Dreyfus BASIC
California Municipal
Money Market
ANNUAL REPORT June 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
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2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
18 Report of Independent Auditors
19 Important Tax Information (Unaudited)
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus BASIC
California Municipal
Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC California
Municipal Money Market Fund, covering the 12-month period from July 1, 1998
through June 30, 1999. Inside, you'll find valuable information about how the
fund was managed during the period, including a discussion with the fund's
portfolio manager, John Flahive.
Yields on tax-exempt money market securities generally fell during the first six
months of the reporting period in response to lower short-term interest rates
established by the Federal Reserve Board. In contrast, tax-exempt money market
yields rose modestly over the first half of the reporting period in response to
conflicting market influences. On one hand, expectations that the Federal
Reserve Board would raise short-term interest rates at their June meeting put
upward pressure on yields. On June 30, the Federal Reserve raised rates amid
stronger-than-expected global and domestic economic growth. Their objective was
to forestall a potential resurgence of inflationary pressures. On the other
hand, strong economic conditions have reduced many municipalities' need to
borrow in the short-term money markets, which put downward pressure on yields.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus BASIC California Municipal Money Market Fund
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus BASIC California Municipal Money Market Fund perform during the
period?
For the 12-month period ended June 30, 1999, the fund's shares provided a yield
of 2.59% , and after taking into account the effects of compounding, the
effective yield was 2.62%.(1)
The fund shares provided a total return of 2.62%,(2) compared to a total return
of 2.46% for the Lipper California Tax-Exempt Money Market Fund category's
average for the same period.(3)
We attribute this performance to lower short-term interest rates following the
Federal Reserve Board's easing of U.S. monetary policy in the fall of 1998. This
move caused money market yields to remain relatively low until investors began
to anticipate a modest rate hike at the end of the reporting period.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and California tax-exempt income
as is practical while maintaining a stable $1.00 share price. To achieve this
objective, we attempt to add value by selecting the individual tax-exempt money
market instruments from California issuers that we believe are most likely to
provide the highest returns with the least risk. We also actively manage the
portfolio' s average maturity in anticipation of supply-and-demand changes in
California's short-term municipal marketplace. Focusing on individual securities
rather than economic or market trends, we search for securities that, in our
opinion, represent better values than we hold in the portfolio at that time.
When we find securities that we believe will help us enhance the fund's yield
without sacrificing quality, we buy them and sell less attractive securities.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average maturity is a more tactical approach.
If we expect the supply of securities to increase temporarily, we may reduce the
portfolio' s average maturity to make cash available for the purchase of higher
yielding securities. That' s because yields tend to rise temporarily if many
issuers are competing for investor interest. If we expect demand to surge at a
time when we anticipate little issuance and, therefore, lower yields, we may
increase the portfolio's average maturity to maintain current yields for as long
as practical. At other times, we try to maintain a neutral average maturity.
What other factors influenced the fund's performance?
Although the fund primarily contains securities from California issuers, the
state' s municipal bond market was influenced by economic events overseas. When
the Asian currency and credit crisis spread to Russia and threatened Latin
America last summer and fall, the Federal Reserve Board and other central banks
moved quickly to stimulate global economic growth. They did so by reducing key
short-term interest rates, which was intended to help boost economic activity.
At the end of the period, however, the Federal Reserve reversed course and
raised short-term interest rates by one-quarter of a percentage point,
effectively ending their apparently successful attempt to stimulate global
economic growth. Because the California municipal marketplace had anticipated
this rate hike in the weeks prior to the actual announcement, California
tax-exempt money market rates rose during the second quarter of 1999.
What is the fund's current strategy?
We have continued to search for the most attractive values in California's
tax-exempt money markets. During much of the one- year reporting period, this
search has led us to Variable Rate Demand Notes (VRDNs), which are issued by
investment banks through the securitization of longer term municipal bonds.
VRDNs offered attractive yields compared to other high-quality, short-term
municipal secu
rities. Toward the end of the reporting period, when it became apparent that the
Federal Reserve was likely to increase short-term rates, we began to reduce our
holdings of VRDNs and increase our exposure to longer-term municipal notes in
order to lock in prevailing yields.
As of June 30, the portfolio's 50-day average maturity was at the long end of
the neutral range. On that date, the Federal Reserve increased a key short-term
interest rate by one-quarter of a percentage point. They also indicated that
they had no current bias toward raising interest rates further over the
foreseeable future. Accordingly, our slightly longer average maturity was
designed to lock in the higher yields produced by the rate hike, while giving us
continued flexibility to change our stance as market forces evolve.
July 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS. INCOME MAY BE SUBJECT TO
STATE AND LOCAL TAXES FOR NON-CALIFORNIA RESIDENTS, AND SOME INCOME MAY BE
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. AN
INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
STATEMENT OF INVESTMENTS
June 30, 1999
<TABLE>
Principal
TAX EXEMPT INVESTMENTS--99.3% Amount ($) Value ($)
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<S> <C> <C>
CALIFORNIA--96.6%
Alameda County Industrial Development Authority,
Revenue, VRDN:
(Dicon Fiberoptics Inc. Project) 3.70%,
Series A (LOC; Wells Fargo Bank) 475,000(a) 475,000
(Ply Properties Project) 3.70%,
Series A (LOC; Wells Fargo Bank) 5,055,000(a) 5,055,000
(Tool Family Partnership) 2.90%,
Series A (LOC; Wells Fargo Bank) 400,000(a) 400,000
Anaheim Public Financing Authority, Revenue
(Anaheim Electric Utility Project)
5%, 10/1/1999 (Insured; MBIA) 1,300,000 1,306,729
California Economic Development Finance Authority,
IDR, VRDN (Lion Enterprise Inc., Project) 3.65%
(LOC; Bank of America) 1,000,000(a) 1,000,000
California Health Facilities Finance Authority, Revenue,
Refunding, Prerefunded (Good Samaritan Health)
7.50%, Series A, 5/1/2000 (Escrowed in;
U.S. Government Securities) 2,000,000 2,112,504
California Housing Finance Agency, Single-Family
Mortgage Purchase Revenue
3%, Series B, 2/1/2000 1,000,000 1,000,000
California Pollution Control Financing Authority, PCR:
(Chervon USA Inc., Project):
3.10%, 11/15/1999 (LOC; Chevron USA Inc.) 1,185,000 1,186,088
3.10%, 5/15/2000 (LOC; Chevron USA Inc.) 700,000 700,000
3.15%, 6/15/2000 (LOC; Chevron USA Inc.) 1,135,000 1,135,000
VRDN:
Refunding (Pacific Gas and Electric)
3%, Series D (LOC; Union Bank of Switzerland) 600,000(a) 600,000
(Shell Oil Co.)
2.85%, (LOC; Shell Oil Co.) 900,000(a) 900,000
California Statewide Communities Development Authority, VRDN:
COP:
(Citrus Valley Health)
3.75% (Insured; MBIA and LOC; Bank of America) 3,000,000(a) 3,000,000
(North California Retired Officers)
3.20% (LOC; Dresdner Bank) 6,800,000(a) 6,800,000
Revenue (John Muir/ Mt. Diablo Health)
3.75% (Insured; AMBAC and LOC; Bank of America) 200,000(a) 200,000
MFHR (Sunrise of Moraga)
3.50%, Series G (LOC; Commerzbank) 755,000(a) 755,000
State of California, Revenue
7.10%, 4/1/2000 2,000,000 2,061,749
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
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CALIFORNIA (CONTINUED)
Contra Costa County:
CP 2.90%, 7/22/1999 (LOC; Westdeutsche Landesbank) 1,000,000 1,000,000
MFHR, Refunding, VRDN (Del Norte Apartments)
3.45%, Series A (LOC; State Street Bank and Trust Co.) 3,500,000(a) 3,500,000
Fremont, MFHR, VRDN
3.45%, Series E (LOC: Bayerische Bank and Landesbank ) 3,140,000(a) 3,140,000
Glendale, Revenue Reliance Development, VRDN (Public Parking)
3.30% (LOC; Barclays Bank) 1,900,000(a) 1,900,000
Irvine Improvement Bond Act of 1915
Assessment District, VRDN:
2.90% (LOC; Bayerische Hypo Vereins) 3,100,000(a) 3,100,000
2.90% (LOC; Canadian Imperial Bank of Commerce) 1,902,000(a) 1,902,000
Limited Obligation, 2.90% (LOC; Kredietbank) 2,900,000(a) 2,900,000
Irvine Ranch Water District, Refunding, VRDN
2.90%, (LOC; Commerzbank) 4,000,000(a) 4,000,000
Lassen Municipal Utility District, Revenue, Refunding, VRDN
3.80%, Series A (Insured; FSA and LOC;
Credit Local De France) 700,000(a) 700,000
Los Angeles Department of Water and Power Electric Plant,
Revenue, CP 3.10%, 8/13/1999(LOC: Bank of
Nova Scotia and Toronto-Dominion Bank) 2,000,000 2,000,000
Los Angeles, MFHR, VRDN (Masselin Manor)
3.40% (LOC; Bank of America) 800,000(a) 800,000
Los Angeles Wastewater System, Revenue, CP:
3.05%, 8/10/1999 (LOC: Morgan Guaranty
Trust Co. and Union Bank of Switzerland) 1,900,000 1,900,000
3.20%, 8/10/1999 (LOC; Bayerische Landesbank) 1,600,000 1,600,000
Los Angeles County Capital Asset Leasing Corporation,
Leasehold Revenue, CP
3%, 8/5/1999 (Insured; MBIA and LOC: Bayerische
Landesbank and Westdeutsche Landesbank) 4,000,000 4,000,000
Los Angeles County Housing Authority,
MFHR, Refunding, VRDN (Malibu Meadows)
3.60% (LOC; FNMA) 4,500,000 4,500,000
Modesto, MFHR, Refunding, VRDN (Shadowbrook)
3%, Series A (LOC; Bank of America) 1,000,000(a) 1,000,000
Monterey County Financing Authority, Revenue, VRDN
(Reclamation and District Project)
3.45% (LOC; Credit Local De France) 2,400,000(a) 2,400,000
Moorpark, Multi-Family Revenue, Refunding,
VRDN (LeClub Apartments Project)
3.40%, Series A (LOC; Citibank) 1,800,000(a) 1,800,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
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CALIFORNIA (CONTINUED)
Moreno Valley Union School District, TRAN 4%, 6/30/2000 2,000,000 2,011,560
North City West School Facilities Financing Authority,
Special Tax Community Facility District, Prerefunded
7.85%, Series A, 9/1/1999
(Escrowed in; U.S. Government Securities) 1,500,000 1,542,169
Oakland, EDR, VRDN (Allen Temple Family Life)
3.55%, Series A (LOC; Wells Fargo Bank) 1,100,000(a) 1,100,000
Orange County, Apartment Development Revenue,
Refunding, VRDN
(Pointe Niguel Project)
3.75%, Series C (LOC; Wells Fargo Bank) 1,000,000(a) 1,000,000
Orange County Various Sanitation Districts, COP, VRDN
2.90% (LOC; National Westminister Bank) 2,600,000(a) 2,600,000
Orange County Water District:
CP 3.10%, 8/17/1999 (LOC; Union Bank of Switzerland) 2,000,000 2,000,000
VRDN 3.75% (LOC; National Westminister Bank) 1,100,000(a) 1,100,000
Oxnard School District, TRAN 4%, 8/19/1999 3,500,000 3,502,177
Riverside County Housing Authority, Multi-Family Housing
Mortgage Revenue, Refunding, VRDN
(Mountain View Apartments)
3.50%, Series A (LOC; Federal Home Loan Banks) 3,725,000(a) 3,725,000
Riverside County Special Tax Refunding Community
Facility District 3.50%, 9/1/1999 2,500,000 2,500,000
Sacramento County, MFHR, VRDN (Smoketree Apartments)
3%, Series A (LOC; FNMA) 300,000(a) 300,000
San Francisco Bay Area Rapid Transit, CP
3.15%, 9/8/1999 (LOC: Morgan Guaranty
Trust Co. and Union Bank of Switzerland) 2,400,000(a) 2,400,000
San Jacinto Union Free School District
3.45%, 9/1/2027 (Insured; FSA and LOC;
National Westminister Bank) 300,000 300,000
San Marcos Public Facilities Authority, Public Facility Revenue
Prerefunded (Civic Center / Mission)
7.40%, 9/2/1999 (Escrowed In; U.S.
Government Securities) 1,495,000 1,535,720
Santa Clara County, TRAN 4.50%, 10/1/1999 500,000 501,836
Santa Paula Public Financing Authority, LR, Water System,
VRDN (Acquis Project)
3.25% (LOC; California Teachers Retirement) 5,700,000(a) 5,700,000
Upland, Apartment Development Revenue, Refunding,
VRDN (Mountain Springs)
3.60%, Series A (LOC; FNMA) 3,000,000(a) 3,000,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
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U.S. RELATED--2.7%
Commonwealth of Puerto Rico, Public Improvement, Revenue
5.50%, Series B, 7/1/2000 (Insured; AMBAC) 1,000,000 1,022,727
Commonwealth of Puerto Rico Highway Authority,
Highway Revenue, Refunding, Prerefunded
6.75%, Series R, 7/1/2000 (Escrowed in; U.S.
Government Securities) 900,000 946,531
Virgin Islands Public Finance Authority, Revenue, Refunding
3.10%, Series A, 10/1/1999 (Escrowed in; U.S.
Government Securities) 1,000,000 1,008,837
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TOTAL INVESTMENTS (cost $108,625,627) 99.3% 108,625,627
CASH AND RECEIVABLES (NET) .7% 766,093
NET ASSETS 100.0% 109,391,720
The Fund
Summary of Abbreviations
AMBAC American Municipal Bond Assurance MBIA Municipal Bond Insurance
Corporation Association Insurance
COP Certificate of Participation Corporation
CP Commercial Paper MFHR Multi-Family Housing Revenue
EDR Economical Development Revenue PCR Pollution Control Revenue
FNMA Federal National Mortgage Association TRAN Tax and Revenue
FSA Financial Security Assurance Anticipation Notes
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
LR Lease Revenue
Summary of Combined Ratings (Unaudited)
Moody's or Standard & Poor's Value (%)
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VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 88.0
Aaa/Aa(b) AAA/AA(b) 12.0
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE - SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 108,625,627 108,625,627
Cash 2,140,211
Interest receivable 670,415
111,436,253
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 31,972
Payable for investments securities purchased 2,011,560
Interest payable-Note 3 1,001
2,044,533
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NET ASSETS ($) 109,391,720
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 109,392,023
Accumulated net realized gain (loss) on investments (303)
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NET ASSETS ($) 109,391,720
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SHARES OUTSTANDING
(unlimited number of shares of Beneficial Interest authorized) 109,392,023
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended June 30, 1999
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INVESTMENT INCOME ($):
INTEREST INCOME 3,109,505
EXPENSES:
Management fee--Note 2 461,141
Interest expense--Note 3 7,108
TOTAL EXPENSES 468,249
INVESTMENT INCOME--NET 2,641,256
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NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (166)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,641,090
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
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Year Ended June 30,
-------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 2,641,256 2,750,679
Net realized gain (loss) on investments (166) 51,000
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,641,090 2,801,679
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DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (2,641,256) (2,750,679)
Net realized gain on investments (8,137) (6,603)
TOTAL DIVIDENDS (2,649,393) (2,757,282)
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BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 280,160,658 190,718,170
Dividends reinvested 1,677,263 2,010,317
Cost of shares redeemed (272,699,712) (173,091,554)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 9,138,209 19,636,933
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,129,906 19,681,330
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NET ASSETS ($):
Beginning of Period 100,261,814 80,580,484
END OF PERIOD 109,391,720 100,261,814
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Year Ended June 30,
--------------------------------------------------------------------------
1999 1998 1997 1996((+)) 1995
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning
of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .026 .031 .031 .031 .031
Distributions:
Dividends from investment
income--net (.026) (.031) (.031) (.031) (.031)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 2.62 3.13 3.11 3.19 3.10
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .46 .46 .42 .44 .60
Ratio of net investment income
to average net assets 2.58 3.08 3.09 3.36 3.07
Decrease reflected in above expense
ratios due to undertakings by the
Manager - - .03 .07 -
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Net Assets, end of period
($ x 1,000) 109,392 100,262 80,580 36,728 15,538
((+)) EFFECTIVE NOVEMBER 20, 1995, THE FUND CONVERTED TO A SINGLE CLASS FUND,
WITH THE EXISTING CLASS R SHARES CONVERTED INTO INVESTOR SHARES. THE FINANCIAL
HIGHLIGHTS FOR THE FISCAL YEAR ENDED JUNE 30, 1996 WERE CALCULATED USING THE
PERFORMANCE OF AN INVESTOR SHARE OUTSTANDING FROM JULY 1, 1995 TO NOVEMBER 19,
1995, AND THE PERFORMANCE OF A FUND SHARE OUTSTANDING FROM NOVEMBER 20, 1995 TO
JUNE 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC California Municipal Money Market Fund (the "fund") is a separate
non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the
"Trust") which is registered under the Investment Company Act of 1940 ("Act") as
an open-end management investment company and operates as a series company
currently offering five series including the fund. The fund's investment
objective is to provide a high level of current income exempt from Federal
income taxes and State of California 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. Premier Mutual Fund Services, Inc. is
the distributor of the fund's shares.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at amortized cost
in accordance with Rule 2a-7 of the Act, which has been determined by the 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 per share 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. Cost of investments
represents amortized cost.
(c) Concentration of risk: The fund follows an investment policy of investing
primarily in municipal obligations of one state. Economic The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
changes affecting the state and certain of its public bodies and municipalities
may affect the ability of issuers within the state to pay interest on, or repay
principal of, municipal obligations held by the fund.
(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, if any,
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.
