trust under the laws of The Commonwealth of
Massachusetts on March 28, 1983 under the name of The Boston Company Tax-Free
Municipal Funds, changed its name to the Laurel Tax-Free Municipal Funds on
March 31, 1994, and changed its name again
(Page 17)
to The Dreyfus/Laurel Tax-Free Municipal Funds on October 17, 1994. The Trust
is registered with the SEC as an open-end management investment company,
commonly known as a mutual fund.
At a meeting of the Fund's shareholders held on February 15, 1996,
shareholders of the Fund, and of each class of the Fund, approved an
Agreement and Plan of Reorganization (the "Plan") between the Trust, on
behalf of the Fund, and Dreyfus Massachusetts Municipal Money Market Fund
(the "Acquiring Fund") effective as of February 22, 1996. Pursuant to the
Plan, on February 22, 1996, (a) a portion of the Fund's assets equal in value
to the aggregate net asset value of the interest in the Fund held by the
Fund's Investor shareholders was transferred to the Acquiring Fund and the
Fund's Investor class of shares was terminated, and (b) holders of Investor
shares of the Fund became shareholders of the Acquiring Fund receiving in
exchange for their Investor shares, shares of the Acquiring Fund having an
aggregate net asset value equal to the aggregate value of the assets
transferred to the Acquiring Fund.
Also, at the February 15, 1996 meeting of the Fund's shareholders,
the Fund's Class R shareholders approved the Investment Management Agreement
which replaced the Prior Management Agreement effective February 22, 1996.
The Investment Management Agreement provides that certain transaction charges
are payable to the Fund's Transfer Agent out of shareholder accounts in
connection with shareholders utilizing certain services.
Also effective February 22, 1996, the Fund's name changed from
Dreyfus/Laurel Massachusetts Tax-Free Money Fund to "Dreyfus BASIC
Massachusetts Municipal Money Market Fund."
Each share (regardless of class) has one vote. All shares of all
funds (and classes thereof) vote together as a single class, except as to any
matter for which a separate vote of any fund or class is required by the 1940
Act, and except as to any matter which affects the interests of one or more
particular funds or classes, in which case only the shareholders of the
affected funds or classes are entitled to vote, each as a separate class
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
Fund shareholders may not consider each year the election of Trustees or the
appointment of auditors. However, pursuant to the Trust's By-Laws, the
holders of at least 10% of the shares outstanding and entitled to vote may
require the Trust to hold a special meeting of shareholders for purposes of
removing a Trustee from office and for any other purpose. Trust shareholders
may remove a Trustee by the affirmative vote of two-thirds of the Trust's
outstanding voting shares. In addition, the Board of Trustees will call a
meeting of shareholders for the purpose of electing Trustees if, at any time,
less than a majority of the Trustees then holding office have been elected by
shareholders.
The Transfer Agent maintains a record of your ownership and will send
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
(Page 18)
[This Page Intentionally Left Blank]
(Page 19)
BASIC
Massachusetts
Municipal
Money Market
Fund
Prospectus
Copy Rights 1996 Dreyfus Service Corporation
315/715p3030195
Registration Mark
Page 20
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
February 29, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus of The
Dreyfus/Laurel Tax-Free Municipal Funds (the "Trust") dated February 29,
1996 (referred to herein as the "Prospectus") describing the Dreyfus BASIC
Massachusetts Municipal Money Market Fund (formerly, the Dreyfus/Laurel
Massachusetts Tax-Free Money Fund) (the "Fund"). To obtain a copy of the
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call one of the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1206
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation ("Dreyfus") serves as the Fund's investment
manager.
Premier Mutual Fund Services, Inc. ("Premier") is the distributor of
the Fund's shares.
TABLE OF CONTENTS
Page
Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . . B-2
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . B-9
(see also in the Prospectus "How to Buy Fund Shares")
Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . B-10
(see also in the Prospectus "Investment Objective and Policies")
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . B-22
(see also in the Prospectus "How to Redeem Fund Shares")
Fund Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-24
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Performance Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-27
(see also in the Prospectus "Dividends, Other
Distributions and Taxes")
Description of the Trust. . . . . . . . . . . . . . . . . . . . . . . . B-28
(see also in the Prospectus "Investment Objective and Policies")
Principal Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . B-30
Custodian and Transfer Agent. . . . . . . . . . . . . . . . . . . . . . B-30
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . . . B-30
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . B-30
Appendix A Risk Factors - Investing in
Massachusetts Municipal Obligations . . . . . . . . . . . . . . . . . B-31
Appendix B - Information about Securities Ratings . . . . . . . . . . . B-34
MANAGEMENT OF THE TRUST
The organizations that provide services to the Trust are as follows:
Dreyfus as investment manager ("Investment Manager"), Mellon Bank, N.A.
("Mellon Bank") as custodian, Premier as the distributor ("Distributor") and
sub-administrator ("Sub-Administrator"), and Dreyfus Transfer, Inc.
("Dreyfus Transfer"), a wholly-owned subsidiary of Dreyfus, as transfer
agent ("Transfer Agent"). The functions they perform for the Trust are
discussed in the Prospectus and in this Statement of Additional Information.
On October 17, 1994, the name of the Trust was changed from "The Laurel
Tax-Free Municipal Funds" to "The Dreyfus/Laurel Tax-Free Municipal Funds"
and the name of the Fund was changed from Laurel Massachusetts Tax-Free
Money Fund to Dreyfus/Laurel Massachusetts Tax-Free Money Fund. On February
22, 1996, the Fund's name changed from Dreyfus/Laurel Massachusetts Tax-Free
Money Fund to Dreyfus BASIC Massachusetts Municipal Money Market Fund.
Trustees and Officers
The Trust has a Board composed of thirteen Trustees which supervises
the Trust's investment activities and reviews contractual arrangements with
companies that provide the Fund with services. The following lists the
Trustees and officers and their positions with the Trust and their present
and principal occupations during the past five years. Each Trustee who is
an "interested person" of the Trust (as defined in the Investment Company
Act of 1940, as amended (the "Act")) is indicated by an asterisk. Each of
the Trustees also serves as a Director of The Dreyfus/Laurel Funds, Inc.,
and as a Trustee of The Dreyfus/Laurel Funds Trust (collectively, with the
Trust, the "Dreyfus/Laurel Funds").
o+RUTH MARIE ADAMS. Trustee of the Trust; Professor of English and Vice
President Emeritus, Dartmouth College; Senator, United Chapters of
Phi Beta Kappa; Trustee, Woods Hole Oceanographic Institution.
Age: 80 years old. Address: 1026 Kendal Lyme Road, Hanover, New
Hampshire 03755.
o+FRANCIS P. BRENNAN. Chairman of the Board of Trustees and Assistant
Treasurer of the Trust; Director and Chairman, Massachusetts Business
Development Corp.; Director, Boston Mutual Insurance Company; Director
and Vice Chairman of the Board, Home Owners Federal Savings and Loan
(prior to May 1990). Age: 78 years old. Address: Massachusetts
Business Development Corp., One Liberty Square, Boston, Massachusetts
02109.
o*JOSEPH S. DiMARTINO. Trustee of the Trust since February 1995. Since
January 1995, Mr. DiMartino has served as Chairman of the Board for
various funds in the Dreyfus Family of Funds. For more than five
years prior thereto, he was President and a director of Dreyfus and
Executive Vice President and a director of Dreyfus Service Corporation,
a wholly-owned subsidiary of Dreyfus and until August 1994, the Funds'
distributor. From August 1994 to December 31, 1994, he was a director
of Mellon Bank Corporation. He is Chairman of the Board of Noel Group,
Inc., a venture capital company; a trustee of Bucknell University; and
a director of the Muscular Dystrophy Association, HealthPlan Services
Corporation, Belding Heminway, Inc., a manufacturer and marketer of
industrial threads, specialty yarns, home furnishings and fabrics, Curtis
Industries, Inc., a national distributor of security products, chemicals
and automotive and other hardware, Simmons Outdoor Corporation and Staffing
Resources, Inc. Mr. DiMartino is also a Board member of 93 other funds in
the Dreyfus Family of Funds. Age: 52 years old. Address: 200 Park
Avenue, New York, New York 10166.
o+JAMES M. FITZGIBBONS. Trustee of the Trust; Chairman, Howes Leather
Company, Inc.; Director, Fiduciary Trust Company; Chairman, CEO and
Director, Fieldcrest-Cannon Inc.; Director, Lumber Mutual Insurance
Company; Director, Barrett Resources, Inc. Age: 60 years old.
Address: 40 Norfolk Road, Brookline, Massachusetts 02167.
o*J. TOMLINSON FORT. Trustee of the Trust; Since 1990, Partner, Reed, Smith,
Shaw & McClay (law firm). Age: 65 years old. Address: 204 Woodcock
Drive, Pittsburgh, Pennsylvania 15215.
o+ARTHUR L. GOESCHEL. Trustee of the Trust; Director, Chairman of the Board
and Director, Rexene Corporation; Director, Calgon Carbon Corporation;
Director, Cerex Corporation; Director, National picture Frame Corporation;
Chairman of the Board and Director, Tetra Corporation 1991-1993; Director,
Medalist Corporation 1992-1993; From 1988-1989 Director, Rexene
Corporation. Since May 1991, Mr. Goeschel has served as a Trustee of
Sewickley Valley Hospital. Age: 73 years old. Address: Way Hollow Road
and Woodland Road, Sewickley, Pennsylvania 15143.
o+KENNETH A. HIMMEL. Trustee of the Trust; Director, The Boston Company,
Inc. ("TBC") and Boston Safe Deposit and Trust Company; President and Chief
Executive Officer, Himmel & Co., Inc.; Vice Chairman, Sutton Place Gourmet,
Inc. Managing Partner, Franklin Federal Partners. Age: 49 years old.
Address: Himmel and Company, Inc., 101 Federal Street, 22nd Floor, Boston,
Massachusetts 02110.
o*ARCH S. JEFFERY. Trustee of the Trust; Financial Consultant. Age: 76
years old. Address: 1817 Foxcroft Lane, Unit 306, Allison Park,
Pennsylvania 15101.
o+STEPHEN J. LOCKWOOD. Trustee of the Trust; President and CEO, LDG
Management Company Inc.; CEO, LDG Reinsurance Underwriters, SRRF
Management Inc. and Medical Reinsurance Underwriters Inc. Age:
48 years old. Address: 401 Edgewater Place, Wakefield, Massachusetts
01880.
o+ROBERT D. MCBRIDE. Trustee of the Trust; Director, Chairman, McLouth
Steel; Director, Salem Corporation. Director, SMS/Concast, Inc.
(1983-1991). Age: 67 years old. Address: 15 Waverly Lane, Grosse
Pointe Farms, Michigan 48236.
o+JOHN L. PROPST. Trustee of the Trust; Of Counsel, Reed, Smith, Shaw &
McClay (law firm). Age: 81 years old. Address: 5521 Dunmoyle Street,
Pittsburgh, Pennsylvania 15217.
o+JOHN J. SCIULLO. Trustee of the Trust; Dean Emeritus and Professor of
Law, Duquesne University Law School; Director, Urban Redevelopment
Authority of Pittsburgh. Age: 63 years old. Address: 321 Gross Street,
Pittsburgh, Pennsylvania 15224.
o+ROSLYN M. WATSON. Trustee of the Trust; Principal, Watson Ventures, Inc.;
Director, American Express Centurion Bank; Director, Harvard Community
Health Plan, Inc.; Director, Massachusetts Electric Company; Director,
The Hymans Foundations, Inc., prior to February, 1993; Real Estate
Development Project Manager and Vice President, The Gunwyn Company.
Age: 45 years old. Address: 25 Braddock Park, Boston, Massachusetts
02116-5816.
#MARIE E. CONNOLLY. President and Treasurer of the Trust, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Funds, Inc. (since September 1994);
Vice President of the Trust, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Funds, Inc. (March 1994 to September 1994); President,
Funds Distributor, Inc. (since 1992); Treasurer, Funds Distributor, Inc.
(July 1993 to April 1994); COO, Funds Distributor, Inc. (since April
1994); Director, Funds Distributor, Inc. (since July 1992); President,
COO and Director, Premier Mutual Fund Services, Inc. (since April 1994);
Senior Vice President and Director of Financial Administration, The Boston
Company Advisors, Inc. (December 1988 to May 1993). Age: 37 years old.
Address: One Exchange Place, Boston, Massachusetts 02109.
#FREDERICK C. DEY. Vice President of the Trust, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Funds, Inc. (since September 1994); Senior
Vice President, Premier Mutual Fund Services, Inc. (since August 1994);
Vice President, Funds Distributor, Inc. (since August 1994); Fundraising
Manager, Swim Across America (October 1993 to August 1994); General
Manager, Spring Industries (August 1988 to October 1993). Age: 33 years
old. Address: One Exchange Place, Boston, Massachusetts 02109.
