<PAGE>
Dreyfus
BASIC Massachusetts
Municipal
Money Market Fund
Annual Report
June 30, 1996
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus BASIC
Massachusetts Municipal Money Market Fund. For its annual reporting period
ended June 30, 1996, your Fund produced an annualized yield of 3.25% per
share. During this 12-month period, the Fund paid income dividends of
approximately $.033 per share. Reinvesting these dividends and calculating
the effect of compounding resulted in an annualized effective yield of
3.30%.* These dividends were exempt from Federal and Commonwealth of Massachus
etts personal income taxes.
Effective May 8, 1996, the Fund's assets attributable to its Investor
class was transferred to the Dreyfus Massachusetts Municipal Money Market
Fund and the Investor class was terminated. In addition, the "Class R"
designation of the Fund's remaining class of shares was eliminated, the
Fund's name was changed from Dreyfus/Laurel Massachusetts Tax-Free Money Fund
to Dreyfus BASIC Massachusetts Municipal Money Market Fund, the Fund entered
into a new Investment Management Agreement with the Dreyfus Corporation, and
certain other changes were made to enable the Fund to join the Dreyfus BASIC
family of money market funds.
THE ECONOMY
So far this year, the economic story has been pleasant reading: solid
growth, strong gains in employment and low inflation. Yet along with this
good news has come the fear that the Federal Reserve Board (the "Fed") will
tighten monetary policy lest the continued economic expansion bring a
resurgence in inflation. The growth in the economy has resulted in strong
gains in employment. Over recent months, these reports of new jobs have been
accompanied by rises in long-term interest rates in the expectation that the
Fed would soon act to cool down an economy at risk of overheating. To date,
the Fed has refrained from any overt tightening moves. (The Fed cut rates
three times between last July and January of this year, and has since held
the Federal Funds rate steady at 5.25%, even as long-term rates in the bond
market have risen more than a full percentage point.)
The interplay between job growth and economic growth has become the
dominant force affecting how investors think about the outlook for inflation
and the possibility that the Fed will raise short-term interest rates. Along
with handsome increases in new jobs have come solid gains in retail sales,
although many economists feel that heavy consumer debt burdens will act as a
constraint against any acceleration in growth. Automobile sales remain
strong, the third year in a row of steady growth for auto manufacturers. Yet,
the factors focused on by investors and the Fed may be different. Near the
end of the reporting period, the Fed's Beige Book, a survey of business
conditions in the 12 districts of the Federal Reserve, reported that the
economy was growing at a moderate pace and that despite the tightening labor
markets "indications of rising wages remain scattered." Recent statements by
officials of the Federal Reserve Board have suggested that "sustained
moderate growth" is the most likely path for the economy and that labor
markets, while tightening, do not yet indicate significant inflationary
pressures.
There seem to be few signs of inflation. Commodity and producer
prices remain subdued. Anecdotal reports from companies continue to attest to
their lack of ability to raise prices. Another measure of potential
inflation, delivery lead times -- one of Chairman Greenspan's favorite
indicators -- has not changed much for months. Furthermore, some of the
inflationary consequences of running large budget deficits have eased due to
the growth in the economy. Higher than expected tax payments -- a result of
economic growth -- have reduced the Federal budget deficit to the $130 billion
level, the lowest since the early 1980s.
<PAGE>
Nevertheless, there are limits to noninflationary economic expansion.
As always, we remain watchful for signs of price pressures that could lead to
a resurgence of inflation. For now, there are few indications of that. In
fact, there also appears to be a growing consensus that the rate of economic
growth could taper off in the second half of the year due to the effect of
higher long-term interest rates on certain key sectors of the economy like
housing and consumer spending.
MARKET ENVIRONMENT/PORTFOLIO ACTIVITY
Interest rates climbed throughout the first half of 1996 as stronger
than expected economic activity led investors to believe that the Federal
Reserve would tighten monetary policy to dampen potential inflation. The
yield on one-year tax-exempt securities rose approximately 50 basis points
over the first half of 1996. Demand for tax-exempt money market instruments
was strong throughout the reporting period, particularly in January and June
when the tax-exempt money market experienced positive cash flow from
seasonally heavy coupon payments and redemptions.
