DREYFUS/LAUREL TAX-FREE MUNICIPALS FUND
PREMIER LIMITED TERM MUNICIPAL FUND
DESCRIPTION OF ART WORK ON REPORT COVER
Small box above fund name showing a lions face.
DEAR SHAREHOLDER,
We are pleased to provide you with performance and portfolio information
for the Premier Limited Term Municipal Fund for the semi-annual period
ended December 31, 1994.
As you know from recent correspondence, The Laurel Funds are integrating
with The Dreyfus Family of Funds. As a result of this integration, the
Laurel Tax-Free Bond Fund is now known, and publicly listed, as the Pre-
mier Limited Term Municipal Fund. Please be assured that the new name does
not affect the value of your account nor the investment objective or
strategy of your Fund.
On December 28, 1994, the Fund, which is now part of The Premier Family of
Funds, a group of funds within The Dreyfus Family of Funds that are sold
primarily through financial professionals, adopted a new sales load struc-
ture consisting of four classes of shares. Class A Shares (formerly Inves-
tor Shares) are now subject to a maximum front-end sales load of 3.0%. In
addition, the Fund began offering Class B and Class C Shares which are
subject to a maximum contingent deferred sales charge of 3.0% and .75% if
shares are redeemed within five years or one year of purchase, respec-
tively. There was no change to Class R Shares (formerly Trust Shares). If
you were a Class A shareholder of the Fund prior to the implementation of
the new multi-class structure, you will continue to be exempt from all
front-end sales loads when continuing to invest and reinvest in additional
Class A Shares of the same Fund account. However, any new purchase of, or
any exchange into, shares of another Fund account or other Premier Funds
will not be exempt from the sales loads that apply to each such purchase
or exchange.
In the pages that follow, we have provided detailed financial statements,
a description of the market environment over the last six months, and a
commentary on the Fund's investment management strategy and portfolio
changes for the reporting period.
We would like to extend our appreciation for your support and hope that
you will find that your Fund, which is now part of The Premier Family of
Funds, will continue to satisfy your investment needs. As always, we
welcome your thoughts and suggestions.
Sincerely,
Marie E. Connolly
President
The Dreyfus/Laurel
Tax-Free Municipal Funds --
Premier Limited Term Municipal Fund
February 22, 1995
TABLE OF CONTENTS
Shareholder Letter ................................................ 1
Economic Review .................................................. 3
Portfolio Overview . ............................................. 5
Portfolio of Investments .......................................... 6
Statement of Assets and Liabilities .............................. 13
Statement of Operations ........................................... 15
Statement of Changes in Net Assets ............................... 16
Financial Highlights .............................................. 18
Notes to Financial Statements ..................................... 22
ECONOMIC REVIEW
ECONOMIC EXPANSION CONTINUES
Following several years of stop-and-start recovery, the U.S. economy fi-
nally established a steady pace of expansion early in 1994 which continued
throughout the year. Major economic indicators pointed to healthy growth,
as report after government report brought confirming evidence. Both con-
sumer and industrial sectors showed strength. Consumer spending rose, as
did homebuying and home construction, which fueled strong sales of durable
goods as recent homebuyers outfitted their new homes. Manufacturing orders
were up as well. At the same time, unemployment fell to its lowest level
in nearly four years.
THE BIG CHANGE: RISING INTEREST RATES
The robust economy triggered a dramatic shift in the Federal Reserve
Board's interest rate policy which began in February and continued
throughout the semi-annual period. Determined to head off inflationary
pressures that might be building along with economic strength, the Fed
raised short-term interest rates six times between February and November,
1994. These moves represented a definitive shift away from the Fed's pre-
vious "easy money" policy and ended a nearly 5-year period of declining
short-term rates that had fueled a rally throughout the fixed-income mar-
ket.
Initially, the Fed acted in a preemptory fashion -- actual inflation had
not yet appeared, although the economy seemed to be growing a bit too rap-
idly for comfort. Later in the year, producer prices did begin to rise.
The Fed was concerned that these price increases would eventually flow
through to the consumer level unless it raised interest rates again. Rap-
idly expanding foreign markets pose yet another challenge for the Fed,
since their growth creates demand for U.S. goods and services which puts
inflationary pressure on our economy.
LESS IMPACT ON MUNICIPALS THAN OTHER BONDS
Financial markets, especially the bond market, had trouble adjusting to
higher interest rates. Along with the Fed's actions, other interest rates
rose and the prices of lower yielding bonds fell in order to bring their
yields in line with those of comparable new issues. Investors had been en-
joying exceptional returns during the past two years of declining rates.
This new rising rate environment dealt investor confidence a heavy blow,
especially since people did not know when rates would level off and some
stability would return to the market. Many investors sold off their bond
holdings.
While municipal bonds felt the negative effects of higher interest rates,
their prices held up better than those of many taxable bonds. In fact,
munis continued to maintain their relative yield advantage over comparable
taxable securities for investors in moderate and higher tax brackets.
YEAR-END SELLING ADDS TO THE DECLINE
In addition to rising interest rates, the municipal bond market had to
deal with the cyclical phenomenon of year-end selling. As the year drew to
a close, many investors sold their municipal securities in order to take
losses for tax purposes. 1994 was a particularly robust year for this nor-
mal, seasonal selling, since there were many more losses to take. While
this year- end selling pushed down prices on all fixed-income securities,
munis fared better than their taxable counterparts as their prices fell
less.