#ERIC B. FISCHMAN. Vice President of the Trust, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Funds, Inc. (since September 1994); Vice
President and Associate General Counsel, Premier Mutual Fund Services,
Inc. (Since August 1994); Vice President and Associate General Counsel,
Funds Distributor, Inc. (since August 1994); Staff Attorney, Federal
Reserve Board (September 1992 to June 1994); Summer Associate, Venture
Economics (May 1991 to September 1991); Summer Associate, Suffolk County
District Attorney (June 1990 to August 1990). Age: 31 years old. Address:
200 Park Avenue, New York, New York 10166.
RICHARD W. HEALEY. Vice President of the Trust, The Dreyfus/Laurel Funds
Trust and The Dreyfus/Laurel Funds, Inc. (since March 1994); Senior Vice
President, Funds Distributor, Inc. (since March 1993); Vice President, The
Boston Company, Inc., (March 1993 to May 1993); Vice President of
Marketing, Calvert Group (1989 to March 1993). Age: 41 years old.
Address: One Exchange Place, Boston, Massachusetts 02109.
#JOHN E. PELLETIER. Vice President and Secretary of the Trust, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
September 1994); Senior Vice President, General Counsel and Secretary,
Funds Distributor, Inc. (since April 1994); Senior Vice President,
General Counsel and Secretary, Premier Mutual Fund Services, Inc.
(since August 1994); Counsel, The Boston Company Advisors, Inc.
(February 1992 to March 1994); Associate, Ropes & Gray (August 1990 to
February 1992). Age: 31 years old. Address: One Exchange Place, Boston,
Massachusetts 02109.
_____________________________________
* "Interested person" of the Trust, as defined in the Act.
o Member of the Audit Committee.
+ Member of the Nominating Committee.
# Officer also serves as an officer for other investment companies advised
by The Dreyfus Corporation.
No officer or employee of Premier (or of any parent, subsidiary, or
affiliate thereof) receives any compensation from the Trust for serving as
an officer or Trustee of the Trust. No officer or employee of Dreyfus (or
of any parent, subsidiary, or affiliate thereof) serves as an officer or
Trustee of the Trust. The Dreyfus/Laurel Funds pay each Director/Trustee
who is not an "interested person" as defined in the Act, $27,000 per annum
(and an additional $75,000 for the Chairman of the Board of
Directors/Trustees of The Dreyfus/Laurel Funds), $1,000 per joint
Dreyfus/Laurel Funds Board meeting attended and $750 per joint
Dreyfus/Laurel Funds Audit Committee meeting attended, and reimburse each
Director/Trustee for travel and out-of-pocket expenses.
The officers and Trustees of the Trust as a group owned beneficially
less than 1% of the total shares of the Fund outstanding as of
______________, 1995.
For the fiscal year ended June 30, 1995, the aggregate amount of fees
and expenses received by each Trustee from the Trust and all other funds in
the Dreyfus Family of Funds for which such person is a Board member were as
follows:
<TABLE>
<CAPTION>
Total
Pension or Compensation from
Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund# Fund's Expenses Retirement Board Member
- ------------------ ------------------- -------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $ 2,093 none none $ 34,750
Francis P. Brennan@ 17,716 none none 110,750
Joseph S. DiMartino*** 2,156* none none 445,000**
James M. Fitzgibbons 1,968 none none 32,750
J. Tomlinson Fort*** 2,156 none none 35,750
Arthur L. Goeschel 2,093 none none 34,750
Kenneth A. Himmel 1,934 none none 32,000
Arch S. Jeffery*** 2,156 none none 35,750
Stephen J. Lockwood 1,934 none none 32,000
Robert D. McBride 2,156 none none 35,750
John L. Propst 2,156 none none 35,750
John J. Sciullo 2,093 none none 34,750
Roslyn M. Watson 2,156 none none 35,750
</TABLE>
_____________________________
# Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $6,559.21 for the Dreyfus/Laurel Funds.
* Estimated amount for fiscal year ending June 30, 1996.
** Estimated amount for year ending December 31, 1995.
*** Interested Trustee - not paid by the Fund, paid by Dreyfus.
@ Francis Brennan is also paid $75,000 by Dreyfus to be the Chairman of
the Board. This amount in included in the total compensation figure
for Mr. Brennan.
Management Arrangements
Dreyfus serves as the investment manager for the Fund
pursuant to an Investment Management Agreement (the "Management
Agreement") with the Trust dated February 22, 1996. Dreyfus is a
wholly-owned subsidiary of Mellon Bank. Pursuant to the
Management Agreement, Dreyfus provides, or arranges for one or
more third parties to provide, investment advisory,
administrative, custody, fund accounting and transfer agency
services to the Fund. As investment manager, Dreyfus manages the
Fund by making investment decisions based on the Fund's
investment objective, policies and restrictions.
Prior to February 22, 1996, Dreyfus served as investment
manager to the Fund pursuant to the prior investment management
agreement (the "Prior Management Agreement") with the Trust dated
April 4, 1994 and transferred from Mellon Bank to Dreyfus on
October 17, 1994.
Prior to May 21, 1993, The Boston Company Advisors, Inc.
("TBC Advisors") served as investment adviser to the Fund
pursuant to a written agreement, which was last approved by the
Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust, on July 22, 1992. From May 21,
1993 through April 3, 1994, Boston Advisors served as investment
adviser to the Fund pursuant to a written agreement ("TBC
Advisors Agreement"), which was last approved by the Trustees,
including a majority of the Trustees who are not "interested
persons" of the Trust, on July 21, 1993 and approved by the
shareholders of the Fund on December 31, 1992. The TBC Advisors
Agreement became effective on May 21, 1993, upon the consummation
of the sale of Boston Group Holdings, Inc., the parent company of
The Boston Company, Inc. ("TBC"), to Mellon Bank Corporation.
Mellon Bank later served as investment manager to the Fund
pursuant to the Prior Management Agreement, which was last
approved by the Trustees, including a majority of the Trustees
who are not "interested persons" of the Trust or Mellon Bank, on
November 22, 1993, (subject to shareholder approval) and approved
by the shareholders of the Fund on March 29, 1994. The Prior
Management Agreement became effective on April 4, 1994. TBC
Advisors is a wholly-owned subsidiary of TBC, a financial
services holding company. TBC is in turn a wholly-owned
subsidiary of Mellon Bank Corporation. As stated above, Dreyfus,
a wholly-owned subsidiary of Mellon Bank, is the current
Investment Manager pursuant to the Management Agreement, which
was last approved by the Trustees on July 26, 1995.
The current Management Agreement with Dreyfus provides for a
"unitary fee." Under the unitary fee structure, Dreyfus pays all
expenses of the Fund except: (i) brokerage commissions, (ii)
taxes, interest and extraordinary expenses (which are expected to
be minimal), and (iii) Rule 12b-1 fees, as applicable. Under the
unitary fee, Dreyfus provides, or arranges for one or more third
parties to provide, investment advisory, administrative, custody,
fund accounting and transfer agency services to the Fund. For
the provision of such services directly, or through one or more
third parties, Dreyfus receives as full compensation for all
services and facilities provided by it, a fee computed daily and
paid monthly at the annual rate of .45 of 1% of the Fund's
average daily net assets, less the accrued fees and expenses
(including counsel fees) of the non-interested Trustees of the
Trust. The Management Agreement provides that certain
redemption, exchange and account closeout charges are payable
directly by the Fund's shareholders to the Fund's Transfer Agent
and the fee payable by the Fund to Dreyfus is not reduced by the
amount of charges payable to the Transfer Agent. Under the prior
agreement with TBC Advisors, the payments to the investment
manager covered merely the provision of investment advisory
services (and payment for sub-advisory services) and certain
specified administrative services. Under this previous
arrangement, the Fund also paid for additional non-investment
advisory expenses, such as custody and transfer agency services,
that were not paid by the investment adviser.
The Management Agreement will remain in effect through
February 21, 1998 and will continue from thereafter year to year
provided that a majority of the Trustees who are not interested
persons of the Fund and either a majority of all Trustees or a
majority of the shareholders of the Fund approve its continuance.
The Fund may terminate the Management Agreement, without prior
notice to Dreyfus, upon the vote of a majority of the Board of
Trustees or upon the vote of a majority of the outstanding voting
securities of the Fund on 60 days written notice to Dreyfus.
Dreyfus may terminate the Management Agreement upon written
notice to the Fund. The Management Agreement will terminate
immediately and automatically upon its assignment.
The following persons are officers and/or directors of
Dreyfus: Howard Stein, Chairman of the Board and Chief Executive
Officer; W. Keith Smith, Vice Chairman of the Board; Christopher
M. Condron, President, Chief Operating Officer and a director;
Stephen E. Canter, Vice Chairman, Chief Investment Officer and a
Director; Lawrence S. Kash, Vice Chairman-Distribution and a
director; Philip L. Toia, Vice Chairman-Operations and
Administration and a director; Barbara E. Casey, Vice President-
Dreyfus Retirement Services; Diane M. Coffey, Vice President-
Corporate Communications; Elie M. Genadry, Vice President-
Institutional Sales; William F. Glavin, Jr., Vice President-
Corporate Development; Henry D. Gottmann, Vice President-Retail
Sales and Service; Mark N. Jacobs, Vice President-Legal and
Secretary; Daniel C. Maclean, Vice President and General Counsel;
Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Andrew
S. Wasser, Vice President-Information Services; Katherine C.
Wickham, Vice President-Human Resources; Maurice Bendrihem,
Controller; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene,
Julian M. Smerling and David B. Truman, directors.
As compensation for Dreyfus' services, the Fund pays a fee,
based on its total average daily net assets, that is computed
daily and paid monthly at the annual rate of .45 of 1%. Dreyfus
has agreed to limit its fee, or to reimburse the Fund for
expenses, to ensure that the Fund's operating expenses do not
exceed .35 of 1% for the period from February 22, 1996 through
February 21, 1997. Dreyfus may waive all or a portion of its
fees payable by the Fund from time to time.
The following table shows the fees paid by the Fund to TBC
Advisors or Mellon (as the prior investment advisors) and to
Dreyfus (the current investment manager), including any fee
waivers or expense reimbursements by TBC Advisors, Mellon Bank or
Dreyfus, pursuant to the Fund's prior investment advisory
agreements, during the Fund's 1993, 1994 and 1995 fiscal years:
1995 * 1994 * (1) 1993 **
Fees Fees Fees Fees Fees Fees
Paid (2) Paid (3) Paid (4) Waived (5) Paid Waived (5)
-------- -------- -------- ---------- ---- ----------
$397,565 $88,706 $451,899 $95,174 (6) $714,501 $ 29,313 (7)
_______________________________
* For the fiscal year ended June 30.
(1) Effective April 4, 1994, Mellon Bank served as the Fund's
investment manager.
(2) For the fiscal year ended June 30, 1995, there were no fee waivers
or expense reimbursements.
(3) Fees paid to Mellon Bank for investment management services for
the period from April 4, 1994 to the fiscal year ended June 30, 1994.
(4) Fees paid to TBC Advisors for investment advisory services for the
period from July 1, 1993 to April 3, 1993.
(5) TBC Advisors waived all or a portion of its fees and/or reimbursed
expenses of the Fund from time to time in order to increase the
Fund's net income available for distribution to shareholders.
(6) Includes $41,577 reimbursement by TBC Advisors.
(7) Amount represents a reimbursement of expenses only.
Dreyfus has agreed that if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to the Management
Agreement, but excluding interest, brokerage expenses, taxes and
extraordinary items) exceed the expense limitation of any state,
it will reduce its management fees by the amount of such excess
expense. Such a fee reduction, if any, will be reconciled on a
monthly basis. The most restrictive state expense limitation
applicable to the Fund requires a reduction of fees in any year
that such expenses exceed 2.5% of the first $30 million of
average net assets, 2.0% of the next $70 million of average net
assets and 1.5% of the remaining average net assets. A number of
factors, including the size of the Fund, will determine which of
these restrictions will be applicable to the Fund at any given
time. No reimbursement pursuant to state expense limitations was
required for the Fund for the fiscal year ended June 30, 1995.
In addition, under a distribution plan adopted by the Fund
pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "Act"), which was terminated effective February
22, 1996, the Fund paid Dreyfus Service Corporation, a subsidiary
of Dreyfus, for shareholder servicing, and the Distributor for
shareholder servicing and expenses presently intended to result
in the sale of Investor shares, at the annual rate of .25%
attributable to its Investor shares. For the year ended June 30,
1995, the Fund paid $222,784 in distribution fees attributable to
its Investor shares.
PURCHASE OF FUND SHARES
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in
the Dreyfus Family of Funds and for certain other investment
companies.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer
purchase orders may be made at any time. Purchase orders
received by 4:00 P.M., New York time, on any business day that
Dreyfus Transfer, Inc., the Fund's transfer and dividend
disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange ("NYSE") are open for business will be credited to the
shareholder's Fund account on the next bank business day
following such purchase order. Purchase orders made after 4:00
P.M., New York time, on any business day the Transfer Agent and
the NYSE are open for business, or orders made on Saturday,
Sunday or any Fund holiday (e.g. when the NYSE is not open for
business), will be credited to the shareholders's Fund account on
the second bank business day following such purchase order.