At June 30, 1999, 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:
Investment management fee: Pursuant to an Investment Management agreement with
the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .45% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, fees and expenses of non-interested Trustees (including counsel
fees) and extraordinary expenses. In addition, the Manager is required
to reduce its fee in an amount equal to the fund's allocable portion of fees and
expenses of the non-interested Trustees (including counsel). Each trustee
receives $40,000 per year, plus $5,000 for each joint Board meeting of The
Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The
Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for
separate committee meetings attended which are not held in conjunction with a
regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone and is reimbursed
for travel and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable amounts)
. In the event that there is a joint committee meeting of the Dreyfus/Laurel
Funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee will be
allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield Strategies
Fund. These fees and expenses are charged and allocated to each series based on
net assets. Amounts required to be paid by the Trust directly to the
non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Trustees. These fees and expenses are allocated to each
series based on net assets. Amounts required to be paid by the Trust directly
to the non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager are in fact paid directly by the Manager
to the non-interested Trustees.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
fund at rates which are related to the Federal funds rate in effect at the time
of borrowings.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $129,000 with a related weighted average annualized
rate of 5.51%.
The 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 of Dreyfus
BASIC California Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds, including the statement of investments, as of June 30, 1999,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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.
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, 1999, by correspondence with the custodian and brokers. 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 California Municipal Money Market Fund of The Dreyfus/Laurel
Tax-Free Municipal Funds as of June 30, 1999, the results of its operations for
the year then ended, changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted
New York, New York
August 11, 1999
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, 1999 as
" exempt-interest divdends" (not subject to regular Federal and, for individuals
who are California residents, California personal income taxes), and
-- the Fund hereby designates $.0001 per share as a long-term capital gain
distribution paid on December 30, 1998.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the Fund' s taxable ordinary dividends (if any) and capital
gains distribution (if any) paid for the 1999 calendar year on Form 1099-DIV
which will be mailed by January 31, 2000.
The Fund
NOTES
For More Information
Dreyfus
BASIC California 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 307AR996
- -------------------------------------------------------------------------------
Dreyfus BASIC Massachusetts Municipal Money Market Fund
ANNUAL REPORT
June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
18 Report of Independent Auditors
19 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
The Fund
Dreyfus BASIC
Massachusetts Municipal
Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC Massachusetts
Municipal Money Market Fund, covering the 12-month period from July 1, 1998
through June 30, 1999. Inside, you'll find valuable information about how the
fund was managed during the period, including a discussion with the fund's
portfolio manager, John Flahive.
Yields on tax-exempt money market securities generally fell during the first six
months of the reporting period in response to lower short-term interest rates
established by the Federal Reserve Board. In contrast, tax-exempt money market
yields rose modestly over the first half of the reporting period in response to
conflicting market influences. On one hand, expectations that the Federal
Reserve Board would raise short-term interest rates at their June meeting put
upward pressure on yields. On June 30, the Federal Reserve raised rates amid
stronger-than-expected global and domestic economic growth. Their objective was
to forestall a potential resurgence of inflationary pressures. On the other
hand, strong economic conditions have reduced many municipalities' need to
borrow in the short-term money markets, which put downward pressure on yields.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus BASIC Massachusetts Municipal Money Market
Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus BASIC Massachusetts Municipal Money Market Fund perform during
the period?
For the 12-month period ended June 30, 1999, the fund's shares provided a yield
of 2.72% , and after taking into account the effects of compounding, the
effective yield was 2.76%.(1)
The fund provided a total return of 2.76%,(2) compared to a total return of
2.60% for the Lipper Massachusetts Tax-Exempt Money Market Fund category's
average for the same period.(3)
We attribute this performance to lower short-term interest rates following the
Federal Reserve Board's easing of U.S. monetary policy in the fall of 1998. This
move caused money market yields to remain relatively low until investors began
to anticipate a modest rate hike at the end of the reporting period. The fund
was also affected by a decrease in the supply of short-term tax-exempt
securities from Massachusetts issuers.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and Massachusetts tax-exempt
income as is practical while maintaining a stable $1.00 share price. To achieve
this objective, we attempt to add value by selecting the individual tax-exempt
money market instruments from Massachusetts issuers that we believe are most
likely to provide the highest returns with the least risk. We also actively
manage the portfolio' s average maturity in anticipation of supply-and-demand
changes in Massachusetts's short-term municipal marketplace.
Focusing on individual securities rather than economic or market trends, we
search for securities that, in our opinion, represent better values than we hold
in the portfolio at that time. When we find securities that we believe will help
us enhance the fund's yield without sacrificing quality, we buy them and sell
less attractive securities.
The Fund
<PAGE>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average maturity is a more tactical approach.
If we expect the supply of securities to increase temporarily, we may reduce the
portfolio' s average maturity to make cash available for the purchase of higher
yielding securities. That' s because yields tend to rise temporarily if many
issuers are competing for investor interest. If we expect demand to surge at a
time when we anticipate little issuance and, therefore, lower yields, we may
increase the portfolio's average maturity to maintain current yields for as long
as practical. At other times, we try to maintain a neutral average maturity.
What other factors influenced the fund's performance?
Although the fund primarily contains securities from Massachusetts issuers, the
state' s municipal bond market was influenced by economic events overseas. When
the Asian currency and credit crisis spread to Russia and threatened Latin
America last summer and fall, the Federal Reserve Board and other central banks
moved quickly to stimulate global economic growth. They did so by reducing key
short-term interest rates, which was intended to help boost economic activity.
At the end of the period, however, the Federal Reserve reversed course and
raised short-term interest rates by one-quarter of a percentage point,
effectively ending their apparently successful attempt to stimulate global
economic growth. Because the Massachusetts municipal marketplace had anticipated
this rate hike in the weeks prior to the actual announcement, Massachusetts
tax-exempt money market rates rose during the second quarter of 1999.
What is the fund's current strategy?
We have continued to search for the most attractive values in Massachusetts's
tax-exempt money markets. During much of the one-year reporting period, this
search has led us to Variable Rate Demand Notes (VRDNs), which are issued by
investment banks through the securitization of longer term municipal bonds.
VRDNs offered attractive yields compared to other high-quality, short-term
municipal securities. Toward the end of the reporting period, when it became
apparent that
<PAGE>
the Federal Reserve was likely to increase short-term rates, we began to attempt
to reduce our holdings of VRDNs and increase our exposure to longer term
municipal notes in order to lock in prevailing yields.
As of June 30, the portfolio' s 45-day average maturity was solidly in the
neutral range. On that date, the Federal Reserve increased a key short-term
interest rate by one-quarter of a percentage point. They also indicated that
they had no current bias toward raising interest rates further over the
foreseeable future. Accordingly, our neutral average maturity was designed to
capture the higher yields produced by the rate hike, while giving us continued
flexibility to change our stance as market forces evolve.
July 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS FLUCTUATE.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS. INCOME MAY BE SUBJECT TO
STATE AND LOCAL TAXES FOR NON-MASSACHUSETTS RESIDENTS, AND SOME INCOME MAY BE
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. AN
INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<PAGE>
STATEMENT OF INVESTMENTS
June 30, 1999
<TABLE>
Principal
TAX EXEMPT INVESTMENTS--99.1% Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
City of Bedford, BAN 3.50%,12/3/1999 3,103,000 3,107,521
City of Boston, Revenue 5.25%, Series A,
10/1/1999 (Insured; MBIA) 100,000 100,502
Town of Cambridge, 4.30%, 8/1/1999 1,000,000 1,000,620
Central Berkshire Regional School District
4.50%, 3/15/2000 (Insured: FSA) 805,000 811,923
Danvers, BAN 3.25%, 7/16/1999 1,755,000 1,755,142
Falmouth 6%, 2/1/2000 582,000 591,261
Fitchburg 4%, 2/15/2000 (Insured: MBIA) 1,305,000 1,312,986
Town of Gloucester, BAN 4%, 8/5/1999 1,000,000 1,000,323
Town of Hopkinton, Revenue 6%, 9/1/1999 (Insured; FGIC) 725,000 727,755
Lowell, Refunding 4.5%, Series A, 1/15/2000 (Insured: FSA) 680,000 684,474
Town of Malden, Revenue 4%, 10/1/1999 (Insured; AMBAC) 1,565,000 1,568,652
Massachusetts Bay Transportation Authority,
General Transportation Systems:
2.95%, Series A, 9/1/1999 (LOC; State
Street Bank and Trust Co.) 2,500,000 2,500,413
Refunding 6%, Series A, 3/1/2000 (LOC; Massachusetts
Bay Transportation Authority) 1,050,000 1,070,978
Commonwealth of Massachusetts:
(Consolidated Loan):
4%, Series A, 1/1/2000 1,000,000 1,003,429
Prerefunded 7%, Series D, 10/1/1999
(Escrowed; U.S. Government Securities and Insured; MBIA) 1,000,000 1,029,704
Refunding:
5.50%, Series A, 7/1/1999 600,000 600,000
VRDN 3.60%, Series A (BPA; Commerzbank) 3,300,000 (a) 3,300,000
Massachusetts Health and Educational Facilities
Authority, Revenue:
CP:
(Boston University) 3%, Series H, 8/25/1999
(LOC; Landesbank Hessen) 5,000,000 5,000,000
(Harvard University):
3.15%, Series L, 8/9/1999 (Guaranteed by;
Harvard University) 2,500,000 2,500,000
3.15%, Series L, 9/10/1999 (Guaranteed by;
Harvard University) 3,000,000 3,000,000
Revenue:
(Harvard Pilgrim Health) 4.25%,
Series A, 7/1/99 (Insured; FSA) 1,000,000 1,000,000
<PAGE>
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health and Educational Facilities
Authority (continued)
VRDN:
(Amherst College) 3.70%, Series F
(Guaranteed by; Amherst College) 500,000(a) 500,000
(Falmouth Assistance For Living) 3.55%,
Series A (LOC; Bank of Boston) 4,900,000(a) 4,900,000
(Hallmark Health Systems) 3.55%,
Series B (Insured; FSA and LOC; Fleet Bank) 3,000,000(a) 3,000,000
(Harvard University) 3.70%, Series I
(Guaranteed by; Harvard University) 4,000,000(a) 4,000,000
(Newton Wellesley Hospital) 3.15%,
Series F (Insured; MBIA and LOC; Credit Suisse) 1,500,000(a) 1,500,000
(Partners Healthcare Systems) 3.40%, Series P-2
(Insured; FSA and SBPA; Bayerische Landesbank) 3,400,000(a) 3,400,000
(Wellesley College) 3.35%, Series B (Guaranteed by;
Wellesley College) 4,015,000(a) 4,015,000
(Williams College) 3.25%, Series E
(Guaranteed by; Williams College) 2,995,000(a) 2,995,000
Massachusetts Housing Finance Agency, VRDN:
Housing Revenue 3.75% (Insured; AMBAC and LOC;
Merrill Lynch and Co.) 1,415,000(a) 1,415,000
Multi-Family Housing:
3.40%, Series A (LOC; Federal National
Management Association) 3,900,000(a) 3,900,000
(Harbor Point) 3.40%, Series A (Insured; GNMA
and SBPA; Republic National Bank) 6,400,000(a) 6,400,000
Massachusetts Industrial Finance Agency:
Industrial Revenue, VRDN, Refunding
(Quamco Inc.) 3.30%, Series A
(LOC; Bank of Nova Scotia) 1,840,000(a) 1,840,000
PCR, VRDN (Holyoke Water Power Co.) 3.30%
(LOC; Union Bank of Switzerland) 6,000,000(a) 6,000,000
Prerefunded:
(Holy Cross College) 7%, 7/1/1999
(Escrowed in; U.S. Government Securities) 2,000,000 2,020,000
(Milton Academy) 7.25%, Series A, 9/1/1999
(Insured MBIA) 1,800,000 1,847,702
Revenue (Springfield College Project) 7.80%, 10/1/99
(Escrowed in; U.S. Government Securities) 1,100,000 1,145,605
VRDN:
(Goddard House) 3.55% (LOC; Fleet Bank) 1,765,000(a) 1,765,000
The Fund
<PAGE>
Principal
TAX-EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Industrial Finance Agency (continued):
VRDN (continued):
(Gordon College) 3.50% (LOC; State Street
Bank and Trust Co.) 4,000,000(a) 4,000,000
(Heritage At Dartmouth) 3.65% (LOC; Bank of Boston) 1,500,000(a) 1,500,000
(Mount IDA College) 3.50%
(LOC; Credit Local de France) 1,900,000(a) 1,900,000
Refunding (Showa Womens Institute) 3.50%
(LOC; Lloyds Bank) 4,520,000(a) 4,520,000
(Society for the Prevention of Cruelty) 2.95%
(LOC; Fleet Bank) 1,000,000(a) 1,000,000
Massachusetts Port Authority, Revenue
4.50%, Series A, 7/1/1999 100,000 100,000
Massachusetts Water Resource Authority:
CP:
3.15%, 8/4/1999 (LOC; Morgan Guaranty Trust Co.) 500,000 500,000
3.05%, 8/11/1999 (LOC; Morgan Guaranty Trust Co.) 5,000,000 5,000,000
3.10%, 9/3/1999 (LOC; Morgan Guaranty Trust Co.) 2,000,000 2,000,000
Prerefunded 7.625, Series A, 4/1/2000 (Escrowed in;
U.S. Government Securities) 1,000,000 1,051,620
VRDN:
3.25% Series A (Insured; AMBAC and LOC:
(Bank of Nova Scotia, Commerzbank) and Credit Local
de France) 2,500,000(a) 2,500,000
3.30%, Series A (Insured AMBAC and LOC;
Bank of Nova Scotia) 1,200,000(a) 1,200,000
3.30%, Series A (LOC; Landesbank Hessen) 2,400,000(a) 2,400,000
Needham 5.75%, 6/15/2000 1,136,000 1,162,615
North Andover 6%, 8/15/1999 (Insured; MBIA) 1,140,000 1,143,364
Town of Norton, Revenue 4.10%, 10/1/1999 (Insured; FGIC) 1,295,000 1,297,227
Rockport 6.80%, 12/15/1999 (Escrowed in: U.S.
Government Securities and Insured; AMBAC) 600,000 627,437
Town of Springfield:
4.50%, 9/1/1999 (Insured; FSA) 930,000 932,323
4.25%, 11/15/1999 (Insured; FSA) 1,810,000 1,817,625
Town of Webster, Revenue 5.90%, 9/1/99 (Insured; AMBAC) 250,000 251,115
Westfield 4.50%, 10/22/1999 1,232,577 1,234,447
Town of Weymouth, Revenue 5%, 11/1/99 (Insured; AMBAC) 1,137,000 1,144,491
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $121,591,254) 99.1% 121,591,254
CASH AND RECEIVABLES (NET) .9% 1,159,690
NET ASSETS 100.0% 122,750,944
<PAGE>
Summary of Abbreviations
AMBAC American Municipal Bond Assurance GNMA Government National Mortgage
Corporation Association
BAN Bond Anticipation Notes LOC Letter of Credit
BPA Bond Purchase Agreement MBIA Municipal Bond Investors
CP Commercial Paper Assurance Insurance
FGIC Financial Guaranty Insurance Company Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ---------------------------------------------------------------------------------------------------------------------------------
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 73.7
AAA/AA(b) Aaa/Aa(b) AAA/AA(b) 21.2
Not Rated(c) Not Rated(c) Not Rated(c) 5.1
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE - SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER
TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
(D) AT JUNE 30, 1999, THE FUND HAD $33,575,605 (27.4% OF NET ASSETS) INVESTED
IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES
GENERATED FROM EDUCATION PROJECTS.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 121,591,254 121,591,254
Cash 323,642
Interest receivable 885,530
122,800,426
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 48,850
Interest payable-Note 3 632
49,482
- --------------------------------------------------------------------------------
NET ASSETS ($) 122,750,944
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 122,762,029
Accumulated net realized gain (loss) on investments (11,085)
- --------------------------------------------------------------------------------
NET ASSETS ($) 122,750,944
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of shares of Beneficial Interest authorized) 122,759,979
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,072,979
EXPENSES:
Management fee--Note 2 579,262
Interest expense--Note 3 5,642
TOTAL EXPENSES 584,904
INVESTMENT INCOME--NET 3,488,075
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 1(B)
Net realized gain (loss) on investments 140
Net unrealized appreciation (depreciation) on investments (28)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 112
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,488,187
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended June 30,
--------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,488,075 3,714,092
Net realized gain (loss) on investments 140 --
Net unrealized appreciation (depreciation)
on investments (28) 28
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,488,187 3,714,120
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (3,488,075) (3,714,092)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 272,439,342 288,336,710
Dividends reinvested 1,491,979 1,359,573
Cost of shares redeemed (262,574,293) (268,566,912)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 11,357,028 21,129,371
TOTAL INCREASE (DECREASE) IN NET ASSETS 11,357,140 21,129,399
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 111,393,804 90,264,405
END OF PERIOD 122,750,944 111,393,804
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Year Ended June 30,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning
of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .027 .031 .031 .033 .032
Distributions:
Dividends from investment
income--net (.027) (.031) (.031) (.033) (.032)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.76 3.17 3.12 3.31 3.25
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .45 .47 .37 .35 .35
Ratio of net investment income
to average net assets 2.71 3.15 3.09 3.24 3.19
Decrease reflected in above expense
ratios due to undertakings by the
Manager - - .09 .02 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 122,751 111,394 90,264 52,317 25,485
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC Massachusetts Municipal Money Market Fund (the "fund") is a
separate non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds
(the "Trust" ) which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company and operates
as a series company currently offering five series including 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 (the "Manager") serves as the fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. ("Mellon Bank"). Premier Mutual Fund
Services, Inc. is the distributor of the fund's shares.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost in accordance
with Rule 2a-7 of the Act, 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 per share 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
<PAGE>
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. Cost of investments represents amortized cost. Under the
terms of the custody agreement, the fund received net earnings of credits $1,884
during the period ended June 30, 1999 based on available cash balances left on
deposit. Income earned under this arrangement is included in interest income.
(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 of 1986, as
amended (the "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 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 $3,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to June 30, 1999. If not applied, $2,000 of
the carryover expires in fiscal 2000 and $1,000 expires in fiscal 2002.
The Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At June 30, 1999, 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:
Investment management fee: Pursuant to an Investment Management Agreement with
the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .45% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, Rule 12b-1 distribution fees and expenses, fees and expenses of
non-interested Trustees (including counsel fees) and extraordinary expenses. In
addition, the Manager is required to reduce its fee in an amount equal to the
fund' s allocable portion of fees and expenses of the non-interested Trustees
(including counsel) . Each trustee receives $40,000 per year, plus $5,000 for
each joint Board meeting of The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel
Tax-Free Municipal Funds and The Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel
Funds" ) attended, $2,000 for separate committee meetings attended which are not
held in conjunction with a regularly scheduled board meeting and $500 for Board
meetings and separate committee meetings attended that are conducted by
telephone and is reimbursed for travel and out-of-pocket expenses. The Chairman
of the Board receives an additional 25% of such compensation (with the exception
of reimbursable amounts). In the event that there is a joint committee meeting
of the Dreyfus/Laurels Funds and the Dreyfus High Yield Strategies Fund, the
$2,000 fee will be allocated between the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund.
