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. 40 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 41 [ ]
(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)
X immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
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/Laurel Massachusetts Tax-Free Money 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/Laurel MA Tax-Free Money 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/Laurel MA Tax-Free Money 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.
39 and 40.
Part B - Statement of Additional Information Incorporated by
reference to Post-Effective Amendment Nos. 39 and 40.
Part C- Other Information
Signature Page - The Dreyfus/Laurel Tax-Free Municipal Funds
Exhibits
______________________________________________________________________________
PROSPECTUS FEBRUARY 28, 1996
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
______________________________________________________________________________
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"), A 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.
THIS PROSPECTUS DESCRIBES TWO CLASSES OF SHARES -- INVESTOR AND CLASS
R SHARES FOR THE FUNDS (COLLECTIVELY, THE "SHARES").
SHARES OF THE FUND ARE SOLD WITHOUT A SALES LOAD. INVESTOR SHARES OF
THE FUNDS ARE SUBJECT TO DISTRIBUTION AND SHAREHOLDER SERVICING FEES.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING THE DREYFUS
TELETRANSFER 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 28,
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.
______________________________________________________________________________
(Continued from Page 1)
BY THIS PROSPECTUS, THE FUND IS OFFERING INVESTOR SHARES AND CLASS R
SHARES. (CLASS R SHARES OF THE FUND WERE FORMERLY CALLED TRUST SHARES.)
INVESTOR SHARES AND CLASS R SHARES ARE IDENTICAL, EXCEPT AS TO THE SERVICES
OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS R SHARES ARE SOLD
PRIMARILY TO BANK TRUST DEPARTMENTS AND OTHER FINANCIAL SERVICE PROVIDERS
(INCLUDING MELLON BANK AND ITS AFFILIATES) ("BANKS") ACTING ON BEHALF OF
CUSTOMERS HAVING A QUALIFIED TRUST OR INVESTMENT ACCOUNT OR RELATIONSHIP AT
SUCH INSTITUTION, OR TO CUSTOMERS WHO HAVE RECEIVED AND HOLD SHARES OF THE
FUND DISTRIBUTED TO THEM BY VIRTUE OF SUCH AN ACCOUNT OR RELATIONSHIP.
INVESTOR SHARES ARE SOLD PRIMARILY TO RETAIL INVESTORS BY THE FUND'S
DISTRIBUTOR AND BY BANKS, SECURITIES BROKERS OR DEALERS AND OTHER FINANCIAL
INSTITUTIONS (INCLUDING DREYFUS AND ITS AFFILIATES) (COLLECTIVELY "AGENTS")
THAT HAVE ENTERED INTO A SELLING AGREEMENT WITH THE FUND'S DISTRIBUTOR.
TABLE OF CONTENTS
EXPENSE SUMMARY.............................. 4
FINANCIAL HIGHLIGHTS......................... 5
DESCRIPTION OF THE FUND...................... 7
MANAGEMENT OF THE FUND....................... 11
HOW TO BUY FUND SHARES....................... 13
SHAREHOLDER SERVICES......................... 14
HOW TO REDEEM FUND SHARES.................... 17
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)..... 19
PERFORMANCE INFORMATION...................... 20
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES..... 20
GENERAL INFORMATION........................ 22
Page 2
[This Page Intentionally Left Blank}
Page 3
<TABLE>
<CAPTION>
EXPENSE SUMMARY
INVESTOR SHARES CLASS R SHARES
________________ ______________
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................. none none
Maximum Sales Load Imposed on Reinvestments............. none none
Deferred Sales Load..................................... none none
Redemption Fee.......................................... none none
Exchange Fee............................................ none none
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fee.......................................... .35% .35%
12b-1 Fee*.............................................. .25% none
Other Expenses**........................................ .00% .00%
______ _____
Total Fund Operating Expenses........................... .60% .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: INVESTOR SHARES CLASS R SHARES
_______________ ______________
1 Year $ 6 $ 4
3 Years $19 $ 11
5 Years $33 $ 20
10 Years $75 $ 44
</TABLE>
* See "Distribution Plan (Investor Shares Only)" for a description of the
Fund's Distribution Plan for the Investor shares.
** Does not include fees and expenses of the non-interested Trustees
(including counsel). The investment manager is contractually required to
reduce its Management Fee in an amount equal to the Fund's allocable portion
of such fees and expenses, which are estimated to be 0.01% of the Fund's net
assets. (See "Management of the Fund.")
_____________________________________________________________________________-
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE 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. Long-term investors in Investor shares could pay more in 12b-1 fees
than the economic equivalent of paying the maximum front-end sales charges
applicable to mutual funds sold by members of the National Association of
Securities Dealers, Inc. The information in the table does not reflect any
fee waivers or expense reimbursement arrangements that may be in effect.
Certain Agents may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
table. See "Management of The Fund," "How to Buy Fund Shares" and
"Distribution Plan (Investor Shares Only)." Certain proposals have been
submitted to the Fund's shareholders that, if approved, would result in
increases in the Fund's Management fee, the imposition of certain shareholder
transaction charges and other changes. See "Description of the Fund--Recent
Developments."
The Fund understands that Agents may charge fees to their clients who
are owners of the Funds' Investor shares for various services provided in
connection with a client's account. These fees would be in addition to any
amounts received by an Agent under its Selling Agreement ("Agreement") with
Premier Mutual Fund Services, Inc. ("Premier"). The Agreement requires each
Agent to disclose to its clients any compensation payable to such Agent by
Premier and any other compensation payable by the clients for various
services provided in connection with their accounts.
Page 4
FINANCIAL HIGHLIGHTS
The following tables are based upon a single Investor or Class R
share outstanding through each fiscal year (period) 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 are 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
year 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
(periods) prior to the fiscal period ended June 30, 1994, has been audited by
other independent auditors.
<TABLE>
<CAPTION>
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR.*
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 0.034 0.019 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%
</TABLE>
________________________________________________________
* 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. The
Financial Highlights for the year ended June 30, 1994, were calculated using
the performance of a Retail share 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.
# 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 $0.049, 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 and 1986
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.
Page 5
<TABLE>
<CAPTION>
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD.*
PERIOD YEAR YEAR
ENDED ENDED ENDED
6/30/93 6/30/94# 6/30/95##
_________ _________ __________
<S> <C> <C> <C>
Net asset value, beginning of period............................... $1.00 $1.00 $1.00
_____ _____ _____
INCOME FROM INVESTMENT OPERATIONS:
Net investment income***....................................... 0.007 0.019 0.032
LESS DISTRIBUTIONS:
Distributions from net investment income....................... (0.007) (0.019) (0.032)
________ _______ ________
Net Asset Value, end of period..................................... $1.00 $1.00 $1.00
====== ====== ======
TOTAL RETURN++....................................................... 0.73% 1.97% 3.25%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net Assets, end of period (in 000's)............................... $19,645 $19,830 $25,485
Ratios of expenses to average net assets+........................... 0.57%** 0.56% 0.35%
Ratios of net investment income to average net assets.............. 1.78%** 1.94% 3.19%
</TABLE>
_____________________________________________________________
* The Fund commenced selling Investment Class shares on
February 1, 1993. Effective April 4, 1994, the Investment Class was
reclassified as the Trust shares. Effective October 17, 1994, Trust
shares were redesignated Class R shares. The table above is based upon an
Investment Class share outstanding from February 1, 1993 to April 3, 1994
and a Trust share outstanding from April 4, 1994 to October 16, 1994.
** Annualized.
***Net investment income per share before waiver of fees and reimbursement
of expenses by the investment manager and/or custodian and/or transfer
agent for the year ended June 30, 1994 and for the period ended
June 30, 1993 were $0.019 and $0.007, respectively.
+ Annualized expense ratios before voluntary waiver of fees and/or
reimbursement of expenses by the investment manager and/or custodian
and/or transfer agent for the year ended June 30, 1994 and for the period
ended June 30, 1993 would have been 0.64% and 0.62%, respectively.
++ Total return represents aggregate total return for the periods
indicated.
# 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 investment manager for
the Fund beginning April 4, 1994.
## Effective October 17, 1994, The Dreyfus Corporation began serving
as the Fund's investment manager.
Page 6
DESCRIPTION OF THE FUND
RECENT DEVELOPMENTS
At a meeting of the Board of Trustees of the Trust held on October
25, 1995, the Board 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"), a fund with an investment
objective substantially similar to that of the Fund, whereby (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 would be
transferred to the Acquiring Fund and the Fund's Investor class would be
terminated, and (b) Investor class shareholders of the Fund would become
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.
Dreyfus has agreed to reduce its fee or reimburse the Acquiring Fund to
ensure that the total operating expenses of the Acquiring Fund for one year
following the closing of the reorganization contemplated by the Plan (the
"Reorganization") do not exceed .60 of 1% of its average daily net assets.
Shareholders of the Fund, and of each Class of the Fund, will be asked to
approve the Plan at a meeting to be held on or about April 16, 1996, and, if
approved, the Reorganization will become effective on or about April 23, 1996
(the "Effective Date"). Consummation of the Reorganization is not dependent
upon approval by Class R shareholders of the proposed new Investment
Management Agreement, discussed below.
