Dreyfus BASIC Massachusetts Municipal Money Market Fund
ANNUAL REPORT June 30, 2000
(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
Contents
THE FUND
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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 Independent Auditors' Report
19 Important Tax Information
FOR MORE INFORMATION
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Back Cover
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, 1999
through June 30, 2000. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, John Flahive.
When the reporting period began, international and domestic economies were
growing faster than most analysts expected, giving rise to concerns that
long-dormant inflationary pressures might reemerge. Consumers continued to spend
heavily, unemployment levels reached new lows and the stock market, while highly
volatile, continued to climb.
Because unsustainable economic growth may trigger unwanted inflationary
pressures, the Federal Reserve Board (the "Fed") raised key short-term interest
rates five times during the reporting period. When combined with the one
interest-rate hike just before the reporting period began, the Fed has increased
short-term rates by 1.75 percentage points since late June 1999. While these
economic influences adversely affected longer term municipal bonds, they
positively influenced tax-exempt money market 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 17, 2000
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, 2000, the fund provided an annualized
yield of 3.15% , and after taking into account the effects of compounding, the
annualized effective yield was 3.20%.(1)
We attribute the fund's performance to a rising interest-rate environment during
much of the past year, which increased the yields of many short-term
fixed-income securities, including tax-exempt money market securities. In
anticipation of rising interest rates, we reduced the fund's average weighted
maturity -- a measure of sensitivity to changes in interest rates -- in an
attempt to capture higher yields more readily.
What is the fund's investment approach?
The fund's goal is to seek a high a level of current income exempt from federal
and Massachusetts income taxes to the extent consistent with the preservation of
capital and the maintenance of liquidity. To pursue 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 high
tax-exempt current income, while focusing on credit risk. We also actively
manage the portfolio' s average weighted maturity in anticipation of
interest-rate and supply-and-demand changes in Massachusetts' s short-term
municipal marketplace.
Rather than focusing on economic or market trends, we search for securities
that, in our opinion, will help us enhance the fund's yield without sacrificing
quality.
The management of the portfolio's average weighted maturity uses 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. The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
This is due to the fact that yields tend to rise temporarily if 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 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?
At the beginning of the reporting period, the United States and Massachusetts
economies continued to exhibit strong growth. In fact, investors had become
concerned that the U.S. economy might be growing too rapidly, increasing the
risk that long-dormant inflationary pressures might reemerge. In response, the
Federal Reserve Board (the "Fed" ) initiated a stance of raising short-term
interest rates, which caused the yields of most money market instruments to
rise, including many of those held in this fund.
When the Fed started raising short-term interest rates, we began to reduce the
fund' s average weighted maturity in an attempt to capture higher yields and
reduce volatility in the portfolio. Conversely, once interest rates were higher,
we extended our average maturity to lock in higher yields.
Another factor that influenced fund performance was a shift in demand caused by
what we believe to be investors who redeemed assets in their money market funds
to pay their income tax liabilities. This seasonal occurrence, coupled with a
lack of demand for money market securities during this period, caused yields to
rise temporarily, which also benefited the fund.
What is the fund's current strategy?
As of the end of the reporting period, we maintained an average maturity that is
slightly longer than neutral. This stance is designed to give us the flexibility
we need in an uncertain economic environment.
However, we are closely monitoring the situation for any changes in market
conditions that would cause us to modify our stance. On a broader note, we are
pleased that we are seeing signs that the short-term interest rate increases
imposed by the Fed have begun to slow the economy. We are also encouraged that
the Massachusetts economy continues to perform well. In fact, for the fiscal
year ending June 30th, the Commonwealth of Massachusetts is expected to record
its ninth consecutive year of an operating surplus. In addition, Massachusetts
has recently introduced a self-supporting transit authority, thanks in large
part to its fiscal surplus.
July 17, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. 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 THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.
The Fund
STATEMENT OF INVESTMENTS
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STATEMENT OF INVESTMENTS
June 30, 2000
Principal
TAX EXEMPT INVESTMENTS--101.9% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Barnstable 6%, 2/15/2001 1,265,000 1,279,184
Boston Water and Sewer Commission, Revenue, VRDN
4.50%, Series A (LOC; State Street Bank and Trust Co.) 2,200,000 (a) 2,200,000
Bridgewater and Raynham Regional School District, BAN
5%, 7/6/2001 3,500,000 3,511,690
Chelmsford 5.20%, 2/1/2001 865,000 869,916
Chicopee 4.125%, 7/15/2000 (Insured; MBIA) 750,000 750,174
Dedham 6.80%, 8/15/2000 675,000 677,256
Framingham 5.35%, 3/1/2001 1,000,000 1,007,412
Town of Gloucester, BAN 4.25%, 8/3/2000 2,985,500 2,986,232
Groton 6.75%, 7/15/2000 (Insured; FSA) 415,000 415,495
Hopkinton, BAN 4.50%, 8/25/2000 800,000 800,161
Lowell 5.25%, 2/15/2001 (Insured; FGIC) 740,000 744,480
Malden 4.50%, 10/1/2000 (Insured; AMBAC) 1,000,000 1,000,634
Marblehead, BAN 4%, 8/25/2000 2,225,000 2,226,130
State of Massachusetts, Refunding:
4.625%, Series A, 2/1/2000 500,000 500,580
VRDN:
4.50%, Series A (LOC; Commerzbank) 3,100,000 (a) 3,100,000
4.60%, Series B (LOC; Landesbank Hessen) 3,900,000 (a) 3,900,000
Massachusetts Bay Transportation Authority,
General Transportation Systems,