FAVORABLE SUPPLY/DEMAND DYNAMICS
During most of the last six months, investors weathered excessive market
volatility that eroded the value of their municipal securities. At the
same time, however, municipal bond supply declined by more than 40%, com-
pared with last year's new issuance and refinancing. Higher interest rates
and tightened budgets quelled the surge of municipal refinancing and new
issuance of recent years.
While rising interest rates and tax considerations motivated investors to
sell municipal holdings in recent months, we expect that summer should
bring a rise in demand for these securities. On July 1, 1995, more bonds
will mature or reach their call dates than ever before in the history of
the municipal market. In addition, coupon payments will be among the larg-
est ever made. The investors holding their bonds will be looking for
places to reinvest their huge windfall of cash, and demand for municipal
securities should rise accordingly.
ORANGE COUNTY: A TEMPORARY AND ISOLATED PROBLEM
In early December, Orange County, California initiated the largest bank-
ruptcy filing ever to occur in the municipal bond market. Even the most
seasoned municipal investors were shocked, and the muni market experienced
a dramatic but temporary setback. Fortunately, the event was an isolated
incident brought about by a number of circumstances unique to that munici-
pality. In fact, December turned out to be an excellent month for the mu-
nicipal market, with prices rising in anticipation of the demand surge ex-
pected next summer.
CAUTIOUSLY OPTIMISTIC FOR 1995
If economic growth shows no signs of abating, the Fed may continue to
raise interest rates in the coming months, although not as dramatically as
it did throughout 1994. Still, we are optimistic that the municipal market
will once again offer positive returns. Municipal securities are one of
the last viable tax shelters for investment income, and with no tax relief
in sight for investors in higher tax brackets, demand should remain
strong. The huge number of bonds being called out of market this year
should also spur demand, and while there can be no assurance, the result-
ing shift toward higher demand with diminished supply could lead to a
strong performance and rising municipal bond prices. This could be of real
benefit to investors in municipal bond funds like this one.
PORTFOLIO OVERVIEW
The Federal Reserve Board's diligence in fighting inflation produced vola-
tility throughout the municipal bond market, but the negative effects were
felt most dramatically in securities with longer maturities. Anticipating
this, the portfolio managers shortened the Fund's average weighted matu-
rity significantly early on from 6.65 years to 5.73 years. The managers
also focused on improving the already-high credit quality of Fund hold-
ings, since lower quality issues tend to be more sensitive to market
shifts. Both moves provided a measure of protection for Fund share value
in this rising interest rate environment. With additional interest rate
increases a possibility in the coming months, the Fund currently intends
to continue to maintain its defensive posture.
PORTFOLIO OF INVESTMENTS
PREMIER LIMITED TERM MUNICIPAL FUND
(UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
MUNICIPAL BONDS AND NOTES -- 93.6%
ALABAMA -- 3.1%
$ 100,000 Birmingham, Alabama, General Obligation
Bonds,
9.800% due 10/01/15 $ 105,375
Decatur, Alabama, General Obligation Bonds-
,Series B:
265,000 4.850% due 12/01/03 239,494
280,000 5.000% due 12/01/04 253,400
University of Alabama, University Revenue:
275,000 5.000% due 06/01/09 236,156
285,000 5.000% due 06/01/10 241,894
1,076,319
ALASKA -- 0.3%
100,000 State of Alaska, Certificates of Participa-
tion,
(Rent Spring Creek Correctional Center),
Series A,
9.700% due 10/01/07, Prerefunded 10/01/95 105,500
ARIZONA -- 2.9%
1,000,000 Arizona State Transportation Board, Excise
Revenue,
7.000% due 07/01/95 1,012,500
ARKANSAS -- 1.7%
100,000 Little Rock, Arkansas, Hotel & Restaurant
Gross Receipts Tax, Refunding Bonds,
(Little Rock Convention Center),
7.625% due 01/01/05, Prerefunded 01/01/96 105,500
500,000 North Little Rock, Arkansas, Electric Ser-
vices,
6.000% due 07/01/01 511,250
616,750
CALIFORNIA -- 5.1%
1,000,000 Sacramento, California, Municipal Utility
Revenue Bonds,
5.000% due 11/15/02 923,750
San Jose, California, Redevelopment Agency,