At the October 25, 1995 Board meeting, the Board of Trustees of the
Trust also approved a new Investment Management Agreement (the "New
Agreement") between the Trust, on behalf of the Fund, and Dreyfus providing
for a fee payable to Dreyfus at the annual rate of .45 of 1% of the Fund's
average daily net assets. The fee payable to Dreyfus under the New Agreement w
ould represent an increase of .10 of 1% from the fee currently paid to
Dreyfus under the existing Investment Management Agreement, although Dreyfus
has agreed that it would limit its fee to .35 of 1% of average daily net
assets for one year following the change in the management fee. In addition,
under the New Agreement certain transaction charges would be payable to the
the Fund's transfer agent, a subsidiary of Dreyfus, out of shareholder
accounts in connection with shareholders utilizing certain services. These
transaction costs would include a $5 charge for exchanges out of the the
Fund, wire redemptions, Dreyfus TELETRANSFER redemptions, and closeouts of
shareholder accounts and a $2 charge for redemption checks ("Shareholder
Transaction Costs"). Dreyfus would continue to be responsible for arranging
and paying for administrative, custody, fund accounting, and certain transfer
agency services out of its fee under the New Agreement. The proposed New
Agreement will be conditioned upon consummation of the Reorganization, and
thus would not affect Investor class shareholders. Class R shareholders of
the Fund will be asked to approve the New Agreement at a meeting to be
held on or about April 16, 1996 and, if approved, the New Agreement would
become effective on the Effective Date. Class R shareholders of the Fund
prior to the Effective Date would not be subject to the Shareholder
Transaction Costs.
The Board also approved certain other changes for the Fund which
would allow the Fund to join Dreyfus' "BASIC" Family of Money Funds, as
described below and which are contingent upon approval by Class R
shareholders of the New Agreement. If Class R shareholders approve the New
Agreement, these additional changes would become effective on the Effective
Date.
The Board approved eliminating the availability of certain of the
Fund's shareholder service features, including the Dreyfus Auto-Exchange
Privilege, Dreyfus-AUTOMATIC-Asset Builder, Dreyfus Dividend Options, Dreyfus
Government Direct Deposit Privilege, Dreyfus Payroll Savings Plan and the
Automatic Withdrawal Plan. The Board also approved increasing the Fund's
minimum initial and subsequent investment requirements from $2,500 to $25,000
and from $100 to $1,000, respectively, and the minimum balance below which
accounts may be involuntarily redeemed by the Fund from $500 to $10,000.
Shareholders of the Fund prior to the Effective Date would not be subject
to the increased minimums.
Page 7
Finally, the Board approved changing the Fund's name from Dreyfus/
Laurel Massachusetts Tax-Free Money Fund to "Dreyfus BASIC Massachusetts
Municipal Money Market Fund," as of the Effective Date.
A Proxy Statement/Prospectus, which will describe the above
proposals, as well as the Fund and other matters, is expected to be mailed to
Fund shareholders on or about February 29, 1996.
GENERAL
By this Prospectus, the Fund is offering Investor shares and Class R
shares. (Class R shares of the Fund were formerly called Trust Shares.)
Investor shares and Class R shares are identical, except as to the services
offered to and the expenses borne by each Class. Class R shares are sold
primarily to Banks acting on behalf of customers having a qualified trust or
investment account or relationship at such institution, or to customers who
have received and hold shares of the Fund distributed to them by virtue of
such an account or relationship. Investor shares are sold primarily to retail
investors by the Distributor and by Agents that have entered into an
Agreement with the Distributor. If shares of the Fund are held in an account
at a Bank or with an Agent, such Bank or Agent may require you to place all
Fund purchase, exchange and redemption orders through them. All Banks and
Agents have agreed to transmit transaction requests to the Fund's transfer
agent or to the Distributor. Distribution and shareholder servicing fees
attributable to Investor shares will cause Investor shares to have a higher
expense ratio and pay lower dividends than Class R shares.
INVESTMENT OBJECTIVE AND POLICIES
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.
The Fund seeks to achieve its objective by investing in a varied portfolio of
high quality, short-term 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 purposes of
federal and Massachusetts personal income taxes ("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 Massachusetts Municipal Obligations purchased by the Fund
consists 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.
Page 8
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 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 Investment Company Act of 1940, as amended (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 ten-
Page 9
der 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 Massachusetts 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.
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. 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.
Massachusetts' expenditures for State programs and services in each of the
fiscal years 1987 through 1991 exceeded each year's current revenues. The
budgeted operating fund of Massachusetts ended fiscal years 1992, 1993 and
1994, however, with an excess of revenues and other sources over expenditures
and other uses of $312.3 million, $13.1 million and $26.8 million,
respectively. Fiscal 1994 ended with positive budgeted operating fund balances
of $589.3 million. 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 (as defined in the 1940 Act) of the Fund's
outstanding shares. As a fundamental policy, the Fund may not (i) borrow
money in an amount exceeding 331\3% of the Fund's total assets at the time of
borrowing; (ii) make loans or lend securities in excess of 331\3% of the
Fund's total assets; and (iii) invest more than 25% of the value of the
Fund's total assets in the securities of one or more issuers conducting their
principal activities in the same industry; provided that there shall be no
such limitation on investments in obligations of the U.S Government, state
and municipal governments and their political subdivisions or investments in
domestic banks, including U.S. branches of foreign banks and foreign branches
of U.S. banks.The SAI describes all of the Fund's fundamental and
non-fundamental 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.
Page 10
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, the Fund will be required, among
other things, 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 its 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 current yield of the Fund. 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
the same state. 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.
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 objectives 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 January 31, 1996, Dreyfus managed or administered
approximately $82 billion in assets for more than 1.7 million investor
accounts nationwide.
Dreyfus serves as the Fund's investment manager. Dreyfus supervises
and assists in the overall management of the Fund's affairs under an
Investment Management Agreement with the Fund, 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.
Page 11
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 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 $233 billion in assets as of
December 31, 1995, including $81 billion in mutual fund assets. As of December
31, 1995, Mellon, through various subsidiaries, provided non-investment
services, such as custodial or administration services, for more than $786
billion in assets, including approximately $60 billion in mutual fund assets.
Under the Investment Management Agreement, the Fund pays a fee,
computed daily and paid monthly, at the annual rate of .35% of the Fund's
average daily net assets less certain expenses described below. Dreyfus pays
all of the expenses of the Fund except brokerage fees, taxes, interest, Rule
12b-1 fees (if applicable) and extraordinary expenses. In order to compensate
Dreyfus for paying virtually all of the Fund's expenses, the Fund's
investment management fee is higher than the investment advisory fees paid by
most investment companies. Most, if not all, such companies also pay for
additional non-investment advisory expenses that are not paid by such
companies' investment adviser. From time to time, Dreyfus may waive (either
voluntarily 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 Investment Management
Agreement.
For the fiscal year ended June 30, 1995, the Fund paid Mellon Bank or
Dreyfus .35% of is average daily net assets in investment management fees,
less fees and expenses of the non-interested Trustees (including counsel
fees).
For the fiscal year ended June 30, 1995, total operating expenses
(excluding Rule 12b-1 fees) of each class of the Fund were 0.35% of the
Fund's average daily net assets.
In addition, Investor shares may be subject to certain distribution
and service fees. See "Distribution Plan (Investor Shares Only)."
In allocating brokerage transactions for the Fund, Dreyfus seeks to
obtain the best execution of orders at the most favorable net price. Subject
to this determination, Dreyfus may consider, among other things, the receipt
of research services and/or the sale of shares of the Fund or other funds
managed, advised or administered by Dreyfus as factors in the election of
broker-dealers to execute portfolio transactions for the Fund. See "Portfolio
Transactions" in the Statement of Additional Information.
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 or 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.
Distributor. 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.
Page 12
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., a
wholly-owned subsidiary of Dreyfus, is located at One American Express Plaza,
Providence, Rhode Island 02903, and serves as th Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). 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. Investor shares are offered to any investor and may be
purchased through the Distributor or Agents that have entered into Selling
Agreements with the Distributor.
Class R shares are sold primarily to Banks acting on behalf of
customers having a qualified trust or investment account or relationship at
such institution, or to customers who have received and hold shares of the
Fund distributed to them by virtue of such an account or relationship.
Stock certificates are issued only upon your written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a
client of an Agent which has made an aggregate minimum initial purchase for
its customers of $2,500. Subsequent investments must be at least $100. The
initial investment must be accompanied by the Fund's Account Application. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries, directors of Dreyfus, board members of a fund advised by
Dreyfus including members of the Trust's board, or the spouse or minor child
of any of the foregoing, the minimum initial investment in $1,000. For
full-time or part-time employees of Dreyfus or any of its affiliates or
subsidiaries who elect to have a portion of their pay directly deposited into
their Fund account, the minimum initial investment is $50. The Fund reserves
the right to vary further the initial and subsequent investment minimum
requirements at any time.
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 indicating
which Class of shares is being purchased. 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 subsequent 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 fund may be
transmitted by wire to Boston Safe Deposit and Trust Company, together with
the applicable Class' DDA # as shown below, for purchase of Fund shares in
your name:
DDA# 043397 Dreyfus/Laurel Massachusetts Tax-Free Money Fund/Investor
shares;
DDA# 043389 Dreyfus/Laurel Massachusetts Tax-Free Money Fund/Class R
shares.
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 fund in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays,
Page 13
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
fund 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 fund 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
"4760" for Dreyfus/Laurel Massachusetts Tax-Free Money Fund/Investor
shares;
"4750" for Dreyfus/Laurel Massachusetts Tax-Free Money Fund/Class R
shares.
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 net
asset value ("NAV") refers to the worth of one share. The NAV for Investor
and Class R shares of the Fund, both of 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.
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 shares of the Fund
(minimum $500 and maximum $150,000 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 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 such fee
currently is contemplated.
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.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be
available to clients of certain Agents and some Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Agent in this regard.
FUND EXCHANGES
You may purchase, in exchange for shares of a Class, shares of the
same class of certain other fund managed or administered by Dreyfus, to the
extent such shares are offered for sale in your state of residence. These
fund 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.