Reopening an Account. An investor may reopen an account
with a minimum investment of $100 without filing a new Account
Application during the calendar year the account is closed or
during the following calendar year, provided the information on
the old Account Application is still applicable.
Federal Law Affecting Mellon Bank
The Glass-Steagall Act of 1933 prohibits national banks from
engaging in the business of underwriting, selling or distributing
securities and prohibits a member bank of the Federal Reserve
System from having certain affiliations with an entity engaged
principally in that business. The activities of Mellon Bank in
informing its customers of, and performing, investment and
redemption services in connection with the Fund, and in providing
services to the Fund as custodian, as well as investment advisory
activities of Dreyfus, may raise issues under these provisions.
Mellon Bank has been advised by counsel that its activities
contemplated under this arrangement are consistent with its
statutory and regulatory obligations.
Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or
administrative decisions or interpretations of such future
statutes and regulations could prevent Mellon Bank or Dreyfus
from continuing to perform all or a part of the above services
for its customers and/or the Fund. If Mellon Bank or Dreyfus
were prohibited from serving the Fund in any of its present
capacities the Trustees would seek an alternative provider(s) of
such services.
INVESTMENT POLICIES
The Prospectus discusses the Fund's investment objective and
the policies it employs to achieve that objective. The following
discussion supplements the description of the Fund's investment
policies in the Prospectus.
Description of Municipal Obligations
For purposes of this Statement of Additional Information,
the term "Municipal Obligations" and "Massachusetts
Municipal Obligations" shall mean debt obligations
issued by the State of Massachusetts, its political subdivisions,
municipalities and public authorities and municipal obligations
issued by other government entities if, in the opinion of counsel
to the respective issuers, the interest from such obligations is
exempt from Federal and Massachusetts personal income taxes.
"Municipal Obligations" and "Massachusetts Municipal Obligations"
include the following:
Municipal Bonds
Municipal Bonds, which generally have a maturity of more
than one year when issued, have two principal classifications:
General Obligation Bonds and Revenue Bonds. A Private Activity
Bond is a particular kind of Revenue Bond. The classification of
General Obligation Bonds, Revenue Bonds and Private Activity
Bonds are discussed below.
1. General Obligation Bonds. The proceeds of these
obligations are used to finance a wide range of public projects,
including construction or improvement of schools, highways and
roads, and water and sewer systems. General Obligation Bonds are
secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest.
2. Revenue Bonds. Revenue Bonds are issued to finance a
wide variety of capital projects including: electric, gas, water
and sewer systems; highways, bridges and tunnels; port and
airport facilities; colleges and universities; and hospitals. The
principal security for a Revenue Bond is generally the net
revenues derived from a particular facility, group of facilities
or, in some cases, the proceeds of a special excise or other
specific revenue source. Although the principal security behind
these bonds may vary, many provide additional security in the
form of a debt service reserve fund whose money may be used to
make principal and interest payments on the issuer's obligations.
Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in
the debt service reserve fund.
3. Private Activity Bonds. Private Activity Bonds, which
are considered Municipal Bonds if the interest paid thereon is
exempt from Federal income tax, are issued by or on behalf of
public authorities to raise money to finance various privately
operated facilities for business and manufacturing, housing,
sports and pollution control. These bonds are also used to
finance public facilities such as airports, mass transit systems,
ports and parking. The payment of the principal and interest on
such bonds is dependent solely on the ability of the facility's
user to meet its financial obligations and the pledge, if any, of
real and personal property so financed as security for such
payment. As noted in the Prospectus and discussed below under
"Taxes," interest income on these bonds may be an item of tax
preference subject to the Federal alternative minimum tax for
individuals and corporations.
Municipal Notes
Municipal Notes generally are used to provide for short-term
capital needs and generally have maturities of thirteen months or
less. Municipal Notes include:
1. Tax Anticipation Notes. Tax Anticipation Notes are
issued to finance working capital needs of municipalities.
Generally, they are issued in anticipation of various seasonal
tax revenue, such as income, sales, use and business taxes, and
are payable from these specific future taxes.
2. Revenue Anticipation Notes. Revenue Anticipation Notes
are issued in expectation of receipt of other kinds of revenue,
such as Federal revenues available under the Federal Revenue
Sharing Programs.
3. Bond Anticipation Notes. Bond Anticipation Notes are
issued to provide interim financing until long-term financing can
be arranged. In most cases, the long-term bonds then provide the
money for the repayment of the Notes.
Municipal Commercial Paper
Issues of Municipal Commercial Paper typically represent
short-term, unsecured, negotiable promissory notes. These
obligations are issued by agencies of state and local governments
to finance seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general
revenues of municipalities or are refinanced with long-term debt.
In most cases, Municipal Commercial Paper is backed by letters of
credit, lending agreements, note repurchase agreements or other
credit facility agreements offered by banks or other
institutions.
Municipal Lease Obligations
Municipal leases may take the form of a lease or a
certificate of participation in a purchase contract issued by
state and local government authorities to obtain funds to acquire
a wide variety of equipment and facilities such as fire and
sanitation vehicles, computer equipment and other capital assets.
A lease obligation does not constitute a general obligation of
the municipality for which the municipality's taxing power is
pledged, although the lease obligation is ordinarily backed by
the municipality's covenant to budget for, appropriate and make
payments due under the lease obligation. Municipal leases have
special risks not normally associated with Municipal Bonds. These
obligations frequently contain "non-appropriation" clauses that
provide that the governmental issuer of the obligation has no
obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the legislative
body on a yearly or other periodic basis. In addition to the
non-appropriation risk, municipal leases represent a type of
financing that has not yet developed the depth of marketability
associated with Municipal Bonds; moreover, although the
obligations will be secured by the leased equipment, the
disposition of the equipment in the event of foreclosure might
prove difficult. For purposes of the 10% limitation on the
purchase of illiquid securities, the Fund will not consider the
municipal lease obligations or certificates of participation in
municipal lease obligations in which it invests as liquid, unless
Dreyfus shall determine, based upon such factors as the frequency
of trades and quotes for the obligation, the number of dealers
willing to purchase or sell the security and the number of other
potential buyers, the willingness of dealers to undertake to make
a market in the security and the nature of marketplace trades,
that a security shall be treated as liquid for purposes of such
limitation.
Obligations of issuers of Municipal Obligations are subject
to the provisions of bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors. In addition, the
obligations of such issuers may become subject to laws enacted in
the future by Congress, state legislators, or referenda extending
the time for payment of principal and/or interest, or imposing
other constraints upon enforcement of such obligations or upon
municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and
interest on its Municipal Obligations may be materially affected.
Unlike the purchase or sale of a Municipal Bond, no
consideration is paid or received by the Fund upon the purchase
or sale of a futures contract. Initially, the Fund will be
required to deposit with the broker an amount of cash or cash
equivalents equal to approximately 10% of the contract amount
(this amount is subject to change by the board of trade on which
the contract is traded and members of such board of trade may
charge a higher amount). This amount is known as initial margin
and is in the nature of a performance bond or good faith deposit
on the contract which is returned to the Fund upon termination of
the futures contract, assuming that all contractual obligations
have been satisfied. Subsequent payments, known as variation
margin, to and from the broker, will be made on a daily basis as
the price of the index fluctuates, making the long and short
positions in the futures contract more or less valuable, a
process known as marking-to-market. At any time prior to the
expiration of the contract, the Fund may elect to close the
position by taking an opposite position, which will operate to
terminate the Fund's existing position in the futures contract.
There are several risks in connection with the use of a
municipal bond index futures contract as a hedging device.
Successful use of municipal bond index futures contracts by the
Fund is subject to the ability of Dreyfus to predict correctly
movements in the direction of interest rates. Such predictions
involve skills and techniques which may be different from those
involved in the management of a long-term municipal bond
portfolio. In addition, there can be no assurance that there
will be a correlation between movements in the price of the
municipal bond index and movements in the price of the Municipal
Bonds which are the subject of the hedge. The degree of
imperfection of correlation depends upon various circumstances,
such as variations in speculative market demand for futures
contracts and municipal securities, technical influences on
futures trading, and differences between the municipal securities
being hedged and the municipal securities underlying the
municipal bond index futures contracts, in such respects as
interest rate levels, maturities and creditworthiness of issuers.
A decision of whether, when and how to hedge involves the
exercise of skill and judgment and even a well-conceived hedge
may be unsuccessful to some degree because of market behavior or
unexpected trends in interest rates.
Although the Fund intends to purchase or sell municipal bond
index futures contracts only if there is an active market for
such contracts, there is no assurance that a liquid market will
exist for the contracts at any particular time. Most domestic
futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the maximum amount the
price of a futures contract may vary either up or down from the
previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond that limit. The
daily limit governs only price movement during a particular
trading day and, therefore, does not limit potential losses
because the limit may prevent the liquidation of unfavorable
positions. It is possible that futures contract prices could
move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of
futures positions and subjecting some futures traders to
substantial losses. In such event, it will not be possible to
close a futures position and, in the event of adverse price
movements, the Fund would be required to make daily cash payments
of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may
partially or completely offset losses on the futures contract.
As described above, however, there is no guarantee that the price
of Municipal Bonds will, in fact, correlate with the price
movements in the municipal bond index futures contract and thus
provide an offset to losses on a futures contract.
If the Fund has hedged against the possibility of an
increase in interest rates adversely affecting the value of the
Municipal Bonds held in its portfolio and rates decrease instead,
the Fund will lose part or all of the benefit of the increased
value of the Municipal Bonds it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily variation margin requirements.
Such sales of securities may, but will not necessarily, be at
increased prices which reflect the decline in interest rates.
The Fund may have to sell securities at a time when it may be
disadvantageous to do so.
When the Fund purchases municipal bond index futures
contracts, an amount of cash and U.S. government securities or
other high grade debt securities equal to the market value of the
futures contracts will be deposited in a segregated account with
the Fund's custodian (and/or such other persons as appropriate)
to collateralize the positions and thereby insure that the use of
such futures contracts is not leveraged. In addition, the
ability of the Fund to trade in municipal bond index futures
contracts and options on interest rate futures contracts may be
materially limited by the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), applicable to a regulated
investment company. See "Taxes" below.
Tender Option Bonds
The Fund may invest up to 10% of the value of its assets in
tender option bonds. A tender option bond is a Municipal
Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed
rate substantially higher than prevailing short-term tax-exempt
rates, that has been coupled with the agreement of a third party,
such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders
the option, at periodic intervals, to tender their securities to
the institution and receive the face value thereof. As
consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the
Municipal Obligation's fixed coupon rate and the rate, as
determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities,
coupled with the tender option, to trade at par on the date of
such determination. Thus, after payment of this fee, the
security holder effectively holds a demand obligation that bears
interest at the prevailing short-term tax-exempt rate. Dreyfus,
on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal
Obligation, of any custodian and the third-party provider of the
tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons. The Fund will not
invest more than 10% of the value of its net assets in illiquid
securities, which would include tender option bonds for which the
required notice to exercise the tender feature is more than seven
days if there is no secondary market available for these
obligations.
Use of Ratings as Investment Criteria
The ratings of nationally recognized statistical rating
organizations ("NRSROs") such as Standard & Poor's ("S&P") and
Moody's Investors Service, Inc. ("Moody's") represent the
opinions of these agencies as to the quality of Municipal
Obligations which they rate. It should be emphasized, however,
that such ratings are relative and subjective and are not
absolute standards of quality. These ratings will be used by the
Fund as initial criteria for the selection of portfolio
securities, but the Fund will also rely upon the independent
advice of Dreyfus to evaluate potential investments. Among the
factors which will be considered are the long-term ability of the
issuer to pay principal and interest and general economic trends.
Further information concerning the ratings of the NRSROs and
their significance is contained in the Appendix B to this
Statement of Additional Information.
After being purchased by the Fund, the rating of a Municipal
Obligation may be reduced below the minimum rating required for
purchase by the Fund or the issuer of the Municipal Obligation
may default on its obligations with respect to the Municipal
Obligation. In that event, the Fund will dispose of the Municipal
Obligation as soon as practicable, consistent with achieving an
orderly disposition of the Municipal Obligation, unless the
Trust's Board of Trustees determines that disposal of the
Municipal Obligation would not be in the best interest of the
Fund. In addition, it is possible that a Municipal Obligation
may cease to be rated or an NRSRO might not timely change its
rating of a particular Municipal Obligation to reflect subsequent
events. Although neither event will require the sale of such
Municipal Obligation by the Fund, Dreyfus will consider such
event in determining whether the Fund should continue to hold the
Municipal Obligation. In addition, if an NRSRO changes its
rating system, the Fund will attempt to use comparable ratings as
standards for its investments in accordance with its investment
objectives and policies.