VRDN 4.50% (LOC; Westdeutsche Landesbank) 6,000,000 (a) 6,000,000
Massachusetts Development Finance Agency, Revenue, VRDN
(Elderhostel Inc.) 4.65% (LOC; Royal Bank of Scotland) 500,000 (a) 500,000
Massachusetts Health and Educational Facilities
Authority, Revenue:
Prerefunded
(St. John's Hospital) 8.375%, Series B, 12/1/2000
(Escrowed in; U.S. Government Securities) 500,000 517,634
VRDN:
(Amherst College) 4.70%, Series F
(Guaranty; Amherst College) 2,300,000 (a) 2,300,000
(Falmouth Assistance For Living) 4.75%, Series A
(LOC; Fleet Bank) 2,800,000 (a) 2,800,000
(Hallmark Health Systems) 4.90%, Series B
(Insured; FSA and LOC; Fleet Bank) 2,500,000 (a) 2,500,000
(Harvard University) 4.50%, Series I
(Guaranty; Harvard University) 500,000 (a) 500,000
(Partners Healthcare Systems) 4.70%, Series P-2
(Insured; FSA, LOC; Morgan Guaranty Trust
and Co. and SBPA; Bayerishe Landesbank) 6,100,000 (a) 6,100,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Massachusetts Health and Educational Facilities
Authority, Revenue VRDN (continued):
Refunding (Harvard University) 4.50%, Series R
(Guaranty; Harvard University) 5,400,000 (a) 5,400,000
(University of Massachusetts) 4.55%, Series A
(LOC; Credit Local de France) 3,000,000 (a) 3,000,000
(Wellesley College) 4.40%, Series E
(Guaranty; Wellesley College) 3,915,000 (a) 3,915,000
(Williams College) 4.55%, Series E
(Guaranty; Williams College) 2,995,000 (a) 2,995,000
Massachusetts Housing Finance Agency, VRDN:
4.72% (Insured; MBIA and LOC; Hypovereinsbank) 2,600,000 (a) 2,600,000
Housing Revenue 4.77%
(Insured; AMBAC and LOC; Commerzbank) 5,980,000 (a) 5,980,000
Multi-Family Housing, Refunding
4.50%, Series A (LOC; FNMA) 3,500,000 (a) 3,500,000
Massachusetts Industrial Finance Agency
VRDN:
Industrial Revenue, Refunding
(Quamco Inc.) 4.65%, Series A (LOC; Bank of Nova Scotia) 980,000 (a) 980,000
PCR (Holyoke Water Power Co. Project)
4.70% (LOC; Toronto-Dominion Bank) 4,000,000 (a) 4,000,000
Revenue:
(Goddard House) 4.75% (LOC; Fleet Bank) 1,765,000 (a) 1,765,000
(Gordon College) 4.65% (LOC; State Street
Bank and Trust Co.) 3,900,000 (a) 3,900,000
(Heritage At Dartmouth) 4.85% (LOC; Bank of Boston) 1,500,000 (a) 1,500,000
(Milton Academy) 4.80% (Insured; MBIA and
LOC; Fleet Bank) 900,000 (a) 900,000
(Mount IDA College) 4.65% (LOC; Credit Local de France) 3,600,000 (a) 3,600,000
Refunding (Showa Women's Institute)
4.75% (LOC; The Bank of New York) 1,700,000 (a) 1,700,000
Massachusetts Water Pollution Abatement Trust, Pool Program
4.25%, Series 5, 8/1/2000 2,000,000 2,000,998
Massachusetts Water Resource Authority:
CP:
4.40%, 8/7/2000 (LOC; Morgan Guaranty Trust Co.) 1,000,000 1,000,000
4.65%, 8/10/2000 (LOC; Morgan Guaranty Trust Co.) 2,000,000 2,000,000
VRDN (Multi-Modal):
4.40%, Series B (LOC; Landesbank Hessen) 4,400,000 (a) 4,400,000
4.60%, Series B (Insured; FGIC and Liquidity Facility; FGIC) 4,200,000 (a) 4,200,000
4.65%, Series A (Insured; AMBAC, LOC: Commerzbank and
Credit Local de France and SBPA; Bank of Nova Scotia) 3,500,000 (a) 3,500,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Massachusetts Water Resource Authority (continued):
VRDN (Multi-Modal) (continued):
Refunding 4.60%, Series D (Insured; FGIC and
Liquidity Facility; FGIC) 1,100,000 (a) 1,100,000
Montachusetts Regional Vocational Technical School District
6.25%, 1/15/2001 (Insured; MBIA) 420,000 424,513
Natick 6%, 8/1/2000 1,220,000 1,222,527
Northampton 5%, 10/15/2000 (Insured; FGIC) 606,000 607,700
Norwell, BAN:
4.50%, 7/20/2000 2,000,000 2,000,504
4.50%, 2/23/2001 2,500,000 2,505,113
Peabody, Municipal Purpose Loan 7%, Series B, 4/1/2001 690,000 703,543
Salem, Municipal Purpose Loan
6.20%, 8/15/2000 (Insured; AMBAC) 200,000 200,168
Sandwich 6.75%, 7/15/2000 405,000 405,475
Scituate, BAN 5.25%, 3/8/2001 1,655,000 1,660,482
Springfield, Municipal Purpose Loan
4.50%, 10/1/2000 (Insured; FSA) 1,020,000 1,021,230
Westfield, BAN 4.50%, 2/1/2001 3,500,000 3,505,901
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TOTAL INVESTMENTS (cost $125,380,132) 101.9% 125,380,132
LIABILITIES, LESS CASH AND RECEIVABLES (1.9%) (2,353,196)
NET ASSETS 100.0% 123,026,936
</TABLE>
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
BAN Bond Anticipation Notes
CP Commercial Paper
FGIC Financial Guaranty Insurance
Company
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
PCR Pollution Control Revenue
SBPA Standby Bond Purchase
Agreement
VRDN Variable Rate Demand Notes
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Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
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F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 75.6
AAA/AA (b) Aaa/Aa (b) AAA/AA (b) 9.2
Not Rated (c) Not Rated (c) Not Rated (c) 15.2
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 125,380,132 125,380,132
Interest receivable 1,237,369
126,617,501
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 47,912
Cash overdraft due to Custodian 30,514
Payable for investment securities purchased 3,511,690
Interest payable--Note 3 449
3,590,565
--------------------------------------------------------------------------------
NET ASSETS ($) 123,026,936
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 123,028,247
Accumulated net realized gain (loss) on investments (1,311)
--------------------------------------------------------------------------------
NET ASSETS ($) 123,026,936
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of shares of Beneficial Interest authorized) 123,035,972
Net Asset Value, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended June 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,284,749
EXPENSES:
Management fee--Note 2 529,668
Interest expense--Note 3 10,675
TOTAL EXPENSES 540,343
INVESTMENT INCOME--NET, representing net increase in
net assets resulting from operations 3,744,406
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,744,406 3,488,075
Net realized gain (loss) from investments -- 140
Net unrealized appreciation (depreciation)
of investments -- (28)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,744,406 3,488,187
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (3,744,406) (3,488,075)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 221,491,665 272,439,342
Dividends reinvested 1,353,000 1,491,979
Cost of shares redeemed (222,568,673) (262,574,293)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 275,992 11,357,028
TOTAL INCREASE (DECREASE) IN NET ASSETS 275,992 11,357,140
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 122,750,944 111,393,804
END OF PERIOD 123,026,936 122,750,944
SEE NOTES TO FINANCIAL STATEMENTS.
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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.