Tax Revenue Bonds:
250,000 4.700% due 08/01/02 225,000
750,000 4.750% due 08/01/03 665,625
1,814,375
COLORADO -- 2.1%
$ 750,000 Platte River Power Authority, Electric Rev-
enue,
Series B,
5.625% due 06/01/03 $ 740,625
FLORIDA -- 0.3%
100,000 Dade County, Florida, Public Improvement
Bonds, Series C,
7.125% due 10/01/16 102,500
GEORGIA -- 4.5%
500,000 Fulton County, Georgia, Fulton-De Kalb Hos-
pital Authority Revenue Certificates, Se-
ries A,
7.250% due 01/01/20, Prerefunded 01/01/00 543,125
1,000,000 Metropolitan Atlanta, Sales Tax Revenue
Bonds,
8.625% due 07/01/10, Prerefunded 07/01/95 1,040,860
1,583,985
ILLINOIS -- 4.9%
100,000 Chicago, Illinois, Refunding Bonds, Series
B,
7.250% due 01/01/10 103,500
300,000 Chicago, Illinois, School Financing Author-
ity,
Refunding Bonds, Series B,
7.750% due 06/01/09, Prerefunded 10/01/95 316,500
500,000 Illinois State, Sales Tax Revenue, Series
A,
9.375% due 06/15/15, Prerefunded 06/15/95 523,505
390,000 Regional Transportation Authority, Illi-
nois,
Series C,
7.750% due 06/01/12 433,388
300,000 Springfield, Sangamon County, Illinois,
School District #186,
7.700% due 06/01/01 330,375
1,707,268
INDIANA -- 0.5%
100,000 Indiana State Toll Finance Authority,
Toll Road Revenue Bonds,
9.500% due 07/01/10, Prerefunded 07/01/95 104,490
$ 50,000 Indiana Transportation Finance Authority,
Highway Revenue Bonds,
7.875% due 12/01/11, Prerefunded 12/01/98 $ 55,000
159,490
KENTUCKY -- 2.7%
1,000,000 Kenton County, Kentucky, Apartment Board
Revenue,
5.100% due 03/01/01 946,250
MARYLAND -- 1.3%
500,000 Maryland State, State & Local Facilities
Loan,
5.000% due 04/15/04 454,375
MASSACHUSETTS -- 13.9%
850,000 Massachusetts Bay Transportation Authority,
5.300% due 03/01/04 793,688
2,000,000 Massachusetts State, General Obligation
Bonds,
6.000% due 03/01/1995 2,005,320
Massachusetts State Health & Educational
Facilities Authority, Revenue Bonds:
100,000 (Addison Gilbert Hospital), Series B,
8.700% due 07/01/97, Prerefunded 07/01/95 104,097
900,000 (Massachusetts General Hospital),
5.350% due 07/01/01 879,750
365,000 (Smith College), Series D,
5.150% due 07/01/03 339,450
800,000 Massachusetts State Housing Finance Agency,
(Housing Project), Series A
5.350% due 04/01/03 769,000
4,891,305
MICHIGAN -- 0.1%
50,000 Comstock Park, Michigan, Public Schools
Revenue Bonds,
6.000% due 05/01/16, Prerefunded 05/01/99 51,437
MINNESOTA -- 3.0%
1,000,000 Southern Minnesota, Municipal Power Agency,
Power Revenue Bonds,
7.125% due 01/01/15 1,040,000
NEW JERSEY -- 3.0%
$ 500,000 Cumberland County, New Jersey, Improvement
Authority, Solid Waste Disposal Revenue,
6.000% due 01/01/01 $ 513,750
600,000 New Jersey State Transportation Authority,
Series A,
4.750% due 06/15/03 544,500
1,058,250
NEW MEXICO -- 0.3%
100,000 Farmington, New Mexico, Utility Systems
Revenue Bonds,
9.750% due 05/15/13, Prerefunded 05/15/96 108,000
NEW YORK -- 4.9%
200,000 New York State Dormitory Authority Revenue
Bonds, Series A,
7.125% due 05/15/09 207,250
500,000 New York State, Environmental Pollution
Control Revenue Bonds, Series A,
7.500% due 06/15/12 529,375
1,000,000 New York State Power Authority, Revenue
Bonds, 4.800% due 01/01/05 866,250
100,000 Triborough Bridge & Tunnel Authority, New
York, General Purpose Revenue Bonds, Se-
ries P,
7.000% due 01/01/11 106,625
1,709,500
NORTH CAROLINA -- 7.4%
North Carolina Eastern Municipal Power
Agency:
1,000,000 Catawaba Electric Revenue,
5.750% due 01/01/02 977,500
Power Systems Revenue Bonds:
1,420,000 7.500% due 01/01/15, Prerefunded 01/01/97 1,506,975
100,000 10.000% due 01/01/18, Prerefunded
01/01/95 101,016
5,000 8.000% due 01/01/21, Prerefunded 01/01/98 5,450
2,590,941
OHIO -- 9.3%
$ 575,000 Columbus, Ohio, General Obligation Bonds,
Series 1,
5.250% due 09/15/05 $ 524,687
250,000 Cuyahoga County, Ohio, Hospital Revenue
Refunding Bonds, (Sinai Medical Center),
Series A,
8.125% due 11/15/14 264,063
625,000 Gahanna -- Jefferson City, Ohio, City
School District,
5.100% due 12/01/01 602,344
Ohio State Building Authority, Correctional
Facilities:
750,000 4.500% due 10/01/02 674,062
1,250,000 5.700% due 10/01/04 1,220,313
3,285,469
OREGON -- 2.2%
500,000 Oregon State, Department of General Ser-
vices,
Series E,
6.600% due 09/01/98 521,250
250,000 Tri-County Metroplitan Transportation Dis-
trict,
Series A,
5.600% due 07/01/03 245,625
766,875
PENNSYLVANIA -- 3.3%
Philadelphia, Pennsylvania, Gas Works