Floating Rate and Variable Rate Obligations
The Fund may purchase floating rate and variable rate
obligations, including participation interests therein. Floating
rate or variable rate obligations provide that the rate of
interest is set as a specific percentage of a designated base
rate (such as the prime rate at a major commercial bank) and that
the Fund can demand payment of the obligation at par plus accrued
interest. Variable rate obligations provide for a specified
periodic adjustment in the interest rate, while floating rate
obligations have an interest rate which changes whenever there is
a change in the external interest rate. Frequently such
obligations are secured by letters of credit or other credit
support arrangements provided by banks. The quality of the
underlying creditor or of the bank, as the case may be, must, as
determined by Dreyfus under the supervision of the Trustees, be
equivalent to the quality standard prescribed for the Fund. The
Fund is currently permitted to purchase floating rate and
variable rate obligations with demand features in accordance with
requirements established by the SEC, which, among other things,
permit such instruments to be deemed to have remaining maturities
of thirteen months or less, notwithstanding that they may
otherwise have a stated maturity in excess of thirteen months.
The Fund may invest in participation interests purchased
from banks in floating rate or variable rate tax-exempt Municipal
Obligations owned by banks. A participation interest gives the
purchaser an undivided interest in the Municipal Obligation in
the proportion that the Fund's participation interest bears to
the total principal amount of the Municipal Obligation, and
provides a demand feature. Each participation is backed by an
irrevocable letter of credit or guarantee of a bank (which may be
the bank issuing the participation interest, a bank issuing a
confirming letter of credit to that of the issuing bank, or a
bank serving as agent of the issuing bank with respect to the
possible repurchase of the participation interest) that Dreyfus,
under the supervision of the Trustees, has determined meets the
prescribed quality standards for the Fund. The Fund has the
right to sell the instrument back to the issuing bank or draw on
the letter of credit on demand for all or any part of the Fund's
participation interest in the Municipal Obligation, plus accrued
interest. The Fund is currently permitted to invest in
participation interests when the demand provision complies with
conditions established by the SEC. Banks will retain a service
and letter of credit fee and a fee for issuing repurchase
commitments in an amount equal to the excess of the interest paid
on the Municipal Obligations over the negotiated yield at which
the instruments were purchased by the Fund.
When-Issued Securities
The Fund may purchase Municipal Obligations on a when-issued
basis (i.e., for delivery beyond the normal settlement date at
the stated price and yield). The payment obligation and the
interest rate that will be received on the Municipal Obligations
purchased on a when-issued basis are each fixed at the time the
buyer enters into the commitment. Although the Fund will purchase
Municipal Obligations on a when-issued basis only with the
intention of actually acquiring the securities, the Fund may sell
these securities before the settlement date if it is deemed
advisable as a matter of investment strategy.
Municipal Obligations purchased on a when-issued basis and
the securities held in the Fund's portfolio are subject to
changes in market value based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated,
in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation
when interest rates decline and depreciation when interest rates
rise). Therefore, to the extent the Fund remains substantially
fully invested at the same time that it has purchased securities
on a when-issued basis, there will be a greater possibility of
fluctuation in the Fund's net asset value. Purchasing Municipal
Obligations on a when-issued basis can involve a risk that the
yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction.
The Fund will establish with the Fund's custodian a
segregated account consisting of cash or liquid debt securities
in an amount at least equal to the amount of its when-issued
commitments. When the time comes to pay for when-issued
securities, the Fund will meet its obligations from then-
available cash flow, sale of securities held in the separate
account, sale of other securities or, although it would not
normally expect to do so, from the sale of the when-issued
securities themselves (which may have a value greater or lesser
than the Fund's payment obligations). Sale of securities to meet
such obligations carries with it a greater potential for the
realization of capital gains, which are not exempt from Federal
income tax.
Purchase of Securities with Stand-by Commitments
Pursuant to an exemptive order issued by the SEC under the
Act, the Fund may acquire standby commitments with respect to
Municipal Obligations held in its portfolio. Under a stand-by
commitment, a broker-dealer, dealer or bank would agree to
purchase, at the Fund's option, a specified Municipal Obligation
at a specified price. Stand-by commitments acquired by the Fund
may also be referred to as "put options." The amount payable to
the Fund upon its exercise of a stand-by commitment normally
would be (a) the acquisition cost of the Municipal Obligation,
less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the
security, plus (b) all interest accrued on the security since the
last interest payment date during the period. Absent unusual
circumstances, in determining net asset value the Fund would
value the underlying Municipal Obligation at amortized cost.
Accordingly, the amount payable by the broker-dealer, dealer or
bank upon exercise of a stand-by commitment will normally be
substantially the same as the portfolio value of the underlying
Municipal Obligation.
The Fund's right to exercise a stand-by commitment is
unconditional and unqualified. Although the Fund could not
transfer a stand-by commitment, the Fund could sell the
underlying Municipal Obligation to a third party at any time. It
is expected that stand-by commitments generally will be available
to the Fund without the payment of any direct or indirect
consideration. The Fund may, however, pay for stand-by
commitments either separately in cash or by paying a higher price
for portfolio securities which are acquired subject to the
commitment (thus reducing the yield to maturity otherwise
available for the same securities). The total amount paid in
either manner for outstanding stand-by commitments held in the
Fund's portfolio will not exceed .5 of 1% of the value of the
Fund's total assets calculated immediately after such stand-by
commitment was acquired.
The Fund intends to enter into stand-by commitments only
with broker-dealers, dealers or banks that Dreyfus believes
present minimum credit risks. The Fund's ability to exercise a
stand-by commitment will depend on the ability of the issuing
institution to pay for the underlying securities at the time the
commitment is exercised. The credit of each institution issuing
a stand-by commitment to the Fund will be evaluated on an ongoing
basis by Dreyfus in accordance with procedures established by the
Trustees.
The Fund intends to acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise
their rights thereunder for trading purposes. The acquisition of
a stand-by commitment would not affect the valuation or maturity
of the underlying Municipal Obligation, which will continue to be
valued in accordance with the amortized cost method. Each stand-
by commitment will be valued at zero in determining net asset
value. Should the Fund pay directly or indirectly for a stand-by
commitment, its costs will be reflected as an unrealized loss for
the period during which the commitment is held by the Fund and
will be reflected in realized gain or loss when the commitment is
exercised or expires. Stand-by commitments will not affect the
dollar-weighted average maturity of the Fund's portfolio. The
Fund understands that the Internal Revenue Service has issued a
revenue ruling to the effect that a registered investment company
will be treated for Federal income tax purposes as the owner of
Municipal Obligations acquired subject to stand-by commitments
and the interest on the Municipal Obligations will be tax-exempt
to the Fund.
Taxable Investments
The Fund anticipates being as fully invested as practicable
in Municipal Obligations. Because the Fund's purpose is to
provide income exempt from Federal and state personal income tax,
the Fund will invest in taxable obligations only if and when the
Trustees believe it would be in the best interests of its
shareholders to do so. Situations in which the Fund may invest
up to 20% of its total assets in taxable securities include: (a)
pending investment of proceeds of sales of shares of the Fund or
of portfolio securities, (b) pending settlement of purchases of
portfolio securities, and (c) when the Fund is attempting to
maintain liquidity for the purpose of meeting anticipated
redemptions. The Fund may temporarily invest more than 20% of
its total assets in taxable securities to maintain a "defensive"
posture when, in the opinion of Dreyfus, it is advisable to do so
because of adverse market conditions affecting the market for
Municipal Obligations. The Fund may invest in only the following
kinds of taxable securities maturing in one year or less from the
date of purchase: (1) obligations of the United States
Government, its agencies or instrumentalities; (2) commercial
paper rated at the time of purchase at least Prime-1 by Moody's
or A-1+ or A-1 by S&P; (3) certificates of deposit of domestic
banks with total assets of $1 billion or more; and (4) repurchase
agreements (instruments under which the seller of a security
agrees to repurchase the security at a specific time and price)
with respect to any securities that the Fund is permitted to
hold.
Repurchase Agreements
The Fund may enter into repurchase agreements with member
banks of the Federal Reserve System or certain non-bank dealers.
Under each repurchase agreement the selling institution will be
required to maintain the value of the securities subject to the
agreement at not less than their repurchase price. If a
particular bank or non-bank dealer defaults on its obligation to
repurchase the underlying debt instrument as required by the
terms of a repurchase agreement, the Fund will incur a loss to
the extent that the proceeds it realizes on the sale of the
collateral are less than the repurchase price of the instrument.
In addition, should the defaulting bank or non-bank dealer file
for bankruptcy, the Fund could incur certain costs in
establishing that it is entitled to dispose of the collateral and
its realization on the collateral may be delayed or limited.
Investments in repurchase agreements are subject to the policy
prohibiting investment of more than 10% of the Fund's assets in
restricted securities, securities without readily available
market quotations and repurchase agreements maturing in more than
seven days.
As noted in the Prospectus, the Fund may, on occasion,
invest in securities issued by other investment companies. These
securities will be of investment companies that determine their
net asset value per share based on the amortized cost or penny-
rounding method. Such securities will be acquired by the Fund
within the limits prescribed by the Act, which include, subject
to certain exceptions, a prohibition against the Fund's investing
more than 10% of the value of its total assets in such
securities.
Special Factors Affecting the Fund
Massachusetts' economic difficulties and fiscal problems in the
late 1980s and early 1990s caused several rating agencies to lower their
ratings of Massachusetts Municipal Obligations. Although Massachusetts'
economic and fiscal difficulties appear to have abated, a return of
persistent serious financial difficulties could adversely affect the market
values and marketability of, or result in default in payment on, outstanding
Massachusetts Municipal Obligations. The information summarized below
describes some of the more significant factors that could affect the Fund or
the ability of the obligors to pay debt service on Massachusetts Municipal
Obligations. The sources of such information are the official statements of
issuers located in the Commonwealth of Massachusetts, as well as other publicly
available documents, and statements of public officials. The Trust has not
independently verified any of the information contained in such statements and
documents, but the Trust is not aware of facts which would render such
information inaccurate.
Risk Factors
Investing in Massachusetts Municipal Obligations. Investors should
consider carefully the special risks inherent in the Fund's investment in
Massachusetts Municipal Obligations. Massachusetts' economic and
fiscal difficulties of recent years appear to have abated. While the
Commonwealth's expenditures for state programs and services in each of the
fiscal years 1987 through 1991 exceeded each year's current revenues,
Massachusetts ended each of the fiscal years 1991 through 1994 and expects to
end fiscal 1995 with a positive fiscal balance in its general operating funds.
Investors should review Appendix A which more fully sets forth these and other
risk factors.
Investment Restrictions
The following are fundamental investment restrictions of the
Fund. The Fund may not:
1. Purchase any securities which would cause more than 25%
of the value of the Fund's total assets at the time of such
purchase to be invested in the securities of one or more issuers
conducting their principal activities in the same industry. (For
purposes of this limitation, U.S. Government securities and state
or municipal governments and their political subdivisions are not
considered members of any industry. In addition, this limitation
does not apply to investments of domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks.)
2. Borrow money or issue senior securities as defined in
the Act, except that (a) the Fund may borrow money in an amount
not exceeding one-third of the Fund's total assets at the time
of such borrowing, and (b) the Fund may issue multiple classes of
shares. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money
or issuance of senior securities.
3. Make loans or lend securities, if as a result thereof
more than one-third of the Fund's total assets would be subject
to all such loans. For purposes of this restriction, debt
instruments and repurchase agreements shall not be treated as
loans.
4. Underwrite securities issued by any other person,
except to the extent that the purchase of securities and the
later disposition of such securities in accordance with the
Fund's investment program may be deemed an underwriting.
5. Purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this
shall not prevent the Fund from investing in securities or other
instruments backed by real estate, including mortgage loans, or
securities of companies that engage in the real estate business
or invest or deal in real estate or interests therein).
6. Purchase or sell commodities, except that the Fund may
enter into futures contracts and related options, forward
currency contracts and other similar instruments.
The Fund may, notwithstanding any other fundamental
investment policy or restriction, invest all of its investable
assets in securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies, and restrictions as the Fund.
The following are non-fundamental investment restrictions of
the Fund:
1. The Fund will not purchase or retain the securities of
any issuer if the officers, directors or Trustees of the Trust,
its advisers, or managers owning beneficially more than one half
of one percent of the securities of each issuer together own
beneficially more than five percent of such securities.
2. The Fund will not purchase securities of issuers (other
than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof), including their
predecessors, that have been in operation for less than three
years, if by reason thereof the value of the Fund's investment in
securities would exceed 5% of the Fund's total assets. For
purposes of this limitation, sponsors, general partners,
guarantors and originators of underlying assets may be treated as
the issuer of a security.