The Fund's average portfolio maturity was shortened at the beginning
of 1996 (44 days on January 2, 1996) to cushion the Fund against the negative
effect of rising interest rates. Beginning in May, the Fund's average
portfolio maturity was carefully extended to take advantage of a seasonal
lack of supply of tax-exempt money market investments as record coupon and
maturity monies flowed into the marketplace. By the end of the reporting
period, the Fund's average portfolio maturity was 61 days.
The Massachusetts economy maintained moderate growth throughout the
reporting period. The unemployment rate fell to 4.8% in March of this year,
its lowest level since December 1989. Job growth has been highest in the
services and construction industries, while continuing to decline in the
manufacturing sector. The Commonwealth under Governor William Weld continues
to operate under a balanced budget, thus improving its financial profile --
long-term general obligation bonds are rated A+ by Standard and Poors and A1
by Moody's Investors Service. Local governments also are benefiting from the
improved State economy and stronger overall financial condition through
increased State aid. This offsets some of the revenue raising restrictions
imposed on local governments by Proposition 2-1/2. Overall, financial trends
remain positive at both the State and local government levels.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
Angela Deni
Portfolio Manager
July 15, 1996
New York, N.Y.
* Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Statement of Investments June 30, 1996
<TABLE>
<CAPTION>
Principal
Tax Exempt Investments--100.0% Amount Value
- ------------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Town of Attleboro, BAN 3.91%, 7/3/97..................................... $ 1,000,000 $ 1,000,000
Boston Water and Sewer Commission, Revenue, VRDN
3.15%, Series A (LOC; State Street Bank) (a,b)....................... 2,780,000 2,780,000
Town of Dartmouth, BAN 3.47%, 9/30/96.................................... 975,000 975,000
Edgartown:
BAN 3.69%, 8/6/96.................................................... 1,517,500 1,517,500
SAAN 3.69%, 8/6/96................................................... 124,129 124,129
Town of Framingham:
Notes 3.86%, 3/28/97................................................. 307,723 307,723
SAAN 3.68%, 8/30/96.................................................. 315,628 315,628
Town of Gloucester, SAAN:
3.68%, 7/15/96....................................................... 533,000 533,000
4.24%, 7/15/96....................................................... 1,200,000 1,200,047
Holyoke, PCR, VRDN (Holyoke Water Power Project)
3.10% (LOC; Union Bank of Switzerland) (a,b)......................... 660,000 660,000
Commonwealth of Massachusetts:
Notes 4.25%, Series A, 6/10/97....................................... 2,000,000 2,008,165
VRDN:
3.60%, Series B (LOC; National Westmister Bank) (a,b)................ 1,305,000 1,305,000
3.60%, Series E (LOC; ABN-Amro Bank) (a,b)........................... 720,000 720,000
Massachusetts Bay Transportation Authority:
CP:
3.50%, Series C, 7/30/96 (LOC; West Deutsche Landesbank) (b)......... 1,300,000 1,300,000
Bridge Notes
3.60%, Series C, 8/13/96 (LOC; West Deutsche Landesbank) (b)........ 1,100,000 1,100,000
Notes 3.75%, Series A, 2/28/97
(Guaranteed by; Commonwealth of Massachusetts)....................... 1,500,000 1,500,000
Massachusetts Health and Education Facilities Authority, Revenue:
CP:
(Boston University) 3.65%, Series H, 8/22/96 (LOC; Landesbank Hessen)(b) 2,000,000 2,000,000
(Fallon Health Care Systems) 3.60%, Series I, 7/25/96 (LOC; Sanwa Bank) (b) 1,000,000 1,000,000
(Harvard University)
3.45%, Series L, 9/18/96 (Guaranteed by; Harvard University)......... 1,840,000 1,840,000
VRDN:
(Capital Asset Program)
3.10%, Series A (LOC; First National Bank of Chicago) (a,b).......... 900,000 900,000
(Children's Hospital) 3.25%, Series F (a)............................... 615,000 615,000
(Falmouth Assistance For Living) 3.25%, Series A
(LOC; Bank of Boston) (a,b)........................................... 1,000,000 1,000,000
(Harvard University) 3.05%, Series I
(Guaranteed by; Harvard University) (a)............................... 2,350,000 2,350,000
(Massachusetts Institute of Technology)
3.05%, Series G (GO of; Massachusetts Instute of Technology) (a)..... 865,000 865,000
(Wellesley College) 3.10%, Series B (Guaranteed by; Wellesley College) (a) 415,000 415,000
(Williams College) 3% (Guaranteed by; Williams College) (a)............. 1,095,000 1,095,000
Massachusetts Industrial Finance Agency:
Industrial Revenue, VRDN:
(General Signal Corp.) 3.15% (LOC; Wachovia Bank and Trust Co.) (a,b) 500,000 500,000
Refunding:
3.15%, Series A (LOC; Fleet Bank) (a,b).............................. 185,000 185,000
(Cabot Newburyport Limited) 3.40% (LOC; Bank of Boston) (a,b)........ 1,250,000 1,250,000
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Statement of Investments (continued) June 30, 1996
Principal
Tax Exempt Investments (continued) Amount Value
- ----------------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Massachusetts Industrial Finance Agency (continued):
Industrial Revenue, VRDN (continued):
Refunding (continued):
(First Healthcare Corp.)