Revenue Bonds:
100,000 9th Series,
9.125% due 03/15/12, Prerefunded 03/15/95 103,527
1,000,000 14th Series,
5.500% due 07/01/04 937,500
100,000 Philadelphia, Pennsylvania, Hospital &
Higher Education Facilities Authority,
Revenue Bonds,
(Albert Einstein Medical Center),
10.000% due 04/01/11, Prerefunded
04/01/95 103,387
1,144,414
PUERTO RICO -- 1.3%
$ 350,000 Commonwealth of Puerto Rico, General
Obligation Bonds,
6.700% due 07/01/98 $ 365,313
100,000 Commonwealth of Puerto Rico, Industrial,
Medical and Environmental Pollution Con-
trol Facilities Financing Authority, Rev-
enue Bonds, (Hospital Project), (FHA in-
sured)++,
9.750% due 08/01/25, Prerefunded 08/01/95 104,875
470,188
RHODE ISLAND -- 0.3%
100,000 Rhode Island State, Health & Educational
Building Corporation, Revenue Bonds,
(Rhode Island Hospital),
9.750% due 07/01/13, Prerefunded 07/01/95 104,587
TEXAS -- 7.5%
Austin, Texas, Utility System Revenue
Bonds:
100,000 10.250% due 11/15/12, Prerefunded
11/15/95 106,625
200,000 Series A,
8.000% due 11/15/16, Prerefunded 05/15/01 223,250
45,000 Brazos River, Texas, Pollution Control Rev-
enue Bonds, (Electric Company), Series A,
9.250% due 03/01/18 48,262
200,000 Bridgeport, Texas, Independent School Dis-
trict,
Revenue Bonds,
6.000% due 08/15/01 202,750
875,000 Fort Bend, Texas, Independent School Dis-
trict,
6.600% due 02/15/04 912,187
100,000 Lower Colorado River, Texas, Revenue Bonds,
9.500% due 01/01/13, Prerefunded 01/01/96 106,250
100,000 San Antonio, Texas, Independent School Dis-
trict, Revenue Bonds,
8.250% due 06/15/01, Prerefunded 06/15/96 104,375
1,000,000 Tarrant County, Texas, General Obligations
Bonds,
4.700% due 07/15/05 880,000
$ 50,000 Texas State Turnpike Authority, Dallas
North,
Thruway Revenue Bonds,
6.000% due 01/01/20 $ 44,750
2,628,449
VIRGINIA -- 4.2%
500,000 Chesapeak, Virginia, General Obligation
Bonds,
5.900% due 08/01/2005 491,250
1,000,000 Virginia Transportation Contract, Rt. 28,
6.000% due 04/01/05 982,500
1,473,750
WASHINGTON -- 3.5%
100,000 Grant County, Washington, Public Utility
District No. 2, Electric Revenue Bonds,
Series C,
7.200% due 01/01/07, Prerefunded 07/01/96 103,000
1,055,000 Snohomish County, Washington, Public Util-
ity District No. 001, Electric Refunding
Revenue Bonds, (Generation System), Se-
ries 86 A,
8.000% due 01/01/15, Prerefunded 01/01/97 1,128,850
1,231,850
TOTAL INVESTMENTS
(Cost $33,582,016*) 93.6% 32,874,952
OTHER ASSETS AND LIABILITIES (NET) 6.4 2,254,648
NET ASSETS 100.0% $35,129,600
<FN>
* Aggregate cost for Federal tax purposes.
++ FHA -- Federal Housing Administration.
</TABLE>
See Notes to Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
PREMIER LIMITED TERM MUNICIPAL FUND
(UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (Cost $33,582,016)
(Note 1)
See accompanying schedule $32,874,952
Cash 609,256
Receivable for investment securities sold 995,294
Interest receivable 722,543
Receivable for Fund shares sold 141,415
TOTAL ASSETS 35,343,460
LIABILITIES:
Dividends payable $ 145,285
Payable for Fund shares redeemed 26,559
Investment management fee payable (Note 2) 16,994
Audit fee payable 13,500
Accrued Trustees' fees and expenses (Note 2) 3,877
Distribution fee payable (Note 3) 596
Accrued expenses and other payables 7,049
TOTAL LIABILITIES 213,860
NET ASSETS $35,129,600
NET ASSETS consist of:
Distributions in excess of net investment in-
come earned to date $(23,918)
Accumulated net realized loss on investments
sold (193,827)
Unrealized depreciation of investments (707,064)
Paid-in capital 36,054,409
TOTAL NET ASSETS $35,129,600
NET ASSET VALUE:
CLASS A SHARES:
Net asset value and redemption price per
share ($21,826,301 / 1,928,607 shares of
beneficial
interest outstanding) $11.32
Maximum offering price per share ($11.32 /
0.97) (based on maximum sales charge of
3.0% of the offering price on December 31,
1994) $11.67
CLASS B SHARES:
Net asset value and offering price per share+
($62,401 / 5,512 shares of beneficial
interest outstanding) $11.32
CLASS C SHARES:
Net asset value and offering price per share+
($15 / 1.325 shares of beneficial interest
outstanding) $11.32
CLASS R SHARES:
Net asset value, offering and redemption
price per share ($13,240,883 / 1,169,986
shares of beneficial interest outstanding) $11.32
<FN>
+ Redemption price per share is equal to net asset value less any applica-
ble contingent deferred sales charge.