Page 14
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 $500; 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 of Investor shares into fund
sold with a sales load. If you are exchanging Investor shares into a fund
that charges a 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
"Shareholder Services_Fund Exchanges" in the SAI. No fees currently are
charged shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal fee in accordance with rules promulgated by the SEC.
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.
DREYFUS AUTO-EXCHANGE PRIVILEGE
Dreyfus Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis), in exchange for shares of
the Fund, in shares of the same class of certain other funds in the Dreyfus
Family of Funds of which you are currently an investor. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth day of the month according to the schedule you have
selected. Shares will be exchanged at the then-current NAV; however a sales
load may be charged with respect to exchanges of Investor shares into funds
sold with a sales load. The right to exercise this Privilege may be modified
or canceled by the Fund or the Transfer Agent. You may modify or cancel your
exercise of this Privilege at any time by mailing written notification to The
Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
The Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. 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. For more information
concerning this Privilege
Page 15
and the funds in the Dreyfus Family of Funds eligible to participate in this
Privilege, or to obtain a Dreyfus Auto-Exchange Authorization Form, please
call toll free 1-800-645-6561.
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund shares
(minimum of $100 and maximum of $150,000 per transaction) at regular
intervals selected by you. Fund shares are purchased by transferring funds
from the bank account designated by you. At your option, the bank account
designated by you will be debited in the specified amount, and Fund shares
will be purchased, once a month, on either the first or fifteenth day, or
twice a month, on both days. Only an account maintained at a domestic
financial institution which is an ACH member may be so designated. To
establish a Dreyfus-AUTOMATIC Asset Builder account, you must file an
authorization form with the Transfer Agent. You may obtain the necessary
authorization form by calling 1-800-645-6561 from the Distributor. You may
cancel your participation in this Privilege or change the amount of purchase
at any time by mailing written notification to The Dreyfus Family of Fund,
P.O. Box 9671, Providence, Rhode Island 02940-9671 and the notification will
be effective three business days following receipt. The Fund may modify or
terminate this Privilege at any time or charge a service fee. No such fee
currently is contemplated.
DREYFUS DIVIDEND OPTIONS
Dreyfus Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of certain other funds in the Dreyfus Family of
Funds of which you are an investor. Shares of the other fund will be
purchased at the then-current NAV; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sales load. If you are
investing in a fund that charges a sales load, you may qualify for share
prices which do not include the sales load or which reflect a reduced sales
load. See "Shareholder Services" in the SAI. Dreyfus Dividend ACH permits you
to transfer electronically on the payment date dividends or dividends and
capital gain distributions, if any, from the Fund to a designated bank
account. Only an account maintained at a domestic financial institution which
is an ACH member may be so designated. Banks may charge a fee for this
service.
For more information concerning these privileges, or to request a
Dreyfus Dividend Options Form, please call toll free 1-800-645-6561. You may
cancel these privileges by mailing written notification to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Enrollment in
or cancellation of these Privileges is effective three business days
following receipt. These Privileges are available only for existing accounts
and may not be used to open new accounts. Minimum subsequent investments do
not apply for Dreyfus Dividend Sweep. The Fund may modify or terminate these
Privileges at any time or charge a service fee. No such fee currently is
contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Dreyfus Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into your
Fund account. You may deposit as much of such payments as you elect. To
enroll in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment that
you desire to include in this Privilege. The appropriate form may be obtained
by calling 1-800-645-6561. Death or legal incapacity will terminate your
participation in this Privilege. You may elect at any time to terminate your
participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to
you.
DREYFUS PAYROLL SAVINGS PLAN
Dreyfus Payroll Savings Plan permits you to purchase Fund shares
(minimum of $100 per transaction) automatically on a regular basis. Depending
upon the direct deposit program of your employer, you may have part or all of
your paycheck transferred to your existing Dreyfus account electronically
through the ACH system at each pay period. To establish a Dreyfus Payroll
Savings Plan account, you must file an
Page 16
authorization form with your employer's payroll department. Your employer
must complete the reverse side of the form and return it to The Dreyfus Family
of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You may obtain
the necessary authorization form by calling 1-800-645-6561. You may change the
amount of purchase or cancel the authorization only by written notification
to your employer. It is the sole responsibility of your employer, not the
Distributor, Dreyfus, the Fund, the Transfer Agent nor any other person, to
arrange for transactions under the Dreyfus Payroll Savings Plan. The Fund may
modify or terminate this Privilege at any time or charge a service fee. No
such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis if you have a $5,000 minimum account.
An application for the Automatic Withdrawal Plan can be obtained by
calling 1-800-645-6561. The Automatic Withdrawal Plan may be ended at any
time by the shareholder, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
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. If you hold Fund shares of more than
one Class, any request for redemption must specify the Class of shares being
redeemed. If you fail to specify the Class of shares to be redeemed or if you
own fewer shares of the Class than specified to be redeemed, the redemption
request may be delayed until the Transfer Agent receives further instructions
from you or your Agent.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Agents or other institutions may charge their clients 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, BY THE DREYFUS TELETRANSFER PRIVILEGE OR
THROUGH DREYFUS-AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE DREYFUS TRANSFER AGENT, THE REDEMPTION PROCEEDS
WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE
CHECK, DREYFUS TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER
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, THE DREYFUS TELETRANSFER
PURCHASE OR THE DREYFUS-AUTOMATIC ASSET BUILDER 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 $500 or less and remains so during the notice period.
Page 17
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 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 $1,000 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 $500 or more.
Redemption Checks should not be used to close your account. Redemption
Checks are free, but 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 fund or other valid
reason. 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 18
WIRE REDEMPTION PRIVILEGE. You may request by wire or telephone that
redemption proceeds (minimum $1,000) 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. 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 $1,000 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, 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
$500 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 TELE-
TRANSFER 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 or charge a service fee
upon notice to shareholders.
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.
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)
DISTRIBUTION PLAN--INVESTOR CLASS. Investor shares are subject to a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1"). The Fund's Investor shares bear some of the cost of selling these
Shares under the Distribution Plan (the "Plan"). The Plan allows the Fund to
spend annually up to 0.25% of its average daily net assets attributable to
Investor shares to compensate Dreyfus Service Corporation, an affiliate of
Dreyfus, for shareholder servicing activities and Premier for shareholder
servicing activities and for activities or expenses primarily intended to
result in the sale of the Fund's Investor shares. The Plan allows Premier to
make payments from the Rule 12b-1 fees it collects from the Fund to
compensate Agents that have entered into Selling Agreements
Page 19
("Agreements") with Premier. Under the Agreements, the Agents are obligated
to provide distribution related services with regard to the Fund and/or share-
holder services to the Agent's clients that own the Fund's Investor shares.
Potential investors should read this Prospectus in light of the terms
governing Agreements with their Agents. An Agent entitled to receive
compensation for selling and servicing the Fund's shares may receive different
compensation with respect to one class of shares over another.
The Fund and Premier may suspend or reduce payments under the Plan at
any time, and payments are subject to the continuation of the Fund's Plan and
the Agreements described above. From time to time, the Agents, Premier and
the Fund may agree to voluntarily reduce the maximum fees payable under the
Plan. See the SAI for more details on the Plan.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise the yield and tax-equivalent
yield on a class of shares. 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 yields will fluctuate substantially.
The "yield" of a class of shares of the Fund refers to the income
generated by an investment in such class over a seven-day period identified
in the advertisement. This income is then "annualized." That is, the amount
of income 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 a class of shares 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 expenses
reduced or waived by Dreyfus 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 a class of shares 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 a class' yield by the amount necessary to reflect
the payment of federal income tax (and state income tax, if applicable) at a
stated tax rate.
Yield quotations will be computed separately for each class of the
Fund's shares. Because of the difference in the fees and expenses borne by
Class R shares of the Fund and Investor shares of the Fund, the yield on
Class R shares will generally be higher than the yield on Investor shares.
Any fees charged by a Bank or 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 the performance of its Investor and Class R
shares 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
Investor and Class R shares' 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.
Page 20
Unless you choose to receive dividend and/or capital gain
distributions in cash, your distributions will be automatically reinvested in
additional Fund shares at the 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.
Distributions paid by the Fund with respect to one class of shares
may be greater or less per share than those paid with respect to another
class of shares due to the different expenses of the different classes.
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 fund 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.
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. 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.
Page 21
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 gain 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 gain distributions also is required for such share-
holders 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 seven 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 Boston
Company Tax-Free Municipal Funds and changed its name to the Laurel Tax-Free
Municipal Funds on March 31, 1994, and changed its name again 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. The Trustees have authorized shares of the
Fund to be issued in two Classes_Investor and Class R.
Each share (regardless of class) has one vote. All shares of all fund
(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 fund or Classes, in which case only the shareholders of the
affected fund or Classes are entitled to vote, each as a separate class. Only
holders of Investor shares will be entitled to vote on matters submitted to
shareholders pertaining to the Distribution Plan relating to that 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.
Page 22
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 23
DREYFUS/LAUREL MASSACHUSETTS
TAX-FREE
MONEY FUND
PROSPECTUS
Copy Rights 1996 Dreyfus Service Corporation
315/715p022896
Registration Mark
______________________________________________________________________________
THE DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
INVESTOR AND CLASS R SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
February 28, 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 28,
1996 (referred to herein as the "Prospectus") describing the Investor
shares and Class R shares of the Dreyfus/Laurel Massachusetts Tax-Free
Money Fund (formerly the Laurel Massachusetts Tax-Free Money Fund). The
Fund is a separate, non-diversified portfolio of the Trust, an open-end
management investment company, known as a mutual fund. As used in this
Statement of Additional Information, the term "Fund" or "Money Fund"
refers to the Dreyfus/Laurel Massachusetts Tax-Free Money 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-3
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . B-10
(see also in the Prospectus "How to Buy Fund Shares")
Distribution Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
(see also in the Prospectus "Investment Objective and Policies")
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . B-23
(see also in the Prospectus "How to Redeem Fund Shares")
Shareholder Services. . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
Performance Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-30
(see also in the Prospectus "Taxes")
Description of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . B-31
(see also in the Prospectus "Investment Objective and Policies")
Principal Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . B-32
Custodian and Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . B-32
Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . . . . B-33
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . B-33
Appendix A - Risk Factors - Investing in
Massachusetts Municipal Obligations . . . . . . . . . . . . . . . . . . B-34
Appendix B - Information about Securities Ratings . . . . . . . . . . . . B-37
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., 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 each Fund was changed from "Laurel Massachusetts
Tax-Free Money Fund" to "Dreyfus/Laurel Massachusetts Tax-Free Money
Fund".