<PAGE>
These fees and expenses are charged and allocated to each series based on net
assets. Amounts required to be paid by the Trust directly to the non-interested
Trustees, that would be applied to offset a portion of the management fee
payable to the Manager, are in fact paid directly by the Manager to the
non-interested Trustees.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million line of
credit primarily to be utilized for temporary or emergency purposes, including
the financing of redemptions. Interest is charged to the fund at rates which are
related to the Federal funds rate in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $101,000 with a related weighted average annualized
interest rate of 5.57%.
The Fund
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We have audited the accompanying statement of assets and liabilities of Dreyfus
BASIC Massachusetts Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds, including the statement of investments, as of June 30, 1999,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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.
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, 1999, 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, 1999, the results of its operations for
the year then ended, changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
New York, New York
August 11, 1999
<PAGE>
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, 1999 as
"exempt-interest dividends" (not subject to regular Federal and, for individuals
who are Massachusetts residents, Massachusetts personal income taxes).
The Fund
<PAGE>
NOTES
<PAGE>
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 715SA996
- -------------------------------------------------------------------------------
Dreyfus
BASIC New York
Municipal Money Market Fund
ANNUAL REPORT
June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
11 Statement of Assets and Liabilities
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Financial Highlights
15 Notes to Financial Statements
19 Report of Independent Auditors
20 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
The Fund
Dreyfus BASIC
New York Municipal
Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus BASIC New York
Municipal Money Market Fund, covering the 12-month period from July 1, 1998
through June 30, 1999. Inside, you'll find valuable information about how the
fund was managed during the period, including a discussion with the fund's
portfolio manager, John Flahive.
Yields on tax-exempt money market securities generally fell during the first six
months of the reporting period in response to lower short-term interest rates
established by the Federal Reserve Board. In contrast, tax-exempt money market
yields rose modestly over the first half of the reporting period in response to
conflicting market influences. On one hand, expectations that the Federal
Reserve Board would raise short-term interest rates at their June meeting put
upward pressure on yields. On June 30, the Federal Reserve raised rates amid
stronger-than-expected global and domestic economic growth. Their objective was
to forestall a potential resurgence of inflationary pressures. On the other
hand, strong economic conditions have reduced many municipalities' need to
borrow in the short-term money markets, which put downward pressure on yields.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus BASIC New York Municipal Money Market Fund
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE>
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus BASIC New York Municipal Money Market Fund perform during the
period?
For the 12-month period ended June 30, 1999, the fund's shares provided a yield
of 2.66% , and after taking into account the effects of compounding, the
effective yield was 2.69%.(1)
The fund provided a total return of 2.69%,(2) compared to a total return of
2.62% for the Lipper New York Tax-Exempt Money Market Fund category's average
for the same period.(3)
We attribute this performance to lower short-term interest rates following the
Federal Reserve Board's easing of U.S. monetary policy in the fall of 1998. This
move caused money market yields to remain relatively low until investors began
to anticipate a modest rate hike at the end of the reporting period.
What is the fund's investment approach?
Our goal is to seek as high a level of federal, New York State and New York City
tax-exempt income as is practical while maintaining a stable $1.00 share price.
To achieve this objective, we attempt to add value by selecting the individual
tax-exempt money market instruments from New York issuers that we believe are
most likely to provide the highest returns with the least risk. We also actively
manage the portfolio' s average maturity in anticipation of supply-and-demand
changes in New York's short-term municipal marketplace.
Focusing on individual securities rather than economic or market trends, we
search for securities that, in our opinion, represent better values than we hold
in the portfolio at that time. When we find securities that we believe will help
us enhance the fund's yield without sacrificing quality, we buy them and sell
less attractive securities.
The management of the portfolio's average maturity is a more tactical approach.
If we expect the supply of securities to increase temporar The Fun
<PAGE>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
ily, we may reduce the portfolio's average maturity to make cash available for
the purchase of higher yielding securities. That's because yields tend to rise
temporarily if many issuers are competing for investor interest. If we expect
demand to surge at a time when we anticipate little issuance and, therefore,
lower yields, we may increase the portfolio's average maturity to maintain
current yields for as long as practical. At other times, we try to maintain a
neutral average maturity.
What other factors influenced the fund's performance?
Although the fund primarily contains securities from New York issuers, the
state' s municipal bond market was influenced by economic events overseas. When
the Asian currency and credit crisis spread to Russia and threatened Latin
America last summer and fall, the Federal Reserve Board and other central banks
moved quickly to stimulate global economic growth. They did so by reducing key
short-term interest rates, which was intended to help boost economic activity.
At the end of the period, however, the Federal Reserve reversed course and
raised short-term interest rates by one-quarter of a percentage point,
effectively ending their apparently successful attempt to stimulate global
economic growth. Because the New York municipal marketplace had anticipated this
rate hike in the weeks prior to the actual announcement, New York tax-exempt
money market rates rose during the second quarter of 1999.
What is the fund's current strategy?
We have continued to search for the most attractive values in New York's
tax-exempt money markets. During much of the one-year reporting period, this
search has led us to Variable Rate Demand Notes (VRDNs), which are issued by
investment banks through the securitization of longer term municipal bonds.
VRDNs offered attractive yields compared to other high-quality, short-term
municipal securities. Toward the end of the reporting period, when it became
apparent that the Federal Reserve was likely to increase short-term rates, we
began to reduce our holdings of VRDNs and increase our exposure to longer term
municipal notes in order to lock in prevailing yields.
<PAGE>
As of June 30, the portfolio's 49-day average maturity was at the long end of
the neutral range. On that date, the Federal Reserve increased a key short-term
interest rate by one-quarter of a percentage point. They also indicated that
they had no current bias toward raising interest rates further over the
foreseeable future. Accordingly, our slightly longer average maturity was
designed to lock in the higher yields produced by the rate hike, while giving us
continued flexibility to change our stance as market forces evolve.
July 15, 1999
(1) EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND REINVESTED
MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
(2) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS. INCOME MAY BE SUBJECT TO
STATE AND LOCAL TAXES FOR NON-NEW YORK RESIDENTS, AND SOME INCOME MAY BE SUBJECT
TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. AN
INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
(3) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<PAGE>
STATEMENT OF INVESTMENTS
June 30, 1999
</TABLE>
<TABLE>
Principal
TAX EXEMPT INVESTMENTS--99.8% Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Albany Industrial Development Agency, IDR, VRDN
(Newkirk Products Inc., Project)
3.55%, Series A (LOC; Fleet Bank)( ) 1,600,000 (a) 1,600,000
Babylon Industrial Development Agency, RRR, VRDN
(Equity Babylon Project)
3.80% (LOC; Union Bank of Switzerland)( ) 4,100,000 (a) 4,100,000
Broome County, BAN 3.50%, 4/5/2000 5,000,000 5,017,007
Broome County Industrial Development Agency, IDR,
Refunding, VRDN (Bing Realty Co. Project)
3.60% (LOC; Meridan Bank Corp.)( ) 1,600,000 (a) 1,600,000
Chemung County Industrial Development Agency, Civic
Facility Revenue, VRDN (Arnot Ogden Medical Center)
3.35% (LOC; Chase Manhattan Bank)( ) 2,475,000 (a) 2,475,000
Great Neck North Water Authority, Water System Revenue,
Refunding, VRDN
3.35% Series A (Insured; FGIC and SBPA; FGIC)( ) 8,400,000 (a) 8,400,000
Jefferson County Industrial Development Agency, IDR, VRDN
(Watertown-Carthage IV)
3.15% (LOC; First National Bank of Chicago)( ) 100,000 (a) 100,000
Long Island Power Authority, Electric System Revenue:
CP:
3.05%, Sub-Series 3, 7/23/1999 (LOC: Bayerische
Landesbank and Westdeutsche Landesbank) 2,000,000 2,000,000
3.15%, Sub-Series 4, 7/26/1999 (LOC: Bayerische
Landesbank and Westdeutsche Landesbank) 2,500,000 2,500,000
2.85%, Sub-Series 6, 8/19/1999 (LOC: Bayerische
Landesbank and Westdeutsche Landesbank) 5,000,000 5,000,000
VRDN:
3.45%, Sub-Series 7 (Insured; MBIA and SBPA;
Credit Suisse)( ) 2,000,000 (a) 2,000,000
3.85%, Sub-Series 6 (LOC: ABN-Amro Bank and Morgan
Guaranty Trust Co.)( ) 900,000 (a) 900,000
Metropolitan Transportation Authority, Transport Facility
Revenue, CP:
3.15%, Series 1, 8/4/1999 (LOC; ABN-Amro) 5,400,000 5,400,000
3.20%, Series 1, 9/7/1999 (LOC; ABN-Amro) 3,000,000 3,000,000
3.10%, Series 1, 9/10/1999 (LOC; ABN-Amro) 2,600,000 2,600,000
3.10%, Series 1, 9/14/1999 (LOC; ABN-Amro) 6,000,000 6,000,000
3.05%, Series 1, 9/13/1999 (LOC; ABN-Amro) 7,000,000 7,000,000
Municipal Assistance Corporation, Refunding
5.50%, Series J, 7/1/1999 (LOC; Municipal
Assistance Corp.) 3,000,000 3,000,000
<PAGE>
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
New York City:
CP:
3.15%, Series H, 9/13/1999 (LOC; FSA and SBPA;
State Street Bank and Trust Co.) 3,000,000 3,000,000
Refunding 3.15%, Series H, 8/5/1999 (Insured; AMBAC
and SBPA; Krediet Bank) 9,000,000 9,000,000
VRDN:
3.25%, Series F-2 (LOC; Toronto-Dominion Bank)( ) 8,900,000 (a) 8,900,000
3.35%, Sub-Series A-6 (LOC; Landesbank Hessen)( ) 2,530,000 (a) 2,530,000
3.50%, Series J (LOC; Commerzbank)( ) 11,700,000 (a) 11,700,000
4%, Sub-Series B-2 (LOC; Morgan Guaranty Trust Co.)( ) 1,100,000 (a) 1,100,000
New York City Health and Hospital Corporation, Revenue,
VRDN (Health Systems):
3.30%, Series A (LOC; Morgan Guaranty Trust Co.)( ) 14,400,000 (a) 14,400,000
3.30%, Series D (LOC; Bank of Nova Scotia)( ) 11,800,000 (a) 11,800,000
3.35%, Series B (LOC; Canadian Imperial Bank of
Commerce)( ) 4,800,000 (a) 4,800,000
New York City Housing Development Corporation, VRDN:
MFMR
(West 89th Street) 3.40%, Series A (LOC; Midland Bank)( ) 12,500,000 (a) 12,500,000
Multi-Family Rental Housing Revenue:
(Carnegie Park) 3.20%, Series A (LOC; FNMA)( ) 9,700,000 (a) 9,700,000
(Columbus Green) 3.20%, Series A (LOC; FNMA)( ) 2,075,000 (a) 2,075,000
(Monterey) 3.20%, Series A (LOC; FNMA)( ) 13,000,000 (a) 13,000,000
New York City Municipal Water Finance Authority:
CP:
3.15%, Series 5, 8/5/1999 (Insured; MBIA and SBPA;
Banco Santander) 2,000,000 2,000,000
3.15%, Series 1, 8/9/1999 (LOC: Bank of Nova Scotia,
Commerez Bank and Toronto-Dominion Bank) 3,000,000 3,000,000
3.10%, Series 3, 8/10/1999 (LOC: Bank of Nova Scotia,
Commerez Bank and Toronto-Dominion Bank) 10,600,000 10,600,000
3.25%, Series 5-A, 8/19/1999 (LOC: Bayerische
Landesbank, Landesbank Hessen and
Westdeutsch Landesbank) 7,000,000 7,000,000
3.35%, Series 1, 9/10/1999 (LOC: Bank of Nova Scotia,
Commerez Bank and Toronto-Dominion Bank) 1,300,000 1,300,000
Water and Sewer Systems Revenue, VRDN
3.70%, Series C (Insured; FGIC and LOC;
General Electric Credit Corp.)( ) 2,300,000 (a) 2,300,000
The Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, Revenue:
Prerefunded:
(State University Educational Facilities)
7.70%, Series A, 5/15/2000 (Escrowed in;
U.S. Government Securities) 10,000,000 10,581,914
Prerefunded (continued):
(United Health Services Inc.)
7.35%, 2/1/2000 (SBPA; Federal Housing Authority) 6,705,000 7,004,203
VRDN:
(Metropolitan Museum of Art):
3.25%, Series A (Guaranty; Metropolitan
Museum of Art)( ) 3,100,000 (a) 3,100,000
3.25%, Series B (Guaranty; Metropolitan
Museum of Art)( ) 1,760,000 (a) 1,760,000
Refunding (Wagner College)
3.40% (LOC; Morgan Guaranty Trust Co.) 7,100,000 (a) 7,100,000
New York State Energy Research and Development Authority:
PCR
(New York State Electric and Gas):
3.20%, Series B, 10/15/1999 (LOC; Union Bank
of Switzerland) 3,250,000 3,250,000
3%, Series D, 12/1/1999 (LOC; Union Bank
of Switzerland) 7,000,000 7,000,000
VRDN:
Gas Facilities Revenue (Brooklyn Union Gas Project):
3.15%, Series A-2 (Insured; MBIA and SBPA;
United Bank of Switzerland)( ) 4,700,000 (a) 4,700,000
3.35%, Series A-1 (Insured; MBIA and SBPA;
United Bank of Switzerland)( ) 4,900,000 (a) 4,900,000
PCR, Refunding (New York State Electric and Gas)
3.80%, Series C (LOC; Morgan Guaranty Trust Co.)( ) 3,900,000 (a) 3,900,000
New York State Environmental Facilities Corporation, SWDR,
CP (General Electric Co. Project)
3.15%, Series A, 7/27/1999 (LOC: Bayerische Landesbank,
Landesbank Hessen and Morgan Guaranty Trust Co.) 7,600,000 7,600,000
New York State Environmental Quality:
3%, Series G, 12/8/1999 (LOC; Westdeutsche Landesbank) 5,000,000 (a) 5,000,000
CP:
3.10%, Series A, 8/9/1999 (LOC: Bayerische Landesbank
and Landesbank Hessen and Morgan Guaranty Trust Co.) 1,500,000 1,500,000
2.80%, Series A, 8/12/1999 (LOC: Bayerische Landesbank
and Landesbank Hessen and Morgan Guaranty Trust Co.) 2,000,000 2,000,000
New York State Housing Finance Agency, VRDN:
HR (East 84th Street) 3.30%, Series A
(LOC; Hypovereins Bank)( ) 4,600,000 (a) 4,600,000
<PAGE>
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
New York State Housing Finance Agency, VRDN (continued):
Revenue (250 West 50th Street) 3.75%, Series A
(LOC; Fleet Bank)( ) 5,000,000 (a) 5,000,000
New York State Housing Finance Agency, VRDN (continued):
Service Contract Obligation 3.35%, Series A
(LOC; Commerzbank)( ) 6,000,000 (a) 6,000,000
New York State Local Governmental Assistance Corporation,
VRDN 3.25%, Series D (LOC; Societe Generale)( ) 10,000,000 (a) 10,000,000
New York State Medical Care Facilities Finance Agency,
Revenue:
Prerefunded (Mental Health Improvement Services)
7.29%, Series C, 8/15/1999 (Insured; MBIA) 1,100,000 1,127,676
VRDN (Pooled Equipment Loan Program II)
3.15%, Series A (LOC; Chase Manhattan Bank)( ) 2,600,000 (a) 2,600,000
New York State Thruway Authority, Highway and Bridge
Trust Fund
5%, Series B, 4/1/2000 (Insured; AMBAC) 5,000,000 5,069,702
Onondaga County Industrial Development Agency, IDR, VRDN
(First Republic Corp. American)
3.30% (LOC; Chase Manhattan Bank)( ) 300,000 (a) 300,000
Rensselaer County Industrial Development Agency,
Civic Facility, Revenue, VRDN
(Polytech Institute Project) 3.40%, Series A
(LOC; Rennselaer Polytech Institute)( ) 4,300,000 (a) 4,300,000
Rochester, BAN 3.10%, Series II, 10/28/1999 3,000,000 3,001,893
Saint Lawrence Industrial Development Agency, Environment
Improvement Revenue, VRDN
(Reynolds Metals Co. Project) 3.20% (LOC; Royal Bank
of Canada)( ) 1,200,000 (a) 1,200,000
Schenectady Industrial Development Agency, VRDN
(Union College Project)
3.40%, Series A( ) 3,846,000 (a) 3,846,000
Yonkers Industrial Development Agency, Civil Facility Revenue,
VRDN (Consumers Union Facility)
3.40% (Insured; AMBAC and SBPA; Credit Locale
de France)( ) 3,500,000 (a) 3,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $313,338,395) 99.8% 313,338,395
Cash and Receivables (Net) .2% 756,444
Net Assets 100.0% 314,094,839
The Fund
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond Assurance MBIA Municipal Bond Investors
Corporation Assurance Insurance
BAN Bond Anticipation Notes Corporation
CP Commercial Paper MFMR Multi-Family Mortgage Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FNMA Federal National Mortgage Association RRR Resources Recovery Revenue
FSA Financial Security Assurance SBPA Standby Bond Purchase Agreement
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ----------------------------------------------------------------------------------------------------------------------------------
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 90.4
AAA/AA(b) Aaa/Aa(b) AAA/AA(b) 8.6
Not Rated(c) Not Rated(c) Not Rated(c) 1.0
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE - SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER
TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
Cost Value
- ------------------------------------------------------------------------------
Assets ($):
Investments in securities--See Statement of
Investments 313,338,395 313,338,395
Interest receivable 1,510,905
314,849,300
- -------------------------------------------------------------------------------
Liabilities ($):
Due to The Dreyfus Corporation and affiliates 116,552
Cash overdraft due to Custodian 637,391
Interest payable-Note 3 518
754,461
- -------------------------------------------------------------------------------
Net Assets ($) 314,094,839
- -------------------------------------------------------------------------------
Composition of Net Assets ($):
Paid-in capital 314,094,849
Accumulated net realized gain (loss) on investments (10)
- -------------------------------------------------------------------------------
Net Assets ($) 314,094,839
- -------------------------------------------------------------------------------
Shares Outstanding
(unlimited number of shares of Beneficial Interest authorized) 314,094,830
Net Asset Value, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1999
- --------------------------------------------------------------------------------
Investment Income ($):
Interest Income 10,540,436
Expenses:
Management fee--Note 2 1,526,997
Interest expense--Note 3 8,216
Total Expenses 1,535,213
Investment Income--Net, representing net increase in net assets
resulting from operations 9,005,223
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
--------------------
1999 1998
- -------------------------------------------------------------------------------
Operations ($):
Investment income--net 9,005,223 9,857,281
- -------------------------------------------------------------------------------
Dividends to Shareholders from ($):
Investment income--net (9,005,223) (9,857,281)
Net realized gain on investments -- (1,034)
Total Dividends (9,005,223) (9,858,315)
- -------------------------------------------------------------------------------
Beneficial Interest Transactions ($1.00 per share):
Net proceeds from shares sold 281,151,852 376,447,696
Dividends reinvested 8,316,374 9,002,552
Cost of shares redeemed (309,861,859) (323,504,736)
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions (20,393,633) 61,945,512
Total Increase (Decrease) in Net Assets (20,393,633) 61,944,478
- --------------------------------------------------------------------------------
Net Assets ($):
Beginning of Period 334,488,472 272,543,994
End of Period 314,094,839 334,488,472
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Year Ended June 30,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning
of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .027 .031 .031 .031 .029
Distributions:
Dividends from investment
income--net (.027) (.031) (.031) (.031) (.029)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.69 3.14 3.11 3.14 2.95
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .45 .45 .41 .43 .60
Ratio of net investment income
to average net assets 2.65 3.09 3.08 3.43 2.97
Decrease reflected in above expense
ratios due to undertakings by the
Manager - - .04 .09 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period
($ x 1,000) 314,095 334,488 272,544 156,491 21,739
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus BASIC New York Municipal Money Market Fund (the "fund") is a separate
non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the
" Trust" ) which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company and operates
as a series company currently offering five series including the fund. The
fund' s investment objective is to provide a high level of current income exempt
from Federal income taxes and New York State and New York City 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. Premier Mutual
Fund Services, Inc. is the distributor of the fund's shares.
The fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities are valued at amortized cost
in accordance with Rule 2a-7 of the Act, which has been determined by the 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 per share of $1.00.
The Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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. Cost of investments
represents amortized cost. Under the terms of the custody agreement, the fund
receives net earnings credits based on available cash balances left on deposit.
(C) CONCENTRATION OF RISK: The fund follows an investment policy of investing
primarily in municipal obligations of one state. Economic changes affecting the
state and certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the fund.
(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 of 1986, as
amended, (the "Code" ). To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, 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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
<PAGE>
At June 30, 1999, 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:
INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management Agreement with
the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .45% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, fees and expenses of non-interested Trustees (including counsel
fees) and extraordinary expenses. In addition, the Manager is required to reduce
its fee in an amount equal to the fund's allocable portion of fees and expenses
of the non-interested Trustees (including counsel) . Each Trustee receives
$40,000 per year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel
Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel
Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for Board meetings and separate committee meetings
attended that are conducted by telephone and is reimbursed for travel and
out-of-pocket expenses. The Chairman of the Board receives an additional 25% of
such compensation (with the exception of reimbursable The Fun
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
amounts) . In the event that there is a joint committee meeting of the
Dreyfus/Laurel funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee
will be allocated between the Dreyfus/Laurel Funds and Dreyfus High Yield
Strategies Fund. These fees and expenses are charged and allocated to each
series based on net assets. Amounts required to be paid by the Trust directly to
the non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Trustees.
NOTE 3--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $100 million line of
credit primarily to be utilized for temporary or emergency purposes, including
the financing of redemptions. Interest is charged to the fund at rates which are
related to the Federal Funds rate in effect at the time of borrowings.
The average daily amount of borrowings outstanding during the period ended June
30, 1999 was approximately $147,300 with a related weighted average annualized
interest rate of 5.58%.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We have audited the accompanying statement of assets and liabilities of Dreyfus
BASIC New York Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds, including the statement of investments, as of June 30, 1999,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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.
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, 1999, 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 New York Municipal Money Market Fund of The Dreyfus/Laurel
Tax-Free Municipal Funds as of June 30, 1999, the results of its operations for
the year then ended, changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
New York, New York
August 11, 1999
The Fund
<PAGE>
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, 1999 as
"exempt-interest dividends" (not subject to regular Federal and, for individuals
who are New York residents, New York personal income taxes).
<PAGE>
For More Information
Dreyfus
BASIC New York
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999, Dreyfus Service Corporation 316AR996
<PAGE>
Dreyfus Premier
Limited Term
Municipal Fund
ANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
18 Statement of Assets and Liabilities
19 Statement of Operations
20 Statement of Changes in Net Assets
23 Financial Highlights
27 Notes to Financial Statements
34 Report of Independent Auditors
35 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
The Fund
Dreyfus Premier Limited Term Municipal Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Limited Term
Municipal Fund, covering the 12-month period from July 1, 1998 through June 30,
1999. Inside, you' ll find valuable information about how the fund was managed
during the period, including a discussion with the fund's portfolio manager,
John Flahive.
Despite higher interest rates, total returns have generally been positive for
municipal bond investors. The U.S. economy has entered its eighth year of
expansion in an environment characterized by low inflation and high levels of
consumer spending. These conditions have helped support the credit quality of
many states and municipalities.
Tax-exempt fixed-income securities generally outperformed U.S. Treasury
securities in this economic climate. While prices of U.S. Treasury securities
declined significantly through the second half of the reporting period, a lack
of new issuance relative to robust investor demand supported most municipal bond
prices. As a result, the differences in valuations between taxable and
tax-exempt bonds, which reached historically wide levels last October, have
since narrowed to a more normal relationship.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Limited Term Municipal Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE 2>
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus Premier Limited Term Municipal Fund perform during the period?
The fund' s Class A shares produced a total return of 1.78% over the 12-month
period ended June 30, 1999,(1) compared to a total return of 1.93% for the
Lipper Intermediate Municipal Debt Fund category's average.(2) The fund produced
a total return of 1.25% for Class B shares, 1.35% for Class C shares, and 2.02%
for Class R shares over the same period.(1)
We attribute the fund's performance to our conservative investment approach in a
mixed environment for municipal bonds. While declining interest rates helped
support limited-term municipal bonds' share prices during the second half of
1998, their prices did not appreciate as much as longer term bonds. During the
first six months of 1999, however, limited-term municipal bonds helped cushion
the effects of sharply higher interest rates, which adversely affected bond
prices.
What is the fund's investment approach?
Our goal is to seek as high a level of federally tax-exempt current income as is
consistent with the prudent risk of capital. To achieve this objective, we
attempt to add value by selecting the individual limited-term, tax-exempt bonds
that we believe are most likely to provide the highest returns with the least
risk. We also actively manage the portfolio's average weighted maturity -- a
measure of sensitivity to changes in interest rates -- in anticipation of
interest rate and supply-and-demand changes in the limited-term municipal
marketplace.
Focusing on individual securities rather than economic or market trends, we
search for securities that, in our opinion, represent better values than we hold
in the portfolio at that time. When we find securities that we believe will help
us enhance the fund's yield without sacrificing quality, we buy them and sell
less attractive securities.
The Fund
<PAGE 3>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average weighted maturity is a more tactical
approach. If we expect the supply of securities to increase temporarily, we may
reduce the portfolio's average weighted maturity to make cash available for the
purchase of higher yielding securities. If we expect demand to surge at a time
when we anticipate little issuance and, therefore, lower yields, we may increase
the portfolio's average weighted maturity to maintain current yields for as long
as practical. At other times, we try to maintain a neutral average weighted
maturity.
What other factors influenced the fund's performance?
When the Asian currency and credit crisis spread to Russia and threatened Latin
America last summer and fall, investors flocked to U.S. Treasury securities. As
a result, yields on taxable Treasuries fell briefly in October to levels that
were roughly equivalent to yields on comparable tax-exempt bonds.
However, the Federal Reserve Board and other central banks moved quickly to
stimulate global economic growth. They did so last fall by reducing key
short-term interest rates. Because lower short-term interest rates were expected
to stimulate economic growth and potentially reignite inflationary pressures,
yields on longer term bonds rose. However, the extent of that rise was much
greater for taxable U.S. Treasury securities than for municipal bonds.
During the second half of 1998, municipal bond issuers came to the market in
droves to take advantage of lower interest rates. As a result, the second half
of 1998 ranked as the second-highest six-month period of issuance in recent
history. In contrast, issuance during the first half of 1999 was relatively low:
about 25% fewer tax-exempt bonds were issued than in the same period one year
ago. Yet, demand from investors seeking to minimize their income tax liabilities
remained high. This balance between supply and demand helped keep municipal bond
prices relatively stable while U.S. Treasury bond prices fell sharply.
<PAGE 4>
What is the fund's current strategy?
We have continued to search for the most attractive values in the tax-exempt
marketplace. This search has led us to bonds with high credit ratings.
Consequently, the portfolio's credit quality averaged in the double-A range on
June 30, 1999.
In addition, we found attractive values in longer maturity bonds selling at a
premium to face value. We balanced these longer positions with investments in
securities with maturities of one year or less, producing an average weighted
maturity of 8 to 9 years, which is toward the long end of the neutral range.
This strategy was designed to capture higher yields as they became available,
while giving us continued flexibility to change our stance as market forces
evolve.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE
CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE
IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE
CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. INCOME MAY BE SUBJECT TO
STATE AND LOCAL TAXES, AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE
MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY
TAXABLE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD
AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<PAGE 5>
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Limited
Term Municipal Fund Class A shares with the Lehman Brothers 10-Year Municipal
Bond Index and the Lehman Brothers 7-year Municipal Bond Index
((+)) SOURCE: LEHMAN BROTHERS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FUND'S CLASS A SHARES
ON 6/30/89 TO A $10,000 INVESTMENT MADE ON THAT DATE IN THE LEHMAN BROTHERS
10-YEAR MUNICIPAL BOND INDEX (THE "LEHMAN 10-YEAR INDEX"), AS WELL AS TO AN
INVESTMENT IN THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX (THE "LEHMAN
7-YEAR INDEX") WHICH ARE DESCRIBED BELOW. THE LEHMAN 7-YEAR INDEX BEGAN IN
JANUARY OF 1990. THIS INVESTMENT ASSUMES A BEGINNING VALUE OF $10,303 WHICH IS
EQUAL TO THE VALUE OF THE $10,000 INVESTMENT IN THE FUND AT THE STARTING POINT
OF THIS INDEX, WITHOUT TAKING INTO ACCOUNT THE FUND'S MAXIMUM INITIAL SALES
CHARGE ON CLASS A SHARES. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE
REINVESTED. PERFORMANCE FOR CLASS B, CLASS C AND CLASS R SHARES WILL VARY FROM
THE PERFORMANCE OF CLASS A SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND
EXPENSES.
THE FUND INVESTS PRIMARILY IN INVESTMENT-GRADE MUNICIPAL BONDS WITH INTERMEDIATE
MATURITIES AND EXPECTS TO MAINTAIN AN AVERAGE MATURITY OF LESS THAN 10 YEARS.
THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM
INITIAL SALES CHARGE ON CLASS A SHARES AND ALL OTHER APPLICABLE FEES AND
EXPENSES. UNLIKE THE FUND, THE LEHMAN 10-YEAR INDEX IS AN UNMANAGED TOTAL RETURN
PERFORMANCE BENCHMARK FOR THE INVESTMENT-GRADE, 10-YEAR TAX EXEMPT BOND MARKET,
CONSISTING OF MUNICIPAL BONDS WITH MATURITIES OF 9-12 YEARS. THE LEHMAN 7-YEAR
INDEX CONSISTS OF BONDS WITH SIMILAR CHARACTERISTICS WITH MATURITIES OF 6-8
YEARS. THE INDICES DO NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES
WHICH CAN CONTRIBUTE TO THE INDICES POTENTIALLY OUTPERFORMING THE FUND. FURTHER
INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF
APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS
AND ELSEWHERE IN THIS REPORT.
$20,604
Lehman Brothers 10-Year Municipal Bond Index((+))
$19,365
Lehman Brothers 7-Year Municipal Bond Index((+))
$17,903
Dreyfus Premier Limited Term Municipal Fund
(Class A Shares)
<PAGE 6>
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 6/30/99
Inception From
Date 1 Year 5 Years 10 Years Inception
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
WITH SALES CHARGE (3.0%) (10/1/85) --1.27% 4.71% 6.00% --
WITHOUT SALES CHARGE (10/1/85) 1.78% 5.35% 6.32% --
CLASS B SHARES
WITH REDEMPTION((+)) (12/28/94) --1.68% -- -- 5.31%
WITHOUT REDEMPTION (12/28/94) 1.25% -- -- 5.50%
CLASS C SHARES
WITH REDEMPTION((+)(+)) (12/28/94) 0.61% -- -- 5.59%
WITHOUT REDEMPTION (12/28/94) 1.35% -- -- 5.59%
CLASS R SHARES
(2/1/93) 2.02% 5.59% -- 5.37%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 3% AND
IS REDUCED TO 0% AFTER FIVE YEARS.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
.75% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund
<PAGE 7>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
June 30, 1999
Principal
LONG-TERM MUNICIPAL INVESTMENTS--95.3% Amount ($) Value ($)
- --------------------------------------------------------------------------------
<S> <C> <C>
ALASKA--1.2%
Anchorage Port and Term Facilities, Revenue
6%, 2/1/2003 (Insured; MBIA) 1,110,000 1,167,598
ARIZONA--2.6%
Maricopa County Unified School District Number 69
(Paradise Valley)
6.35%, 7/1/2010 (Insured; MBIA) 550,000 609,549
Mesa, 5.90%, 7/1/2000 (Insured; AMBAC) 500,000 511,945
Phoenix, 6.25%, 7/1/2016 1,250,000 1,397,713
ARKANSAS--.6%
North Little Rock, Electric Revenue, 6%, 7/1/2001
(Insured; MBIA) 500,000 518,330
CALIFORNIA--17.4%
State of California:
6.80%, 10/1/2005 700,000 790,454
6.60%, 10/1/2005 510,000 580,059
California Educational Facilities Authority, College and
University Revenue,
(Los Angeles College Chiropractic) 5.75%, 11/1/2006 780,000 813,306
California Housing Finance Agency, Home Mortgage Revenue
5.65%, 8/1/2006 (Insured; MBIA) 655,000 683,722
5.65%, 8/1/2017 (Insured; MBIA) 400,000 403,960
California Public Works Board, LR
(California State University) 5.50%, 10/1/2007 500,000 530,045
California Rural Home Mortgage Finance Authority, SFMR
5.75%, 8/1/2009 (Guaranteed; FNMA) 25,000 25,798
California Statewide Communities Development Authority,
Multi-Family Revenue
(Archstone/Leclub) 5.30%, 6/1/2020 1,000,000 1,002,070
Franklin-McKinley School District, 5.20%, 7/1/2004
(Insured; MBIA) 375,000 391,163
Kern High School District, 6.40%, 2/1/2012 (Insured; MBIA) 750,000 847,545
Metropolitan Water District of Southern California,
Waterworks Revenue:
6.375%, 7/1/2002 835,000 887,897
5%, 7/1/2026 1,000,000 940,120
Modesto, Wastewater Treatment Facilities Revenue
6%, 11/1/2009 (Insured; MBIA) 500,000 549,475
Redding JT Powers Financing Authority, Electrical Systems
Revenue
5.25%, 6/1/2015 (Insured; MBIA) 670,000 671,628
<PAGE 8>
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Riverside County Transportation Commission, Sales Tax Revenue :
6.50%, 6/1/2001 (Insured; AMBAC) 520,000 544,830
6%, 6/1/2009 (Insured; FGIC) 500,000 547,925
Sacramento Municipal Utilities District, Electrical Revenue
6.30%, 9/1/2001 (Insured; MBIA) 500,000 524,835
San Diego County Regional Transportation Commission,
Sales Tax Revenue
6%, 4/1/2004 (Insured; FGIC) 750,000 805,725
San Francisco City and County Airport Commission, International
Airport Revenue
5.625%, 5/1/2006 (Insured; FGIC) 500,000 531,090
San Francisco City and County Public Utilities Commission,
Water Revenue, Refunding:
6%, 11/1/2003 750,000 805,575
6.375%, 11/1/2006 500,000 540,730
San Jose Redevelopment Agency, Tax Allocation
(Merged Area Redevelopment Project) 6%, 8/1/2009
(Insured; MBIA) 625,000 684,644
Santa Margarita-Dana Point Authority, Revenue
7.25%, 8/1/2007 (Insured; MBIA) 500,000 586,945
Santa Rosa, Wastewater Revenue
6.20%, 9/1/2003 (Prerefunded 9/1/2002) (Insured; FGIC) 350,000 (a) 376,502
Simi Valley Unified School District,
6.25%, 8/1/2004 (Insured; FGIC) 700,000 762,902
Southern California Public Power Authority, Power Project
Revenue
(Hydroelectric-Hoover Uprating Project) 6.30%, 10/1/2002 420,000 447,728
Westside Unified School District, 6%, 8/1/2014
(Insured; AMBAC) 385,000 425,856
COLORADO--3.0%
Adams County School District Number 12, 6%, 12/15/2006
(Insured; FGIC) 1,235,000 1,333,788
Denver City and County
5.90%, 8/1/2003 (Prerefunded 8/1/2000) 1,000,000 (a) 1,035,190
Larimer County School District No. R1 Poudre
5.50%, 12/15/2013 500,000 511,645
CONNECTICUT--.6%
Stamford 6.60%, 1/15/2007 500,000 562,125
The Fund
<PAGE 9>
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
FLORIDA--4.1%
Dade County:
Sales Tax Revenue, 6%, 10/1/2002 (Insured; AMBAC) 1,000,000 1,053,960
Water and Sewer System Revenue 6.25%, 10/1/2008
(Insured; FGIC) 535,000 589,629
Florida Board of Education, Capital Outlay
5.25%, 1/1/2014 1,155,000 1,159,712
Miami Health Facilities Authority, Health Facilities Revenue
(Mercy Hospital Project)
6.75%, 8/1/2020 (Insured; AMBAC)
(Prerefunded 8/1/2001) 1,000,000 (a) 1,071,950
GEORGIA--1.0%
Georgia Municipal Electric Authority, Power Revenue,
6%, 1/1/2006 900,000 953,280
HAWAII--1.0%
Hawaii, 4.75%, 11/1/2013 (Insured; MBIA) 1,000,000 958,260
ILLINOIS--6.1%
Chicago Metropolitan Water Reclamation District
(Chicago Capital Improvement)
7.25%, 12/1/2012 1,000,000 1,203,020
Illinois 5.60%, 6/1/2004 750,000 783,825
Illinois Development Finance Authority, PCR