</TABLE>
See Notes to Financial Statements.
STATEMENT of OPERATIONS
PREMIER LIMITED TERM MUNICIPAL FUND
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $984,729
EXPENSES:
Investment management fee (Note 2) $88,403
Distribution fee (Note 3) 29,045
Trustees' fees and expenses (Note 2) 3,684
TOTAL EXPENSES 121,132
NET INVESTMENT INCOME 863,597
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(Notes 1 and 4):
Net realized loss on investments sold dur-
ing the period (193,829)
Net unrealized depreciation of investments
during the period (791,327)
NET REALIZED AND UNREALIZED LOSS ON INVEST-
MENTS (985,156)
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS (121,559)
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
PREMIER LIMITED TERM MUNICIPAL FUND
<TABLE>
<CAPTION>
SIX
MONTHS YEAR
ENDED ENDED
12/31/94 6/30/94
(UNAUDITED)
<S> <C> <C>
Net investment income $863,597 $1,637,818
Net realized gain/(loss) on investments
sold during the period (193,829) 411,488
Net unrealized depreciation of investments
during the period (791,327) (1,792,658)
Net increase/(decrease) in net assets re-
sulting from operations (121,559) 256,648
Distributions to shareholders from net in-
come:
Class A (535,373) (1,114,200)
Class B (15) --
Class R (328,133) (523,618)
Distribution to shareholders from net real-
ized capital gains:
Class A (50,841) (1,093,772)
Class R (31,701) (436,684)
Net increase/(decrease) in net assets from
Fund share transactions (Note 5):
Class A (1,215,293) 1,377,089
Class B 62,392 --
Class C 15 --
Class R 1,054,416 4,541,935
Net increase/(decrease) in net assets (1,166,092) 3,007,398
NET ASSETS:
Beginning of period 36,295,692 33,288,294
End of period (including distributions in
excess of net investment income of
$23,918 and $23,994, respectively.) $35,129,600 $36,295,692
</TABLE>
[This Page Intentionally Left Blank]
FINANCIAL HIGHLIGHTS
PREMIER LIMITED TERM MUNICIPAL FUND
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.*
<TABLE>
<CAPTION>
SIX
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
12/31/94# 6/30/94# 6/30/93 6/30/92
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $11.66 $12.61 $12.21 $11.58
Income from investment op-
erations:
Net investment income** 0.27 0.54 0.60 0.70
Net realized and unreal-
ized gain/(loss) on in-
vestments (0.31) (0.41) 0.68 0.65
Total from investment op-
erations (0.04) 0.13 1.28 1.35
Less distributions:
Distributions from net in-
vestment income (0.27) (0.54) (0.60) (0.70)
Distributions from net re-
alized capital gains (0.03) (0.54) (0.28) (0.02)
Total distributions (0.30) (1.08) (0.88) (0.72)
Net asset value, end of
period $11.32 $11.66 $12.61 $12.21
Total return+++ (0.41)% 0.96% 10.95% 11.94%
Ratios to average net as-
sets/ supplemental data:
Net assets, end of period
(in 000's) $21,826 $23,715 $18,251 $26,192
Ratio of operating ex-
penses to average net
assets++ 0.75%+ 0.76% 1.03% 0.97%
Ratio of net investment
income to average net
assets 4.60%+ 4.43% 4.91% 5.82%
Portfolio turnover rate 23% 57% 103% 30%
<FN>
* The Fund commenced operations on October 5, 1985. 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 the Investor
Shares. Effective October 17, 1994, the Investor Shares were redesig-
nated Class A Shares. The Financial Highlights for the six months
ended December 31, 1994 are based upon a Class A Share outstanding.
The amounts shown for the year ended June 30, 1994 were calculated
using the performance of a Retail Shares outstanding from July 1, 1993
to April 3, 1994, and the performance of an Investor Share outstanding
from April 4, 1994 to June 30, 1994. The Financial Highlights for the
year ended June 30, 1993 and prior years are based upon a Retail Share
outstanding.
** Net investment income before waiver of fees and/or reimbursement of
expenses by the investment adviser and/or custodian and/or transfer
agent for the years ended June 30, 1994, 1993, 1992, 1991, 1990,
1989, 1988, 1987 and for the period ended June 30, 1986 were $0.49,
$0.59, $0.68, $0.68, $0.70, $0.68, $0.70, $0.71 and $0.54, respec-
tively.
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/91 6/30/90 6/30/89 6/30/88 6/30/87 6/30/86*
<S> <C> <C> <C> <C> <C>
$ 11.44 $11.95 $11.36 $11.23 $11.06 $10.00
0.74 0.76 0.78 0.76 0.76 0.59
0.14 (0.18) 0.67 0.13 0.17 1.06
0.88 0.58 1.45 0.89 0.93 1.65
(0.74) (0.77) (0.79) (0.74) (0.76) (0.59)
-- (0.32) (0.07) (0.02) -- --
(0.74) (1.09) (0.86) (0.76) (0.76) (0.59)
$ 11.58 $11.44 $11.95 $11.36 $11.23 $11.06
7.97% 5.06% 13.29% 8.21% 8.47% 16.68%
$18,042 $15,209 $13,304 $10,150 $9,225 $6,286
0.81% 0.82% 0.79% 0.79% 0.78% 0.75%+
6.43% 6.45% 6.82% 6.73% 6.58% 7.25%+
54% 76% 101% 81% 241% 5%
<FN>
+ Annualized.