3. The Fund will not purchase puts, calls, straddles,
spreads and any combination thereof if by reason thereof the
value of its aggregate investment in such classes of securities
will exceed 5% of its total assets, except that: (a) this
restriction shall not apply to standby commitments, and (b) this
restriction shall not apply to the Fund's transactions in futures
contracts and related options.
4. The Fund will not purchase warrants if at the time of
such purchase: (a) more than 5% of the value of the Fund's
assets would be invested in warrants, or (b) more than 2% of the
value of the Fund's assets would be invested in warrants that are
not listed on the NYSE or American Stock Exchange ("AMEX") (for
purposes of this limitation, warrants acquired by the Fund in
units or attached to securities will be deemed to have no value).
5. The Fund will not invest more than 10% of the value of
its net assets in illiquid securities, including repurchase
agreements with remaining maturities in excess of seven days, and
other securities which are not readily marketable. For purposes
of this restriction, illiquid securities shall not include
commercial paper issued pursuant to Section 4(2) of the
Securities Act of 1933 and securities which may be resold under
Rule 144A under the Securities Act of 1933, provided that the
Board of Trustees, or its delegate, determines that such
securities are liquid based upon the trading markets for the
specific security.
6. The Fund may not invest in securities of other
investment companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets and except to the
extent otherwise permitted by the Act.
7. The Fund will not purchase oil, gas or mineral leases
(the Fund may, however, purchase and sell the securities of
companies engaged in the exploration, development, production,
refining, transporting and marketing of oil, gas or minerals).
8. The Fund shall not sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and
amounts to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
9. The Fund shall not purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that
margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities
on margin.
10. The Fund shall not purchase any security while
borrowings representing more than 5% of the Fund's total assets
are outstanding.
If a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in such percentage
resulting from a change in the values of assets will not
constitute a violation of such restriction.
Under the Act, a fundamental policy may not be changed
without the vote of a majority of the outstanding voting
securities of the Fund, as defined in the Act. "Majority" means
the lesser of (1) 67% or more of the shares present at the Fund's
meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (2)
more than 50% of the outstanding shares of the Fund. Non-
fundamental investments restrictions may be changed, without
shareholder approval, by vote of a majority of the Trust's Board
of Trustees at any time.
In order to permit the sale of the Fund's shares in certain
states, the Trust may make commitments more restrictive than the
investment restrictions described above. Accordingly, pursuant
to such commitments, the Fund has undertaken not to invest in
oil, gas or other mineral leases. In addition, the Trust has
undertaken not to invest in warrants (other than warrants
acquired by the Fund as part of a unit or attached to securities
at the time of purchase) if, as a result, the investments (valued
at the lower of cost or market) would exceed 5% of the value of
the Fund's net assets or if, as a result, more than 2% of the
Fund's net assets would be invested in warrants not listed on
AMEX or NYSE. Further, the Fund has given a representation that
investments will not be made in real estate limited partnerships.
Should the Trust determine that any such commitment is no longer
in the best interests of the Trust and its shareholders, it will
revoke the commitment by terminating sales of its shares in the
state involved.
Portfolio Transactions
Decisions to buy and sell securities for the Fund and
effectuation of securities transactions are made by Dreyfus,
subject to the overall supervision and review of the Trustees.
The same personnel are also in charge of portfolio transactions
for other clients of other subsidiaries and affiliates of
Dreyfus.
Purchases and sales of portfolio securities for the Fund
will generally be transacted with the issuer or a primary market
maker on a net basis, without the payment by the Fund of any
brokerage commission for such purchases or sales. Purchases from
dealers serving as primary market makers will reflect the spread
between the bid and asked prices. In selecting dealers and in
executing portfolio transactions, Dreyfus seeks, on behalf of the
Fund, the best overall terms available. In doing so, Dreyfus
considers all matters it deems relevant, including the breadth of
the market in the security, the price of the security and the
financial condition and executing capability of the dealer.
Dealers may be selected who provide brokerage and/or
research services to the Trust and/or other accounts over which
Dreyfus or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities;
the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or
sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental
thereto (such as clearance and settlement). The receipt of
research from dealers may be useful to Dreyfus in rendering
investment management services to the Trust and/or its other
clients; and, conversely, such information provided by its
brokers or dealers who have executed transaction orders on behalf
of other clients of Dreyfus may be useful to Dreyfus in carrying
out its obligation to the Trust.
The Fund will not purchase Municipal Obligations during the
existence of any underwriting or selling group relating thereto
of which an affiliate is a member, except to the extent permitted
by the SEC. Under certain circumstances, the Fund may be at a
disadvantage because of this limitation in comparison with other
investment companies which have a similar investment objective
but are not subject to such limitations.
Dreyfus will make investment decisions for the Fund
independently from those made for its other clients, other funds
and clients of other subsidiaries of Dreyfus. On occasion,
however, the same investment decisions will be made for the Fund
as for one or more of Dreyfus' clients at about the same time. In
a case in which the Fund and one of these other clients are
simultaneously engaged in the purchase or sale of the same
security, the transactions will, to the extent feasible and
practicable, be averaged as to price and allocated as to amount
among the Fund and/or the other client or clients pursuant to a
formula considered equitable. In some cases, this system could
have a detrimental effect on the price or volume of the security
to be purchased or sold on behalf of the Fund. In other cases,
however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the
Fund.
For the fiscal years ended June 30, 1995 and June 30, 1994,
the Fund paid no stated brokerage commissions.
REDEMPTION OF FUND SHARES
Check Redemption Privilege. An investor may indicate on the
Account Application or by later written request that the Fund
provide Redemption Checks ("Checks") drawn on the Fund's account.
Checks will be sent only to the registered owner(s) of the
account and only to the address of record. The Account
Application or later written request must be manually signed by
the registered owner(s). Checks may be made payable to the order
of any person in an amount of $1,000 or more. When a Check is
presented to the Transfer Agent for payment, the Transfer Agent,
as the investor's agent, will cause the Fund to redeem a
sufficient number of shares in the investor's account to cover
the amount of the Check and the $2.00 charge. Dividends are
earned until the Check clears. After clearance, a copy of the
Check will be returned to the investor. Investors generally will
be subject to the same rules and regulations that apply to
checking accounts, although election of this Privilege creates
only a shareholder-transfer agent relationship with the Transfer
Agent.
If the amount of the Check, plus any applicable charges, is
greater than the value of the shares in an investor's account,
the Check will be returned marked insufficient funds. Checks
should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the
investor authorizes the Transfer Agent to act on wire or
telephone redemption instructions from any person representing
himself or herself to be the investor, or a representative of the
investor's Agent, and reasonably believed by the Transfer Agent
to be genuine. An investor will be charged a $5.00 fee for each
wire redemption, which will be deducted from the investor's
account and paid to the Transfer Agent. Ordinarily, the Fund
will initiate payment for shares redeemed pursuant to this
Privilege on the next business day after receipt if the Transfer
Agent receives the redemption request in proper form. Redemption
proceeds will be transferred by Federal Reserve wire only to the
commercial bank account specified by the investor on the Account
Application or Shareholder Services Form. Redemption proceeds,
if wired, must be in the amount of $5,000 or more and will be
wired to the investor's account at the bank of record designated
in the investor's file at the Transfer Agent, if the investor's
bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees
ordinarily are imposed by such bank and usually are borne by the
investor. Immediate notification by the correspondent bank to
the investor's bank is necessary to avoid a delay in crediting
the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire
redemption requests to the Transfer Agent by employing the
following transmittal code which may be used for domestic or
overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic
equipment may have the wire transmitted by contacting a TRT
Cables operator at 1-800-654-7171, toll free. Investors should
advise the operator that the above transmittal code must be used
and should also inform the operator of the Transfer Agent's
answer back sign.
Stock Certificates; Signatures. Any certificates
representing Fund shares to be redeemed must be submitted with
the redemption request. Written redemption requests must be
signed by each shareholder, including each holder of a joint
account, and each signature must be guaranteed. Signatures on
endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations as well as from participants in the NYSE Medallion
Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional
documentation from corporations, executors, administrators,
trustees or guardians, and may accept other suitable verification
arrangements from foreign investors, such as consular
verification. For more information with respect to signature-
guarantees, please call one of the telephone numbers listed on
the cover.
Dreyfus TeleTransfer Privilege. Investors should be aware
that if they have selected the Dreyfus TeleTransfer Privilege,
any request for a wire redemption will be effected as a Dreyfus
TeleTransfer transaction through the ACH system unless more
prompt transmittal specifically is requested. Redemption
proceeds will be on deposit in the investor's account at an ACH
member bank ordinarily two business days after receipt of the
redemption request. An investor will be charged a $5.00 fee for
each redemption effected pursuant to this Privilege, which will
be deducted from the investor's account and paid to the Transfer
Agent. See "Purchase of Fund Shares-- Dreyfus TeleTransfer
Privilege."
Redemption Commitment. The Fund has committed itself to pay
in cash all redemption requests by any shareholder of record of
the Fund, limited in amount during any 90-day period to the
lesser of $250,000 or 1% of the value of the Fund's net assets at
the beginning of such period. Such commitment is irrevocable
without the prior approval of the SEC. In the case of requests
for redemption in excess of such amount, the Trustees and
executive officers of the Trust reserve the right to make
payments in whole or in part in securities or other assets in
case of an emergency or any time a cash distribution would impair
the liquidity of the Fund to the detriment of the existing
shareholders. In this event, the securities would be valued in
the same manner as the Fund's portfolio is valued. If the
recipient sold such securities, brokerage charges would be
incurred.
Suspension of Redemptions. The right to redeem Fund shares
may be suspended or the date of payment postponed (a) for any
period during which the NYSE is closed (other than for customary
weekend or holiday closings); (b) when trading in the markets the
Trust normally uses is restricted or when an emergency exists as
determined by the SEC so that disposal of the Fund's investments
or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC, by order,
may permit for protection of the Fund's shareholders.
FUND EXCHANGES
Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as
follows:
A. Exchanges for shares of funds that are offered without
a sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be
exchanged without a sales load for shares of other
funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of
funds acquired by a previous exchange from shares purchased
with a sales load and additional shares acquired through
reinvestment of dividends or other distributions of any such
funds (collectively referred to herein as "Purchased Shares")
may be exchanged for shares of other funds sold with a sales
load (referred to herein as "Offered Shares"), provided that,
if the sales load applicable to the Offered Shares exceeds the
maximum sales load that could have been imposed in connection
with the Purchased Shares (at the time the Purchased Shares
were acquired), without giving effect to any reduced loads,
the difference will be deducted.
To accomplish an exchange under item D above, shareholders
must notify the Transfer Agent of their prior ownership of fund
shares and their account number.
To request an exchange, an investor or the investor's Agent
acting on the investor's behalf must give exchange instructions
to the Transfer Agent in writing, by wire or by telephone. The
ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless the investor checks
the applicable "No" box on the Account Application, indicating
that the investor specifically refuses this Privilege. By using
the Telephone Exchange, the investor authorizes the Transfer
Agent to act on telephonic instructions from any person
representing himself or herself to be the investor or a
representative of the investor's Agent, and reasonably believed
by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange. Investors will be
charged a $5.00 fee for each exchange made out of the Fund, which
will be deducted from the investor's account and paid to the
Transfer Agent.
This Privilege is available to shareholders resident in any
state in which shares of the fund being acquired may legally be
sold. Shares may be exchanged only between accounts having
identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other
funds may be obtained by calling 1-800-645-6561. The Fund
reserves the right to reject any exchange request in whole or in
part. The Fund exchange service may be modified or terminated at
any time upon notice to shareholders.
VALUATION OF SHARES
The Prospectus describes the time at which the net asset
value of the Fund is determined for purposes of sales and
redemptions. In addition, portfolio securities held by the Fund
may be actively traded in securities markets which are open for
trading on days when the Fund will not be determining its net
asset value. Accordingly, there may be occasions when the Fund
is not open for business but when the value of the Fund's
portfolio securities will be affected by such trading activity.
The holidays (as observed) on which the NYSE is closed currently
are: New Years Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
It is the Trust's policy to use its best efforts to maintain
the Fund's net asset value per share ("NAV") at a constant per
share price for the value of $1.00. The Fund's portfolio
instruments are valued on the basis of amortized cost. This
involves valuing an instrument at its cost initially and,
thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods
during which the value, as determined by amortized cost, is
higher or lower than the price the Trust would receive if it sold
the instrument.
The valuation of the Fund's portfolio instruments based upon
their amortized cost and simultaneous maintenance of the Fund's
per share NAV at $1.00 are permitted by a rule adopted by the
SEC. Under this rule, the Fund must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of thirteen months or
less, and invest only in securities determined by the Trustees to
be eligible securities with minimal credit risks at the time of
their acquisition by the Fund. In accordance with the rule, the
Trustees have established procedures designed to stabilize, to
the extent reasonably practicable, the Fund's NAV as computed for
the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's portfolio holdings by the Trustees,
at such intervals as they may deem appropriate, to determine
whether the NAV of the Fund calculated by using available market
quotations or market equivalents deviates from $1.00 per share
based on amortized cost. The rule also provides that the extent
of any deviation between the Fund's NAV based upon available
market quotations or market equivalents and $1.00 per share NAV
based on amortized cost must be examined by the Trustees. In the
event the Trustees determine that a deviation exists which may
result in material dilution or other unfair results to investors
or existing shareholders, pursuant to the rule they must cause
the Fund to take such corrective action as the Trustees regard as
necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends
or paying distributions from capital or capital gains; redeeming
shares in kind; or establishing a NAV by using available market
quotations.