(Central Illinois Public Service Company) 5.70%, 8/15/2026 750,000 759,795
McHenry County Community Unit School District No. 012:
5.50%, 12/1/2012 1,065,000 1,083,350
5.50%, 12/1/2013 1,215,000 1,232,326
Regional Transportation Authority,
7.75%, 6/1/2012 (Insured; FGIC) 390,000 482,192
Sangamon County School District Number 186 (Springfield)
7.70%, 6/1/2001 (Insured; MBIA) 300,000 319,233
INDIANA--.6%
Indianapolis Airport Authority, Special Facilities Revenue
(Federal Express Corp. Project) 7.10%, 1/15/2017 500,000 550,065
IOWA--1.1%
Iowa Student Loan Liquidity Corp., Student Loan Revenue
5.65%, 12/1/2005 1,000,000 1,029,330
KENTUCKY--1.2%
Kentucky Turnpike Authority, Economic Development Road
Revenue
(Revitalization Projects) 6.50%, 7/1/2007 (Insured; AMBAC) 1,000,000 1,112,220
<PAGE 10>
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
MARYLAND--1.5%
Maryland, State and Local Facilities Loan 5.25%, 6/15/2006 1,400,000 1,459,136
MASSACHUSETTS--3.0%
Massachusetts, Special Obligation Revenue 7%, 6/1/2002 1,000,000 1,072,580
Worcester:
(Municipal Purpose Loan) 5.75%, 10/1/2014
(Insured; MBIA) 1,000,000 1,040,860
6.25%, 7/1/2009 (Insured; MBIA) 720,000 792,252
MICHIGAN--3.7%
Berkley City School District (Qualified School Board Loan Fund)
7%, 1/1/2009 (Insured; FGIC) 1,030,000 1,185,582
Flowerville Community School District
6.50%, 5/1/2006 (Insured; MBIA) 555,000 611,255
Lanse Creuse Public Schools, 5%, 5/1/2004 (Insured; AMBAC) 1,140,000 1,167,189
Saint John's Public Schools (Qualified School Board Loan Fund)
6.50%, 5/1/2006 (Insured; FGIC) 525,000 578,534
MISSISSIPPI--.5%
Mississippi Higher Education Assistance Corporation,
Student Loan Revenue
6.05%, 9/1/2007 485,000 497,363
NEBRASKA--1.1%
Omaha, 4.70%, 5/1/2003 1,000,000 1,015,540
NEW JERSEY--2.1%
Ocean County Utilities Authority, Wastewater Revenue
5%, 1/1/2004 1,000,000 1,023,240
New Jersey Transportation Corporation, Capital Grant
Anticipation Notes
5.50%, 9/1/2003 (Insured; FSA) 1,000,000 1,034,950
NEW YORK--16.9%
Amherst, Public Improvement 6.20%, 4/1/2002 (Insured; FGIC) 150,000 157,667
Erie County Water Authority, Water Revenue
7%, 12/1/2000 (Insured; AMBAC) 200,000 209,138
Greece Central School District 6%, 6/15/2010 225,000 244,296
Metropolitan Transportation Authority:
Commuter Facilities Revenue (Grand Central Terminal)
5.70%, 7/1/2024 (Insured; FSA) 200,000 203,868
Transportation Facilities Revenue 6.30%, 7/1/2007
(Insured; MBIA) 250,000 273,720
Monroe County, Public Improvement 7%, 6/1/2003
(Insured; FGIC) 200,000 218,486
The Fund
<PAGE 11>
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
NEW YORK (CONTINUED)
Municipal Assistance Corporation for the City of New York:
7.10%, 7/1/2000 (Prerefunded 7/1/1999) 100,000 (a) 102,010
6%, 7/1/2005 (Insured; AMBAC) 100,000 107,136
Nassau County:
7%, 7/1/2002 (Insured; AMBAC) (Prerefunded 7/1/2000) 100,000 (a) 104,481
6.30%, 11/1/2003 (Insured; FGIC) 200,000 214,536
New York City:
5%, 8/1/2006 (Insured; FGIC) 1,000,000 1,014,550
5.12%, 8/1/2010 2,000,000 1,986,560
5.75%, 8/1/2012 545,000 565,454
7%, 8/1/2006 300,000 337,032
6.20%, 8/1/2007 (Prerefunded 8/1/2004) 55,000 (a) 59,798
6.20%, 8/1/2007 945,000 1,006,397
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue 5.50%, 6/15/2027
(Insured; MBIA) 250,000 251,133
New York State, 6.25%, 8/15/2004 1,000,000 1,077,110
New York State Dormitory Authority, Revenue:
(Consolidated City University) 5.75%, 7/1/2018
(Insured; FSA) 200,000 212,056
(FIT Student Housing) 5.75%, 7/1/2006 (Insured; AMBAC) 130,000 137,866
(Mental Health Services Facilities) 6%, 8/15/2005 1,000,000 1,062,150
(Vassar College) 6%, 7/1/2005 250,000 270,013
(Rochester Institute of Technology) 5.50%, 7/1/2006
(Insured; MBIA) 200,000 209,758
New York State Environmental Facilities Corporation, PCR
(State Water Revolving Fund) 7.50%, 6/15/2012 500,000 526,340
New York State Local Government Assistance Corporation
6.375%, 4/1/2000 200,000 204,418
New York State Power Authority, General Purpose Revenue
7%, 1/1/2018 (Prerefunded 1/1/2010) 300,000 (a) 352,188
New York State Thruway Authority
(Highway and Bridge Trust Fund)
5.50%, 4/1/2007 (Insured; FGIC) 1,000,000 1,044,460
New York State Urban Development Corporation, Revenue:
(Corporation Purpose) 5.50%, 7/1/2005 200,000 209,508
(Higher Education Technology Grants) 5.75%, 4/1/2015
(Insured; MBIA) 500,000 516,515
Orange County:
5.10%, 11/15/2002 130,000 133,743
5.50%, 11/15/2007 250,000 262,905
Oyster Bay 7.125%, 4/15/2000 (Insured; FGIC) 180,000 185,281
<PAGE 12>
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
NEW YORK (CONTINUED)
Port Washington Union Free School District 6%, 8/1/2001 125,000 129,760
Putman County, Public Improvement, 5.25%, 4/15/2011 150,000 152,831
St. Lawrence County Industrial Development Agency,
Civic Facility Revenue
(Lawrence University Project) 5.50%,
7/1/2013 (Insured; MBIA) 250,000 255,068
Suffolk County, Public Improvement
7%, 4/1/2002 (Insured; MBIA) (Prerefunded 4/1/2000) 150,000 (a) 157,004
Town of Hempstead 6.30%, 1/1/2002 (Insured; AMBAC) 150,000 157,094
Triborough Bridge and Tunnel Authority:
General Purpose Revenue:
5.75%, 1/1/2005 250,000 264,148
5.90%, 1/1/2007 100,000 106,998
Special Oligation 5.25%, 1/1/2013 1,000,000 1,002,800
Westchester County 6.625%, 11/1/2004 250,000 276,180
Western Nassau County Water Authority,
Water Systems Revenue 5.50%, 5/1/2004 (Insured; AMBAC) 250,000 261,458
NORTH CAROLINA--1.1%
Dare County, Utility System Revenue
5.25%, 6/1/2014 (Insured; MBIA) 1,085,000 1,090,772
OHIO--4.2%
Clermont County, Hospital Facilities Revenue,
(Mercy Health System) 5.25%, 9/1/2003 (Insured; AMBAC) 685,000 703,632
Hamilton County, Sales Tax (Hamilton County Football Project)
5.50%, 12/1/2013 (Insured; MBIA) 1,500,000 1,537,380
Ohio Building Authority
(State Facilities Adult Correction Building)
5%, 4/1/2001 1,795,000 1,822,087
OREGON--.3%
Tri County Metropolitan Transportation District
(Light Rail Extension)
5.60%, 7/1/2003 (Prerefunded 7/1/2022) 250,000 (a) 262,093
PENNSYLVANIA--2.2%
Pennsylvania Intergovernmental Coop Authority,
Special Tax Revenue
(City of Philadelphia Funding Program) 6.80%, 6/15/2022
(Prerefunded 6/15/2002) 1,000,000 (a) 1,071,170
Somerset County General Authority, Commonwealth LR
6.70%, 10/15/2003 (Insured; FGIC)
(Prerefunded 10/15/2001) 1,000,000 (a) 1,058,150
The Fund
<PAGE 13>
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
TEXAS--7.7%
Arlington Independent School District, 5%, 2/15/2021 1,000,000 940,160
Austin, Utility System Revenue
8%, 11/15/2016 (Prerefunded 5/15/2001) 200,000 (a) 214,150
Fort Bend Independent School District (Permanent School
Fund Guaranteed)
6.60%, 2/15/2004 875,000 948,885
Houston (Public Improvement) 5%, 3/1/2001 1,550,000 1,573,157
Lewisville Independent School District (Building Bonds):
(Permanent School Fund Guaranteed):
7.50%, 8/15/2006 650,000 752,674
7.50%, 8/15/2007 600,000 701,508
Socorro Independent School District (Permanent School
Fund Guaranteed) 6%, 8/15/2014 2,085,000 2,214,937
UTAH--1.6%
Intermountain Power Agency, Power Supply Revenue
6.25%, 7/1/2009 (Insured; FSA) 500,000 548,105
5.25%, 7/1/2014 1,000,000 999,480
VIRGINIA--1.7%
Richmond Metropolitan Authority, Expressway Revenue
5.25%, 7/15/2011 (Insuered; FGIC) 525,000 532,718
Virginia Transportation Board, Transportation Contract
Revenue
(Route 28 Project) 6%, 4/1/2005 1,000,000 1,057,380
WASHINGTON--1.7%
Washington Public Power Supply System, Revenue
(Nuclear Project No. 1):
6%, 7/1/2006 (Insured; MBIA) 500,000 535,175
7%, 7/1/2008 1,000,000 1,133,099
WISCONSIN--1.8%
Kenosha, Waterworks Revenue, 5%, 12/1/2012
(Insured; FGIC) 750,000 735,959
Wisconsin, 5.40%, 11/1/2023 500,000 497,614
Wisconsin, Health and Educational Facilities Revenue
(Aurora Medical Group Inc.) 5.75%, 11/15/2007
(Insured; FSA) 500,000 525,894
<PAGE 14>
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
U. S. RELATED--3.7%
Puerto Rico Commonwealth, 6.25%, 7/1/2011 (Insured; MBIA) 950,000 1,059,392
Puerto Rico Commonwealth Highway and Transporation Authority,
Highway Revenue 6.25%, 7/1/2009 (Insured; MBIA) 150,000 166,802
Puerto Rico Electric Power Authority, Power Revenue
6.50%, 7/1/2006 (Insured; MBIA) 625,000 695,212
Puerto Rico Public Buildings Authority,
Government Guaranteed Facilities
6.25%, 7/1/2010 (Insured; AMBAC) 750,000 835,664
University of Puerto Rico, University Revenue
6.25%, 6/1/2008 (Insured; MBIA) 750,000 831,854
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $89,773,120) 91,440,057
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--4.1%
- --------------------------------------------------------------------------------------------------------------------------------
ALABAMA--.1%
Birmingham-Carraway Special Care Facilities Finance Authority,
VRDN, Revenue
(Carraway Methodist Health) 3.65% (LOC; Amsouth Bank) 100,000 (b) 100,000
ILLINOIS--.1%
Illinois Development Finance Authority, Revenue, VRDN
(Uhlich Childrens Home Project) 3.65% (LOC; American
National Bank and Trust Company) 100,000 (b) 100,000
MASSACHUSETTS--2.0%
Massachusetts State Health and Educational Facilities Authority,
Revenue, VRDN:
(Amherst College) 3.7% 200,000 (b) 200,000
(Newton Wellesley Hospital) 3.4% (Insured; MBIA) 1,700,000 (b) 1,700,000
MONTANA--.7%
Montana State Health Facilities Authority, Revenue, VRDN
(Health Care Pooled Loan Program) 3.55% (Insured; FGIC) 700,000 (b) 700,000
NEW YORK--.5%
New York City,VRDN, 3.55% 500,000 (b) 500,000
The Fund
<PAGE 15>
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
PENNSYLVANIA--.6%
Delaware Valley Regional Finance Authority, Government
Revenue, VRDN
3.75% (LOC; Credit Suisse) 500,000 (b) 500,000
Jeannette Health Service Authority, HR, VRDN
(Jeannette District Memorial Hospital Project) 3.65%
(LOC; PNC Bank, National Association) 100,000 (b) 100,000
WASHINGTON--.1%
Washington Community Economic Revitalization Board,
Economic Revenue, VRDN
3.70% (LOC; Bank of America NT & SA) 100,000 (b) 100,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $4,000,000) 4,000,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $93,773,120) 99.4% 95,440,057
CASH AND RECEIVABLES (NET) .6% 532,071
NET ASSETS 100.0% 95,972,128
</TABLE>
<PAGE 16>
Summary of Abbreviations
<TABLE>
<CAPTION>
<S> <C> <S> <C>
AMBAC American Municipal Bond LR Lease Revenue
Assurance Corporation MBIA Municipal Bond Investors
FGIC Financial Guaranty Insurance Assurance Insurance
Company Corporation
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage
HR Hospital Revenue Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA Aaa AAA 61.7
AA Aa AA 22.0
A A A 9.7
BBB Baa BBB 2.5
F1 MIG1/P1 SP1/A1 4.1
100.0
</TABLE>
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 17>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
Cost Value
- ------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 93,773,120 95,440,057
Receivable for investment securities sold 2,463,547
Interest receivable 1,593,836
99,497,440
- ------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 44,288
Due to Distributor 2,953
Cash overdraft due to Custodian 1,068,637
Payable for investment securities purchased 2,335,434
Payable for shares of Beneficial Interest redeemed 3,031
Other liabilities 70,969
3,525,312
- ------------------------------------------------------------------------------
NET ASSETS ($) 95,972,128
- ------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 94,318,400
Accumulated net realized gain (loss) on investments (13,209)
<TABLE>
<CAPTION>
<S> <C>
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 1,666,937
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 95,972,128
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets ($) 27,083,881 2,778,884 1,534,382 64,574,981
Shares Outstanding 2,252,161 231,105 127,194 5,370,248
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 12.03 12.02 12.06 12.02
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 18>
STATEMENT OF OPERATIONS
Year Ended June 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,226,019
EXPENSES:
Management fee--Note 2(a) 435,019
Distribution and service fees--Note 2(b) 91,658
Merger Expense--Note 1 32,243
Loan commitment fees--Note 4 282
TOTAL EXPENSES 559,202
INVESTMENT INCOME--NET 3,666,817
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments 75,642
Net unrealized gain (loss) on financial futures (39,913)
NET REALIZED GAIN (LOSS) 35,729
Net unrealized appreciation (depreciation) on investments (691,521)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (655,792)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,011,025
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 19>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS ($):
Investment income--net 3,666,817 2,305,341
Net realized gain (loss) on investments 35,729 39,537
Net unrealized appreciation (depreciation)
on investments (691,521) 951,247
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,011,025 3,296,125
- ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (1,090,877) (749,279)
Class B shares (87,000) (39,058)
Class C shares (29,934) (5,176)
Class R shares (2,459,006) (1,511,828)
Net realized gain on investments:
Class A shares (26,111) (80,051)
Class B shares (2,389) (4,823)
Class C shares (790) (650)
Class R shares (58,521) (142,207)
TOTAL DIVIDENDS (3,754,628) (2,533,072)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 12,748,480 1,928,337
Class B shares 1,370,541 866,854
Class C shares 1,515,094 169,572
Class R shares 19,087,979 20,684,158
<PAGE 20>
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS (CONTINUED) ($):
Dividends reinvested:
Class A shares 856,147 627,594
Class B shares 44,509 30,430
Class C shares 17,759 5,778
Class R shares 1,046,181 559,128
Cost of shares redeemed:
Class A shares (13,066,638) (2,732,478)
Class B shares (714,277) (219,487)
Class C shares (492,357) (42,680)
Class R shares (16,675,376) (4,439,994)
Net assets received in connection with reorganization
of Dreyfus Premier Limited Term California
Municipal Fund--Note 1 21,310,517 --
Net assets received in connection with reorganization
of Dreyfus Premier Limited Term New York
Municipal Fund--Note 1 7,777,417 --
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 34,825,976 17,437,212
TOTAL INCREASE (DECREASE) IN NET ASSETS 34,082,373 18,200,265
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 61,889,755 43,689,490
END OF PERIOD 95,972,128 61,889,755
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 21>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 1,097,666 156,992
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term California
Municipal Fund--Note 1 570,050 --
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term New York
Municipal Fund--Note 1 156,647 --
Shares issued for dividends reinvested 69,015 51,084
Shares redeemed (1,055,869) (222,938)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 837,509 (14,862)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold 110,983 70,552
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term California
Municipal Fund--Note 1 52,551 --
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term New York
Municipal Fund--Note 1 21,313 --
Shares issued for dividends reinvested 3,591 2,478
Shares redeemed (58,059) (17,814)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 130,379 55,216
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold 122,301 13,837
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term California
Municipal Fund--Note 1 11,009 --
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term New York
Municipal Fund--Note 1 15,617 --
Shares issued for dividends reinvested 1,434 469
Shares redeemed (40,102) (3,467)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 110,259 10,839
- --------------------------------------------------------------------------------------------------------------------------------
CLASS R
Shares sold 1,623,187 1,685,584
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term California
Municipal Fund--Note 1 1,082,177 --
Shares issued in connection with reorganization of
Dreyfus Premier Limited Term New York
Municipal Fund--Note 1 432,574 --
Shares issued for dividends reinvested 84,427 45,521
Shares redeemed (1,345,302) (362,249)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,877,063 1,368,856
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 22>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.32 12.12 11.89 11.82 11.66
Investment Operations:
Investment income--net .50 .52 .54 .54 .53
Net realized and unrealized gain (loss)
on investments (.28) .26 .26 .08 .19
Total from Investment Operations .22 .78 .80 .62 .72
Distributions:
Dividends from investment income--net (.50) (.52) (.54) (.55) (.53)
Dividends from net realized gain
on investments (.01) (.06) (.03) -- (.03)
Total Distributions (.51) (.58) (.57) (.55) (.56)
Net asset value, end of period 12.03 12.32 12.12 11.89 11.82
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(%)(A) 1.78 6.52 6.92 5.25 6.37
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .79 .77 .75 .75 .75
Ratio of net investment income
to average net assets 4.06 4.24 4.52 4.53 4.59
Portfolio Turnover Rate 28.19 14.62 30.50 55.07 61.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 27,084 17,423 17,323 18,751 21,375
(A) EXCLUSIVE OF SALES CHARGE.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 23>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
Period
Ended
Year Ended June 30, June 30,
----------------------------------
CLASS B SHARES 1999 1998 1997 1996 1995(a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.31 12.12 11.89 11.82 11.32
Investment Operations:
Investment income--net .44 .46 .48 .48 .24
Net realized and unrealized gain (loss)
on investments (.28) .25 .26 .07 .50
Total from Investment Operations .16 .71 .74 .55 .74
Distributions:
Dividends from investment income--net (.44) (.46) (.48) (.48) (.24)
Dividends from net realized gain
on investments (.01) (.06) (.03) -- --
Total Distributions (.45) (.52) (.51) (.48) (.24)
Net asset value, end of period 12.02 12.31 12.12 11.89 11.82
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(%)(B) 1.25 5.89 6.38 4.71 6.59(c)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.28 1.27 1.25 1.25 1.25(d)
Ratio of net investment income
to average net assets 3.55 3.68 4.01 3.98 4.09(d)
Portfolio Turnover Rate 28.19 14.62 30.50 55.07 61.00
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 2,779 1,240 551 500 85
(A) THE FUND COMMENCED SELLING CLASS B SHARES ON DECEMBER 28, 1994.