++ Annualized expense ratios before voluntary waiver of fees and reim-
bursement of expenses by the investment adviser and/or custodian
and/or transfer agent for the years ended June 30, 1994, 1993, 1992,
1991, 1990, 1989, 1988, 1987 and for the period ended June 30, 1986
were 1.09%, 1.11%, 1.12%, 1.31%, 1.32%, 1.65%, 1.29%, 1.21% and 1.41%,
respectively.
+++ Total return represents aggregate total return for the periods indi-
cated and does not reflect the deduction of any applicable sales
charge.
# Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manger. From April 4,1994 through October 16, 1994,
Mellon Bank, N.A. served as the Fund's investment manager. Prior to
April 4, 1994, The Boston Company Advisors, Inc. served as the Fund's
investment adviser.
</TABLE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
PREMIER LIMITED TERM MUNICIPAL FUND
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/94*
(UNAUDITED)
<S> <C>
Net asset value, beginning of period $11.32
Income from investment operations:
Net investment income 0.00#
Net realized and unrealized gain on investments 0.00#
Total from investment operations 0.00#
Less distributions:
Distributions from net investment income 0.00#
Net asset value, end of period $11.32
Total Return+++ 0.00%##
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $62
Ratio of operating expenses to average net
assets 0.50%+
Ratio of net investment income to average
net assets 4.85%+
Portfolio turnover rate 23%
<FN>
* The Fund commenced selling Class B shares on December 29, 1994.
+ Annualized.
+++ Total return represents aggregate total return for the period indi-
cated and does not reflect the deduction of any applicable sales
charges.
# Amount represents less than $0.01 per share.
## Amount represents less than 0.01%.
</TABLE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
PREMIER LIMITED TERM MUNICIPAL FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
SIX
MONTHS YEAR PERIOD
ENDED ENDED ENDED
12/31/94# 6/30/94# 6/30/93*
(UNAUDITED)
<S> <C> <C> <C>
Net asset value, beginning of
period $11.66 $12.61 $12.21
Income from investment opera-
tions:
Net investment income** 0.28 0.58 0.25
Net realized and unrealized
gain/(loss) on investments (0.31) (0.43) 0.40
Total from investment operations (0.03) 0.15 0.65
Less distributions:
Distributions from net invest-
ment income (0.28) (0.56) (0.25)
Distributions from net realized
capital gains (0.03) (0.54)
Total distributions (0.31) (1.10) (0.25)
Net asset value, end of period $11.32 $11.66 $12.61
Total Return+++ (0.29)% 1.08% 5.36%
Ratios to average net as-
sets/supplemental data:
Net assets, end of period (in
000's) $13,241 $12,581 $8,974
Ratio of operating expenses to
average net assets++ 0.50%+ 0.50% 0.68%+
Ratio of net investment income
to average net assets 4.85%+ 4.69% 4.82%+
Portfolio turnover rate 23% 57% 103%
<FN>
* The Fund commenced selling Investment Class shares on February 1,
1993. Effective April 4, 1994 the Investment Class was redesignated
the Trust Shares. Effective October 17, the Trust Shares were redesig-
nated Class R Shares.
** Net investment income before waiver of fees and reimbursement of ex-
penses by the investment adviser and/or custodian and/or transfer
agent for the year ended June 30, 1994 and for the period ended June
30, 1993 were $0.54 and $0.24, respectively.
+ Annualized.
++ Annualized expense ratios before voluntary waiver of fees and reim-
bursement of expenses by the investment adviser and/or custodian
and/or transfer agent for the year ended June 30, 1994 and for the pe-
riod ended June 30, 1993 were 0.83% and 0.93%, respectively.
+++ Total return represents aggregate total return for the periods indi-
cated.
# Effective October 17, 1994, The Dreyfus Corporation serves as the
Fund's investment manger. From April 4,1994 through October 16, 1994,
Mellon Bank, N.A. served as the Fund's investment manager. Prior to
April 4, 1994, The Boston Company Advisors, Inc. served as the Fund's
investment adviser.
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Dreyfus/Laurel Tax-Free Municipal Funds (the "Trust"), The Dreyfu-
s/Laurel Funds, Inc., The Dreyfus/Laurel Funds Trust and The Dreyfus/Lau-
rel Investment Series are all registered open-end investment companies
that are now part of The Dreyfus Family of Funds. The Trust is an invest-
ment company which consists of seven funds: the Dreyfus/Laurel California
Tax- Free Money Fund, the Dreyfus/Laurel Massachusetts Tax-Free Money
Fund, the Dreyfus/Laurel New York Tax-Free Money Fund, the Premier Limited
Term California Municipal Fund, the Premier Limited Term Massachusetts Mu-
nicipal Fund, the Premier Limited Term New York Municipal Fund and the
Premier Limited Term Municipal Fund. This report contains financial state-
ments for the Premier Limited Term Municipal Fund (the "Fund"). The Trust
is a "Massachusetts business trust" and is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open- end management investment company.