3.40%, Series B (LOC; Wachovia Bank and Trust Co.) (a,b)........... $ 2,190,000 $ 2,190,000
(Harvard Commision Health Plan) 3.80%, Series B (a).................. 700,000 700,000
(Quamco Inc.):
3.05%, Series A (LOC; Banca Commerciale Italia) (a,b).............. 820,000 820,000
3.05%, Series B (LOC; Banca Commerciale Italia) (a,b).............. 1,135,000 1,135,000
Mortgage Revenue, Refunding, VRDN (Chestnut House Apartments)
3.15% (LOC; Sumitomo Bank) (a,b)....................................... 590,000 590,000
PCR, Refunding:
CP (New England Power Co. Project):
3.70%, Series B, 8/8/96 (Guaranteed by; New England Power Co.)....... 1,000,000 1,000,000
3.55%, Series B, 8/13/96 (Guaranteed by; New England Power Co.)...... 1,000,000 1,000,000
VRDN (Holyoke Water Power Co.)
3.10%, Series A (LOC; Canadian Imperial Bank of Commerce) (a,b)........ 660,000 660,000
Revenue, VRDN:
(Berkshire Project) 3.15%, Series A (LOC; National Westminster Bank) (a,b) 1,600,000 1,600,000
(Goodard House) 3.85% (LOC; Fleet Bank) (a,b).......................... 860,000 860,000
(Groton School Project) 3.15% (LOC; State Street Bank) (a,b)........... 1,500,000 1,500,000
RRR, Refunding, VRDN (Ogden Haverhill Project)
3.35%, Series A (LOC; Union Bank of Switzerland) (a,b)................. 580,000 580,000
Massachusetts Municipal Wholesale Electric Company,
Power Supply Systems Revenue, VRDN
3.05%, Series C (LOC; Canadian Imperial Bank of Commerce) (a,b).......... 1,735,000 1,735,000
Massachusetts Port Authority, Revenue, CP
3.35%, Series B, 9/5/96 (LOC; Canadian Imperial Bank of Commerce) (b).... 2,000,000 2,000,000
Massachusetts Water Resource Authority:
CP:
3.50%, 8/13/96 (LOC; Morgan Guaranty Trust Co.) (b).................... 1,000,000 1,000,000
3.45%, 8/20/96 (LOC; Morgan Guaranty Trust Co.) (b).................... 1,000,000 1,000,000
Revenue 6.90%, Series A, 4/1/97 (Escrowed In; U.S. Government Securities) 725,000 742,272
Town of Milbury:
BAN 3.65%, 11/15/96...................................................... 190,400 190,400
SAAN:
3.52%, 8/15/96......................................................... 200,000 200,000
3.52%, 8/15/96......................................................... 180,095 180,095
Mohawk Trail Regional School District, Notes 3.53%, 2/21/97.................. 105,000 105,000
Town of Middleboro, BAN 3.49%, 7/26/96....................................... 126,571 126,571
Middlesex County, RAN 3.69%, 12/13/96........................................ 1,500,000 1,500,023
Town of North Andover, Revenue 6.50%, 5/15/97 (Insured; MBIA)................ 200,000 204,589
Town of West Boylston, BAN 3.71%, 3/14/97.................................... 130,000 130,000
Town of Westminster, SAAN 3.61%, 9/16/96..................................... 293,214 293,214
------------
TOTAL INVESTMENTS (cost $53,403,356)......................................... $53,403,356
------------
------------
</TABLE>
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Summary of Abbreviations
<TABLE>
<S> <C> <C> <C>
BAN Bond Anticipation Notes PCR Pollution Control Revenue
CP Commercial Paper RAN Revenue Anticipation Notes
GO General Obligation RRR Resources Recovery Revenue
LOC Letter of Credit SAAN State Aid Anticipation Notes
MBIA Municipal Bond Investors Assurance TAN Tax Anticipation Notes
Insurance Corporation VRDN Variable Rate Demand Notes
</TABLE>
Summary of Combined Ratings (Unaudited)
<TABLE>
<CAPTION>
Moody's or Standard & Poors's Percentage of Value
- -------- ------------------ --------------------
<S> <C> <C>
VMIG1/MIG1, P1 (c) SP1+/SP1, A1+/A1 (c) 80.6%
VMIG2/MIG2, P2 SP2, A2 1.2
Aaa/Aa (d) AAA/AA (d) 9.4
Not Rated (e) Not Rated (e) 8.8
-------
100.0%
-------
-------
</TABLE>
Notes to Statement of Investments:
- ----------------------------------------------------------------------------
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest rates.