Trustees and Officers
The Trust has a Board composed of twelve 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 "1940 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") and Mr.
DiMartino serves as a Board member of 93 other funds advised by Dreyfus.
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. 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 trustee of
Bucknell University; and a director of the Muscular Dystrophy
Association, HealthPlan Services Corporation, Belding Heminway, Inc.,
Curtis Industries, Inc., Simmons Outdoor Corporation and Staffing
Resources, Inc. 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.
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 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.
# ELIZABETH BACHMAN. Vice President and Assistant Secretary of the Trust,
The Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Funds, Inc.
(since January 1996); Counsel, Premier Mutual Fund Services, Inc.
Prior to September 1995, she was enrolled at the Fordham University
School of Law and received her J.D. in May 1995. Prior to September
1992, she was an Assistant at the National Association for Public
Interest Law. Age: 26 years old. Address: 200 Park Avenue, New
York, New York 10166.
#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
Investment Series, 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 and Assistant Secretary (since January
1996) of the Trust, The Dreyfus/Laurel Funds Trust and The
Dreyfus/Laurel Funds, Inc.; 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); Fidelity
Investments (prior to 1989). Age: 41 years old. Address: One Exchange
Place, Boston, Massachusetts 02109.
#MARGARET PARDO. Assistant Secretary of the Trust, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Funds, Inc. (since January 1996);
Paralegal, Premier Mutual Fund Services, Inc. Prior to April 1995,
she was a Medical Coordination Officer at ORBIS International. Prior
to June 1992, she worked as a Program Coordinator at Physicians World
Communications Group. Age: 27 years old. Address: 200 Park Avenue,
New York, New York 10166.
#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 Servic
es, Inc. (since August 1994); Counsel, The Boston Company Advisors,
Inc. (February 1992 to March 1994); Associate, Ropes & Gray (August
1990 to February 1992); Associate, Sidley & Austin (June 1989 to
August 1990). Age: 31 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
# JOHN J. PYBURN. Assistant Treasurer of the Trust, The Dreyfus/Laurel
Funds Trust and The Dreyfus/Laurel Funds, Inc. (since January 1996);
Vice President of Premier Mutual Fund Services, Inc. and an officer
of other investment companies advised or administered by Dreyfus.
From 1984 to July 1994, he was Assistant Vice President in the Mutual
Fund Accounting Department of Dreyfus. Age: 61 years old. Address:
200 Park Avenue, New York, New York 10166.
# JOSEPH F. TOWER, III. Assistant Treasurer of the Trust, The
Dreyfus/Laurel Funds Trust and The Dreyfus/Laurel Funds, Inc. (since
January 1996); Senior Vice President, Treasurer and Chief Financial
Officer of Premier Mutual Fund Services, Inc. and an officer of other
investment companies advised or administered by Dreyfus. From 1988
to August 1994, he was employed by The Boston Company, Inc. where he
held various management positions in the Corporate Finance and
Treasury areas. Age: 33 years old. Address: One Exchange Place,
Boston, Massachusetts 02109.
_____________________________________
* "Interested person" of the Trust, as defined in the 1940 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.
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 January 31,
1996.
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" of the Trust (as
defined in the 1940 Act), $27,000 per annum (and an additional $75,000 for
the Chairman of the Board of Directors/Trustees of the Dreyfus/Laurel
Funds). In addition, the Dreyfus/Laurel Funds pays each Director/Trustee
$1,000 per joint Dreyfus/Laurel Funds meeting attended, plus $750 per
joint Dreyfus/Laurel Family of Funds Audit Committee meeting attended, and
reimburses each Director/Trustee who is not an "interested person" of the
Trust (as defined in the 1940 Act), for travel and out-of-pocket expenses.
For the fiscal year ended June 30, 1995, the aggregate amount of fees
and expenses received by each current 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 the Trust and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member the Trust# Fund's Expenses Retirement Board Member
------------- ------------------ -------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Ruth Marie Adams $ 2,093 none none $ 34,750
Francis P. Brennan@ 6,642 none none 110,750
Joseph S. DiMartino** none none none 448,618*
James M. Fitzgibbons 2,031 none none 33,750
J. Tomlinson Fort** none none none none
Arthur L. Goeschel 2,093 none none 34,750
Kenneth A. Himmel 1,996 none none 33,000
Arch S. Jeffery** none none none none
Stephen J. Lockwood 1,934 none none 32,000
Robert D. McBride 2,156 none none 35,750
John J. Sciullo 2,093 none none 34,750
Roslyn M. Watson 2,156 none none 35,750
_____________________________
# Amounts required to be paid by the Trust directly to the non-interested Trustees
that would be applied to offset a portion of the management fee payable to Dreyfus,
are in part paid directly by Dreyfus to the non-interested Trustees. Amount does
not include reimbursed expenses for attending Board meetings, which amounted to
$1,192 for the Dreyfus/Laurel Funds.
* Estimated amount for fiscal year ended June 30, 1995.
** Joseph S. DiMartino, J. Tomlinson Fort and Arch Jeffery are paid directly by
Dreyfus for serving as Board members of the Trust and the funds in the
Dreyfus/Laurel Funds. For the fiscal year ended June 30, 1995, the aggregate
amount of fees and expenses received by Joseph S. DiMartino, J. Tomlinson Fort and
Arch Jeffery from Dreyfus for serving as a Board member of the Trust were $1,792,
$2,156 and $2,156, respectively and for serving as a Board member of all funds in
the Dreyfus/Laurel Funds (including the Trust) were $14,000, $35,750 and $35,750,
respectively. In addition, Dreyfus reimbursed Messrs. DiMartino, Fort and Jeffery
a total of $136 for expenses attributable to the Trust's Board meetings ($136 is
not included in $1,192 above).
@ The compensation of Francis P. Brennan includes $75,000 by Dreyfus to be the
Chairman of the Board.
</TABLE>
Management Arrangements
Dreyfus serves as the investment manager for the Fund pursuant to an
Investment Management Agreement (the "Management Agreement") with the
Trust dated April 4, 1994, and transferred from Mellon Bank, N.A. (One
Mellon Bank Center, Pittsburgh, PA 15258), to Dreyfus effective October
17, 1994. 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 objectives, policies and restrictions.
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, TBC Advisors served as
investment adviser to each 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 of the Trust 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. 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. Mellon Bank later served as
investment manager to the Fund pursuant to the Management Agreement, which
was approved by the shareholders of the Fund of the Trust on March 29,
1994 and became effective on April 4, 1994. 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, including a majority of the Trustees who are not "interested
persons" of the Trust or Mellon Bank, on on January 31, 1996.
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) the
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 set forth in the Fund's Prospectus, applied to the average
daily net assets of the Fund's investment portfolio, less the accrued fees
and expenses (including counsel fees) of the non-interested Trustees of
the Trust. Previously, 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 continue from year to year as to the
Fund 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 60 days 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
President-Dreyfus Retirement Services; Diane M. Coffey, Vice President-
Corporate Communications; Elie M. Genadry, Vice President-Institutional
Sales; William T. Sandalls, Jr., Senior Vice President, Chief Financial
Officer and a director; William F. Glavin, Jr., Vice President-Corporate
Development; Andrew S. Wasser, Vice President-Information Services; Mark
N. Jacobs, Vice President-Fund Legal and Compliance and Secretary; Jeffrey
N. Nachman, Vice President-Mutual Fund Accounting; Maurice Bendrihem,
Controller; Elvira Oslapas; Assistant Secretary; Mandell L. Berman, Frank
V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian M. Smerling
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 .35 of 1%. In addition, 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, during the Fund's fiscal years
ending June 30, 1993, 1994 and 1995 fiscal years:
<TABLE>
<CAPTION>
1995 1994 (1) 1993
---- -------- ----
Fees Fees Fees Fees Fees Fees
Paid (2) Waived (3) Paid (4) Waived (5) Paid Waived (5)
-------- ---------- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts Tax-Free $397,565 $88,706 $451,899 $95,174 (6) $714,501 $ 29,313 (7)
Fund
_______________________________
(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.
</TABLE>
Dreyfus has agreed that if in any fiscal year the aggregate expenses
of the Fund of the Trust (including fees pursuant to the Management
Agreement, but excluding interest, brokerage expenses, taxes and
extraordinary items) exceed the expense limitation of the 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. To the
extent these state regulations permit the exclusion of distribution
expenses (see "Distribution Plan" below), the Trust will exclude such
expenses in determining whether any reduction obligation exists. The most
restrictive 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.
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 the Fund's Transfer Agent and the New York
Stock Exchange (the "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 shareholder'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.
In-Kind Purchases. If the following conditions are satisfied, the
Fund may at its discretion, permit the purchase of shares through an "in-
kind" exchange of securities. Any securities exchanged must meet the
investment objective, policies and limitations of the Fund, must have a
readily ascertainable market value, must be liquid and must not be subject
to restrictions on resale. The market value of any securities exchanged,
plus any cash, must be at least equal to $25,000. Shares purchased in
exchange for securities generally cannot be redeemed for fifteen days
following the exchange in order to allow time for the transfer to settle.