Year Ended June 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
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PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .032 .027 .031 .031 .033
Distributions:
Dividends from investment income--net (.032) (.027) (.031) (.031) (.033)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 3.21 2.76 3.17 3.12 3.31
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses
to average net assets .45 .45 .47 .37 .35
Ratio of interest expense
to average net assets .01 -- -- -- --
Ratio of net investment income
to average net assets 3.18 2.71 3.15 3.09 3.24
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation -- -- -- .09 .02
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Net Assets, end of period ($ x 1,000) 123,027 122,751 111,394 90,264 52,317
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
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 and Massachusetts state 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., which is a wholly-owned subsidiary of Mellon
Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation
("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the
fund' s shares, which are sold to the public without a sales charge. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor.
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.
(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
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 $1,300 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to June 30, 2000. If not applied, the
carryover expires in fiscal 2002.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the period ended June 30, 2000, the fund reclassified $9,774 between
accumulated net realized gain (loss) on investments and paid-in capital due to
the expiration of capital loss carryovers. The results of operations and net
assets were not affected by the reclassification.
At June 30, 2000, 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 fees). 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.
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, 2000 was approximately $169,000 with a related weighted average annualized
interest rate of 6.30%.
The Fund
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders The Dreyfus/Laurels 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, 2000,
and the related statement of operations for the year then ended, the statement
of changes in 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. 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 auditing standards generally accepted
in the United States. 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, 2000, by correspondence with the custodian. As to
securities purchased and sold, but not received or delivered, we performed other
appropriate auditing procedures. 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, 2000, the results of its operations for
the year then ended, the 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 accounting principles generally
accepted in the United States.
/s/ KPMG
New York, New York
August 4, 2000
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, 2000 as
"exempt-interest dividends" (not subject to regular Federal and, for individuals
who are Massachusetts residents, Massachusetts personal income taxes).
The Fund
NOTES
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 715AR006
Dreyfus BASIC
California Municipal
Money Market
ANNUAL REPORT June 30, 2000
(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
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 Independent Auditors' Report
20 Important Tax Information
FOR MORE INFORMATION
---------------------------------------------------------------------------
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, 1999
through June 30, 2000. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, John Flahive.
When the reporting period began, international and domestic economies were
growing faster than most analysts expected, giving rise to concerns that
long-dormant inflationary pressures might reemerge. Consumers continued to spend
heavily, unemployment levels reached new lows and the stock market, while highly
volatile, continued to climb.
Because unsustainable economic growth may trigger unwanted inflationary
pressures, the Federal Reserve Board (the "Fed") raised key short-term interest
rates five times during the reporting period. When combined with the one
interest-rate hike just before the reporting period began, the Fed has increased
short-term rates by 1.75 percentage points since late June 1999. While these
economic influences adversely affected longer term municipal bonds, they
positively influenced tax-exempt money market 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 17, 2000
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, 2000, the fund's shares provided an
annualized yield of 2.81% and, after taking into account the effects of
compounding, the annualized effective yield was 2.84%.(1
We attribute the fund's performance to a rising interest-rate environment during
much of the past year, which increased the yields of many short-term
fixed-income securities, including tax-exempt money market securities. In
anticipation of rising interest rates, we reduced the fund's average weighted
maturity -- a measure of sensitivity to changes in interest rates -- in an
attempt to capture higher yields more readily.
What is the fund's investment approach?
The fund' s goal is to seek a high level of current income exempt from federal
and California income taxes to the extent consistent with the preservation of
capital and the maintenance of liquidity. To pursue 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 high
tax-exempt current income, while focusing on credit risk. We also actively
manage the portfolio' s average weighted maturity in anticipation of
interest-rate and supply-and-demand changes in California's short-term municipal
marketplace.
Rather than focusing on economic or market trends, we search for securities
that, in our opinion, will help us enhance the fund's yield without sacrificing
quality.
The management of the portfolio's average weighted maturity uses 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. The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
This is due to the fact that yields tend to rise temporarily if 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 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?
At the beginning of the reporting period, the United States and California
economies continued to exhibit strong growth. In fact, investors had become
concerned that the U.S. economy might be growing too rapidly, increasing the
risk that long-dormant inflationary pressures might reemerge. In response, the
Federal Reserve Board (the "Fed") initiated a series of short-term interest-rate
increases, which caused the yields of most money market instruments to rise,
including many of those held in this fund.
When the Fed started raising short-term interest rates, we began to reduce the
fund' s average weighted maturity in an attempt to capture higher yields more
quickly and reduce volatility in the portfolio. Conversely, once interest rates
were higher, we extended our average weighted maturity to lock in higher
prevailing yields.
Another factor that influenced fund performance was a shift in demand caused by
what we believe to be investors who redeemed assets in their money market funds
to pay their income tax liabilities. This seasonal occurrence, coupled with a
lack of demand for money market securities during this period, caused yields to
rise temporarily, which also benefited the fund.
What is the fund's current strategy?
As of the end of the reporting period, we maintained an average weighted
maturity that is slightly longer than neutral. This stance is designed to give
us the flexibility we need in an uncertain economic
environment. We currently prefer school district and local debt, whose revenues
tend to be more predictable, to county-issued debt. That said, there are some
isolated school districts that we have continued to avoid because of their
limited access to revenues and excessive expenditures.
However, we are closely monitoring the situation for any changes in market
conditions that would cause us to modify our stance. On a broader note, we are
pleased that we are seeing signs that the short-term interest-rate increases
imposed by the Fed have begun to slow the economy. We are also encouraged that
the California economy continues to perform well. With a state surplus in place,
the need to borrow money to finance improvements or services has diminished.
Furthermore, the rising interest-rate environment has also discouraged the need
for refinancing.
July 17, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. 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 THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.