(B) EXCLUSIVE OF SALES CHARGE.
(C) NOT ANNUALIZED.
(D) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 24>
<TABLE>
<CAPTION>
Period
Ended
Year Ended June 30, June 30,
----------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.34 12.14 11.90 11.82 11.32
Investment Operations:
Investment income--net .44 .46 .49 .48 .24
Net realized and unrealized gain (loss)
on investments (.27) .26 .27 .08 .50
Total from Investment Operations .17 .72 .76 .56 .74
Distributions:
Dividends from investment income--net (.44) (.46) (.49) (.48) (.24)
Dividends from net realized gain
on investments (.01) (.06) (.03) -- .--
Total Distributions (.45) (.52) (.52) (.48) (.24)
Net asset value, end of period 12.06 12.34 12.14 11.90 11.82
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 1.35 6.02 6.50 4.81 6.59(c)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.26 1.27 1.27 1.24 1.25(d)
Ratio of net investment income
to average net assets 3.58 3.71 4.17 4.00 4.09(d)
Portfolio Turnover Rate 28.19 14.62 30.50 55.07 61.00
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 1,534 209 74 150 84
(A) THE FUND COMMENCED SELLING CLASS C SHARES ON DECEMBER 28, 1994.
(B) EXCLUSIVE OF SALES CHARGE.
(C) NOT ANNUALIZED.
(D) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 25>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
---------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 12.31 12.12 11.89 11.82 11.66
Investment Operations:
Investment income--net .53 .55 .57 .57 .56
Net realized and unrealized gain (loss)
on investments (.28) .25 .26 .08 .19
Total from Investment Operations .25 .80 .83 .65 .75
Distributions:
Dividends from investment income--net (.53) (.55) (.57) (.58) .(.56)
Dividends from net realized gain
on investments (.01) (.06) (.03) -- (.03)
Total Distributions (.54) (.61) (.60) (.58) (.59)
Net asset value, end of period 12.02 12.31 12.12 11.89 11.82
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.02 6.69 7.17 5.51 6.64
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .54 .52 .50 .50 .50
Ratio of net investment income
to average net assets 4.32 4.47 4.77 4.77 4.84
Portfolio Turnover Rate 28.19 14.62 30.50 55.07 61.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 64,575 43,018 25,741 17,870 16,727
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 26>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Limited Term Municipal Fund (the "fund" ) is a separate
non-diversified series of The Dreyfus/Laurel Tax-Free Municipal Funds (the
" Trust" ) which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company and operates
as a series company currently offering five series including the fund. The
fund' s investment objective is to maximize current income exempt from Federal
income taxes consistent with the prudent risk of capital by investing in
municipal securities which are of investment-grade quality and intermediate
maturities. The Dreyfus Corporation (the "Manager" ) serves as the fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon Bank").
On September 15, 1998, the Board Members of the Trust approved, subject to
approval by the shareholders of the Dreyfus Premier Limited Term Municipal Fund,
an Agreement and Plan of Reorganization providing for the transfer of all or
substantially all of the Dreyfus Premier Limited Term California Municipal
Fund' s assets and liabilities to the fund in a tax free exchange for shares of
beneficial interest of the fund, and the assumption by the fund of stated
liabilities (the "Exchange"). The Exchange was approved by the shareholders of
Premier Limited Term California Municipal Fund on November 12, 1998, and was
consummated after the close of business on November 12, 1998, at which time
531,135 Class A shares valued at $13.33 per share, 48,964 Class B shares valued
at $13.33 per share, 10,268 Class C shares valued at $13.36 per share and
1,009,057 Class R shares valued at $13.32 per share, representing combined net
assets of $21,310,517, (including $1,460,492 net unrealized appreciation on
investments) were exchanged by Dreyfus Premier Limited Term California Municipal
Fund for the equivalent number of Class A, Class B, Class C shares and Class R
shares of the fund.
On September 15, 1998, the Board Members of the Trust approved, subject to
approval by the shareholders of the Dreyfus Premier Limited
The Fund
<PAGE 27>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Term Municipal Fund, an Agreement and Plan of Reorganization providing for the
transfer of all or substantially all of the Dreyfus Premier Limited Term New
York Municipal Fund's assets and liabilities to the fund in a tax free exchange
for shares of beneficial interest of the fund, and the assumption by the fund of
stated liabilities (the "Exchange" ). The Exchange was approved by the
shareholders of Premier Limited Term New York Municipal Fund on November 12,
1998, and was consummated after the close of business on November 12, 1998, at
which time 150,236 Class A shares valued at $12.95 per share, 20,425 Class B
shares valued at $12.96 per share, 14,991 Class C shares valued at $12.98 per
share and 414,870 Class R shares valued at $12.95 per share, representing
combined net assets of $7,777,417, (including $390,164 net unrealized
appreciation on investments) were exchanged by Dreyfus Premier Limited Term New
York Municipal Fund for the equivalent number of Class A, Class B, Class C
shares and Class R shares of the fund.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue an unlimited number of shares of
Beneficial Interest in the following classes of shares: Class A, Class B, Class
C and Class R. Class A, Class B and Class C shares are sold primarily to retail
investors through financial intermediaries and bear a distribution fee and/or
service fee. Class A shares are sold with a front-end sales charge, while Class
B and Class C shares are subject to a contingent deferred sales charge ("CDSC")
and distribution and service fee. Class R shares are 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 bear no distribution
or service fees. Class R shares are offered without a front-end sales load or
CDSC. Each class of shares has identical rights and privileges, except with
respect to distribution and service fees and voting rights on matters affecting
a single class.
Investment income, net of expenses (other than class specific expenses) and
realized and unrealized gains and losses are allocated daily to each
<PAGE 28>
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 principles which require the use of management estimates.
Actual results may differ from estimates.
(a) Portfolio valuation: Investments in securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the Board
of Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(b) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost 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.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
The Fund
<PAGE 29>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) Financial futures: The fund may invest in financial futures contracts in
order to gain exposure to or protect against changes in the market. The fund is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the fund to
"mark to market" on a daily basis, which reflects the change in the market value
of the contract at the close of each day's trading. Typically, variation margin
payments are received or made to reflect daily unrealized gains or losses. When
the contracts are closed, the fund recognizes a realized gain or loss. These
investments require initial margin deposits with a custodian, which consist of
cash or cash equivalents, up to approximately 10% of the contract amount. The
amount of these deposits is determined by the exchange or Board of Trade on
which the contract is traded and is subject to change. At June 30, 1999, there
were no financial futures contracts outstanding.
(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 of 1986, as
amended (the "Code"). To the extent that net realized capital gain can be offset
by capital loss carryovers, if any, 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 Code, and to make distributions
of income and net realized capital gain sufficient to relieve it from
substantially all Federal income and excise taxes.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(a) Investment management fee: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or
<PAGE 30>
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 .50% of the value of the fund's average
daily net assets. Out of its fee, the Manager pays all of the expenses of the
fund except brokerage fees, taxes, interest, commitment fees, Rule 12b-1
distribution fees and expenses, fees and expenses of non-interested Trustees
(including counsel fees) and extraordinary expenses. In addition, the Manager is
required to reduce its fee in an amount equal to the fund's allocable portion of
fees and expenses of the non-interested Trustees (including counsel). Each
Trustee receives $40,000 per year, plus $5,000 for each joint Board meeting of
The Dreyfus/Laurel Funds, Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and
The Dreyfus/Laurel Funds Trust (the "Dreyfus/Laurel Funds") attended, $2,000 for
separate committee meetings attended which are not held in conjunction with a
regularly scheduled board meeting and $500 for Board meetings and separate
committee meetings attended that are conducted by telephone and is reimbursed
for travel and out-of-pocket expenses. The Chairman of the Board receives an
additional 25% of such compensation (with the exception of reimbursable
amounts). In the event that there is a joint committee meeting of the Dreyfus/
Laurel Funds and the Dreyfus High Yield Strategies Fund, the $2,000 fee
will be allocated between the Dreyfus/Laurel Funds and the Dreyfus High Yield
Strategies Fund. These fees and expenses are charged and allocated to each
series based on net assets. Amounts required to be paid by the Trust directly
to the non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Trustees.
(b) Distribution and service plan: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, the fund may
The Fund
<PAGE 31>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
pay annually up to .25% of the value of its average daily net assets
attributable to its Class A shares to compensate the Distributor and Dreyfus
Service Corporation, an affiliate of the Manager, for shareholder servicing
activities and the Distributor for activities and expenses primarily intended to
result in the sale of Class A shares. Under the Plan, Class B and Class C may
pay the Distributor for distributing their shares at an aggregate annual rate of
.50% of the value of the average daily net assets of Class B and Class C shares.
Class B shares and Class C shares are also subject to a service plan adopted
pursuant to Rule 12b-1, under which the Class B shares and Class C shares pay
Dreyfus Service Corporation or the Distributor for providing certain services to
the holders of Class B and Class C shares a fee at the annual rate of .25% of
the value of the average daily net assets of Class B and Class C shares. Class R
shares bear no distribution or service fee. During the period ended June 30,
1999, Class A, Class B and Class C shares were charged $67,052, $12,225 and
$4,179, respectively, pursuant to the Plan and Class B and Class C were charged
$6,112 and $2,090, respectively, pursuant to the service plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of majority of
those Trustees who are not "interested persons" of the Company and who have no
direct or indirect financial interest in the operation of or in any agreement
related to the Plan or service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended June 30,
1999, amounted to $56,509,704 and $23,420,534, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$1,666,937, consisting of $2,119,325 gross unrealized appreciation and $452,388
gross unrealized depreciation.
<PAGE 32>
At June 30, 1999, 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 4--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended June
30, 1999, the fund did not borrow under the Facility.
The Fund
<PAGE 33>
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 of Dreyfus
Premier Limited Term Municipal Fund of The Dreyfus/Laurel Tax-Free Municipal
Funds, including the statement of investments, as of June 30, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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.
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, 1999, by correspondence with the custodian and brokers. 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 Premier Limited Term Municipal Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds as of June 30, 1999, the results of its operations for the year
then ended, changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
New York, New York
August 11, 1999
<PAGE 34>
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended June 30, 1999:
-- all the dividends paid from investment income-net are "exempt-interest
dividends" (not generally subject to regular Federal income tax), and
-- the fund hereby designates $.0058 per share as a long-term capital gain
distribution of the $.0113 per share paid on December 9, 1998.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the fund's taxable ordinary dividends (if any) and capital gain
distributions (if any) paid for the 1999 calendar year on Form 1099-DIV which
will be mailed by January 31, 2000.
The Fund
<PAGE 35>
NOTES
<PAGE 36>
For More Information
Dreyfus Premier Limited Term Municipal 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 347/647AR996
Dreyfus Premier
Limited Term
Massachusetts
Municipal Fund
ANNUAL REPORT June 30, 1999
(reg.tm)
<PAGE>
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
14 Statement of Assets and Liabilities
15 Statement of Operations
16 Statement of Changes in Net Assets
19 Financial Highlights
23 Notes to Financial Statements
29 Report of Independent Auditors
30 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
<PAGE>
The Fund
Dreyfus Premier Limited Term Massachusetts
Municipal Money Market Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Limited Term
Massachusetts Municipal Money Market Fund, covering the 12-month period from
July 1, 1998 through June 30, 1999. Inside, you'll find valuable information
about how the fund was managed during the period, including a discussion with
the fund's portfolio manager, Kristin Lindquist.
The U.S. economy has entered its eighth year of expansion in an environment
characterized by low inflation and high levels of consumer spending. These
conditions have helped support the credit quality of many states and
municipalities.
Tax-exempt fixed-income securities generally outperformed U.S. Treasury
securities in this economic climate. While prices of U.S. Treasury securities
declined significantly through the second half of the reporting period, a lack
of new issuance relative to robust investor demand supported most municipal bond
prices. As a result, the differences in valuations between taxable and
tax-exempt bonds, which reached historically wide levels last October, have
since narrowed to a more normal relationship.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Limited Term Massachusetts Municipal
Money Market Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 15, 1999
<PAGE 2>
DISCUSSION OF FUND PERFORMANCE
Kristin Lindquist, Portfolio Manager
How did Dreyfus Premier Limited Term Massachusetts Municipal Money Market Fund
perform during the period?
The fund' s Class A shares produced a total return of 1.60% over the 12-month
period ended June 30, 1999,(1) compared to a total return of 1.57% for the
Lipper Massachusetts Intermediate Municipal Debt Fund category's average.(2) The
fund produced a total return of 1.09% for Class B shares, 1.18% for Class C
shares, and 1.93% for Class R shares over the same period.(1)
We attribute the fund's performance to our conservative investment approach in a
mixed environment for municipal bonds. While declining interest rates helped
support limited-term municipal bonds' share prices during the second half of
1998, their prices did not appreciate as much as longer term bonds. During the
first six months of 1999, however, limited-term municipal bonds helped cushion
the effects of sharply higher interest rates, which adversely affected bond
prices.
What is the fund's investment approach?
Our goal is to seek as high a level of federal and Massachusetts state
tax-exempt current income as is consistent with the prudent risk of capital. To
achieve this objective, we attempt to add value by selecting the individual
limited-term, tax-exempt bonds from Massachusetts issuers that we believe are
most likely to provide the highest returns with the least risk. We also actively
manage the portfolio's average weighted maturity -- a measure of sensitivity to
changes in interest rates -- in anticipation of interest rate and
supply-and-demand changes in Massachusetts's limited-term municipal marketplace
Focusing on individual securities rather than economic or market trends, we
search for securities that, in our opinion, represent better values than we hold
in the portfolio at that time. When we find securities that we believe will help
us enhance the fund's yield without sacrificing quality, we buy them and sell
less attractive securities.
The Fund
<PAGE 3>
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average weighted maturity is a more tactical
approach. If we expect the supply of securities to increase temporarily, we may
reduce the portfolio's average weighted maturity to make cash available for the
purchase of higher yielding securities. If we expect demand to surge at a time
when we anticipate little issuance and, therefore, lower yields, we may increase
the portfolio's average weighted maturity to maintain current yields for as long
as practical. At other times, we try to maintain a neutral average weighted
maturity.
What other factors influenced the fund's performance?
When the Asian currency and credit crisis spread to Russia and threatened Latin
America last summer and fall, investors flocked to U.S. Treasury securities. As
a result, yields on taxable Treasuries fell briefly in October to levels that
were roughly equivalent to yields on comparable tax-exempt bonds.
However, the Federal Reserve Board and other central banks moved quickly to
stimulate global economic growth. They did so last fall by reducing key
short-term interest rates. Because lower short-term interest rates were expected
to stimulate economic growth and potentially reignite inflationary pressures,
yields on longer term bonds rose. However, the extent of that rise was much
greater for taxable U.S. Treasury securities than for municipal bonds.
During the second half of 1998, municipal bond issuers came to the market in
droves to take advantage of lower interest rates. As a result, the second half
of 1998 ranked as the second-highest six-month period of issuance in recent
history. In contrast, issuance during the first half of 1999 was relatively low:
nationally, about 25% fewer tax-exempt bonds were issued than in the same period
one year ago. Yet,
<PAGE 4>
demand from investors seeking to minimize their income tax liabilities remained
high. This balance between supply and demand helped keep municipal bond prices
relatively stable while U.S. Treasury bond prices fell sharply.
What is the fund's current strategy?
We have continued to search for the most attractive values in Massachusetts's
tax-exempt marketplace. This search has led us to bonds with high credit
ratings. Consequently, the portfolio's credit quality averaged in the double-A
range on June 30, 1999.