PERFORMANCE DATA
From time to time, the Fund may quote its yield in
advertisements, shareholder reports or other communications to
shareholders. The Fund may compare its performance to that of
other mutual funds, relevant indices or rankings prepared by
independent services or other financial or industry publications
that monitor mutual fund performance.
Performance rankings as reported in Changing Times, Business
Week, Institutional Investor, The Wall Street Journal, Mutual
Fund Forecaster, No Load Investor, Money Magazine, Morningstar
Mutual Fund Values, U.S. News and World Report, Forbes, Fortune,
Barron's, Financial Planning, Financial Planning on Wall Street,
Certified Financial Planner Today, Investment Advisor,
Kiplinger's, Smart Money and similar publications may also be
used in comparing the Fund's performance.
Yields
The Fund's yield is computed by: (a) determining the net
change in the value of a hypothetical pre-existing account in a
Fund having a balance of one share at the beginning of a seven-
calendar-day period for which yield is to be quoted, (b) dividing
the net change by the value of the account at the beginning of
the period to obtain the base period return, and (c) annualizing
the results (i.e., multiplying the base period return by 365/7).
The net change in the value of the account reflects the value of
additional shares purchased with dividends declared on the
original share and any such additional shares, but does not
include realized gains and losses or unrealized appreciation and
depreciation. In addition, the Fund may calculate a compound
effective annualized yield by adding 1 to the base period return
(calculated as described above), raising the sum to a power equal
to 365/7 and subtracting 1. The Fund's equivalent taxable yield
is computed by dividing that portion of the Fund's yield which is
tax-exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Fund's yield that is not
tax-exempt. For the seven-day period ended June 30, 1995, the
Fund's annualized current yields, compounded effective yields,
and for its then existing Investor shares and Class R shares
equivalent taxable yields were as follows:
7-Day Yield for Period Ended
June 30, 1995
Annualized Compounded Equivalent
Current Yield Effective Yield Taxable Yield*
Investor shares 3.42% 3.48% 6.07%
Class R shares 3.67% 3.74% 6.52%
Effective February 22, 1996, the Fund's separate "Investor"
and "Class R" designations were eliminated and the Fund became a
single class Fund.
* Example assumes a Federal marginal tax rate of 36% and a Massachusetts
marginal tax rate of 12% (combined effective rate of 43.68%).
TAXES
The Fund intends to satisfy the requirements for qualifying
as a "regulated investment company" under Subchapter M of the
Code. Provided that the Fund distributes at least 90% of its
taxable net investment income, including market discount and net
realized short-term capital gains, and 90% of the tax-exempt
interest income (reduced by certain expenses), the Fund, if it
qualifies as a regulated investment company, will not be liable
for Federal income taxes to the extent its taxable net investment
income and capital gain net income are distributed to its
shareholders.
Because the Fund will distribute exempt-interest dividends,
interest on indebtedness incurred by a shareholder to purchase or
carry Fund shares is not deductible for Federal income tax
purposes. If a shareholder receives an exempt-interest dividend
with respect to shares of the Fund and if such shares are held by
the shareholder for six months or less, then any loss on the
redemption or exchange of such shares will, to the extent of such
exempt-interest dividends, be disallowed. In addition, the Code
may require a shareholder, if he or she receives exempt-interest
dividends, to treat as taxable income a portion of certain
otherwise non-taxable social security and railroad retirement
benefit payments. Furthermore, that portion of an exempt-
interest dividend paid by the Fund which represents income from
private activity bonds may not retain its tax-exempt status in
the hands of a shareholder who is a "substantial user" of a
facility financed by such bonds, or a "related person" thereof.
Moreover, as noted in the Fund's Prospectus, some or all of the
Fund's dividends may be a specific preference item, or a
component of an adjustment item, for purposes of the Federal
individual and corporate alternative minimum taxes. In addition,
the receipt of Fund dividends and distributions may affect a
foreign corporate shareholder's Federal "branch profits" tax
liability and a Subchapter S corporation shareholder's Federal
"excess net passive income" tax liability. Shareholders should
consult their own tax advisers as to whether they are (1)
substantial users with respect to a facility or related to such
users within the meaning of the Code or (2) subject to a Federal
alternative minimum tax, any applicable state alternative minimum
tax, the Federal branch profits tax, or the Federal excess net
passive income tax.
Dividends derived by the Fund from tax-exempt interest are
designated as tax-exempt in the same percentage of the day's
dividend as the actual tax-exempt income earned that day. Thus,
the percentage of the dividend designated as tax-exempt may vary
from day to day. Similarly, dividends derived by the Fund from
interest on Massachusetts Municipal Obligations will be
designated as exempt from the State of Massachusetts taxation in
the same percentage of the day's dividend as the actual interest
on Massachusetts Municipal Obligations earned on that day.
The Fund is required to withhold and remit to the U.S.
Treasury 31% of the taxable dividends paid by the Fund and the
distributions paid by the Fund (in excess of $10 on an annualized
basis) with respect to any non-corporate shareholder who fails to
furnish or certify his or her correct taxpayer identification
number, who has been notified that he or she is to subject to
back up withholding due to underreporting of dividend or interest
income or who fails to certify that he or she has provided a
correct taxpayer identification number, and that he or she is not
subject to such withholding. An individual's tax identification
number is his or her social security number. The backup
withholding tax is not an additional tax and may be credited
against a shareholder's regular Federal income tax liability.
The foregoing is only a summary of certain tax
considerations generally affecting the Fund and its shareholders,
and is not intended as a substitute for careful tax planning.
Individuals may be exempt from Massachusetts state and local
personal income taxes on exempt-interest income derived from
obligations of issuers located in Massachusetts, but are usually
subject to such taxes on such dividends that are derived from
obligations of issuers located in other jurisdictions. Investors
are urged to consult their tax advisers with specific reference
to their own tax situations.
DESCRIPTION OF THE TRUST
The Trust is an open-end management investment company
organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts by an Agreement and Declaration
of Trust dated March 28, 1983, amended and restated December 9,
1992, and subsequently further amended. On March 31, 1994 the
Trust changed its name from "The Boston Company Tax-Free
Municipal Funds" to "The Laurel Tax-Free Municipal Funds." The
Trust's name was then changed from "The Laurel Tax-Free Municipal
Funds" to "The Dreyfus/Laurel Tax-Free Municipal Funds" effective
October 17, 1994. On February 22, 1996, the Fund's name was
changed from "Dreyfus/Laurel Massachusetts Tax-Free Money Fund"
to "Dreyfus BASIC Massachusetts Municipal Money Market Fund".
The Trustees have authority to create an unlimited number of
shares of beneficial interest, without par value, in separate
series. Each series will be treated as a separate entity.
Currently, seven series have been authorized (each a fund). The
Trustees have authority to create additional series at any time
in the future without shareholder approval.
Each share (regardless of class) has one vote. On each
matter submitted to a vote of the shareholders, all shares of
each fund or class shall vote together as a single class, except
as to any matter for which a separate vote of any fund or class
is required by the Act and except as to any matter which affects
the interest of a particular fund or class, in which case only
the holders of shares of the one or more affected funds or
classes shall be entitled to vote, each as a separate class.
The assets received by the Trust for the issue or sale of
shares of each Fund and all income, earnings, profits and
proceeds thereof, subject only to the rights of creditors, are
specifically allocated to such fund, and constitute the
underlying assets of such fund. The underlying assets of each
fund are required to be segregated on the books of account, and
are to be charged with the expenses in respect to such fund and
with a share of the general expenses of the Trust. Any general
expenses of the Trust not readily identifiable as belonging to a
particular fund shall be allocated by or under the direction of
the Trustees in such manner as the Trustees determine to be fair
and equitable, taking into consideration, among other things, the
relative sizes of the funds and the relative difficulty in
administering each fund. Each share of each fund represents an
equal proportionate interest in that fund with each other share
and is entitled to such dividends and distributions out of the
income belonging to such fund as are declared by the Trustees.
Upon any liquidation of a fund, shareholders thereof are entitled
to share pro rata in the net assets belonging to that fund
available for distribution.
The Trust does not hold annual meetings of shareholders.
There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less
than a majority of the Trustees holding office have been elected
by shareholders, at which time the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Under
the Act, shareholders of record of no less than two-thirds of the
outstanding shares of the Trust may remove a Trustee through a
declaration in writing or by a vote cast in person or by proxy at
a meeting called for that purpose. The Trustees are required to
call a meeting of shareholders for the purposes of voting upon
the question of removal of any Trustee when requested in writing
to do so by the shareholders of record of not less than 10% of
the Trust's outstanding shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Trust. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed
by the Trust or a Trustee. The Agreement and Declaration of
Trust provides for indemnification from the Trust's property for
all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations, a possibility which
Dreyfus believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying such liability will
be entitled to reimbursement from the general assets of the
Trust. The Trustees intend to conduct the operations of each
fund in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of such fund.
PRINCIPAL SHAREHOLDERS
As of _______________, the following companies/individuals
owned beneficially 5% or more of the outstanding shares of the
Fund ___________:
CUSTODIAN AND TRANSFER AGENT
Mellon Bank, which is located at Mellon Bank Center,
Pittsburgh, PA 15258, serves as the Fund's custodian. Dreyfus
Transfer, Inc., a wholly-owned subsidiary of Dreyfus located at
One American Express Plaza, Providence, Rhode Island 02903, is
the Fund's transfer and dividend disbursing agent. Under a
transfer agency agreement with the Fund, the Transfer Agent
arranges for the maintenance of shareholder account records for
the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of
the number of shareholder accounts it maintains for the Fund
during the month, and is reimbursed for certain out-of-pocket
expenses. Dreyfus Transfer, Inc. and Mellon Bank, as custodian,
have no part in determining the investment policies of the Fund
or which securities are to be purchased or sold by the Fund.
Prior to the effectiveness of the Investment Management
Agreement, for its services as custodian, Mellon Bank was paid an
annual fee of $30,000 per portfolio, and, for all portfolios, an
annual administrative account maintenance fee of $10,000, an
annual on-line fee of $3,600, an asset-based fee of .02% of the
first $500 million of the Trust's net assets and .01% of net
assets over $500 million, plus a specified transaction fee for
each transaction. For its services as transfer and dividend
disbursing agent, Mellon Bank was paid an annual fee of $13.00
per shareholder account with a minimum monthly fee of $3,000 per
portfolio. Mellon Bank was reimbursed for certain out-of-pocket
expenses including wire fees, and postage, stationery and
telephone expenses.
COUNSEL AND INDEPENDENT AUDITORS
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W.,
Second Floor, Washington, D.C., 20036-1800, has passed upon the
legality of the shares offered by the Prospectus and this
Statement of Additional Information.
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15218, was appointed by the Board of Trustees to
serve as the Fund's independent auditors for the year ending June
30, 1995, providing audit services including (1) examination of
the annual financial statements, (2) assistance, review and
consultation in connection with the SEC and (3) review of the
annual Federal income tax return filed on behalf of the Fund.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year ended June 30,
1995 accompanies this Statement of Additional Information, and
the financial statements contained therein, and related notes,
are incorporated by reference herein.
APPENDIX A
RISK FACTORS - INVESTING
IN MASSACHUSETTS MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary,
does not purport to be a complete description, and is based on
information drawn from official statements relating to securities
offerings of the Commonwealth of Massachusetts available as of
the date of this Statement of Additional Information. While the
Fund has not independently verified this information, it has no
reason to believe that such information is not correct in all
material aspects.
At the present time, the Commonwealth of Massachusetts'
economy is experiencing a modest recovery following a slow down
that began in mid-1988. Massachusetts has nonetheless undergone
serious financial difficulties in recent years that have
adversely affected the Commonwealth's credit standing. While
Massachusetts had benefitted from an annual job growth rate of
approximately 2% since the early 1980s, by 1989 employment
started to decline. Between 1988 and 1992, total employment in
Massachusetts declined 10.7 percent. In 1993 and 1994, however,
total employment increased by 1.6 percent and 2.2 percent,
respectively. Employment levels increased in all sectors except
manufacturing. Between 1990 and 1992, the Commonwealth's
unemployment rate was considerably higher than the national
average, although unemployment rates in Massachusetts since 1993
have declined faster than the national average. As a result, the
average monthly unemployment rate in Massachusetts for 1993 was
only slightly higher than the national average (6.9 percent
compared to 6.8 percent) and the unemployment rate in
Massachusetts in 1994 was slightly below the national average
(6.0 percent compared to 6.1 percent).