The Fund
June 30, 2000
STATEMENT OF INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
Principal
TAX EXEMPT INVESTMENTS--99.5% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--94.3%
Alameda County, COP, Revenue
Refunding and Capital Projects
4%, 12/1/2000 (Insured; MBIA) 1,555,000 1,556,549
California Economic Development Financing Authority, IDR,
VRDN (Lion Enterprise Inc., Project)
4.40% (LOC; Bank of America) 900,000 (a) 900,000
California Health Facilities Financing Authority,
Health Facilities Financing Revenue, Refunding
(Catholic Healthcare West)
4.75%, 7/1/2000 (Insured; MBIA) 3,205,000 3,205,000
California Housing Finance Agency, Home Mortgage
Revenue 4.70%, Series Q, 1/5/2001 (LOC: California State
Teachers Retirement and Commerzbank) 1,600,000 1,600,000
California Pollution Control Financing Authority:
PCR:
(Chevron USA Inc., Project):
3.80%, 11/14/2000 (LOC; Chevron USA Inc.) 1,185,000 1,185,000
4.15%, 5/15/2001 (LOC; Chevron USA Inc.) 700,000 700,000
VRDN, Refunding (Pacific Gas and Electric)
4.05%, Series D (LOC; Union Bank of Switzerland) 1,000,000 (a) 1,000,000
SWDR, VRDN (Western Waste Industries)
4.60%, Series A (LOC; Fleet Bank) 3,000,000 (a) 3,000,000
State of California, CP:
3.75%, 7/11/2000 (LOC: Bayerische and Landesbank,
Commerzbank, Credit Agricole, Credit Local De France,
Landesbank Hessen, Morgan Guaranty Trust Co.,
State Street Bank, Toronto-Dominion Bank, and
Westdeutsche Landesbank) 5,000,000 5,000,000
4.30%, 7/7/2000 (LOC: Bayerische and Landesbank,
Commerzbank, Credit Agricole, Credit Local De France,
Landesbank Hessen, Morgan Guaranty Trust Co.,
State Street Bank, Toronto-Dominion Bank, and
Westdeutsche Landesbank) 5,000,000 5,000,000
California Statewide Communities Development Authority,
COP, VRDN (Citrus Valley Health)
4% (Insured; MBIA and LOC; Bank of America) 3,800,000 (a) 3,800,000
Elsinore Valley Municipal Water District, COP, VRDN
4.25%, Series A (Insured; FGIC and Liquidity; FGIC) 2,000,000 (a) 2,000,000
Fremont, MFHR, VRDN
4.35%, Series E (LOC: Bayerische Bank and Landesbank) 3,100,000 (a) 3,100,000
Fremont Unified School District,
TRAN, 4%, 7/28/2000 3,000,000 3,001,392
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Glendale, Reliance Development Revenue, VRDN
(Public Parking) 4.30% (LOC; Barclays Bank) 2,400,000 (a) 2,400,000
Irvine Improvement Bond Act of 1915, VRDN:
Assessment District No. 94-15
4.15% (LOC; Canadian Imperial Bank of Commerce) 100,000 (a) 100,000
Assessment District No. 95-12
4.15%, Series A (LOC; Kredietbank) 900,000 (a) 900,000
Irvine Ranch Water District, VRDN
4.30%, Series B (LOC; Landesbank Hessen) 1,500,000 (a) 1,500,000
Kern High School District, TRAN
4%, 7/6/2000 3,000,000 3,000,249
Lassen Municipal Utility District, Revenue, Refunding
VRDN 4.65%, Series A (Insured; FSA and LOC;
Credit Local De France) 600,000 (a) 600,000
Los Angeles County Housing Authority, MFHR,
Refunding, VRDN (Malibu Meadows)
4.25%, Project B (LOC; FNMA) 4,500,000 (a) 4,500,000
Los Angeles County Metropolitan Transportation Authority
CP 4%, 7/12/2000 (LOC; ABN-AMRO Bank) 3,500,000 3,500,000
Los Angeles Department of Water and Power,
Electric Plant Revenue, CP:
3.65%, 8/10/2000 (LOC: Bank of America, Bayerische
Landesbank, Credit Local de France, Morgan Guaranty
Trust Co. and Westdeutsche Landesbank) 5,000,000 5,000,000
3.90%, 8/10/2000 (LOC: Bank of America, Bayerische
Landesbank, Credit Local de France, Morgan Guaranty
Trust Co. and Westdeutsche Landesbank) 5,000,000 5,000,000
Los Angeles Municipal Improvement Corporation,
Sanitary Equipment Charge Revenue
5%, Series A, 2/1/2001 (Insured; FSA) 1,175,000 1,181,686
Los Angeles Unified School District, COP, VRDN
(Belmont Learning Complex)
4.70%, Series A (LOC; Commerzbank) 5,700,000 (a) 5,700,000
Metropolitan Water District,
Southern California Water Works Revenue, VRDN:
3.65%, Series B 3,000,000 (a) 3,000,000
4.80%, Series A6 (LOC; Hypovereinsbank) 2,500,000 (a) 2,500,000
Mount Diablo Unified School District, TRAN
4.45%, 1/19/2001 3,500,000 3,510,779
Oakland, COP, VRDN (Capital Equipment Project)
4.25% (LOC; National Westminster Bank) 5,900,000 (a) 5,900,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
Orange County, Apartment Development Revenue, Refunding
VRDN (Capistrano Pointe) 4.30%, Series A
(LOC; Federal Home Loan Mortgage Corp.) 5,000,000 (a) 5,000,000
Orange County Various Sanitation Districts Numbers 1-3,
5-7, 11, 13 and 14, COP, Refunding, VRDN
Capital Improvement Program 1990-1992
4.15%, Series A (LOC; National Westminster Bank) 800,000 (a) 800,000
Port of Oakland, Revenue, CP
4.25%, Series 1989-A, 8/10/2000
(LOC: Bank of Nova Scotia and Commerzbank) 1,000,000 1,000,000
Rancho Mirage Joint Powers Financing Authority, COP
VRDN (Eisenhower Medical Center)
4.65%, Series B (Insured; MBIA and LOC; Credit Suisse) 700,000 (a) 700,000
Rancho Water District Financing Authority, Revenue, VRDN
4.25%, Series A ( Liquidity; FGIC) 3,000,000 (a) 3,000,000
Riverside County Housing Authority, Multi-Family
Housing Mortgage Revenue, Refunding, VRDN
(Mountain View Apartments)
4.35%, Series A (LOC; Federal Home Loan Banks) 3,675,000 (a) 3,675,000
Sacramento Municipal Utility District, Electricity Revenue, CP
4.15% (LOC: Bayerische Landesbank, Morgan Guaranty
Trust Co. and Westdeutsche Landesbank) 2,300,000 2,300,000
San Diego, IDR, VRDN
4.42% (Insured; AMBAC and LOC; Merrill Lynch & Co.) 3,000,000 (a) 3,000,000
San Francisco Bay Area Rapid Transit District, CP:
4.20%, Series 99-C, 8/9/2000
(LOC; Morgan Guaranty Trust Co.) 1,600,000 1,600,000
4.25%, Series 99-C, 8/10/2000
(LOC; Morgan Guaranty Trust Co.) 1,000,000 1,000,000
San Jose Institutional Apartment Authority, Revenue, CP
4.20%, 9/6/2000 (LOC; Morgan Guaranty Trust Co.) 1,800,000 1,800,000
Stockton, MFHR, VRDN (Marine Point Association)
4.55% Series A (LOC; Lasalle National Bank) 2,500,000 (a) 2,500,000
Upland, Apartment Development Revenue, Refunding
VRDN (Mountain Springs) 4.25%, Series A (LOC; FNMA) 3,000,000 (a) 3,000,000
U.S. RELATED--5.2%
Commonwealth of Puerto Rico:
Public Improvement, Revenue:
5.50%, Series B, 7/1/2000 (Insured; AMBAC) 1,000,000 1,000,000
7.25%, 7/1/2000 (Insured; FGIC) 250,000 255,000
VRDN 4.42% (Insured; AMBAC and LOC; Merrill Lynch & Co.) 2,000,000 (a) 2,000,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. RELATED (CONTINUED)
Commonwealth of Puerto Rico Highway Authority,
Highway Revenue, Refunding, Prerefunded
6.75%, Series R, 7/1/2000 (Escrowed in; U.S.