The basis of the exchange will depend upon the relative NAVs of the
shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Fund and
prior to the exchange will be considered in valuing the securities. All
interest, dividends, subscription or other rights attached to the
securities become the property of the Fund, along with the securities.
For further information about "in-kind" purchases, call 1-800-645-6561.
DISTRIBUTION PLANS
The Securities and Exchange Commission ("SEC") has adopted Rule 12b-1
under the Act (the "Rule") regulating the circumstances under which
investment companies such as the Trust directly or indirectly bear the
expenses of distributing their shares. The Rule defines distribution
expenses to include expenditures for "any activity which is primarily
intended to result in the sale of fund shares." The Rule, among other
things, provides that an investment company may bear such expenses only
pursuant to a plan adopted in accordance with the Rule.
Prior Plan. Prior to April 4, 1994, the Investor Shares of the Fund
were known as either the "Retail Class" of shares or the "Institutional
Class" of shares. These two classes of shares of the Fund were
reclassified as a single class of shares (the Investor Shares) by the
Board of Trustees at a meeting held on November 22, 1993, subject to
certain approvals that were obtained from the Fund's shareholders at a
meeting held on March 29, 1994. At the November 22, 1993 Board Meeting,
the Trustees also approved a new distribution plan for the Investor Shares
(formerly the Fund's Retail and/or Institutional Class of shares).
Shareholders of the Fund's Retail Class of Shares and Institutional Class
of Shares approved the new distribution plans at a shareholders' meeting
held on March 14 and March 29, 1994. The new distribution plan ("Current
Investor Plan") was effective on April 4, 1994.
Prior to April 4, 1994, the Fund's Retail Shares and Institutional
Shares were subject to a distribution plan (the "Prior Plan") that was
adopted by the Trust under the Rule. Under the Prior Plan, the Fund was
authorized to spend up to .25% of its average daily net assets
attributable to the Retail Class on activities primarily intended to
result in the sale of such Shares, and the Fund was authorized to spend up
to .15% of its average daily net assets attributable to the Institutional
Class on activities primarily intended to result in the sale of such
Shares.
Under the distribution agreement with the prior distributor, Funds
Distributor, Inc. ("Funds Distributor") the Fund was authorized to pay, or
reimburse Funds Distributor, for distribution activities (which are the
same as those authorized by the Plans) on behalf of the Fund on a monthly
basis, provided that any payment by the Fund to Funds Distributor,
together with any other payments made by the Fund pursuant to the Prior
Plan, did not exceed .0208% of its average daily net assets attributable
to the Retail Class for the prior month (.25% on an annualized basis) and
.0125% of its average daily net assets attributable to the Institutional
Class for the prior month (.15% on an annualized basis).
Current Plan. Distribution Plan--Investor shares. Under the Current
Plan, Investor shares of the Fund may spend annually up to 0.25% of the
average of its net asset values for costs and expenses incurred in
connection with the distribution of, and shareholder servicing with
respect to, Investor shares. For the year ended June 30, 1995, the Fund
paid $222,784 in distribution fees for the Investor shares.
The Current Plan provides that a report of the amounts expended under
the Current Plan, and the purposes for which such expenditures were
incurred, must be made to the Trust's Trustees for their review at least
quarterly. In addition, the Current Plan provides that it may not be
amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Current Plan without approval of the Fund's
shareholders, and that other material amendments of the Current Plan must
be approved by the vote of a majority of the Trustees and of the Trustees
who are not "interested persons" of the Trust (as defined in the 1940 Act)
and who do not have any direct or indirect financial interest in the
operation of the Current Plan, cast in person at a meeting called for the
purpose of considering such amendments. The Current Plan is subject to
annual approval by the entire Board of Trustees and by the Trustees who
are neither interested persons nor have any direct or indirect financial
interest in the operation of the Current Plan, by vote cast in person at a
meeting called for the purpose of voting on the Current Plan. The Current
Plan is terminable, as to the Fund's Investor shares, at any time by vote
of a majority of the Trustees who are not interested persons and have no
direct or indirect financial interest in the operation of the Current Plan
or by vote of the holders of a majority of the outstanding Investor shares
of the Fund.
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 investment objectives of each Fund and
the policies it employs to achieve those objectives. 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, with respect to the Fund, debt obligations issued by the
Commonwealth of Massachusetts, its political subdivisions, municipalities
and public authorities and 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 income tax purposes and 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.
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 portfolio of the Fund 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.
A separate account of the Fund consisting of cash or liquid debt
securities equal to the amount of the when-issued commitments will be
established with the Fund's custodian. 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 do 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 maturities 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 a
Fund's investing more than 10% of the value of its total assets in such
securities.
Special Factors Affecting the Fund
The Commonwealth of Massachusetts and certain of its cities and towns
and public bodies have at times experienced financial difficulties that
have adversely affected their credit standing. The prolonged effects of
such financial difficulties could adversely affect the market value of the
Massachusetts Municipal Obligations held by the Fund. 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
certain of these securities. 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 difficulties
and fiscal problems in the late 1980s and early 1990s caused several
rating agencies to lower their ratings of Massachusetts Municipal
Obligations. 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.
Massachusetts' expenditures for State programs and services in each of the
fiscal years 1987 through 1991 exceeded each year's current revenues. The
budgeted operating funds of Massachusetts ended fiscal years 1992, 1993
and 1994, however, with an excess of revenues and other sources over
expenditures and other uses of $312.3 million, $13.1 million and $26.8
million, respectfully. Fiscal 1994 ended with positive budgeted operating
fund balances of $589.3 million. 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 1940
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 Trust 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 1940 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 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 1940 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 1940 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 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 Funds have 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 Funds 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, 1994 and June 30, 1995, 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.
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. 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
$1,000 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 shares
of the Fund 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. 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 shares of the Fund
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.
SHAREHOLDER SERVICES
Fund Exchanges. Shares of any Class of the Fund may be exchanged for
shares of the respective Class of certain other funds advised or
administered by Dreyfus. Shares of the same Class of such 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.
E. Shares of funds subject to a contingent deferred sales charge
("CDSC") that are exchanged for shares of another fund will be
subject to the higher applicable CDSC of the two funds, and for
purposes of calculating CDSC rates and conversion periods, if
any, will be deemed to have been held since the date the shares
being exchanged were initially purchased.
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, the investor's Service 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 Applica-
tion, 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 Service 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.
Dreyfus Auto-Exchange Privilege. The Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund,
shares of the same Class of another fund in the Dreyfus Family of Funds.
This Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as described above
under "Fund Exchanges." Enrollment in or modification or cancellation of
this Privilege is effective three business days following notification by
the investor. An investor will be notified if the investor's account
falls below the amount designated to be exchanged under this Privilege.
In this case, an investor's account will fall to zero unless additional
investments are made in excess of the designated amount prior to the next
Dreyfus Auto-Exchange transaction.
Fund exchanges and Dreyfus Auto-Exchange Privilege are 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 or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Automatic Withdrawal. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. Automatic Withdrawal may be terminated at any
time by the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest on the payment date their dividends or dividends and capital gain
distributions, if any, from the Fund in shares of the same Class of
certain other funds in the Dreyfus Family of Funds of which the investor
is a shareholder. Shares of the same Class of other funds purchased
pursuant to this Privilege will be purchased on the basis of relative net
asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds that
are offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge
a sales load may be invested in shares of other funds sold with
a sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales
load may be invested in 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 charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
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 their net asset values. 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 ("NAV") at a constant per share price of $1.00.
The portfolio instruments of the Fund 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 Money 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 each
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 issuing available market quotations.
PERFORMANCE DATA
From time to time, the Fund may quote its yields in advertisements,
shareholder reports or other communications to shareholders. Price/yield
information is generally available by calling the Trust toll free at 1-
800-645-6561.
The Fund may compare the 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. Furthermore, the Fund
may quote its Class R or Investor shares' yields in advertisements or in
shareholder reports.
Yields
The yield for the Fund is computed by: (a) determining the net change
in the value of a hypothetical pre-existing account in the 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
annualized current yields, compounded effective yields, and the equivalent
taxable yields of the Fund were as follows:
<TABLE>
<CAPTION>
7-Day Yield for Period Ended
June 30, 1995
Annualized Compounded Equivalent
Current Yield Effective Yield Taxable Yield*
------------- --------------- --------------
<S> <C> <C> <C>
Investor shares 3.42% 3.48% 6.07%
Class R shares 3.67% 3.74% 6.52%
</TABLE>
* Example assumes a Federal marginal tax rate of 36%, for the Fund and
a marginal tax rate of 12% (combined effective rate of 43.68%).
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
TAXES
The Fund has satisfied, and intends to continue to satisfy, the
requirements for qualifying as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (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 a 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 Commonwealth of Massachusetts
personal income 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 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
state and local personal income taxes on exempt-interest income derived
from obligations of issuers located in the state in which they reside, 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, non-diversified 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 to "The
Dreyfus/Laurel Tax-Free Municipal Funds" effective October 17, 1994.
The Trustees have authority to create an unlimited number of shares
of beneficial interest, without par value, in separate series for each
class of shares. 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 the Fund or Class
shall vote together as a single class, except as to any matter for which a
separate vote of the Fund or Class is required by the 1940 Act and except
as to any matter which affects the interest of a particular Class, in
which case only the holders of shares of the one or more affected 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 size 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 1940 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 January 31, 1996, the following companies/individuals owned
beneficially 5% or more of the outstanding shares of the Massachusetts
Tax-Free Money Fund: Galt & Co. Attn: Sweep Funds, NY/RO/3090 One East
Avenue, Rochester, NY 14638-0001 owned 29% of the outstanding Investor
shares and Boston and Company, Attn. John Kacinko, 3 Mellon Bank Center,
Pittsburgh, PA 15259 owned 68% of the outstanding Class R shares.