Massachusetts' economic and fiscal difficulties of recent
years appear to have abated. While the Commonwealth's
expenditures for State programs and services in each of the
fiscal years 1987 through 1991 exceeded each year's current
revenues, Massachusetts ended each of the fiscal years 1991 to
1994 and expects to end fiscal 1995 with a positive closing fund
balance in its budgeted operating funds.
Massachusetts expenditures for State government programs and
services in each of the fiscal years 1987 through 1991,
inclusive, exceeded each fiscal year's current revenues. In
fiscal years 1987 and 1988, largely by drawing on fund balances
from prior years, Massachusetts ended each fiscal year with
budgetary surpluses. However, fiscal years 1989 and 1990 ended
with operating deficits of $672.5 million and $1.25 billion,
respectively.
In fiscal 1991, total revenues and other sources of the
budgeted operating funds increased by 13.8% over the prior year,
to $13.913 billion. This increase was due chiefly to State tax
rate increases enacted in 1990 and to a substantial federal
reimbursement under the Medicaid program for uncompensated
patient care payments, as well as other factors. The
Commonwealth ended fiscal 1991 with an operating loss of $21.2
million, but with positive closing fund balances of $237.1
million.
Budgeted revenues and other sources for fiscal 1992 were
$13.728 billion, including tax revenues of $9.484 billion.
Budgeted revenues and other sources increased by approximately
0.7% from fiscal 1991 to fiscal 1992, while tax revenues
increased by 5.4% for the same period.
Commonwealth expenditures and other uses were approximately
$13.420 billion for fiscal 1992, which is $238.7 million or 1.7%
lower than fiscal 1991 budgeted expenditures and other uses.
Final fiscal 1992 budgeted expenditures were approximately $300
million higher than the initial July 1991 estimates of budgetary
expenditures. A large portion of the increase in spending
resulted from increases in certain human services programs,
including an increase of $268.7 million for the Medicaid program
and $50.0 million for mental retardation consent decree
requirements. Fiscal 1992 expenditures for Medicaid were $2.818
billion, or 1.9% higher than fiscal 1991. This increase compares
favorably with the 19.25% average annual growth rate of Medicaid
expenditures for fiscal years 1988 through 1991. Overall, the
budgeted operating funds ended fiscal 1992 with an excess of
revenues and other sources over expenditures and other uses of
$312.3 million.
The budgeted operating funds of the Commonwealth ended
fiscal 1993 with a surplus of revenues and other sources over
expenditures and other uses of $13.1 million. Budgeted revenues
and other sources for fiscal 1993 totaled approximately $14.710
billion, including tax revenues of $9.40 billion. Total revenues
and other sources increased by approximately 6.9% from fiscal
1992 to fiscal 1993, while tax revenues increased by 4.7% for the
same period.
Budgeted operating funds of the Commonwealth ended fiscal
1994 with a surplus of revenues and other sources over
expenditures and other uses of $26.8 million and the aggregate
ending fund balance in the budgeted operating funds of the
Commonwealth was approximately $589.3 million. Budgeted revenues
and other sources for fiscal 1994 totaled approximately $15.55
billion, including tax revenues of $10.607 billion. Budgeted
expenditures and other uses in fiscal 1994 totaled $15.52
billion, approximately 5.6% higher than budgeted expenditures and
other uses in fiscal 1993.
In recent years, health care related costs have risen
dramatically in Massachusetts and across the nation and the
increase in the State's Medicaid and group health insurance costs
reflects this trend. In fiscal 1993, Medicaid was the largest
item in Massachusetts' budget and has been one of the fastest
growing budget items. During fiscal years 1989, 1990, 1991 and
1992, Medicaid expenditures were $1.83 billion, $2.12 billion,
$2.77 billion and $2.82 billion, respectively, representing an
average annual increase of 15.4%. Expenditures for fiscal 1993
were $3.15 billion, an 11.8% increase over fiscal 1992. Medicaid
expenses in fiscal 1994 were $3.31 billion.
Massachusetts' pension costs have risen dramatically as the
State has appropriated funds to address in part the unfunded
liabilities that had accumulated over several decades. Total
pension costs increased at an average annual rate of 7.1% from
$659.7 million in fiscal 1989 to $868.2 million in fiscal 1993.
Pension costs (inclusive of current benefits and pension
reserves) for fiscal 1994 were $908.9 million, an increase of
4.7% over fiscal 1993 expenditures.
Payments for debt service on Massachusetts general
obligation bonds and notes have risen at an average annual rate
of 11.6% from $649.8 million in fiscal 1989 to $1.15 billion in
fiscal 1994. Debt service payments were $898.3 million in fiscal
1992, $1.14 billion in fiscal 1993 and $1.15 billion in fiscal
1994. In 1990, legislation was enacted which generally imposes a
10% limit on the total appropriations in any fiscal year that may
be expended for payment of interest and principal on general
obligation debt. As of January 1, 1995, the State had
approximately $9,595 billion of long-term general obligation debt
outstanding and short-term direct obligations of the Commonwealth
totalled $264 million.
Certain independent authorities and agencies within the
State are statutorily authorized to issue debt for which
Massachusetts is either directly, in whole or in part, or
indirectly liable. The State's liabilities are either in the
form of (i) a direct guaranty, (ii) State support through
contract assistance payments for debt service, or (iii) indirect
obligations. The State is indirectly liable for the debt of
certain authorities through the funding of reserve funds which
are pledged as security for the authorities' debt.
In November 1980, voters in the Commonwealth approved a
State-wide tax limitation initiative petition, commonly known as
Proposition 2-1/2, to constrain levels of property taxation and
to limit the charges and fees imposed on cities and towns by
certain government entities, including county governments. The
law is not a constitutional provision and accordingly is subject
to amendment or repeal by the legislature. Proposition 2-1/2
limits the property taxes which a Massachusetts city or town may
assess in any fiscal year to the lesser of (i) 2.5% of the full
and fair cash value of real estate and personal property therein
and (ii) 2.5% over the previous year's levy limit plus any growth
in the tax base from certain new construction and parcel
subdivisions. In addition, Proposition 2-1/2 limits any increase
in the charges and fees assessed by certain governmental
entities, including county governments, on cities and towns to
the sum of (i) 2.5% of the total charges and fees imposed in the
preceding fiscal year, and (ii) any increase in charges for
services customarily provided locally or services obtained by the
city or town at its option. The law contains certain override
provisions which require voter approval at a general or special
election. Proposition 2-1/2 also limits any annual increase in
the total assessments on cities and towns by any county,
district, authority, the Commonwealth, or any other governmental
entity. During the 1980s, Massachusetts increased payments to
the cities, towns and regional school districts ("Local Aid") to
mitigate the impact of Proposition 2-1/2 on local programs and
services. In fiscal 1994, approximately 17.59% of Massachusetts'
budget was allocated to Local Aid. Direct Local Aid has dropped
from a high of $2.961 billion in fiscal 1989 to $2.727 billion in
fiscal 1994.
Many factors affect the financial condition of the
Commonwealth and its cities, towns and public bodies, such as
social, environmental, and economic conditions, many of which are
not within the control of such entities. As is the case with
most urban States, the continuation of many of Massachusetts'
programs, particularly its human services programs, is in
significant part dependent upon continuing Federal reimbursements
which have been steadily declining. The loss of grants to
Massachusetts and its cities and towns could further slow
economic development. To the extent that such factors may exist,
they could have an adverse effect on economic conditions in
Massachusetts, although what effect, if any, such factors would
have on Massachusetts' Municipal Obligations cannot be predicted.
APPENDIX B
INFORMATION ABOUT SECURITIES RATINGS
The following are excerpts from Description of Moody's
Investors' Service, Inc. ("Moody's) municipal bond ratings. Aaa
- -- judged to be of the "best quality" and are referred to as
"gilt edge"; interest payments are protected by a large or by an
exceptionally stable margin and principal is secure; Aa -- judged
to be of "high quality by all standards," but as to which margins
of protection or other elements make long-term risks appear
somewhat larger than Aaa-rated Municipal Bonds; together with Aaa
group they comprise what are generally known as "high grade
bonds"; A -- possess many favorable investment attributes and are
considered "upper medium grade obligations." Factors giving
security to principal and interest of A-rated Municipal Bonds are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future; Baa --
considered as medium grade obligations; i.e., they are neither
highly protected nor poorly secured; interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time.
Moody's applies the numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through Baa to indicate
ranking within a general rating category; 1 being the highest and
3 the lowest.
Description of Moody's ratings of state and municipal notes.
Moody's ratings for state and municipal notes and other short-
term obligations are designated Moody's Investment Grade ("MIG")
and for variable rate demand obligations are designated Variable
Moody's Investment Grade ("VMIG"). This distinction recognizes
the differences between short-term credit risk and long-term
risk. Symbols used will be as follows: MIG 1/VMIG 1 --best
quality, enjoying strong protection for established cash flows of
funds for their servicing or from established and broad-based
access to the market for refinancing, or both; MIG 2/VMIG 2 --
high quality, with margins of protection ample although not so
large as in the preceding group; MIG 3/VMIG 3 --favorable
quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades.
Description of Moody's commercial paper ratings. PRIME-1
("P-1") -- judged to be of the best quality. Their short-term
debt obligations carry the smallest degree of investment risk;
PRIME-2 -- indicates a strong capacity for repayment, but to a
lesser degree than 1.
Description of Standard & Poors ("S&P") Municipal Bond
ratings. AAA -- has the highest rating assigned by S&P; extremely
strong capacity to pay principal and interest; AA -- has very
strong capacity to pay interest and repay principal and differs
from the higher rated issues only in a small degree; A -- has a
strong capacity to pay principal and interest, although somewhat
more susceptible to adverse changes in circumstances and economic
conditions; BBB -- regarded as having an adequate capacity to pay
principal and interest; normally exhibit adequate protection
parameters but adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to
pay principal and interest than for bonds in the A category.
Ratings may be modified by the addition of a plus or minus sign
to show relative standing within the major rating categories,
except in the AAA category.
Description of S&P's ratings of municipal note issues. SP-1+
- -- very strong capacity to pay principal and interest; SP-1 --
strong capacity to pay principal and interest; SP-2 --
satisfactory capacity to pay principal and interest.
Description of S&P's commercial paper ratings. A-1+ --
indicates an overwhelming degree of safety regarding timely
payment; A-1 -- indicates a very strong degree of safety
regarding timely payment; A-2 -- indicates a strong capacity for
timely payment but with a relative degree of safety not as
overwhelming as for issues designated A-1.
Description of IBCA Limited/IBCA Inc. commercial paper
ratings. Short-term obligations, including commercial paper,
rated A-1+ by IBCA Limited or its affiliate IBCA Inc. are
obligations supported by the highest capacity for timely
repayment. Obligations rated A-1 have a very strong capacity for
timely repayment. Obligations rated A-2 have a strong capacity
for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
Description of Fitch Investors Services, Inc. commercial
paper ratings. Fitch Investors Services, Inc. employs the rating
F-1+ to indicate issues regarded as having the strongest degree
of assurance for timely payment. The rating F-1 reflects an
assurance of timely payment only slightly less in degree than
issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance for timely payment, although the margin of
safety is not as great as indicated by the F-1+ and F-1
categories.
Description of Duff & Phelps Inc. commercial paper ratings.
Duff & Phelps Inc. employs the designation of Duff 1 with respect
to top grade commercial paper and bank money instruments. Duff
1+ indicates the highest certainty of timely payment: short-term
liquidity is clearly outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations. Duff 1-indicates high
certainty of timely payment. Duff 2 indicates good certainty of
timely payment: liquidity factors and company fundamentals are
sound.
Various of the nationally recognized statistical rating
organizations ("NRSROs") utilize rankings within rating
categories indicated by a + or -. The Fund, in accordance with
industry practice, recognizes such rankings within categories as
graduations, viewing for example S&P's rating of A-1+ and A-1 as
being in S&P's highest rating category.
Description of Thomson BankWatch, Inc. ("BankWatch")
commercial paper ratings. BankWatch will assign both short-term
debt ratings and issuer ratings to the issuers it rates.
BankWatch will assign a short-term rating ("TBW-1," "TBW-2,"
"TBW-3," or "TBW-4") to each class of debt (e.g., commercial
paper or non-convertible debt), having a maturity of one-year or
less, issued by a holding company structure or an entity within
the holding company structure that is rated by BankWatch.
Additionally, BankWatch will assign an issuer rating ("A," "A/B,"
"B," "B/C," "C," "C/D," "D," "D/E," and "E") to each issuer that
it rates.
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
(formerly The Laurel Tax-Free Municipal Funds)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A:
Financial Highlights for each of the periods indicated therein.