Government Securities) 900,000 918,000
Commonwealth of Puerto Rico Industrial, Medical and
Environmental Pollution Control Facility Financing
Authority, Revenue 3.50%, 9/1/2000
(LOC; ABN-Amro Bank) 2,000,000 2,000,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $118,888,655) 99.5% 118,888,655
CASH AND RECEIVABLES (NET) .5% 597,208
NET ASSETS 100.0% 119,485,863
</TABLE>
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
COP Certificate of Participation
CP Commercial Paper
FGIC Financial Guaranty Insurance
Company
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance
Insurance Corporation
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SWDR Solid Waste Disposal Revenue
TRAN Tax and Revenue Anticipation
Notes
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
F1+,F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 86.7
AAA/AA(b) Aaa/Aa(b) AAA/AA(b) 5.1
Not Rated(c) Not Rated(c) Not Rated(c) 8.2
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD AND POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUAILITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 118,888,655 118,888,655
Interest receivable 973,620
119,862,275
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 44,859
Cash overdraft due to Custodian 331,553
376,412
--------------------------------------------------------------------------------
NET ASSETS ($) 119,485,863
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 119,486,166
Accumulated net realized gain (loss) on investments (303)
--------------------------------------------------------------------------------
NET ASSETS ($) 119,485,863
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of shares of Beneficial Interest authorized) 119,486,166
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended June 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 3,961,545
EXPENSES:
Management fee--Note 2 545,961
Interest expense--Note 3 18,015
TOTAL EXPENSES 563,976
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE
IN NET ASSETS RESULTING FROM OPERATIONS 3,397,569
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
-------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,397,569 2,641,256
Net realized gain (loss) from investments -- (166)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,397,569 2,641,090
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (3,397,569) (2,641,256)
Net realized gain on investments -- (8,137)
TOTAL DIVIDENDS (3,397,569) (2,649,393)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 290,132,549 280,160,658
Dividends reinvested 2,030,609 1,677,263
Cost of shares redeemed (282,069,015) (272,699,712)
INCREASE (DECREASE) IN NET ASSETS
FROM BENEFICIAL INTEREST TRANSACTIONS 10,094,143 9,138,209
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,094,143 9,129,906
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 109,391,720 100,261,814
END OF PERIOD 119,485,863 109,391,720
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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.
Year Ended June 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .028 .026 .031 .031 .031
Distributions:
Dividends from investment income--net (.028) (.026) (.031) (.031) (.031)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 2.85 2.62 3.13 3.11 3.19
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of operating expenses to
average net assets .45 .45 .45 .42 .44
Ratio of interest expense to
average net assets .01 .01 .01 -- --
Ratio of net investment income
to average net assets 2.80 2.58 3.08 3.09 3.36
Decrease reflected in above expense
ratios due to undertakings
by The Dreyfus Corporation -- -- -- .03 .07
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 119,486 109,392 100,262 80,580 36,728
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, 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 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, which is a wholly-owned
subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus
Service Corporation (" DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund's shares, which are sold to the public without a
sales charge. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was
the distributor.
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 The Fun
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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, if any, 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. The fund has an unused
capital loss carryover of approximately $300 available for Federal inome tax
purposes to be applied against future net securities profits, if any, realized
subsequent to June 30, 2000. If not applied, the carryover expires in fiscal
2008.
At June 30, 2000, 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 fees). 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 The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2000 was approximately $289,900 with a related weighted average annualized
interest rate of 6.20%.
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders The Dreyfus/Laurel Tax-Free Municipal
Funds
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Dreyfus BASIC California Municipal Money Market
Fund of The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30, 2000, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the years 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 auditing standards generally accepted
in the United States. 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, 2000, 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 California Municipal Money Market Fund of The Dreyfus/Laurel
Tax-Free Municipal Funds as of June 30, 2000, the results of its operations for
the year then ended, the 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 accounting principles generally
accepted in the United States.
/s/ KPMG
New York, New York
August 4, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby designates all the dividends
paid from investment income-net during the fiscal year ended June 30, 2000 as
" exempt-interest divdends" (not subject to regular Federal and, for individuals
who are California residents, California personal income taxes).
The Fund
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 307AR006
================================================================================
Dreyfus Premier
Limited Term
Massachusetts
Municipal Fund
ANNUAL REPORT June 30, 2000
(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
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 Independent Auditors' Report
30 Important Tax Information
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier Limited Term Massachusetts Municipal Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Limited Term
Massachusetts Municipal Fund, covering the 12-month period from July 1, 1999
through June 30, 2000. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, Kristin Lindquist.
Tighter monetary policy adversely affected the municipal bond market over the
past 12 months. This was primarily a result of efforts by the Federal Reserve
Board (the "Fed") to forestall potential inflationary pressures. The Fed raised
short-term interest rates five times during the reporting period, following one
interest-rate hike implemented just before the reporting period began. Since
June 1999, the Fed has raised short-term interest rates a total of 1.75
percentage points.
However, supply-and-demand factors unique to the municipal bond market helped
constrain price erosion. Because of robust economic growth, most municipalities
had little need to borrow during the second half of the reporting period,
creating a reduced supply of new issues.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier Limited Term Massachusetts Municipal
Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF FUND PERFORMANCE
Kristin Lindquist, Portfolio Manager
How did Dreyfus Premier Limited Term Massachusetts Municipal Fund perform during
the period?
For the 12-month period ended June 30, 2000, the fund produced a total return of
3.21% for Class A shares, 2.70% for Class B shares, 2.63% for Class C shares,
and 3.37% for Class R shares.(1) This compares to a total return of 2.26% for
the Lipper Massachusetts Intermediate Municipal Debt Fund category average for
the same period.(2)
We attribute the fund's good performance to a rising interest-rate environment
during much of the past year, which resulted in modest returns for many
fixed-income securities, including limited-term municipal securities. At the
beginning of the period, in anticipation of rising interest rates, we reduced
the fund' s average weighted maturity -- a measure of sensitivity to changes in
interest rates -- which enabled the portfolio to capture higher yields more
readily.
What is the fund's investment approach?
The fund' s goal is to seek to maximize current income exempt from federal and
Massachusetts personal income taxes consistent with the prudent risk of capital.
To pursue this objective, we attempt to add value by selecting the individual
tax-exempt bonds from Massachusetts issuers that we believe are most likely to
provide high tax-exempt current income, while focusing on credit risk. We also
actively manage the portfolio' s average maturity in anticipation of
interest-rate and supply-and-demand changes in Massachusetts's limited-term
municipal marketplace. The fund's dollar-weighted average portfolio maturity is
not expected to exceed 10 years.