The Fund seeks current income exempt from Federal income tax. The Fund
currently offers four classes of shares: Class A, Class B, Class C and
Class R Shares (effective October 17, 1994, the Investor Shares were rede-
signated Class A Shares and the Trust Shares were redesignated Class R
Shares). Class A, Class B and Class C Shares are sold primarily to retail
investors through financial intermediaries and bear a distribution fee.
Class A Shares are sold with a front-end sales charge, while Class B and
Class C Shares are subject to a contingent deferred sales charge ("CDSC")
and service fees. Class R Shares are designed for clients of financial in-
stitutions, such as banks, trust companies or thrift institutions who have
qualified accounts at such institutions and bear no sales charges or dis-
tribution or service fees. Each class of shares has identical rights and
privileges except with respect to the distribution fees and voting rights
on matters affecting a single class. The following is a summary of signif-
icant accounting policies consistently followed by the Fund in the prepa-
ration of its financial statements in accordance with generally accepted
accounting principals
(A) PORTFOLIO VALUATION
The portfolio securities of the Fund, except as otherwise noted, listed or
traded on a national securities exchange, are valued at the mean of the
latest bid and asked prices. Securities traded over-the-counter are priced
at the mean of the latest bid and asked prices but will be valued at the
last sale price if required by regulations of the SEC. When market quota-
tions are not readily available, securities and other assets are valued at
fair value as determined in good faith in accordance with procedures es-
tablished by the Board of Trustees. Short-term debt securities with matu-
rities of 60 days or less from the valuation day are valued on the basis
of amortized cost.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Interest income
is recorded on the accrual basis. Realized gains and losses from securi-
ties transactions are recorded on the identified cost basis. Investment
income and realized and unrealized gains and losses are allocated based
upon the relative average daily net assets of each class of shares.
(C) EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of any
class of shares are pro rated among the classes based upon the relative
average daily net assets of each class. Distribution expense is directly
attributable to a particular class of shares and is charged only to that
class' operations.
(D) DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income of the Fund, if any, are declared
on a class level on each day the Fund is open for business and are paid no
later than the first business day of the next month. Distributions from
net realized capital gains, if any, are determined on a Fund level and are
declared and paid annually. Distributions to shareholders are recorded on
ex-dividend date. The Fund is subject to a 4% nondeductible excise tax
measured with respect to certain undistributed amounts of net investment
income and capital gain. The Fund expects to make such additional distri-
butions as are necessary to avoid the application of this tax. Income dis-
tributions and capital gain distributions on a Fund level are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities
held by the Fund, timing differences and differing characterization of
distributions made by the Fund as a whole.
(E) FEDERAL INCOME TAXES
The Fund intends to qualify as a regulated investment company by complying
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and by distributing substantially all of its taxable
income to shareholders. Therefore, no Federal income tax provision is re-
quired.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEES AND OTHER RELATED PARTY
TRANSACTIONS
Effective as of October 17, 1994 the Trust's investment management agree-
ment with Mellon Bank, N.A. ("Mellon Bank") was transferred to The Dreyfus
Corporation (the "Manager"), a wholly-owned subsidiary of Mellon Bank. The
Manager provides, or arranges for the provision by one or more third par-
ties to provide investment advisory, administrative, custody, fund ac-
counting and transfer agency services to the Trust. The Manager also di-
rects the investments of the Fund in accordance with its investment objec-
tives, policies and limitations. For these services, the Fund is
contractually obligated to pay the Manager a fee, calculated daily and
paid monthly, at the annual rate of .50% of the value of the Fund's aver-
age daily net assets. Out of its fee, the Manager pays all of the expenses
of the Fund except brokerage fees, taxes, interest, Rule 12b-1 distribu-
tion fees and expenses, fees and expenses of the non-interested Trustees
(including counsel fees) and extraordinary expenses. In addition, the Man-
ager is required to reduce its fee in an amount equal to the Fund's allo-
cable portion of fees and expenses of the non-interested Trustees
(including counsel).
Prior to October 16, 1994, Mellon Bank served as the Fund's investment
manager pursuant to the investment management agreement described above.
Prior to September 23, 1994, Frank Russell Investment Management Company
(the "Administrator") served as the Fund's administrator and provided pur-
suant to an administration agreement various administrative and corporate
secretarial services to the Fund. Mellon Bank, as investment manager, paid
the Administrator's fee out of the management fee described above.
Prior to October 17, 1994, Funds Distributor, Inc. served as distributor
of the Trust's shares. Effective as of October 17, 1994, Premier Mutual
Fund Services, Inc. ("Premier") serves as the Trust's distributor. Premier
also serves as the Trust's sub-administrator and, pursuant to a sub-
administration agreement with the Manager, provides various administrative
and corporate secretarial services to the Trust.
No officer or employee of Premier (or of any parent, subsidiary or affili-
ate thereof) receives any compensation from The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Funds Trust, The Dreyfus/Laurel Tax-Free Munici-
pal Funds or The Dreyfus/Laurel Investment Series (collectively, "The
Dreyfus/Laurel Funds") for serving as an officer, Director or Trustee of
The Dreyfus/ Laurel Funds. In addition, no officer or employee of the Man-
ager (or of any parent, subsidiary or affiliate thereof) serves as an of-
ficer, Director or Trustee of The Dreyfus/Laurel Funds. The Dreyfus/Laurel
Funds pay each Director or Trustee who is not an officer or employee of
Premier (or of any parent, subsidiary or affiliate thereof) or of the Man-
ager, $27,000 per annum, $1,000 for each Board meeting attended and $750
for each Audit Committee meeting attended, and reimburse each Director or
Trustee for travel and out-of-pocket expenses.