Included in Part B:
The following are incorporated by reference to the Registrant's
Annual Report to Shareholders (filed September 8, 1994) and the
Registrant's Semi Annual Report for the fiscal year ending
June 30, 1995:
- Reports of Independent Accountants
- Portfolios of Investments
- Statements of Assets and Liabilities
- Statements of Operations
- Statements of Changes in Net Assets
- Notes to Financial Statements
(b) Exhibits:
1(a) Third Amended and Restated Master Trust Agreement filed
January 8, 1993, incorporated by reference to Post-Effective
Amendment No. 22, filed on January 29, 1993.
1(b) Amendment No. 1 to the Third Amended and Restated Master
Trust Agreement filed on May 21, 1993, incorporated by
reference to Post-Effective Amendment No. 24, filed on
June 29, 1993.
1(c) Amendment No. 2 to the Third Amended and Restated Master
Trust Agreement filed on February 7, 1994, incorporated by
reference to Post-Effective Amendment No. 29, filed on
April 1, 1994.
1(d) Amendment No. 3 to the Third Amended and Restated Master
Trust Agreement filed on March 31, 1994, incorporated by
reference to Post-Effective Amendment No. 29, filed on
April 1, 1994.
1(e) Amendment No. 4 to the Third Amended and Restated Master
Trust Agreement. Incorporated by reference to
Post-Effective Amendment No. 32, filed on December 13, 1994.
1(f) Amendment No. 5 to the Third Amended and Restated Master
Trust. Incorporated by reference to Post-Effective Amendment
No. 32, filed on December 13, 1994.
2 By-Laws of the Trust, incorporated by reference to the
Registrant's Registration Statement (No. 33-43845), filed on
July 3, 1985 (the "Registration Statement").
3 Not Applicable.
4 Specimen security. To be filed by amendment.
5(a) Investment Management Agreement between the Registrant and
Mellon Bank, N.A., dated April 4, 1994, incorporated by
reference to Post-Effective Amendment No. 29, filed on
April 1, 1994.
5(b) Assignment Agreement among the Registrant, Mellon Bank, N.A.
and The Dreyfus Corporation, dated as of October 17, 1994,
(relating to Investment Management Agreement dated
April 4, 1994). Incorporated by reference to
Post-Effective Amendment No. 33 filed on December 19, 1994.
6 Distribution Agreement between the Registrant and Premier
Mutual Fund Services, Inc., dated as of October 17, 1994.
Incorporated by reference to Post-Effective Amendment No. 33
filed on December 19, 1994.
7 Not Applicable.
8(a) Custody and Fund Accounting Agreement between the Registrant
and Mellon Bank, N.A., dated April 4, 1994, incorporated by
reference to Post-Effective Amendment No. 29, filed on
April 1, 1994.
8(b) Sub-Custodian Agreement between Mellon Bank, N.A. and Boston
Safe Deposit and Trust Company, dated April 4, 1994,
incorporated by reference to Post-Effective Amendment
No. 30, filed on October 11, 1994.
8(c) Amendment to Custody and Fund Accounting Agreement, dated
August 1, 1994,incorporated by reference to Post-Effective
Amendment No. 30, filed on October 11, 1994.
9(a) Transfer Agent Agreement between the Registrant and Boston
Safe Deposit and Trust Company (currently known as The
Shareholder Services Group, Inc.), incorporated by reference
to Post-Effective Amendment No. 10, filed on February 24,
1984.
9(b) Supplement to Transfer Agent Agreement relating to the
Tax-Free Bond Fund and the Massachusetts Tax-Free Bond Fund,
dated September 3, 1985, incorporated by reference to
Post-Effective Amendment No. 9, filed on November 23, 1987.
9(c) Supplement to Transfer Agent Agreement relating to the
California Tax-Free Money Fund, the California Tax-Free Bond
Fund, the New York Tax-Free Money Fund and the New York
Tax-Free Bond Fund, dated January 28, 1988, incorporated by
reference to Post-Effective Amendment No. 10, filed on
January 28, 1988.
9(d) Supplement to Transfer Agent Agreement for the Registrant,
dated June 1, 1989, incorporated by reference to
Post-Effective Amendment No. 14, filed on September 5, 1989.
9(e) Supplement to Transfer Agent Agreement for the Registrant,
dated April 4, 1994, incorporated by reference to
Post-Effective Amendment No. 30, filed on October 11, 1994.
10 Opinion of counsel is incorporated by reference to the
Registration Statement and to Post-Effective Amendment
Number 34 filed on December 28, 1994. Consent of Counsel is
Filed herewith.
11(a) Consent of Coopers & Lybrand L.L.P. is incorporated by
reference to Post-Effective Amendment No 36.
11(b) Consent of KPMG Peat Marwick LLP.
12 Not Applicable.
13 Not Applicable.
14 Not Applicable.
15(a) Restated Distribution Plan (relating to Investor Shares
and Class A Shares). Incorporated by reference to
Post-Effective Amendment No. 33 filed on December 19,
1994.
15(b) Distribution and Service Plans (relating to Class B
Shares and Class C Shares). Incorporated by reference
to Post-Effective Amendment No. 33 filed on December
19, 1994.
16 Performance Information, incorporated by reference to
Post-Effective Amendment No. 12, filed on September 1, 1988.
18 Rule 18f-3 Plans dated April 26, 1995, incorporated by
reference to Post-Effect Amendment No. 36, filed on May 16,
1995.
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and Officers dated April
5, 1995 are incorporated by reference to Post-Effective
Amendment No. 36.
Item 25. Persons Controlled by or under Common Control with
Registrant
--------------------------------------------------
Not applicable.
Item 26. Number of Holders of Securities
-------------------------------
Set forth below are the number of recordholders of
securities of each series of the Registrant as of October 9,
1995:
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class Class A Class B Class C Investor Class Class R
- -------------- ---------- ------- ------- -------------- -------
<S> <C> <C> <C> <C> <C>
Dreyfus BASIC Massachusetts
Municipal Money Fund
</TABLE>
Item 27. Indemnification
---------------
Under a provision of the Registrant's Third Amended and Restated
Master Trust Agreement ("Master Trust Agreement"), any past or present
Trustee or officer of the Registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by
him/her in connection with any action, suit or proceeding to which he/she
may be a party or otherwise involved by reason of his/her being or having
been a Trustee or officer of the Registrant. This provision does not
authorize indemnification when it is determined, in the manner specified in
the Master Trust Agreement, that such Trustee or officer did not act in
good faith in the reasonable belief that his/her actions were in or not
opposed to the best interests of the Registrant or acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of his/her
duties. Expenses may be paid by the Registrant in advance of the final
disposition of any action, suit or proceeding upon receipt of an
undertaking by such Trustee or officer to repay such expenses to the
Registrant if it is ultimately determined that indemnification of such
expenses is not authorized under the Master Trust Agreement.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Investment Adviser -- The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists primarily
of providing investment management services as the investment adviser,
manager and distributor for sponsored investment companies registered under
the Investment Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned subsidiary,
provides investment management services to various pension plans,
institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
DAVID B. TRUMAN Former Director:
(cont'd) Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company*****
Vice Chairman of the Board:
Mellon Bank Corporation****
Mellon Bank, N.A.****
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation****
Operating Officer The Boston Company*****
and Director Deputy Director:
Mellon Trust****
Chief Executive Officer:
The Boston Company Asset Management,
Inc.*****
President:
Boston Safe Deposit and Trust Company*****
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*
and a Director Director:
The Dreyfus Trust Company++
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.***;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
President:
The Boston Company*****
Laurel Capital Advisors****
Boston Group Holdings, Inc.
Executive Vice President:
Mellon Bank, N.A.****
Boston Safe Deposit & Trust*****
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company++;
and a Director Chairman of the Board and Chief Operating
Officer:
Major Trading Corporation*;
Director:
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization, Inc.***;
The Truepenny Corporation*;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.*****
Dreyfus Service Corporation*
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Vice President:
The Dreyfus Trust Company++
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals, Inc.*
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Director and Secretary:
Dreyfus Acquisition Corporation*;
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director, Vice President and Treasurer:
Lion Management, Inc.*;
Director:
The Dreyfus Trust Company++;
Secretary:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Executive Vice President:
Vice President-Corporate Dreyfus Service Corporation*;
Development Senior Vice President:
The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President- Lion Management, Inc.*;
Legal and Secretary Secretary:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.***;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation****
Services
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.***;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
Dreyfus Service Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
**** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
***** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus/Laurel Funds, Inc.
36) The Dreyfus/Laurel Funds Trust
37) The Dreyfus Leverage Fund, Inc.
38) Dreyfus Life and Annuity Index Fund, Inc.
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus Michigan Municipal Money Market Fund, Inc.
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Insured Tax Exempt Bond Fund
54) Dreyfus New York Municipal Cash Management
55) Dreyfus New York Tax Exempt Bond Fund, Inc.
56) Dreyfus New York Tax Exempt Intermediate Bond Fund
57) Dreyfus New York Tax Exempt Money Market Fund
58) Dreyfus Ohio Municipal Money Market Fund, Inc.
59) Dreyfus 100% U.S. Treasury Intermediate Term Fund
60) Dreyfus 100% U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus 100% U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Short-Intermediate Government Fund
66) Dreyfus Short-Intermediate Municipal Bond Fund
67) Dreyfus Short-Term Income Fund, Inc.
68) The Dreyfus Socially Responsible Growth Fund, Inc.
69) Dreyfus Strategic Growth, L.P.
70) Dreyfus Strategic Income
71) Dreyfus Strategic Investing
72) Dreyfus Tax Exempt Cash Management
73) The Dreyfus Third Century Fund, Inc.
74) Dreyfus Treasury Cash Management
75) Dreyfus Treasury Prime Cash Management
76) Dreyfus Variable Investment Fund
77) Dreyfus-Wilshire Target Funds, Inc.
78) Dreyfus Worldwide Dollar Money Market Fund, Inc.
79) General California Municipal Bond Fund, Inc.
80) General California Municipal Money Market Fund
81) General Government Securities Money Market Fund, Inc.
82) General Money Market Fund, Inc.
83) General Municipal Bond Fund, Inc.
84) General Municipal Money Market Fund, Inc.
85) General New York Municipal Bond Fund, Inc.
86) General New York Municipal Money Market Fund
87) Pacifica Funds Trust -
Pacific American Money Market Portfolio
Pacific American U.S. Treasury Portfolio
88) Peoples Index Fund, Inc.
89) Peoples S&P MidCap Index Fund, Inc.
90) Premier Insured Municipal Bond Fund
91) Premier California Municipal Bond Fund
92) Premier Global Investing, Inc.
93) Premier GNMA Fund
94) Premier Growth Fund, Inc.
95) Premier Municipal Bond Fund
96) Premier New York Municipal Bond Fund
97) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Paul Prescott+ Vice President None
Elizabeth Bachman++ Assistant Vice President Vice President
and Assistant
Secretary
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02903-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
__________
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant, The Dreyfus/Laurel
Tax-Free Municipal Funds (formerly, The Laurel Tax-Free Municipal Funds) has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York on the 29th day of December, 1995.
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
BY: /s/Marie E. Connolly*
Marie E. Connolly, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration
Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
________________________ ______________________________ __________
/s/Marie E. Connolly* President, Treasurer 12/29/95
Marie E. Connolly
/s/Francis P. Brennan* Trustee, 12/29/95
Francis P. Brennan Chairman of the Board
/s/Ruth Marie Adams* Trustee 12/29/95
Ruth Marie Adams
/s/Joseph S. DiMartino* Trustee 12/29/95
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 12/29/95
James M. Fitzgibbons
/s/Kenneth A. Himmel* Trustee 12/29/95
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 12/29/95
Stephen J. Lockwood
/s/Roslyn M. Watson* Trustee 12/29/95
Roslyn M. Watson
/s/J. Tomlinson Fort* Trustee 12/29/95
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 12/29/95
Arthur L. Goeschel
/s/Arch S. Jeffery* Trustee 12/29/95
Arch S. Jeffery
/s/Robert D. McBride* Trustee 12/29/95
Robert D. McBride
/s/John L. Propst* Trustee 12/29/95
John L. Propst
/s/John Sciullo* Trustee 12/29/95
John Sciullo
*By: /s/Eric B. Fischman
Attorney-in-Fact
Independent Auditors' Consent
To the Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We consent to the use of our report dated August 18, 1995 with respect
to the Dreyfus Massachusetts Tax-Free Money Fund (one of the funds
comprising "The Dreyfus/Laurel Tax-Free Municipal Funds") incorporated by
reference in the Prospectus and Statement of Additional Information under
the heading "Financial Statements" and to the reference to our Firm under
the heading "Financial Highlights" in the Prospectus and "Counsel and
Independent Auditors" in the Statement of Additional Information to be
dated February 29, 1996 in amendment number 39 under the Investment Company
Act of 1940 and post-effective amendment number 38 under the Securities Act
of 1933.
[KPMG Peat Marwick LLP]
Pittsburgh, Pennsylvania
December 29, 1995