Rather than focusing on economic or market trends, we search for securities
that, in our opinion, will help us enhance the fund's yield without sacrificing
quality.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
The management of the portfolio's average duration is a more tactical approach.
If we expect the supply of securities to increase temporarily, we may reduce the
portfolio' s average duration to make cash available for the purchase of higher
yielding securities. This is due to the fact that yields tend to rise if 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 duration to maintain current yields for as long as
practical. At other times, we try to maintain a neutral average duration.
What other factors influenced the fund's performance?
At the beginning of the reporting period, the United States and Massachusetts
economies continued to exhibit strong growth. In fact, investors had become
concerned that the U.S. economy might be growing too rapidly, increasing the
risk that long-dormant inflationary pressures might reemerge. In response, the
Federal Reserve Board (the "Fed" ) initiated a stance of raising short-term
interest rates, which caused the yields of most money market instruments to
rise, including many of those held in this fund.
When the Fed started raising short-term interest rates, we began to reduce the
fund' s average weighted maturity in an attempt to capture higher yields more
quickly and reduce volatility in the portfolio. Conversely, once rates were
higher, we extended our average maturity to lock in higher yields.
Another factor that influenced fund performance was a shift in demand caused by
what we believe to be investors who redeemed assets in their limited-term
municipal funds to pay their income tax liabilities. This seasonal occurrence,
coupled with a lack of demand for limited-term municipal securities during this
period, caused yields to rise, which benefited the fund.
What is the fund's current strategy?
As of the end of the reporting period, we have favored securities with longer
maturities and have taken the opportunity to emphasize bonds with the highest
credit rating. That' s because we have seen signs that the short-term
interest-rate increases imposed by the Fed appear to be slowing the economy,
suggesting that the end of the current series of interest-rate hikes may be near
its end. We are also encouraged that the Massachusetts economy continues to
perform well. In fact, for the fiscal year ending June 30, 2000, the
Commonwealth of Massachusetts is expected to record its ninth consecutive year
with an operating surplus. In addition, Massachusetts has recently introduced a
self-supporting transit authority, thanks in large part to its fiscal surplus.
On the other hand, a major challenge continues to be the Central Artery/Third
Harbor Tunnel Project in Boston, where cost overruns have complicated and
delayed its completion.
July 17, 2000
(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. 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. 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.
(2) SOURCE: LIPPER INC.
The Fund
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 6/30/90 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. 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 OR UNDERPERFORMING 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns AS OF 6/30/00
Inception From
Date 1 Year 5 Years 10 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (3.0%) 9/24/85 0.12% 3.90% 5.77% --
WITHOUT SALES CHARGE 9/24/85 3.21% 4.54% 6.09% --
CLASS B SHARES
WITH REDEMPTION((+)) 12/28/94 -0.27% 3.90% -- 4.83%
WITHOUT REDEMPTION 12/28/94 2.70% 4.07% -- 4.83%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 12/28/94 1.89% 4.09% -- 4.85%
WITHOUT REDEMPTION 12/28/94 2.63% 4.09% -- 4.85%
CLASS R SHARES 2/1/93 3.37% 4.79% -- 4.98%
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. CLASS B SHARES CONVERT TO CLASS A SHARES
AFTER SIX YEARS.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
.75% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
</TABLE>
The Fund
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
June 30, 2000
STATEMENT OF INVESTMENTS
Principal
LONG-TERM MUNICIPAL INVESTMENTS--96.5% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--91.7%
Amherst 6%, 1/15/2003 200,000 206,228
Andover 6%, 12/1/2005 700,000 743,918
Attleboro 6%, 10/15/2003 1,085,000 1,127,825
Boston 5.75%, 2/1/2010 2,000,000 2,113,820
Boston Water and Sewer Commission, Revenue
9.25%, 1/1/2011 100,000 130,936
Burlington:
5.25%, 2/1/2012 200,000 201,458
5.25%, 2/1/2013 250,000 250,330
Cambridge 5.60%, 11/1/2001 500,000 507,900
Chicopee 4.50%, 7/15/2001 (Insured; MBIA) 500,000 500,665
Cohasset, Municipal Purpose Loan
6.90%, 11/1/2000 (Insured; MBIA) 150,000 151,291
Easton, Municipal Purpose Loan 6%, 9/15/2006 105,000 109,346
Everett 6.125%, 12/15/2014 (Insured; MBIA) 1,000,000 1,070,290
Fall River 7.20%, 6/1/2010
(Insured; MBIA, Prerefunded 6/1/2001) 500,000 (a) 522,440
Framingham 5.75%, 3/1/2005 1,145,000 1,194,063
Franklin 6.25%, 11/15/2005 (Insured; MBIA) 430,000 460,147
Haverhill 6%, 6/15/2005 (Insured; FGIC) 750,000 790,800
Holden, Municipal Purpose Loan 6%, 3/1/2014 (Insured; FGIC) 1,000,000 1,061,100
Lynn, 5.25%, 2/15/2008 1,500,000 1,531,545
Martha's Vineyard, Land Bank Revenue 5.50%, 5/1/2011 1,030,000 1,059,468
Mashpee, Municipal Purpose Loan
6.25%, 2/1/2006 (Insured; MBIA) 1,000,000 1,071,020
Massachusetts Commonwealth:
5%, 8/1/2001 1,020,000 1,026,457
6.50%, 8/1/2008 600,000 659,268
Consolidated Loan:
7%, 7/1/2006 (Insured; MBIA, Prerefunded 7/1/2000) 500,000 (a) 510,035
5.50%, 7/1/2008 2,500,000 2,583,775
6.75%, 11/1/2011 (Insured; FGIC, Prerefunded 11/1/2004) 1,375,000 (a) 1,493,003
6%, 8/1/2012 (Insured; FGIC, Prerefunded 8/1/2004) 2,500,000 (a) 2,656,450
5.625%, 8/1/2015 (Insured; MBIA, Prerefunded 8/1/2005) 1,000,000 (a) 1,045,340
5.25%, 8/1/2017 500,000 486,510
Massachusetts Bay Transportation Authority,
General Transportation System:
5.90%, 3/1/2004 (Prerefunded 2/1/2003) 20,000 (a) 20,929
5.90%, 3/1/2004 530,000 550,718
5.50%, 3/1/2009 2,000,000 2,075,920
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Bay Transportation Authority,
General Transportation System (continued):
5.50%, 3/1/2014 (Insured; FGIC) 1,000,000 1,018,710
5.25%, 3/1/2015 (Insured; FGIC) 1,000,000 988,350
Massachusetts Development Finance Agency, Revenue
(Massachusetts College of Pharmacy):
6%, 7/1/2008 310,000 308,348
6.30%, 7/1/2010 350,000 351,725
6.40%, 7/1/2011 370,000 372,057
6.50%, 7/1/2012 395,000 398,982
(Waste Management, Inc.)