(b) Secured by letters of credit. At June 30, 1996, 58.1% of the Fund's net
assets are backed by letters of credit issued by domestic banks, foreign
banks and brokerage firms.
(c) P1 and A1 are the highest ratings assigned tax-exempt commercial paper by
Moody's and Standard & Poor's, respectively.
(d) Notes which are not MIG or SP rated are represented by bond ratings of
the issuers.
(e) Securities which, while not rated by Moody's and Standard & Poor's,
respectively, have been determined by the Fund's Board of Trustees to be of
comparable quality to those rated securities in which the Fund may invest.
See notes to financial statements.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Statement of Assets and Liabilities June 30, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $53,403,356)--see Statement of Investments................ $53,403,356
Interest receivable............................................... 279,884
------------
53,683,240
LIABILITIES:
Due to The Dreyfus Corporation--Note 2(a)......................... $ 34,659
Cash overdraft due to Custodian................................... 331,281
Payable for investment securities purchased....................... 1,000,000 1,365,940
---------- ------------
NET ASSETS............................................................ $52,317,300
------------
------------
REPRESENTED BY:
Paid-in capital................................................... $52,331,942
Accumulated net realized (loss) on investments.................... (14,642)
------------
NET ASSETS at value applicable to 52,329,890 shares outstanding
(unlimited number of shares of Beneficial Interest authorized).... $52,317,300
------------
------------
NET ASSET VALUE, offering and redemption price per share
($52,317,300 / 52,329,890 shares of Beneficial Interest outstanding) $1.00
------
------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Statement of Operations year ended June 30, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest Income.......................................................... $3,645,997
Expenses:
Investment management fee--Note 2(a)................................... $344,315
Distribution fee--Note 2(b)............................................ 164,110
Trustees' fees and expenses--Note 2(c)................................. 14,962
---------
Total Expenses................................................... 523,387
Less--reduction in management fee due to undertaking--Note 2(a)........ 7,062
---------
Net Expenses..................................................... 516,325
-----------
INVESTMENT INCOME--NET....................................................... 3,129,672
NET REALIZED (LOSS) ON INVESTMENTS--Note 1(b)................................ (7,461)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... $3,122,211
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------
1996(1) 1995(2)
--------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 3,129,672 $ 3,483,630
Net realized gain (loss) on investments.............................. (7,461) 977
-------------- --------------
Net Increase In Net Assets Resulting From Operations............. 3,122,211 3,484,607
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net:
Investor shares.................................................... (1,993,334) (2,605,776)
Class R shares..................................................... (1,136,338) (877,854)
-------------- --------------
Total Dividends.................................................. (3,129,672) (3,483,630)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Investor shares.................................................... 90,074,035 130,450,064
Class R shares..................................................... 129,504,181 81,076,293
Dividends reinvested:
Investor shares.................................................... 1,339,526 1,980,170
Class R shares..................................................... 365,421 513,180
Cost of shares redeemed:
Investor Shares.................................................... (167,147,872) (143,194,523)
Class R Shares..................................................... (103,041,570) (75,930,219)
-------------- --------------
(Decrease) In Net Assets From Beneficial Interest
Transactions................................................... (48,906,279) (5,105,035)
-------------- --------------
Total (Decrease) In Net Assets................................. (48,913,740) (5,104,058)
NET ASSETS:
Beginning of year.................................................... 101,231,040 106,335,098
-------------- --------------
End of year.......................................................... $ 52,317,300 $101,231,040
-------------- --------------
-------------- --------------
<FN>
- -------------------
(1) Effective May 8, 1996, the Fund converted to a single class Fund, with existing Class R shares. Investor class shares became
shares of Dreyfus Massachusetts Municipal Money Market Fund.