3. DISTRIBUTION PLAN
Class A Shares are subject to a Distribution Plan adopted pursuant to Rule
12b-1 of the 1940 Act. Under this Distribution Plan, the Fund may pay an-
nually up to 0.25% of its average daily net assets attributable to Class A
Shares to compensate Premier and Dreyfus Service Corporation, an affiliate
of the Manager, for shareholder servicing activities and Premier for ac-
tivities and expenses primarily intended to result in the sale of Class A
Shares. Class B and Class C Shares are subject to a Distribution Plan
adopted pursuant to Rule 12b-1, pursuant to which the Fund pays Premier
for distributing the Fund's Class B and C Shares, at an aggregate annual
rate of 0.50% of the value of the average daily net assets of Class B and
C. Class B and Class C Shares are also subject to a Service Plan adopted
pursuant to Rule 12b-1, pursuant to which the Fund pays Dreyfus Service
Corporation or Premier for providing certain services to the holders of
Class B and C Shares a fee at the annual rate of 0.25% of the value of the
average daily net assets of Class B and C. The Class R Shares bear no ser-
vice or distribution fee.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of
the Trustees and a majority of those Trustees who are not "interested per-
sons" of the Trust and who have no direct or indirect financial interest
in the operation of the Plans.
4. SECURITIES TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of securities, ex-
cluding short- term investments, aggregated $8,854,028 and $7,544,459, re-
spectively for the six months ended December 31, 1994.
At December 31, 1994, aggregate gross unrealized appreciation for all se-
curities in which there is an excess of value over tax cost was $402,393
and aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value was $1,109,457.
5. SHARES OF BENEFICIAL INTEREST
The Trust has the authority to issue an unlimited number of shares of ben-
eficial interest of each class in each separate series, without par value.
The Trust offers four classes of shares of the Fund. The tables below sum-
marize transactions in Fund shares.
PREMIER LIMITED TERM MUNICIPAL FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
December 31, 1994** June 30, 1994#
SHARES AMOUNT SHARES+ AMOUNT++
<S> <C> <C> <C> <C>
CLASS A SHARES:
Sold 315,692 $3,649,958 1,263,188 $15,623,897
Issued as reinvest-
ment of dividends
and distributions 44,092 507,079 157,941 1,924,481
Redeemed (465,758) (5,372,330) (1,314,307) (16,171,289)
Net increase/(de-
crease) (105,974) $(1,215,293) 106,822 $1,377,089
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
December 31, 1994*
SHARES AMOUNT
<S> <C> <C>
CLASS B SHARES:
Sold 5,510 $62,370
Issued as reinvest-
ment of dividends
and distributions 2 22
Net increase 5,512 $62,392
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
December 31, 1994** June 30, 1994
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS R SHARES:
Sold 296,002 $3,400,416 796,221 $9,781,827
Issued as reinvest-
ment of dividends
and distributions 5,791 66,656 17,601 213,170
Redeemed (211,155) (2,412,656) (445,983) (5,453,062)
Net increase 90,638 $1,054,416 367,839 $4,541,935
<FN>
* The Fund commenced selling Class B Shares on December 29, 1994.
** On October 17, 1994, Investor and Trust Shares were redesignated Class
A and Class R Shares, respectively.
# Effective April 4, 1994, the Retail and Institutional Classes of Shares
were reclassified as a single class of shares known as Investor Shares.
+ Shares include 784,364 of subscriptions, 39,536 of reinvestments and
763,362 of redemptions for the Institutional Class up to April 4, 1994.
++ Amounts include $9,755,119 of subscriptions, $484,346 of reinvestments
and $9,483,248 of redemptions for the Institutional Class up to April
4, 1994.
</TABLE>
On December 29, 1994, the Fund began offering Class C Shares. As of Decem-
ber 31, 1994 the Fund had issued 1.325 Class C Shares in the amount of
$15.
6. LINE OF CREDIT
The Fund and several affiliated entities participate in a $20 million line
of credit provided by Bank of America (formerly known as Continental Bank
N.A.) under a Line of Credit Agreement (the "Agreement") dated March 31,
1992, primarily for temporary or emergency purposes, including the meeting
of redemption requests that otherwise might require the untimely disposi-
tion of securities. Under this Agreement, the Fund may borrow up to the
amount specified in its Borrowing Base Certificate. Interest is payable at
the bank's Money Market Rate or the London Interbank offered Rate (LIBOR)
plus 0.375% on an annualized basis. The Funds and the other affiliated en-
tities are charged an aggregate commitment fee of $50,000, which is allo-
cated equally among each of the participants. The Agreement requires,
among other provisions, each participating fund to maintain a ratio of net
assets (not including funds borrowed pursuant to the Agreement) to aggre-
gate amount of indebtedness pursuant to the Agreement of no less than 4 to
1. For the six months ended December 31, 1994, the Fund had no borrowings
under the Agreement.