In addition, we found attractive values in longer maturity bonds selling at a
premium to face value. We balanced these longer positions with investments in
securities with maturities of one year or less, producing an average weighted
maturity of 8 to 9 years, which is toward the long end of the neutral range.
This strategy was designed to capture higher yields as they became available,
while giving us continued flexibility to change our stance as market forces
evolve.
July 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID,
AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE
CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE
IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE
CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. INCOME MAY BE SUBJECT TO
STATE AND LOCAL TAXES FOR NON-MASSACHUSETTS RESIDENTS, AND SOME INCOME MAY BE
SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS.
CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT
UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: LIPPER ANALYTICAL SERVICES, INC.
The Fund
<PAGE 5>
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Limited
Term Massachusetts Municipal Fund Class A shares with the Lehman Brothers
10-Year Municipal Bond Index and the Lehman Brothers 7-year Municipal Bond Inde
((+)) SOURCE: LEHMAN BROTHERS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FUND'S CLASS A SHARES
ON 6/30/89 TO A $10,000 INVESTMENT MADE ON THAT DATE IN THE LEHMAN BROTHERS
10-YEAR MUNICIPAL BOND INDEX (THE "LEHMAN 10-YEAR INDEX"), AS WELL AS TO AN
INVESTMENT IN THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX (THE "LEHMAN
7-YEAR INDEX") WHICH ARE DESCRIBED BELOW. THE LEHMAN 7-YEAR INDEX BEGAN IN
JANUARY OF 1990. THIS INVESTMENT ASSUMES A BEGINNING VALUE OF $10,281 WHICH IS
EQUAL TO THE VALUE OF THE $10,000 INVESTMENT IN THE FUND AT THE STARTING POINT
OF THIS INDEX, WITHOUT TAKING INTO ACCOUNT THE FUND'S MAXIMUM INITIAL SALES
CHARGE ON CLASS A SHARES. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE
REINVESTED. PERFORMANCE FOR CLASS B, CLASS C AND CLASS R SHARES WILL VARY FROM
THE PERFORMANCE OF CLASS A SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND
EXPENSES.
THE FUND INVESTS PRIMARILY IN MASSACHUSETTS INVESTMENT-GRADE MUNICIPAL BONDS
WITH INTERMEDIATE MATURITIES AND EXPECTS TO MAINTAIN AN AVERAGE MATURITY OF LESS
THAN 10 YEARS. THE FUND'S PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT
THE MAXIMUM INITIAL SALES CHARGE ON CLASS A SHARES AND ALL OTHER APPLICABLE FEES
AND EXPENSES. UNLIKE THE FUND, THE LEHMAN 10-YEAR INDEX IS AN UNMANAGED TOTAL
RETURN PERFORMANCE BENCHMARK FOR THE INVESTMENT-GRADE, GEOGRAPHICALLY
UNRESTRICTED 10-YEAR TAX EXEMPT BOND MARKET, CONSISTING OF MUNICIPAL BONDS WITH
MATURITIES OF 9-12 YEARS. THE LEHMAN 7-YEAR INDEX CONSISTS OF BONDS WITH SIMILAR
CHARACTERISTICS WITH MATURITIES OF 6-8 YEARS. THE INDICES DO NOT TAKE INTO
ACCOUNT CHARGES, FEES AND OTHER EXPENSES AND ARE NOT LIMITED TO INVESTMENTS
PRINCIPALLY IN MASSACHUSETTS MUNICIPAL OBLIGATIONS. THESE FACTORS CAN CONTRIBUTE
TO THE INDICES POTENTIALLY OUTPERFORMING THE FUND. FURTHER INFORMATION RELATING
TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS
CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN
THIS REPORT.
$20,604
Lehman Brothers 10-Year Municipal Bond Index((+)
$19,323
Lehman Brothers 7-Year Municipal Bond Index((+)
$17,837
Dreyfus Premier Limited Term Massachusetts Municipal Fund
(Class A Shares)
<PAGE 6>
Average Annual Total Returns AS OF 6/30/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year 5 Years 10 Years Inception
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
<S> <C> <C> <C> <C> <C>
WITH SALES CHARGE (3.0%) (9/24/85) --1.43% 4.59% 5.96% --
WITHOUT SALES CHARGE (9/24/85) 1.60% 5.22% 6.28% --
CLASS B SHARES
WITH REDEMPTION((+)) (12/28/94) --1.84% -- -- 5.12%
WITHOUT REDEMPTION (12/28/94) 1.09% -- -- 5.31%
CLASS C SHARES
WITH REDEMPTION((+)(+)) (12/28/94) 0.44% -- -- 5.35%
WITHOUT REDEMPTION (12/28/94) 1.18% -- -- 5.35%
CLASS R SHARES
(2/1/93) 1.93% 5.49% -- 5.23%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 3%
AND IS REDUCED TO 0% AFTER
FIVE YEARS.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
.75% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund
<PAGE 7>
STATEMENT OF INVESTMENTS
June 30, 1999
- --------------------------------------------------------------------------------
Principal
LONG-TERM MUNICIPAL INVESTMENTS--93.5% Amount ($) Value ($)
- --------------------------------------------------------------------------------
MASSACHUSETTS--87.4%
Amesbury:
6.75%, 11/1/1999 (Insured; MBIA) 355,000 358,930
6.75%, 11/1/2000 355,000 368,728
Amherst 6%, 1/15/2003 200,000 210,472
Amherst-Pelham Regional School District
5.50%, 5/15/2003 (Insured; AMBAC) 1,000,000 1,029,220
Andover 6%, 1/15/2005 700,000 760,592
Belmont 5.50%, 1/15/2005 585,000 614,420
Boston 5.25%, 10/1/2004 (Insured; MBIA) 2,000,000 2,074,540
Boston Water and Sewer Commission, Revenue
9.25%, 1/1/2011 100,000 134,613
Burlington:
5.25%, 2/1/2012 200,000 203,216
5.25%, 2/1/2013 250,000 253,510
Cambridge:
6.60%, 6/15/2000 675,000 695,277
Municipal Purpose Loan 5.60%, 11/1/2001 500,000 518,040
Cohasset, Municipal Purpose Loan
6.90% 11/1/2000 (Insured; MBIA) 150,000 156,424
Easton, Municipal Purpose Loan 6%, 9/15/2006 105,000 111,599
Franklin 6.25%, 11/15/2005 (Insured; MBIA) 430,000 467,926
Frontier Regional School District
5.50%, 6/15/2014 (Insured; AMBAC) 1,000,000 1,021,860
Haverhill 6%, 6/15/2005 (Insured; FGIC) 750,000 803,153
Martha's Vineyard, Land Bank Revenue 5.50%, 5/1/2011 1,030,000 1,064,330
Mashpee, Municipal Purpose Loan
6.25%, 2/1/2006 (Insured; MBIA) 1,000,000 1,088,350
Massachusetts:
5%, 8/1/2001 1,020,000 1,039,268
6.50%, 8/1/2008 600,000 668,382
Consolidated Loan:
7%, 7/1/2006 (Insured; MBIA, Prerefunded 7/1/2000) 500,000 (a) 527,190
5.25%, 8/1/2015 850,000 848,589
5.25%, 8/1/2017 500,000 500,845
Massachusetts Bay Transportation Authority,
General Transportation System:
5.90%, 3/1/2004 (Prerefunded 2/1/2003) 20,000 (a) 21,366
5.90%, 3/1/2004 530,000 560,512
5.25%, 3/1/2011 (Insured; AMBAC, Prerefunded 3/1/2005) 1,000,000 (a) 1,043,590
5.50%, 3/1/2009 2,000,000 2,084,360
<PAGE 8>
- --------------------------------------------------------------------------------
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Development Finance Agency, Revenue
(Higher Education - Emerson College)
5.125%, 1/1/2014 (Insured; AMBAC) 2,500,000 2,469,800
Massachusetts Education Loan Authority, Education Loan
Revenue 6.20%, 7/1/2013 (Insured; AMBAC) 905,000 953,526
Massachusetts Federal Highway Grant, Anticipation Notes
5.25%, 6/15/2013 1,000,000 1,001,250
Massachusetts Health and Educational Facilities Authority,
Revenue:
(Boston College) 5%, 6/1/2016 500,000 479,315
(Brandeis University) 5.25%, 10/1/2013 (Insured; MBIA) 1,000,000 999,420
(Brigham & Womens Hospital)
6.75%, 7/1/2024 (Insured; MBIA,
Prerefunded 7/1/2001) 2,000,000 (a) 2,142,000
(Dana-Farber Cancer Institute)
5.55%, 12/1/2003 (Insured; FGIC) 400,000 416,240
(Harvard University):
6.20%, 12/1/2001 1,000,000 1,049,630
Refunding 6.50%, 11/1/2004 700,000 769,356
(Institute of Technology) 5.20%, 1/1/2028 1,000,000 986,100
(Jordan Hospital):
5%, 10/1/2010 500,000 485,760
6.875%, 10/1/2015 1,000,000 1,059,860
(Northeastern University) 5.50%,
10/1/2009 (Insured; MBIA) 420,000 437,850
(Partners Healthcare Systems):
5.25%, 7/1/2004 (Insured; FSA) 1,000,000 1,029,430
5.25%, 7/1/2013 1,595,000 1,575,557
5.125%, 7/1/2019 1,000,000 948,460
(South Shore Hospital):
4.75%, 7/1/2004 700,000 694,323
7.50%, 7/1/2010 (Insured; MBIA,
Prerefunded 7/1/2000) 350,000 (a) 370,493
7.50%, 7/1/2020 (Insured; MBIA,
Prerefunded 7/1/2000) 500,000 (a) 529,275
(Wenworth Institute of Technology):
7.15%, 4/1/2000 (Insured; AMBAC) 225,000 231,327
7.40%, 4/1/2010 (Insured; AMBAC,
Prerefunded 4/1/2000) 220,000 (a) 230,870
(Williams College) 5.70%, 7/1/2008 520,000 546,702
Massachusetts Housing Finance Agency, SFHR:
6%, 6/1/2014 (Insured; MBIA) 1,170,000 1,225,856
5.75%, 12/1/2029 (Insured; MBIA) 345,000 354,153
The Fund
<PAGE 9>
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Industrial Finance Agency:
Electric Revenue (Nantucket Electric Co. Project)
6.75%, 7/1/2006 (Insured; AMBAC) 1,400,000 1,548,036
Museum Revenue, Refunding (Museum of Fine Arts of Boston)
5.375%, 1/1/2007 (Insured; MBIA) 1,000,000 1,036,830
Revenue:
(Babson College) 5.75%, 10/1/2007 (Insured; MBIA) 555,000 590,731
(Brooks School):
5.70%, 7/1/2006 (Prerefunded 7/1/2003) 260,000 (a) 276,403
5.75%, 7/1/2007 (Prerefunded 7/1/2003) 275,000 (a) 292,847
5.80%, 7/1/2008 (Prerefunded 7/1/2003) 290,000 (a) 309,349
5.85%, 7/1/2009 (Prerefunded 7/1/2003) 305,000 (a) 325,905
(Concord Academy) 5.50%, 9/1/2027 1,250,000 1,190,662
(College of The Holy Cross):
5.50%, 3/1/2005 (Insured; MBIA) 1,000,000 1,044,140
5.50%, 3/1/2007 (Insured; MBIA) 1,145,000 1,196,216
(St. John's School, Inc.) 5.70%, 6/1/2018 1,000,000 990,250
(The Tabor Academy) 5.40%, 12/1/2028 500,000 474,265
(Tufts University):
5.50%, 2/15/2007 (Insured; MBIA) 750,000 783,390
5.50%, 2/15/2008 (Insured; MBIA) 1,595,000 1,662,134
5.50%, 2/15/2009 (Insured; MBIA) 665,000 691,919
(Wentworth Institute of Technology) 5.55%, 10/1/2013 500,000 489,600
(Worcester Polytechnic) 5.35%, 9/1/2006 850,000 884,025
Massachusetts Special Obligation, Revenue:
(Highway Improvement Loan) 5.80%, 6/1/2000 880,000 899,158
(Consolidated Loan) 5.25%, 6/1/2010 1,000,000 1,018,690
Massachusetts Turnpike Authoriy, Metropolitan Highway
System Revenue 5.25%, 1/1/2015 1,500,000 1,494,495
Massachusetts Water Pollution Abatement Trust:
(Pool Loan Program) 6.125%, 2/1/2007 (Insured; FSA) 1,000,000 1,083,370
Water Pollution Abatement Revenue:
(New Bedford Loan Program):
6%, 2/1/2004 745,000 792,553
6%, 2/1/2004 255,000 270,193
5.25%, 2/1/2012 500,000 505,260
(Seso Loan Program) 5.25%, 8/1/2005 1,050,000 1,083,862
Massachusetts Water Resource Authority:
5.875%, 11/1/2004 500,000 531,105
5.50%, 8/1/2008 (Insured; MBIA) 500,000 522,695
5.30%, 11/1/2010 (Insured; FGIC) 1,000,000 1,021,270
<PAGE 10>
- --------------------------------------------------------------------------------
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
- --------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Mendon Upton Regional School District
6%, 6/1/2007 (Insured; FGIC) 600,000 646,332
Milford 5.375%, 8/15/2011 (Insured MBIA) 500,000 510,815
Nantucket 5%, 7/15/2017 (Insured; MBIA) 1,000,000 959,230
North Attleborough 5.50%, 3/1/2006 (Insured; AMBAC) 1,000,000 1,045,570
Northampton, School Project Loan
6.40%, 5/15/2004 (Insured; MBIA) 750,000 810,990
Quabbin Regional School District
6%, 6/15/2008 (Insured; AMBAC) 780,000 841,300
Rockport 6.90%, 12/15/2007 (Prerefunded 12/15/1999) 1,000,000 (a) 1,045,940
Somerville 6%, 2/15/2007 (Insured; FSA) 775,000 835,543
Southeastern University Building Authority, Project Revenue
5.90%, 5/1/2010 (Insured; AMBAC) 500,000 532,175
Springfield:
(Municipal purpose Loan) 5.25%, 11/15/2012 (Insured; FSA) 2,000,000 2,012,660
(School Project Loan) 6.10%, 9/1/2002 (Insured; AMBAC) 600,000 632,382
Uxbridge, Municipal Purpose Loan:
6.125%, 11/15/2005 (Insured; MBIA) 500,000 541,830
6.125%, 11/15/2007 (Insured; MBIA) 525,000 572,476
Worchester, Municipal Purpose Loan:
6.25%, 7/1/2010 (Insured; MBIA) 755,000 835,136
5.25%, 11/1/2010 (Insured; MBIA) 1,000,000 1,017,460
Yarmouth 8.60%, 10/1/2000 100,000 105,883
U.S. RELATED--6.1%
Puerto Rico Commonwealth, Refunding
6.25%, 7/1/2011 (Insured; MBIA) 1,050,000 1,170,907
Puerto Rico Commonwealth Highway and
Transportation Authority, Highway Revenue
6.25%, 7/1/2009 (Insured; MBIA) 1,000,000 1,112,020
Puerto Rico Electric Power Authority, Power Revenue
6.50%, 7/1/2006 (Insured; MBIA) 1,000,000 1,112,340
Puerto Rico Public Buildings Authority, Revenue
6.75%, 7/1/2005 (Insured; AMBAC) 1,000,000 1,116,380
University of Puerto Rico, University Revenue
6.25%, 6/1/2005 750,000 818,932
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $81,314,948) 81,501,509
The Fund
<PAGE 11>
STATEMENT OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Principal
SHORT-TERM MUNICIPAL INVESTMENTS--10.4% Amount ($) Value ($)
- --------------------------------------------------------------------------------
MASSACHUSETTS:
Massachusetts 3.60% 1,500,000 (b) 1,500,000
Massachusetts Development Finance Agency, VRDN
(1st Mortgage Lasell Village)
3.20% (LOC; Fleet National Bank) 300,000 (b) 300,000
Massachusetts Health and Educational Facilities Authority,
Revenue, VRDN:
(Amherst College) 3.90% 200,000 200,000
(Capital Asset Program):
3.90% (Insured; MBIA) 700,000 (b) 700,000
3.85% (Insured; MBIA) 1,500,000 (b) 1,500,000
3.95% (Insured; MBIA) 600,000 (b) 600,000
3.60% (Insured; MBIA) 400,000 (b) 400,000
(Newton Wellesley Hospital) 3.40% 500,000 (b) 500,000
Massachusetts Water Research Authority, VRDN
3.30% (LOC; Helaba) 3,000,000 (b) 3,000,000
Massachusetts Industrial Finance Agency, Revenue, VRDN
(Showa Womans Institute, Inc.) 3.90% 400,000 (b) 400,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $9,100,000) 9,100,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $90,414,948) 103.9% 90,601,509
LIABILITIES, LESS CASH AND RECEIVABLES (3.9%) (3,421,998)
NET ASSETS 100.0% 87,179,511
<PAGE 12>
Summary of Abbreviations
AMBAC American Municipal Bond MBIA Municipal Bond
Assurance Corporation Investors Assurance
FGIC Financial Guaranty Insurance Insurance Corporation
Company SFHR Single Family Housing
FSA Financial Security Assurance Revenue
LOC Letter of Credit VRDN Variable Rate Demand
Notes
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
- --------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 67.4
AA Aa AA 14.5
A A A 2.9
BBB Baa BBB 5.2
F1+, F-1 MIG1, VMIG1 & P1 SP1, A1 10.0
100.0
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE SUBJECT TO PERIODIC
CHANGE.
(C) AT JUNE 30, 1999, 32% OF THE FUND'S NET ASSETS ARE INSURED BY MBIA.