(2) On October 17, 1994, the Trust shares were redesignated Class R shares.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Financial Highlights
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investments return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.(1)
<TABLE>
<CAPTION>
Investor Shares
---------------------------------------------------------
Year Ended June 30,
---------------------------------------------------------
PER SHARE DATA: 1996 1995(2)(3) 1994(2)(4) 1993(2) 1992(2)
------ ----- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............ $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations;
Investments income--net........................ .026 .029 .018(5) .019(5) .034
----- ----- ----- ----- -----
Distributions;
Dividends from investment income--net.......... (.026) (.029) (.018) (.019) (.034)
----- ----- ----- ----- -----
Net asset value, end of year................... -- $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
----- ----- ----- ----- -----
TOTAL INVESTMENT RETURN............................ -- 2.99% 1.83% 1.94% 3.36%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........ .51% .60% .70%(6) .68%(6) .67%
Ratio of net investment income to
average net assets ........................... 2.60% 2.94% 1.80% 1.98% 3.38%
Net Assets, end of year (000's Omitted)........ -- $75,746 $86,505 $68,952 $149,679
<FN>
- ------------------
(1) Effective May 8, 1996, the Fund converted to a single class Fund, with
existing Class R shares. Investor class shares became shares of Dreyfus
Massachusetts Municipal Money Market Fund.
(2) 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, 1995
are based upon an Investor share outstanding. The amounts shown for the
period ended June 30, 1994 were calculated using
the performance of a Retail share outstanding from
December 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 periods are
based upon a Retail Share outstanding.
(3) Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund's investment manager.
(4) Prior to April 4, 1994, The Boston Company Advisors, Inc. served as the
Fund's investment adviser. From April 4, 1994 through October 16, 1994,
Mellon Bank, N.A. served as the Fund's investment manager.
(5) Net investment income per share before waiver of fees and/or
reimbursement of expenses by the investment adviser and/or custodian and/or
transfer agent for the years ended June 30, 1994 and 1993 were $0.017 and
$0.019, respectively.
(6) Annualized expense ratios before voluntary waiver of fees and or
reimbursement of expense by the investment adviser and/or custodian and/or
transfer agent for the years ended June 30, 1994 and 1993 were 0.78% and
0.69%, respectively.
</TABLE>
See notes to financial statments.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Financial Highlights (continued)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.(1)
<TABLE>
<CAPTION>
Class R Shares
-----------------------------------------------------
Year Ended June 30,
------------------------------------- Period Ended
November 30
PER SHARE DATA: 1996 1995(2) 1994(3)(4) 1993(3)
------ ----- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year............ $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Investment Operations;
Investment income--net........................ .033 .032 .019(5) .007(5)
----- ----- ----- -----
Distributions;
Dividends from investment income--net......... (.033) (.032) (.019) (.007)
----- ----- ----- -----
Net asset value, end of year................. $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
----- ----- ----- -----
TOTAL INVESTMENT RETURN.......................... 3.31% 3.25% 1.97% .73%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .35%(3) .35% .56%(6) .57%(6)(7)
Ratio of net investment income to average
net assets ................................. 3.24% 3.19% 1.94% 1.78%(7)
Decrease reflected in above expense ratios
due to undertaking by the Manager.......... .02% -- -- --
Net Assets, end of year (000's Omitted)...... $52,317 $25,485 $19,830 $19,645
<FN>
- -------------
(1) Effective May 8, 1996, the Fund's Investor class shares became shares of
Dreyfus Massachusetts Municipal Money Market Fund and
Class R designates were
eliminated and the Fund became a single class Fund.
(2) Effective October 17, 1994, The Dreyfus Corporation began serving as the
Fund's investment manager.
(3) 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 as Class R
shares. The above is based upon an Investment Class share outstanding from
February 1, 1993 to April 3, 1994 and a Trust outstanding
from April 4, 1994 to October 16, 1994.