6.90%, 12/1/2029 1,000,000 1,021,000
Massachusetts Education Loan Authority, Education
Loan Revenue 6.20%, 7/1/2013 (Insured; AMBAC) 810,000 839,776
Massachusetts Health and Educational Facilities Authority,
Revenue:
(Boston College) 5%, 6/1/2016 500,000 466,395
(Brigham & Womens Hospital)
6.75%, 7/1/2024
(Insured; MBIA, Prerefunded 7/1/2001) 2,000,000 (a) 2,085,020
(Dana-Farber Cancer Institute)
5.55%, 12/1/2003 (Insured; FGIC) 400,000 409,024
(Harvard University):
6.20%, 12/1/2001 1,000,000 1,024,130
6.50%, 11/1/2004 700,000 748,993
(Institute of Technology) 5.20%, 1/1/2028 1,000,000 931,630
(Jordan Hospital):
5%, 10/1/2010 500,000 446,695
6.875%, 10/1/2015 1,000,000 982,920
(Northeastern University)
5.50%, 10/1/2009 (Insured; MBIA) 420,000 435,842
(Partners Healthcare Systems):
5.25%, 7/1/2004 (Insured; FSA) 1,000,000 1,013,490
5.25%, 7/1/2013 1,595,000 1,479,219
5.125%, 7/1/2019 1,000,000 852,160
(South Shore Hospital):
4.75%, 7/1/2004 700,000 670,824
7.50%, 7/1/2010 (Insured; MBIA, Prerefunded 7/1/2000) 350,000 (a) 357,028
7.50%, 7/1/2020 (Insured; MBIA, Prerefunded 7/1/2000) 500,000 (a) 510,040
(Tufts University) 5.95%, 8/15/2018 (Insured; FGIC) 2,000,000 2,018,940
(Williams College) 5.70%, 7/1/2008 520,000 537,909
(Winchester Hospital) 6.75%, 7/1/2030 1,500,000 1,460,550
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Housing Finance Agency, SFHR:
6%, 6/1/2014 (Insured; MBIA) 1,150,000 1,148,861
5.75%, 12/1/2029 (Insured; MBIA) 315,000 316,751
Massachusetts Industrial Finance Agency:
Electric Revenue (Nantucket Electric Co. Project)
6.75%, 7/1/2006 (Insured; AMBAC) 1,400,000 1,516,284
Museum Revenue (Museum of Fine Arts of Boston)
5.375%, 1/1/2007 (Insured; MBIA) 1,000,000 1,028,140
Revenue:
(Babson College) 5.75%, 10/1/2007 (Insured; MBIA) 555,000 584,670
(Brooks School):
5.70%, 7/1/2006 (Prerefunded 7/1/2003) 260,000 (a) 271,092
5.75%, 7/1/2007 (Prerefunded 7/1/2003) 275,000 (a) 287,114
5.80%, 7/1/2008 (Prerefunded 7/1/2003) 290,000 (a) 303,175
5.85%, 7/1/2009 (Prerefunded 7/1/2003) 305,000 (a) 319,277
(Concord Academy):
5.45%, 9/1/2017 500,000 471,905
5.50%, 9/1/2027 1,250,000 1,133,800
(College of The Holy Cross)
5.50%, 3/1/2007 (Insured; MBIA) 1,145,000 1,184,583
(St. John's School, Inc.) 5.70%, 6/1/2018 1,000,000 943,510
(The Tabor Academy) 5.40%, 12/1/2028 500,000 442,475
(Tufts University):
5.50%, 2/15/2007 (Insured; MBIA) 750,000 776,647
5.50%, 2/15/2008 (Insured; MBIA) 1,595,000 1,652,611
(Wentworth Institute of Technology) 5.55%, 10/1/2013 500,000 481,480
(Worcester Polytechnic) 5.35%, 9/1/2006 850,000 874,880
Massachusetts Municipal Wheelhouse Electric Company,
Power Supply System Revenue:
6.625%, 7/1/2003 (Insured; MBIA) 1,000,000 1,053,330
6.75%, 7/1/2005 1,775,000 1,854,928
6%, 7/1/2011 2,240,000 2,268,134
Massachusetts Port Authority, Revenue:
5.75%, 7/1/2010 2,000,000 2,109,680
5.75%, 7/1/2011 2,500,000 2,630,175
6%, 7/1/2013 2,500,000 2,650,950
Massachusetts Turnpike Authority,
Metropolitan Highway System Revenue:
5.25%, 1/1/2015 1,500,000 1,467,990
5.55%, 1/1/2017 1,000,000 1,000,000
Massachusetts Water Pollution Abatement Trust:
(Pool Loan Program) 6.125%, 2/1/2007 (Insured; FSA) 1,000,000 1,073,720
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts Water Pollution Abatement Trust (continued):
Water Pollution Abatement Revenue:
(New Bedford Loan Program):
6%, 2/1/2004 (escrowed to maturity) 745,000 775,463
6%, 2/1/2004 255,000 265,853
5.25%, 2/1/2012 500,000 503,215
(SESD Loan Program) 6.375%, 2/1/2015 2,500,000 2,645,275
Massachusetts Water Resource Authority:
5.875%, 11/1/2004 2,345,000 2,445,858
5.50%, 8/1/2008 (Insured; MBIA) 500,000 519,300
5.30%, 11/1/2010 (Insured; FGIC) 1,000,000 1,019,970
5.50%, 8/1/2011 (Insured; FSA) 1,100,000 1,134,507
6%, 8/1/2020 (Prerefunded 7/1/2003) 3,000,000 (a) 3,175,380
Mendon Upton Regional School District
6%, 6/1/2007 (Insured; FGIC) 600,000 639,576
North Attleborough 5.50%, 3/1/2006 (Insured; AMBAC) 1,000,000 1,034,560
Northampton, School Project Loan
6.40%, 5/15/2004 (Insured; MBIA) 750,000 794,070
Quabbin Regional School District
6%, 6/15/2008 (Insured; AMBAC) 780,000 835,169
Somerville 6%, 2/15/2007 (Insured; FSA) 775,000 825,158
Southeastern University Building Authority, Project Revenue
5.90%, 5/1/2010 (Insured; AMBAC) 500,000 523,830
Springfield (School Project Loan)
6.10%, 9/1/2002 (Insured; AMBAC) 600,000 618,522
Uxbridge, Municipal Purpose Loan:
6.125%, 11/15/2005 (Insured; MBIA) 500,000 532,120
6.125%, 11/15/2007 (Insured; MBIA) 525,000 565,546
Westfield 6.50%, 5/1/2017 (Insured; FGIC) 735,000 800,062
Worchester, Municipal Purpose Loan:
6.25%, 7/1/2010 (Insured; MBIA) 755,000 827,639
5.25%, 11/1/2010 (Insured; MBIA) 1,000,000 1,020,320
Yarmouth 8.60%, 10/1/2000 100,000 101,016
U.S. RELATED--4.8%
Puerto Rico Commonwealth
6.25%, 7/1/2011 (Insured; MBIA) 1,050,000 1,163,327
Puerto Rico Commonwealth Highway and
Transportation Authority, Highway Revenue
6.25%, 7/1/2009 (Insured; MBIA) 1,000,000 1,105,370
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. RELATED (CONTINUED)
Puerto Rico Electric Power Authority, Power Revenue
6.50%, 7/1/2006 (Insured; MBIA) 1,000,000 1,097,300
Puerto Rico Public Buildings Authority, Revenue
6.75%, 7/1/2005 (Insured; AMBAC) 1,000,000 1,096,750
University of Puerto Rico, University Revenue 750,000 805,433
6.25%, 6/1/2005
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $106,640,376) 106,359,503
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--2.6%
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS:
Massachusetts Commonwealth, VRDN 1,200,000 (b) 1,200,000
Massachusetts Health and Educational Facilities Authority,
Revenue, VRDN:
(Capital Asset Program)
3.90% (Insured; MBIA) 660,000 (b) 660,000
(Partners Healthcare Systems)
4.70% (Insured; FSA) 700,000 (b) 700,000
Massachusetts Industrial Finance Agency, Revenue, VRDN
(Showa Womans Institute, Inc.)