CUSTODIAN AND TRANSFER AGENT
Mellon Bank, which is located at Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, serves as the Fund's custodian. Dreyfus Transfer,
Inc., a wholly-owned subsidiary of Dreyfus, is located at One American
Express Plaza, Providence, Rhode Island 02903, and serves as 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. The Transfer Agent has no
part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
COUNSEL AND INDEPENDENT AUDITORS
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Second
Floor, Washington, D.C., 20039, 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 15219, was appointed by the Board of Trustees to serve as the
Fund's independent auditors for the year ending June 30, 1996, 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 Ratings Group ("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 Funds, in accordance with industry practice, recognize 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.
PORTFOLIO OF INVESTMENTS
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND JUNE 30, 1995
<TABLE>
<CAPTION>
FACE VALUE
VALUE (NOTE 1)
<S> <C> <C>
MUNICIPAL BONDS AND NOTES -- 101.4%
MASSACHUSETTS -- 101.4%
$1,000,000 Attleboro, Massachusetts, Bond Anticipation
Notes,
4.500% due 07/07/95 $ 1,000,049
400,000 Auburn, Massachusetts, State Aid Anticipation
Notes,
3.850% due 08/25/95 400,000
1,700,000 Boston, Massachusetts, Water & Sewer Commission
Revenue,
4.050% due 11/01/24+ 1,700,000
3,000,000 Bristol, Massachusetts, Revenue Anticipation
Notes,
4.160% due 06/28/96 3,000,000
100,000 East Brookfield, Massachusetts, Revenue Antici-
pation Notes,
4.010% due 06/19/96 100,000
1,215,000 Edgartown, Massachusetts, Bond Anticipation
Notes,
3.210% due 08/18/95 1,215,000
260,000 Everett, Massachusetts, General Obligation
Bonds,
6.000% due 10/15/95 261,296
256,000 Farmington, Massachusetts, Bond Anticipation
Notes,
4.120% due 06/21/96 256,000
310,000 Franklin, Massachusetts, State Aid Anticipation
Notes,
3.960% due 08/31/95 310,000
1,000,000 Gloucester, Massachusetts, Bond Anticipation
Notes,
4.460% due 10/06/95 1,000,000
2,527,000 Gloucester, Massachusetts, State Aid Anticipa-
tion Notes,
4.460% due 10/06/95 2,527,000
200,000 Holyoke, Massachusetts, Pollution Control Reve-
nue,
3.950% due 11/01/13+ 200,000
Massachusetts Bay Transportation Authority:
2,500,000 3.800% due 07/12/95 2,500,000
Series A:
400,000 5.000% due 03/01/96 402,573
2,000,000 5.500% due 03/01/96 2,010,898
3,000,000 4.400% due 03/01/14++ 3,000,000
Massachusetts Health & Educational Facilities:
4,000,000 3.500% due 08/17/95 4,000,000
2,000,000 4.150% due 01/01/35+ 2,000,000
1,600,000 Project A,
4.000% due 01/01/01+ 1,600,000
1,000,000 Series A,
3.950% due 11/01/26+ 1,000,000
3,500,000 Series F,
3.950% due 07/01/24+ 3,500,000
1,150,000 (Boston University),
8.875% due 07/01/15++ 1,167,295
7,000,000 Series H,
3.550% due 12/01/15++ 7,000,000
1,000,000 (Capital Asset Program), Series B,
3.850% due 07/01/22+ 1,000,000
2,000,000 Series D,
3.900% due 08/01/14+ 2,000,000
1,070,000 (Harvard University),
3.550% due 08/01/17+ 1,070,000
300,000 Series I, 3.550% due 02/01/16+ 300,000
1,340,000 Series L, 3.000% due 01/01/24+ 1,340,000
300,000 (Massachusetts Institute of Technology),
Series G,
3.400% due 07/01/21+ 300,000
4,700,000 (Tufts University), Series E,
Commercial Paper,
3.100% due 08/01/03+ 4,700,000
Massachusetts Industrial Finance Agency:
750,000 4.100% due 03/15/04+ 750,000
2,500,000 5.250% due 09/01/11++ 2,500,000
(Berkshire Project), Refunding Revenue:
1,200,000 4.000% due 09/01/20+ 1,200,000
900,000 3.900% due 04/01/23+ 900,000
2,550,000 (Cabot Newburyport Ltd.),
4.000% due 01/01/99+ 2,550,000
1,715,000 (Chestnut Housing Apartments),
3.850% due 08/01/26+ 1,715,000
(Family YMCA Project):
2,030,000 4.000% due 06/01/09+ 2,030,000
1,700,000 4.000% due 06/01/19+ 1,700,000
900,000 (Holyoke Water Power),
3.950% due 05/01/22+ 900,000
3,985,000 (First Healthcare Corporation), Refunding Rev-
enue,
4.150% due 04/01/13+ 3,985,000
500,000 (General Signal Corporation), General
Obligation Bond,
3.900% due 07/01/04+ 500,000
1,100,000 (Manhasset Bay Cambridge),
3.7000% due 10/01/10+ 1,100,000
4,450,000 (New England Power Company), Pollution
Control Revenue,
4.200% due 10/01/22+ 4,450,000
2,200,000 (Odgen Haverhill Project),
3.900% due 12/01/06 + 2,200,000
(Quamco):
2,895,000 Series A,
3.600% due 09/01/01+ 2,895,000
1,300,000 Series B,
3.600% due 09/01/01+ 1,300,000
220,000 Refunding Revenue, Series A,
3.850% due 07/01/96+ 220,000
735,000 Series B,
3.850% due 07/01/08+ 735,000
5,000,000 Massachusetts Municipal Wholesale Electric
Company, Power Supply,
3.850% due 07/01/19+ 5,000,000
Massachusetts State, Updates:
800,000 Series B,
4.200% due 12/01/97+ 800,000
600,000 Series E,
4.200% due 12/01/97+ 600,000
5,000,000 Massachusetts Water Resource Authority,
3.050% due 08/07/95 5,000,000
1,109,500 Merrimack, Massachusetts, Bond
Anticipation Notes,
4.010% due 08/17/95 1,109,500
985,600 Mohawk Trail Regional School District, Bond An-
ticipation Notes,
4.510% due 05/17/96 985,600
1,135,000 North Andover, Massachusetts, Bond
Anticipation Notes,
5.500% due 01/11/96 1,136,429
222,000 North Brookfield, Massachusetts, Bond
Anticipation Notes,
4.970% due 09/01/95 222,000
125,000 North Middlesex, Massachusetts School
District, Bond Anticipation Notes,
4.150% due 06/13/96 125,000
Pepperell, Massachusetts, Bond
Anticipation Notes:
275,000 3.870% due 07/28/95 275,000
188,731 3.910% due 09/22/95 188,731
900,000 Spencer, Massachusetts, Revenue
Anticipation Notes,
4.300% due 11/03/95 900,000
200,000 Wayland, Massachusetts, State Aid
Anticipation Notes,
4.050% due 09/15/95 200,000
Worcester County, Massachusetts,
Bond Anticipation Notes:
2,000,000 4.010% due 08/31/95 2,000,000
1,600,000 4.950% due 01/25/96 1,600,000
TOTAL INVESTMENTS
(Cost $102,632,371*) 101.4% 102,632,371
OTHER ASSETS AND LIABILITIES (NET) (1.4) (1,401,331)
NET ASSETS 100.0% $101,231,040
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand bonds payable upon not more than seven calendar
days' notice. The interest rate shown reflects the rate currently in ef-
fect.
++ Put bonds and notes have demand features to mature within one year. The
interest rate shown reflects the rate currently in effect.