(4) Prior to April 4, 1994, The Boston Company Advisors, Inc., served as the
Fund's investment adviser. From April 4, 1994, through October 16, 1994,
Mellon Bank, N.A., served as the Fund's investment manager.
(5) Net investment income per share before waiver of fees and reimbursement
of expenses by the investment adviser and/or custodian
and/or transfer agent
for the year ended June 30, 1994 and period ended June 30, 1993 were $0.019
and $0.007, respectively.
(6) Annualized expense ratios before voluntary waiver of fees and
reimbursement of expenses by the investment adviser and/or
custodian and/or transfer agent for the periods
ended June 30, 1994 and period ended June 30,
1993 were 0.64% and .62%, respectively.
(7) Annualized.
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
The Dreyfus/Laurel Tax-Free Municipal Funds (the "Trust") is
registered under the Investment Company Act of 1940 ("Act") as a
non-diversified open-end management investment company and operates as a
series company currently offering seven series including the Dreyfus BASIC
Massachusetts Municipal Money Market Fund (the "Fund"). The Fund's investment
objective is 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. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank").
On October 25, 1995, the Board of Trustees approved an Agreement
and Plan of Reorganization providing for the transfer of 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 to the Dreyfus
Massachusetts Municipal Money Market Fund and the subsequent termination of
the Fund's Investor class. The Plan of Reorganization was approved by Fund
shareholders at a special meeting of shareholders held on April 16, 1996 (the
"Meeting") by a vote of 71,488,311 shares in favor of, and 10,355,453 shares
against, approval of the Plan, with 1,800,311 shares abstaining, and became
effective on May 8, 1996.
On October 25, 1995, the Fund's Board of Trustees also approved a
new Investment Management Agreement between the Fund and the Manager (the
"New Agreement") and certain other changes to restructure the Fund to enable
it to join Dreyfus' Basic Family of Money Market Funds. Shareholders approved
the New Agreement at the Meeting by a vote of 30,560,994 shares in favor of,
and 0 shares against, approval of the New Agreement, with 0 shares
abstaining, and the New Agreement and other changes became effective May 8,
1996.
On October 25, 1995, the Fund's Board of Trustees approved a change
to the Fund's name, effective May 8, 1996, from "Dreyfus/Laurel Massachusetts
Tax-Free Money Fund" to "Dreyfus BASIC Massachusetts Municipal Money Market
Fund."
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. Prior to May 8, 1996 the Fund was
authorized to issue two classes of shares: Investor shares and Class R
shares. Investor shares were sold primarily to retail investors and were
subject to a distribution fee. Class R shares were sold primarily to bank
trust departments and other financial service providers (including Mellon
Bank and its affiliates) acting on behalf of customers having a qualified
trust or investment account or relationship at such institution, and were not
subject to a distribution fee. Each class of shares had identical rights and
privileges, except with respect to the distribution fee and voting rights on
matters affecting a single class. Effective May 8, 1996, the Fund's Investor
class was eliminated, the Fund became a single class Fund and the Class R
designation of the Fund's remaining class of shares was eliminated.
Investment income, net of expenses (other than class specific
expenses), realized and unrealized gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets of each
class.
The Fund's financial statements are prepared in accordance with
generally accepted accounting priniciples which require the use of management
estimates. Actual results may differ from estimates.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
NOTES TO FINANCIAL STATEMENTS (continued)
(a) Portfolio valuation: Investments are valued at amortized cost
in accordance with Rule 2a-7 of the Investment Company Act of 1940, which has
been determined by the Fund's Board of Trustees to represent the fair value
of the Fund's investments.
It is the Fund's policy to maintain a continuous net asset value
per share of $1.00 for the Fund; the Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that the Fund will be able to maintain a
stable net asset value of $1.00.
(b) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and original issue discounts on investments, is
earned from settlement date and recognized on the accrual basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
(c) Concentration of risk: The Fund follows an investment policy of
investing primarily in municipal obligations of one state. Economic changes
affecting the commonwealth and certain of its public bodies and
municipalities may affect the ability of issuers within the state to pay
interest on, or repay principal of, municipal obligations held by the Fund.