(D) AT JUNE 30, 1999, THE FUND HAD $24,812,305 (28.5% OF NET ASSETS) INVESTED
IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES
GENERATED FROM EDUCATION PROJECTS.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 13>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 90,414,948 90,601,509
Interest receivable 1,350,146
Receivable for shares of Beneficial Interest subscribed 30,000
91,981,655
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 38,594
Due to Distributor 1,057
Cash overdraft due to Custodian 3,066
Payable for investment securities purchased 4,759,427
4,802,144
- --------------------------------------------------------------------------------
NET ASSETS ($) 87,179,511
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 87,066,426
Accumulated net realized gain (loss) on investments (73,476)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 186,561
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 87,179,511
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 15,045,436 900,807 331,845 70,901,423
Shares Outstanding 1,250,251 74,686 27,476 5,891,093
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 12.03 12.06 12.08 12.04
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 14>
STATEMENT OF OPERATIONS
Year Ended June 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 3,904,617
EXPENSES:
Management fee--Note 2(a) 402,864
Distribution and service fees--Note 2(b) 50,563
Loan commitment fees--Note 4 244
TOTAL EXPENSES 453,671
INVESTMENT INCOME--NET 3,450,946
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3:
Net realized gain (loss) on investments (32,947)
Net realized gain (loss) on financial futures (39,912)
NET REALIZED GAIN (LOSS) (72,859)
Net unrealized appreciation (depreciation) on investments (2,223,377)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,296,236)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,154,710
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 15>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,450,946 2,602,611
Net realized gain (loss) on investments (72,859) 34,608
Net unrealized appreciation (depreciation)
on investments (2,223,377) 991,497
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,154,710 3,628,716
- --------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (679,400) (693,581)
Class B shares (32,547) (20,716)
Class C shares (10,697) (3,463)
Class R shares (2,728,302) (1,884,851)
Net realized gain on investments:
Class A shares (7,443) (62,410)
Class B shares (444) (2,165)
Class C shares (124) (207)
Class R shares (26,730) (148,583)
TOTAL DIVIDENDS (3,485,687) (2,815,976)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 1,385,254 2,367,545
Class B shares 536,215 187,900
Class C shares 126,450 280,514
Class R shares 34,270,298 26,924,745
<PAGE 16>
- --------------------------------------------------------------------------------
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
BENEFICIAL TRANSACTIONS (CONTINUED) ($):
Dividends reinvested:
Class A shares 466,046 559,919
Class B shares 9,718 8,878
Class C shares 6,288 3,253
Class R shares 1,128,686 749,754
Cost of shares redeemed:
Class A shares (2,784,916) (2,913,411)
Class B shares (253,992) (31,308)
Class C shares (75,000) (10,008)
Class R shares (13,537,327) (10,459,243)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 21,277,720 17,668,538
TOTAL INCREASE (DECREASE) IN NET ASSETS 18,946,743 18,481,278
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 68,232,768 49,751,490
END OF PERIOD 87,179,511 68,232,768
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 17>
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended June 30,
---------------------------------
1999 1998
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 112,386 192,071
Shares issued for dividends reinvested 37,514 45,454
Shares redeemed (225,095) (236,197)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (75,195) 1,328
- --------------------------------------------------------------------------------
CLASS B
Shares sold 42,719 15,210
Shares issued for dividends reinvested 780 718
Shares redeemed (20,283) (2,513)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 23,216 13,415
- --------------------------------------------------------------------------------
CLASS C
Shares sold 10,127 22,762
Shares issued for dividends reinvested 506 263
Shares redeemed (5,957) (809)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 4,676 22,216
- --------------------------------------------------------------------------------
CLASS R
Shares sold 2,761,644 2,186,687
Shares issued for dividends reinvested 90,921 60,853
Shares redeemed (1,090,901) (848,374)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,761,664 1,399,166
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 18>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single fund share. Total return shows how much your investment in the fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures have been derived
from the fund's financial statements.
Year Ended June 30,
--------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.34 12.15 11.97 11.91 11.74
Investment Operations:
Investment income--net .51 .53 .54 .54 .55
Net realized and unrealized gain (loss)
on investments (.30) .24 .20 .08 .20
Total from Investment Operations .21 .77 .74 .62 .75
Distributions:
Dividends from investment income--net (.51) (.53) (.54) (.54) (.54)
Dividends from net realized gain
on investments (.01) (.05) (.02) .(.02) (.04)
Total Distributions (.52) (.58) (.56) (.56) (.58)
Net asset value, end of period 12.03 12.34 12.15 11.97 11.91
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN( )(%)(A) 1.60 6.41 6.36 5.22 6.60
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .75 .75 .75 .75 .75
Ratio of net investment income
to average net assets 4.10 4.30 4.47 4.44 4.65
Portfolio Turnover Rate 16.35 6.63 22.57 39.16 25.00
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 15,045 16,355 16,093 15,689 16,501
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 19>
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
---------------------------------
CLASS B SHARES 1999 1998 1997 1996(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.37 12.18 11.99 11.91
Investment Operations:
Investment income--net .44 .47 .48 .48
Net realized and unrealized gain (loss)
on investments (.30) .24 .21 .10
Total from Investment Operations .14 .71 .69 .58
Distributions:
Dividends from investment income--net (.44) (.47) (.48) (.48)
Dividends from net realized gain
on investments (.01) (.05) .(.02) (.02)
Total Distributions (.45) (.52) (.50) (.50)
Net asset value, end of period 12.06 12.37 12.18 11.99
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN( )(%)(B) 1.09 5.87 5.90 4.87
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.25 1.25
Ratio of net investment income
to average net assets 3.56 3.78 3.96 3.67
Portfolio Turnover Rate 16.35 6.63 22.57 39.16
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 901 637 464 452
(A) THE FUND COMMENCED SELLING CLASS B SHARES ON DECEMBER 28, 1994. FINANCIAL
HIGHLIGHTS FOR THE PERIOD ENDED JUNE 30, 1995 FOR CLASS B SHARES ARE NOT
PRESENTED BECAUSE NO SHARES HAD BEEN ISSUED TO THE PUBLIC AS OF THAT DATE.
(B) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 20>
Period
Ended
Year Ended June 30, June 30,
----------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.38 12.15 11.97 11.91 11.45
Investment Operations:
Investment income--net .44 .46 .49 .48 .26
Net realized and unrealized gain (loss)
on investments (.29) .28 .20 .08 .45
Total from Investment Operations .15 .74 .69 .56 .71
Distributions:
Dividends from investment income--net (.44) (.46) (.49) (.48) .(.25)
Dividends from net realized gain
on investments (.01) (.05) (.02) (.02) .--
Total Distributions (.45) (.51) (.51) (.50) (.25)
Net asset value, end of period 12.08 12.38 12.15 11.97 11.91
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 1.18 6.19 5.87 4.68 6.24
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.23 1.25 1.25 1.25(c)
Ratio of net investment income
to average net assets 3.58 3.64 4.05 3.93 4.15(c)
Portfolio Turnover Rate 16.35 6.63 22.57 39.16 25.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 332 282 7 16 18
(A) THE FUND COMMENCED SELLING CLASS C SHARES ON DECEMBER 28, 1994.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<PAGE 21>
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
---------------------------------------------
CLASS R SHARES 1999 1998 1997 1996 1995(a)
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.34 12.16 11.97 11.91 11.74
Investment Operations:
Investment income--net .54 .56 .57 .57 .57
Net realized and unrealized gain (loss)
on investments (.29) .23 .21 .08 .21
Total from Investment Operations .25 .79 .78 .65 .78
Distributions:
Dividends from investment income--net (.54) (.56) (.57) (.57) .(.57)
Dividends from net realized gain
on investments (.01) (.05) (.02) (.02) (.04)
Total Distributions (.55) (.61) (.59) (.59) (.61)
Net asset value, end of period 12.04 12.34 12.16 11.97 11.91
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 1.93 6.58 6.70 5.46 6.87
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 4.35 4.54 4.73 4.68 4.90
Portfolio Turnover Rate 16.35 6.63 22.57 39.16 25.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 70,901 50,959 33,188 25,981 19,700
</TABLE>
(A) EFFECTIVE OCTOBER 17, 1994 TRUST SHARES WERE REDESIGNATED CLASS R SHARES.
THE FINANCIAL HIGHLIGHTS ABOVE ARE BASED UPON TRUST SHARE OUTSTANDING FROM APRIL
4, 1994 TO OCTOBER 16, 1994.
(B) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE 22>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier Limited Term Massachusetts Municipal Fund (the "fund") is a
separate non-diversified series of the Dreyfus/Laurel Tax-Free Municipal Funds
(the "Trust" ) which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company and operates
as a series company currently offering five series including the fund. The
fund' s investment objective is to maximize current income exempt from Federal
income taxes and state personal income taxes for resident shareholders of
Massachusetts consistent with the prudent risk of capital by investing in
municipal obligations of the named state which are of investment-grade quality
and intermediate maturities. The Dreyfus Corporation (the "Manager") serves as
the fund' s investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A. ("Mellon Bank").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the
fund' s shares. The fund is authorized to issue an unlimited number of shares of
Beneficial Interest in the following classes of shares: Class A, Class B, Class
C and Class R shares. Class A, Class B and Class C shares are sold primarily to
retail investors through financial intermediaries and bear a distribution fee
and/or service fee. Class A shares are sold with a front-end sales charge, while
Class B and Class C shares are subject to a contingent deferred sales charge
("CDSC") and distribution and service fees. Class R shares are 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 bear no
distribution fee or service fee. Class R shares are offered without a front-end
sales load or CDSC. Each class of shares has identical rights and privileges,
except with respect to distribution fees and voting rights on matters affecting
a single class.
The Fund
<PAGE 23>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Investment income, net of expenses (other than class specific expenses) and
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 principles which may require the use of management
estimates. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the Board
of Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the Service
are valued at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the Service
based upon its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at fair
value as determined by the Service, based on methods which include consideration
of: yields or prices of municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and rec
<PAGE>
ognized on the accrual basis. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after the trade date.
(C) FINANCIAL FUTURES: The fund may invest in trading financial futures
contracts in order to gain exposure to or protect against changes in the market.
The fund is exposed to market risk as a result of changes in the value of the
underlying financial instruments. Investments in financial futures require the
fund to "mark to market" on a daily basis, which reflects the change in the
market value of the contract at the close of each day's trading. Typically,
variation margin payments are received or made to reflect daily unrealized gains
or losses. When the contracts are closed, the fund recognizes a realized gain or
loss. These investments require initial margin deposits with a custodian, which
consist of cash or cash equivalents, up to approximately 10% of the contract
amount. The amount of these deposits is determined by the exchange or Board of
Trade on which the contract is traded and is subject to change. At June 30,
1999, there were no financial futures contracts outstanding.
(D) CONCENTRATION OF RISK: The fund follows an investment policy of investing
primarily in municipal obligations of one state. Economic changes affecting the
state and certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the fund.
(E) 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 of 1986, as
amended (the "Code"). To the extent that net realized capital gain can be offset
by capital loss carryovers, if any, it is the policy of the fund not to
distribute such gain.
(F) 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 The Fun
The Fund
<PAGE 24>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $36,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to June 30, 1999. The carryover does not
include net realized securities losses from November 1, 1998 through June 30,
1999 which are treated, for Federal income tax purposes, as arising in fiscal
2000. If not applied, the carryover expires in fiscal 2007.
NOTE 2--Investment Management Fee and Other Transactions With Affiliates:
(A) INVESTMENT MANAGEMENT FEE: Pursuant to an Investment Management agreement
with the Manager, the Manager provides or arranges for one or more third parties
and/or affiliates to provide investment advisory, administrative, custody, fund
accounting and transfer agency services to the fund. The Manager also directs
the investments of the fund in accordance with its investment objective,
policies and limitations. For these services, the fund is contractually
obligated to pay the Manager a fee, calculated daily and paid monthly, at the
annual rate of .50% of the value of the fund's average daily net assets. Out of
its fee, the Manager pays all of the expenses of the fund except brokerage fees,
taxes, interest, commitment fees, Rule 12b-1 distribution fees and expenses,
fees and expenses of non-interested Trustees (including counsel fees) and
extraordinary expenses. In addition, the Manager is required to reduce its fee
in an amount equal to the fund's allocable portion of fees and expenses of the
non-interested Trustees (including counsel). Each trustee receives $40,000 per
year, plus $5,000 for each joint Board meeting of The Dreyfus/Laurel Funds,
Inc., The Dreyfus/Laurel Tax-Free Municipal Funds, and The Dreyfus/Laurel Funds
Trust (the "Dreyfus/Laurel Funds" ) attended, $2,000 for separate committee
meetings attended which are not held in conjunction with a regularly scheduled
board meeting and $500 for
<PAGE 25>
Board meetings and separate committee meetings attended that are conducted by
telephone and is reimbursed for travel and out-of-pocket expenses. The Chairman
of the Board receives an additional 25% of such compensation (with the exception
of reimbursable amounts). In the event that there is a joint committee meeting
of the Dreyfus/Laurel Funds and the Dreyfus High Yield Strategies Fund, the
$2,000 fee will be allocated between the Dreyfus/Laurel Funds and the Dreyfus
High Yield Strategies Fund. These fees and expenses are allocated to each series
based on net assets. Amounts required to be paid by the Trust directly to
non-interested Trustees, that would be applied to offset a portion of the
management fee payable to the Manager, are in fact paid directly by the Manager
to the non-interested Trustees.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$3,628 during the period ended June 30, 1999, from commissions earned on sales
of the fund's shares.
(B) DISTRIBUTION AND SERVICE PLAN: Under the Distribution Plan (the "Plan")
adopted pursuant to Rule 12b-1 under the Act, Class A shares may pay annually up
to .25% of the value of its average daily net assets to compensate the
Distributor and Dreyfus Service Corporation, an affiliate of the Manager, for
shareholder servicing activities and the Distributor for activities and expenses
primarily intended to result in the sale of Class A shares. Under the Plan,
Class B and Class C shares may pay the Distributor for distributing shares at an
aggregate annual rate of .50% of the value of the average daily net assets of
Class B and Class C shares. Class B and Class C shares are also subject to a
service plan adopted pursuant to Rule 12b-1, under which the fund pays Dreyfus
Service Corporation or the Distributor for providing certain services to the
holders of Class B and Class C shares a fee at the annual rate of .25% of the
value of the average daily net assets of Class B and Class C shares. Class R
shares bear no distribution or service fee. During the period ended June 30,
1999, Class A, Class B and Class C shares were charged $41,468, $4,571 and
$1,492 respectively, pursuant to the Plan. During the period ended June 30,
1999, Class B and Class The Fund
The Fund
<PAGE 26>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
C shares were charged $2,286 and $746, respectively, pursuant to the service
plan.
Under its terms, the Plan and service plan shall remain in effect from year to
year, provided such continuance is approved annually by a vote of 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 or in any agreement
related to the Plan and service plan.
NOTE 3--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities and financial futures, during the period ended June 30,
1999, amounted to $30,237,964 and $12,637,143, respectively.
At June 30, 1999, accumulated net unrealized appreciation on investments was
$186,561 consisting of $1,255,611 gross unrealized appreciation and $1,069,050
gross unrealized depreciation.
At June 30, 1999, 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 4--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (the "Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the fund at rates which are related to the
Federal funds rate in effect at the time of borrowings. During the period ended
June 30, 1999, the fund did not borrow under the Facility.
<PAGE 27>
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Shareholders
The Dreyfus/Laurel Tax-Free Municipal Funds:
We have audited the accompanying statement of assets and liabilities of Dreyfus
Premier Limited Term Massachusetts Municipal Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds, including the statement of investments, as of June 30, 1999,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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.
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, 1999, by correspondence with the custodian and brokers. 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 Premier Limited Term Massachusetts Municipal Fund of The Dreyfus/Laurel
Tax-Free Municipal Funds as of June 30, 1999, the results of its operations for
the year then ended, changes in its net assets for each of the two years in the
period then ended, and financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
New York, New York
August 11, 1999
<PAGE 28>
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended June 30, 1999:
-- all the dividends paid from investment income-net are "exempt-interest
dividends" (not subject to regular Federal, and for individuals who are
Massachusetts residents, Massachusetts personal income taxes), and
-- the fund heregy designates $.0033 per share as a long-term capital gain
distribution of the $.0054 per share paid on December 9, 1998. In addition,
96.07% of the long-term capital gain distribution is not subject to
Massachusetts personal income taxes.
As required by Federal tax law rules, shareholders will receive notification of
their portion of the fund's taxable ordinary dividends (if any) and capital gain
distributions (if any) paid for the 1999 calendar on Form 1099-DIV which will be
mailed by January 31, 2000.
<PAGE 29>
NOTES
<PAGE 30>
For More Information
Dreyfus Premier Limited Term Massachusetts Municipal
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-554-4611
BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss
Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 346/646/A996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER
LIMITED TERM MASSACHUSETTS MUNICIPAL FUND CLASS A SHARES WITH THE LEHMAN
BROTHERS 10-YEAR MUNICIPAL BOND INDEX AND THE LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX
EXHIBIT A:
DREYFUS LEHMAN LEHMAN
PREMIER LIMITED BROTHERS BROTHERS
TERM MASSACHUSETTS 10-YEAR 7-YEAR
PERIOD MUNICIPAL FUND MUNICIPAL MUNICIPAL
(CLASS A SHARES) BOND INDEX* BOND INDEX*
6/30/89 9,698 10,000 -
12/30/89 - - 10,281
6/30/90 10,196 10,711 10,563
6/30/91 11,025 11,701 11,502
6/30/92 12,371 13,026 12,759
6/30/93 13,642 14,665 14,129
6/30/94 13,831 14,810 14,308
6/30/95 14,743 16,110 15,486
6/30/96 15,512 17,139 16,342
6/30/97 16,498 18,567 17,491
6/30/98 17,556 20,142 18,775
6/30/99 17,837 20,604 19,323
*Source: Lehman Brothers
- ----------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS PREMIER LIMITED TERM MUNICIPAL FUND CLASS A
SHARES WITH THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX AND THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX
EXHIBIT A:
LEHMAN LEHMAN
DREYFUS PREMIER BROTHERS BROTHERS
LIMITED TERM 10-YEAR 7-YEAR
PERIOD MUNICIPAL FUND MUNICIPAL MUNICIPAL
(CLASS A SHARES) BOND INDEX* BOND INDEX*
6/30/89 9,700 10,000 -
12/31/89 - - 10,303
6/30/90 10,191 10,711 10,585
6/30/91 11,003 11,701 11,526
6/30/92 12,316 13,026 12,786
6/30/93 13,665 14,665 14,159
6/30/94 13,796 14,810 14,339
6/30/95 14,675 16,110 15,519
6/30/96 15,446 17,139 16,377
6/30/97 16,514 18,567 17,529
6/30/98 17,591 20,142 18,815
6/30/99 17,903 20,604 19,365
*Source: Lehman Brothers