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF ASSETS AND LIABILITIES
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS JUNE 30, 1995
<TABLE>
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
CALIFORNIA MASSACHUSETTS NEW YORK
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
<S> <C> <C> <C>
ASSETS
Investments, at value
(Cost $22,367,447, $102,632,371 and
$29,815,343, respectively) (Note 1)
See accompanying schedules $22,367,447 $102,632,371 $ 29,815,343
Cash -- 13,488 177,364
Interest receivable 321,211 636,046 264,116
Receivable for Fund shares sold 1,042,363 1,559,769 89,796
TOTAL ASSETS 23,731,021 104,841,674 30,346,619
LIABILITIES
Payable for investment securities purchased 503,350 3,200,000 493,418
Dividends payable 9,772 94,261 20,038
Payable for Fund shares redeemed 216,722 212,589 22,682
Investment management fee payable (Note 2) 20,307 84,998 16,292
Due to custodian 9,353 -- --
Accrued Trustees' fees and expenses (Note 2) 758 3,381 758
Distribution fee payable (Note 3) 3,182 15,405 3,965
TOTAL LIABILITIES 763,444 3,610,634 557,153
NET ASSETS $22,967,577 $101,231,040 $ 29,789,466
NET ASSETS CONSIST OF:
ACCUMULATED NET REALIZED GAIN/
(LOSS) ON INVESTMENTS SOLD $ (233) $ (51,059) $ 339
PAID-IN CAPITAL 22,967,810 101,282,099 29,789,127
TOTAL NET ASSETS $22,967,577 $101,231,040 $ 29,789,466
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS JUNE 30, 1995
<TABLE>
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
CALIFORNIA MASSACHUSETTS NEW YORK
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
<S> <C> <C> <C>
NET ASSETS:
Investor Shares $ 15,537,878 $ 75,746,221 $ 21,739,314
Class R Shares $ 7,429,699 $ 25,484,819 $ 8,050,152
SHARES OUTSTANDING:
Investor Shares 15,537,767 75,797,831 21,739,067
Class R Shares 7,429,644 25,501,860 8,050,060
NET ASSET VALUE:
INVESTOR SHARES
Net asset value, offering and redemption price
per share of beneficial interest outstanding $ 1.00 $ 1.00 $ 1.00
CLASS R SHARES
Net asset value, offering and redemption price
per share of beneficial interest outstanding $ 1.00 $ 1.00 $ 1.00
</TABLE>
STATEMENTS OF OPERATIONS
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
CALIFORNIA MASSACHUSETTS NEW YORK
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 973,443 $ 4,113,322 $ 511,298
EXPENSES
Investment management fee (Note 2) 90,816 397,565 48,800
Distribution fee (Note 3) 38,346 222,784 20,798
Trustees' fees and expenses (Note 2) 2,069 9,343 1,308
Total expenses 131,231 629,692 70,906
NET INVESTMENT INCOME 842,212 3,483,630 440,392
NET REALIZED GAIN
ON INVESTMENTS (Note 1)
Net realized gain on investments sold during
the period 6 977 349
NET INCREASE IN NET ASSETS RESULTING FROM OPER-
ATIONS $ 842,218 $ 3,484,607 $ 440,741
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
CALIFORNIA MASSACHUSETTS NEW YORK
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
<S> <C> <C> <C>
Net investment income $ 842,212 $ 3,483,630 $ 440,392
Net realized gain on investments sold during
the year 6 977 349
Net increase in net assets resulting from oper-
ations 842,218 3,484,607 440,741
Distributions to shareholders from net invest-
ment income:
Investor shares (468,028) (2,605,776) (248,024)
Class R shares (374,184) (877,854) (192,368)
Net increase/(decrease) in net assets from Fund
share transactions (Note 4):
Investor shares (1,631,735) (10,764,289) 13,727,989
Class R shares (2,316,810) 5,659,254 2,591,101
Net increase/(decrease) in net assets (3,948,539) (5,104,058) 16,319,439
NET ASSETS:
Beginning of year 26,916,116 106,335,098 13,470,027
End of year $ 22,967,577 $ 101,231,040 $ 29,789,466
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
THE DREYFUS/LAUREL TAX-FREE MUNICIPAL FUNDS
FOR THE YEAR OR PERIOD ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
DREYFUS/ DREYFUS/ DREYFUS/
LAUREL LAUREL LAUREL
CALIFORNIA MASSACHUSETTS NEW YORK
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND* MONEY FUND MONEY FUND*
<S> <C> <C> <C>
Net investment income $ 346,378 $ 2,167,350 $ 204,215
Net realized loss on investments sold during
the year -- (1,311) --
Net increase in net assets result from opera-
tions 346,378 2,166,039 204,215
Distributions to shareholders from net invest-
ment income:
Investor Shares (198,324) (1,317,812) (124,785)
Trust Shares (118,164) (371,662) (78,946)
Institutional Shares (29,890) (477,876) (484)
Net increase/(decrease) in net assets from Fund
share transactions (Note 4):
Investor Shares (3,450,010) (21,462,072) (1,409,966)
Trust Shares 3,338,359 186,693 (2,241,040)
Net decrease in net assets (111,651) (21,276,690) (3,651,006)
NET ASSETS:
Beginning of year 27,027,767 127,611,788 17,121,033
End of year (including undistributed net in-
vestment income of $399 for the Dreyfus/Laurel
California Tax-Free Money Fund) $ 26,916,116 $ 106,335,098 $ 13,470,027
<FN>
* The Fund changed its fiscal year end to June 30. Prior to this, the
Fund's fiscal year end was November 30.
</TABLE>
See Notes to Financial Statements.
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FINANCIAL HIGHLIGHTS
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT EACH YEAR*
Reference is made to Page 5 of the Fund's Prospectus dated February 28, 1996.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
FOR A CLASS R SHARE OUTSTANDING THROUGHOUT EACH YEAR*
Reference is made to Page 6 of the Fund's Prospectus dated February 28, 1996.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
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 (collectively, "The Dreyfus/Laurel Funds") are all
registered open-end investment companies that are part of The Dreyfus Fam-
ily of Funds. The Trust is an investment company which consists of seven
funds: the Dreyfus/Laurel California Tax-Free Money Fund, the Dreyfus/Lau-
rel Massachusetts Tax-Free Money Fund, the Dreyfus/Laurel New York Tax-
Free Money Fund (collectively, the "Money Funds") (individually, the
"Fund"), the Premier Limited Term California Municipal Fund, the Premier
Limited Term Massachusetts Municipal Fund, the Premier Limited Term New
York Municipal Fund and the Premier Limited Term Municipal Fund. This re-
port contains financial statements for the Money Funds. The Trust is a
Massachusetts business trust and is registered with the Securities and Ex-
change Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Money
Funds currently offer two classes of shares: Investor shares and Class R
shares (effective October 17, 1994, the Trust shares were redesignated
Class R shares). Investor shares are sold primarily to retail investors
and bear a distribution fee. Class R shares are sold primarily to bank
trust departments and other financial service providers (including Mellon
Bank, N.A. ("Mellon Bank") and its affiliates) acting on behalf of custom-
ers having a qualified trust or investment account or relationship at such
institution, and bear no distribution fee. Each class of shares has iden-
tical 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 significant accounting policies consistently followed by each
Fund in the preparation of its financial statements in accordance with
generally accepted accounting principles.
(A) PORTFOLIO VALUATION:
Portfolio securities are valued on the basis of amortized cost in accor-
dance with Rule 2a-7 of the 1940 Act. Amortized cost valuation involves
valuing an instrument at its cost initially and thereafter assuming a con-
stant amortization to maturity of any discount or premium, regardless of
the effect of fluctuating interest rates on the market value of the in-
strument.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains
and losses on investments sold are recorded on the identified cost basis.
Interest income is recorded on the accrual basis. Investment income and
realized and unrealized gains and losses are allocated based upon the rel-
ative average daily net assets of each class of shares.
(C) DISTRIBUTIONS TO SHAREHOLDERS:
Each Fund declares dividends from net investment income on a class level
on each day the Fund is open for business and pays such dividends no later
than the first business day of the next month. Each Fund may distribute
net realized capital gains on a Fund level, if any, annually or more fre-
quently to maintain its net asset value of $1.00 per share. Each Fund may
be subject to a 4.00% nondeductible excise tax for certain undistributed
amounts of net investment income and capital gain. Each Fund expects to
make additional distributions to avoid the application of the excise tax.
Income distributions 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 se-
curities held by the Fund, timing differences and the differing character-
ization of distributions made by the Fund as a whole. Permanent differ-
ences on the Massachusetts Tax-Free Money Fund incurred during the year
ended June 30, 1995, which resulted from an expiration of capital loss
carryforward have been reclassified to paid-in capital at year end.
(D) EXPENSE ALLOCATION
Expenses of each Fund not directly attributable to the operations of any
class of shares are prorated between 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.
(E) FEDERAL INCOME TAXES:
It is policy of each Fund to qualify as a regulated investment company, if
such qualification is in the best interests of its shareholders, by com-
plying with the requirements of the Internal Revenue Code applicable to
regulated investment companies and by distributing all of its earnings to
shareholders. Therefore, no Federal income tax provision is required.
2. INVESTMENT MANAGEMENT FEE, TRUSTEES' FEE AND OTHER PARTY TRANSACTIONS
Effective as of October 17, 1994, the Trust's investment management agree-
ment with Mellon Bank was transferred to The Dreyfus Corporation (the
"Manager"), a wholly-owned subsidiary of Mellon Bank. The Manager pro-
vides, or arranges for one or more third parties to provide, investment
advisory, administrative, custody, fund accounting and transfer agency
services to the Trust. The Manager also directs the investments of each
Fund in accordance with its investment objective, policies and limita-
tions. For these services, each Fund is contractually obligated to pay the
Manager a fee, calculated daily and paid monthly, at the annual rate of
0.35% of the value of that Fund's average daily net assets. Out of its
fee, the Manager pays all of the expenses of each Fund except brokerage
fees, taxes, interest, Rule 12b-1 distribution fees and expenses, fees and
expenses of non-interested Trustees (including counsel fees) and extraor-
dinary expenses. In addition, the Manager is required to reduce its fee in
an amount equal to each Fund's allocable portion of fees and expenses of
the non- interested Trustees (including counsel).
Prior to October 17, 1994, Mellon Bank served as the Trust'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 each Fund's administrator and provided,
pursuant to an administration agreement, various administrative and corpo-
rate secretarial services to each Fund. Mellon Bank, as investment man-
ager, 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 for
serving as an officer or Director or Trustee of The Dreyfus/Laurel Funds.
In addition, no officer or employee of the Manager (or of any parent, sub-
sidiary or affiliate thereof) serves as an officer or 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 any parent, sub-
sidiary or affiliate thereof), or of the Manager $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
Each Fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act relating to its Investor shares. Under the Plan,
each Fund may pay annually up to 0.25% of the value of the average daily
net assets attributable to its Investor shares to compensate Premier and
Dreyfus Service Corporation, an affiliate of the Manager, for shareholder
servicing activities and Premier for activities and expenses primarily in-
tended to result in the sale of Investor shares. Class R shares bear no
distribution fee.
Under its terms, the Plan shall remain in effect from year to year, pro-
vided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of those Trustees who are not "interested persons"
of the Trust and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan.
4. 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 two classes of shares of the Money Funds.