(d) Distributions to shareholders: It is the policy of the Fund to
declare dividends daily from investment income-net; such dividends are paid
monthly. Dividends from net realized capital gain are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(e) Federal income taxes: It is the policy of the Fund to continue
to qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately
$15,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to June 30, 1996.
If not applied, $4,000 of the carryover expires in fiscal 1997, $7,000
expires in fiscal 1998, $1,000 expires in fiscal 1999, $2,000 expires in
fiscal 2000 and $1,000 expires in fiscal 2002.
At June 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
NOTE 2 -- Investment Management Fee And Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to the New Agreement with
the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody,
fund accounting and transfer agency services to the Fund. The Manager also
directs the investments of the Fund in accordance with its investment
objective, policies and limitations. For these services, the Fund is
contractually obligated to pay the Manager a fee, calculated daily and paid
monthly, at the annual rate of .45% of the value of the Fund's average daily
net assets. The Manager has
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
NOTES TO FINANCIAL STATEMENTS (continued)
undertaken through May 7, 1997 to limit its unitary fee to .35 of
1% of the Fund's average daily net assets excluding certain fees outlined
below. Out of its fee, the Manager pays all of the expenses of the Fund
except brokerage fees, taxes, interest, fees and expenses of non-interested
Trustees (including counsel fees) and extraordinary expenses. In addition,
the Manager is required to reduce its fee in an amount equal to the Fund's
allocable portion of fees and expenses of the non-interested Trustees (includi
ng counsel). The reduction in management fee, pursuant to the undertaking,
amounted to $7,062 during the year ended June 30, 1996.
(b) Distribution plan: The Fund had adopted a Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act relating to its
then-existing Investor shares. Under the Plan, the Fund paid annually up to
.25% of the value of the average daily net assets attributable to its
Investor shares to compensate the Distributor and Dreyfus Service
Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities primarily intended to result in
the sale of Investor shares. The Class R shares did not bear a distribution
or shareholder servicing fee. During the year ended June 30, 1996, the
distribution fee and shareholder servicing fee for the Investor shares were
$164,110. Effective May 8, 1996, the Plan was terminated.
(c) Trustees' fees: Each trustee who is not an "interested person"
as defined in the Act receives $27,000 per year, $1,000 for each Board
meeting attended and $750 for each Audit Committee attended and is reimbursed
for travel and out-of-pocket expenses. These expenses are paid in total by
the following funds: The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel
Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds Trust. In addition the
Chairman of the Board receives an annual fee of $25,000 per year. These fees
and expenses are charged and allocated to each series based on net assets.
(d) Affiliated Transactions: During the year ended June 30, 1996, an
affiliate of the Fund's adviser contributed $43,878 to the Fund. This
contribution enabled holders of the Fund's Investor class shares to receive,
under the Plan of Reorganization, the same number of shares in the Dreyfus
Massachusetts Municipal Money Market Fund. As a result of this exchange of
Investor class shares, the Fund recognized a capital gain of $43,878 which
was offset by unused capital loss carryovers. This gain is reflected as a
reduction in the accumulated net realized (loss) on investments on the Fund's
Statement of Assets and Liabilities.
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Independent Auditors' Report
The Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We have audited the accompanying statement of assets and
liabilities, including the statement of investments of Dreyfus Basic
Massachusetts Municipal Money Market Fund (formerly the Dreyfus/Laurel Tax
Free Money Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30,
1996, and the related statement of operations for the year then ended and
statement of changes in net assets for each of the years in the two-year
period then ended and financial highlights for each of the years or period in
the three-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each
of the years or period in the two-year period ended June 30, 1993 were
audited by other auditors whose report thereon, dated August 11, 1993,
expressed an unqualified 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 financial highlights are free of material misstatement. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of June 30, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles 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 Dreyfus Basic Massachusetts Municipal Money Market Fund of The
Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 1996, the results of
its operations for the year then ended and the changes in its net assets for
each of the years in the two-year period then ended and financial highlights
for each of the years or period in the three-year period then ended in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, NY
July 29, 1996
<PAGE>
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Important Tax Information (Unaudited)
In accordance with Federal tax law, the Fund hereby designates all
the dividends paid from investment income--net during the fiscal year ended
June 30, 1996 as "exempt-interest dividends" (not subject to regular Federal
and, for individuals who are Massachusetts residents, Massachusetts personal
income taxes).
<PAGE>
Dreyfus BASIC Massachusetts
Municipal Money Market Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 315AR966