The tables below summarize transactions in Fund shares for the years or
periods indicated. Because each of the Money Funds has sold shares, issued
shares as reinvestments of dividends and redeemed shares only at a con-
stant net asset value of $1.00 per share, the number of shares represented
by such sales, reinvestments and redemptions is the same as the amounts
shown below for such transactions.
DREYFUS/LAUREL CALIFORNIA TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*+#
<S> <C> <C>
INVESTOR SHARES:
Sold $ 32,912,720 $ 22,619,988
Issued as reinvestment of dividends and
distributions 462,650 225,575
Redeemed (35,007,105) (26,295,573)
Net decrease $ (1,631,735) $ (3,450,010)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995## JUNE 30, 1994*
<S> <C> <C>
CLASS R SHARES:
Sold $ 32,480,825 $10,968,762
Issued as reinvestment of dividends and
distributions 265,428 65,613
Redeemed (35,063,063) (7,696,016)
Net increase/(decrease) $ (2,316,810) $ 3,338,359
<FN>
* The Fund changed its fiscal year end to June 30. Prior to this, the
Fund's fiscal year end was November 30.
+ Amounts include $8,676,000 of subscriptions, $28,427 of reinvestments
and $8,004,712 of redemptions for the Institutional Class up to April
4, 1994.
# Effective April 4, 1994 the Retail and Institutional Classes of shares
were reclassified as a single class of shares known as Investor shares.
## On October 17, 1994, the Trust shares were redesignated Class R shares.
</TABLE>
DREYFUS/LAUREL MASSACHUSETTS TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994+#
<S> <C> <C>
INVESTOR SHARES:
Sold $ 130,450,064 $ 139,311,367
Issued as reinvestment of dividends and
distributions 1,980,170 1,217,369
Redeemed (143,194,523) (161,990,808)
Net decrease $ (10,764,289) $ (21,462,072)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1995## JUNE 30, 1994
<S> <C> <C>
CLASS R SHARES:
Sold $ 81,076,293 $ 66,966,216
Issued as reinvestment of dividends and
distributions 513,180 112,247
Redeemed (75,930,219) (66,891,770)
Net increase $ 5,659,254 $ 186,693
<FN>
+ Amounts include $50,504,187 of subscriptions, $63,928 of reinvestments
and $60,326,788 of redemptions for the Institutional Class up to April
4, 1994.
# Effective April 4, 1994 the Retail and Institutional Classes of shares
were reclassified as a single class of shares known as Investor shares.
## On October 17, 1994, the Trust Shares were redesignated Class R shares.
</TABLE>
DREYFUS/LAUREL NEW YORK TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994*+#
<S> <C> <C>
INVESTOR SHARES:
Sold $ 23,865,192 $ 4,170,313
Issued as reinvestment of dividends and
distributions 240,333 123,051
Redeemed (10,377,536) (5,703,330)
Net increase/(decrease) $ 13,727,989 $(1,409,966)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1995## JUNE 30, 1994*
<S> <C> <C>
CLASS R SHARES:
Sold $10,336,048 $ 3,604,985
Issued as reinvestment of dividends and
distributions 44,938 3,922
Redeemed (7,789,885) (5,849,947)
Net increase/(decrease) $ 2,591,101 $(2,241,040)
<FN>
* The Fund changed its fiscal year end to June 30. Prior to this, the
Fund's fiscal year end was November 30.
+ Amounts include $11,467 of subscriptions, $468 of reinvestments and
$9,120 of redemptions for the Institutional Class up to April 4, 1994.
# Effective April 4, 1994 the Retail and Institutional Classes of shares
were reclassified as a single class of shares known as Investor shares.
## On October 17, 1994, the Trust shares were redesignated Class R shares.
</TABLE>
5. CAPITAL LOSS CARRYFORWARD
As of June 30, 1995, the California Tax-Free Money Fund had available for
Federal tax purposes unused capital loss carryforwards of $233 expiring in
the year 2000, the Massachusetts Tax-Free Money Fund had unused capital
loss carryforwards of $51,059 expiring in the year 2002.
6. CONCENTRATION OF CREDIT
Each Fund invests primarily in debt obligations issued by the Fund's re-
spective state (ie. California, Massachusetts, or New York) and its polit-
ical subdivisions, municipalities, agencies and public authorities who ob-
tain funds for various public purposes. Each Fund is more susceptible to
factors adversely affecting issuers of its respective state municipal se-
curities than is a municipal bond fund that is not concentrated in these
issuers to the same extent.
INDEPENDENT AUDITORS' REPORT
KPMG
The Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We have audited the accompanying statements of assets and liabilities, in-
cluding the portfolio of investments, of the California Tax-Free Money
Fund, Massachusetts Tax-Free Money Fund and New York Tax-Free Money Fund
of The Dreyfus/Laurel Tax-Free Municipal Funds (formerly the Laurel Tax-
Free Municipal Funds) as of June 30, 1995, and the related statement of
operations for the year then ended and statement of changes in net assets
and financial highlights for Investor and Class R shares for each of the
years in the two-year period then ended for the Massachusetts Tax-Free
Money Fund and for the year ended June 30, 1995 and for the period from
December 1, 1993 to June 30, 1994 for the California Tax-Free Money Fund
and New York Tax-Free Money Fund. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsi-
bility is to express an opinion on these financial statements and finan-
cial highlights based on our audits. The financial highlights presented
for each of the years or periods ended June 30, 1993 or prior for the Mas-
sachusetts Tax-Free Money Fund and for each of the years or periods ended
November 30, 1993 or prior for the California Tax-Free Money Fund and New
York Tax-Free Money Fund were audited by other auditors whose reports
thereon, dated August 11, 1993 and January 18, 1994, expressed an unquali-
fied opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and fi-
nancial highlights are free of material misstatement. An audit also in-
cludes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirma-
tion of securities owned as of June 30, 1995, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principals used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the California Tax-Free Money Fund, Massachusetts Tax-Free Money Fund
and New York Tax-Free Money Fund of The Dreyfus/Laurel Tax-Free Municipal
Funds as of June 30, 1995, the results of their operations for the year
then ended and the change in their net assets and financial highlights for
each of the years or periods in the two-year period ended June 30, 1995 in
conformity with generally accepted accounting Principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 18, 1995
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 Auditors
- 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
January 31, 1996:
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class Investor Class Class R
- -------------- -------------- -------
<S> <C> <C>
Dreyfus/Laurel Massachusetts 1033 69
Tax-Free 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
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 Director:
Vice Chairman and The Dreyfus Trust Company++
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
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
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
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++
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
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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Capital Value Fund, Inc.
14) Dreyfus Cash Management
15) Dreyfus Cash Management Plus, Inc.
16) Dreyfus Connecticut Intermediate Municipal Bond Fund
17) Dreyfus Connecticut Municipal Money Market Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) The Dreyfus Fund Incorporated
22) Dreyfus Global Bond Fund, Inc.
23) Dreyfus Global Growth Fund
24) Dreyfus GNMA Fund, Inc.
25) Dreyfus Government Cash Management
26) Dreyfus Growth and Income Fund, Inc.
27) Dreyfus Growth and Value Funds, 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) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) The Dreyfus/Laurel Investment Series
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 Income
70) Dreyfus Strategic Investing
71) Dreyfus Tax Exempt Cash Management
72) The Dreyfus Third Century Fund, Inc.
73) Dreyfus Treasury Cash Management
74) Dreyfus Treasury Prime Cash Management
75) Dreyfus Variable Investment Fund
76) Dreyfus-Wilshire Target Funds, Inc.
77) Dreyfus Worldwide Dollar Money Market Fund, Inc.
78) General California Municipal Bond Fund, Inc.
79) General California Municipal Money Market Fund
80) General Government Securities Money Market Fund, Inc.
81) General Money Market Fund, Inc.
82) General Municipal Bond Fund, Inc.
83) General Municipal Money Market Fund, Inc.
84) General New York Municipal Bond Fund, Inc.
85) General New York Municipal Money Market Fund
86) Pacifica Funds Trust -
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
87) Peoples Index Fund, Inc.
88) Peoples S&P MidCap Index Fund, Inc.
89) Premier Insured Municipal Bond Fund
90) Premier California Municipal Bond Fund
91) Premier Capital Growth Fund, Inc.
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
98) Premier Strategic Growth 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
Margaret Pardo++ Legal Assistant 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.
One American Express Plaza
Providence, Rhode Island 02903
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 28th day of February, 1996.
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 02/28/96
Marie E. Connolly
/s/Francis P. Brennan* Trustee, 02/28/96
Francis P. Brennan Chairman of the Board
/s/Ruth Marie Adams* Trustee 02/28/96
Ruth Marie Adams
/s/Joseph S. DiMartino* Trustee 02/28/96
Joseph S. DiMartino
/s/James M. Fitzgibbons* Trustee 02/28/96
James M. Fitzgibbons
/s/Kenneth A. Himmel* Trustee 02/28/96
Kenneth A. Himmel
/s/Stephen J. Lockwood* Trustee 02/28/96
Stephen J. Lockwood
/s/Roslyn M. Watson* Trustee 02/28/96
Roslyn M. Watson
/s/J. Tomlinson Fort* Trustee 02/28/96
J. Tomlinson Fort
/s/Arthur L. Goeschel* Trustee 02/28/96
Arthur L. Goeschel
/s/Arch S. Jeffery* Trustee 02/28/96
Arch S. Jeffery
/s/Robert D. McBride* Trustee 02/28/96
Robert D. McBride
/s/John Sciullo* Trustee 02/28/96
John Sciullo
*By: /s/Eric B. Fischman
Attorney-in-Fact
Independent Auditors' Consent
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/Laurel 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 dated
February 28, 1996.
New York, New York
February 28, 1996
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