3.90% (LOC; Bank of New York, Fuji Bank & Trust Co.
Bank of New York) 100,000 (b) 100,000
Massachusetts Water Resource Authority, VRDN
4.60% (Insured; FGIC) 200,000 (b) 200,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $2,860,000) 2,860,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $109,500,376) 99.1% 109,219,503
CASH AND RECEIVABLES (NET) .9% 981,593
NET ASSETS 100.0% 110,201,096
</TABLE>
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
LOC Letter of Credit
MBIA Municipal Bond
Investors Assurance
Insurance Corporation
SFHR Single Family Housing Revenue
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 60.0
AA Aa AA 21.4
A A A 4.1
BBB Baa BBB 11.9
F1+, F-1 MIG1, VMIG1 & P1 SP1, A1 2.6
100.0
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE -- SUBJECT TO PERIODIC
CHANGE.
(C) AT JUNE 30, 2000, 28.5% OF THE FUND'S NET ASSETS ARE INSURED BY MBIA.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 109,500,376 109,219,503
Interest receivable 2,248,287
111,467,790
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 47,667
Cash overdraft due to Custodian 76,822
Payable for investment securities purchased 1,142,205
1,266,694
--------------------------------------------------------------------------------
NET ASSETS ($) 110,201,096
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 111,079,038
Accumulated net realized gain (loss) on investments (597,069)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 3 (280,873)
--------------------------------------------------------------------------------
NET ASSETS ($) 110,201,096
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 12,581,392 737,854 49,807 96,832,043
Shares Outstanding 1,058,125 61,910 4,174 8,142,882
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 11.89 11.92 11.93 11.89
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended June 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 5,096,175
EXPENSES:
Management fee--Note 2(a) 500,682
Distribution and service fees--Note 2(b) 41,901
Loan commitment fees--Note 4 857
TOTAL EXPENSES 543,440
INVESTMENT INCOME--NET 4,552,735
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 3 ($):
Net realized gain (loss) on investments (720,723)
Net realized gain (loss) on financial futures 197,130
NET REALIZED GAIN (LOSS) (523,593)
Net unrealized appreciation (depreciation) on investments (467,434)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (991,027)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,561,708
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 4,552,735 3,450,946
Net realized gain (loss) on investments (523,593) (72,859)
Net unrealized appreciation (depreciation)
on investments (467,434) (2,223,377)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 3,561,708 1,154,710
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (585,969) (679,400)
Class B shares (32,776) (32,547)
Class C shares (8,154) (10,697)
Class R shares (3,925,836) (2,728,302)
Net realized gain on investments:
Class A shares -- (7,443)
Class B shares -- (444)
Class C shares -- (124)
Class R shares -- (26,730)
TOTAL DIVIDENDS (4,552,735) (3,485,687)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 1,171,419 1,385,254
Class B shares 153,018 536,215
Class C shares -- 126,450
Class R shares 50,538,530 34,270,298
Year Ended June 30,
-----------------------------------
2000 1999
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($) (CONTINUED):
Dividends reinvested:
Class A shares 324,529 466,046
Class B shares 9,187 9,718
Class C shares 5,709 6,288
Class R shares 1,596,577 1,128,686
Cost of shares redeemed:
Class A shares (3,756,395) (2,784,916)
Class B shares (310,229) (253,992)
Class C shares (282,000) (75,000)
Class R shares (25,437,733) (13,537,327)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 24,012,612 21,277,720
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,021,585 18,946,743
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 87,179,511 68,232,768
END OF PERIOD 110,201,096 87,179,511
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended June 30,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 98,338 112,386
Shares issued for dividends reinvested 27,389 37,514
Shares redeemed (317,853) (225,095)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (192,126) (75,195)
--------------------------------------------------------------------------------
CLASS B
Shares sold 12,690 42,719
Shares issued for dividends reinvested 775 780
Shares redeemed (26,241) (20,283)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (12,776) 23,216
--------------------------------------------------------------------------------
CLASS C
Shares sold -- 10,127
Shares issued for dividends reinvested 480 506
Shares redeemed (23,783) (5,957)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (23,303) 4,676
--------------------------------------------------------------------------------
CLASS R
Shares sold 4,271,237 2,761,644
Shares issued for dividends reinvested 135,016 90,921
Shares redeemed (2,154,464) (1,090,901)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,251,789 1,761,664
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.03 12.34 12.15 11.97 11.91
Investment Operations:
Investment income--net .51 .51 .53 .54 .54
Net realized and unrealized gain (loss)
on investments (.14) (.30) .24 .20 .08
Total from Investment Operations .37 .21 .77 .74 .62
Distributions:
Dividends from investment income--net (.51) (.51) (.53) (.54) (.54)
Dividends from net realized
gain on investments -- (.01) (.05) (.02) (.02)
Total Distributions (.51) (.52) (.58) (.56) (.56)
Net asset value, end of period 11.89 12.03 12.34 12.15 11.97
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 3.21 1.60 6.41 6.36 5.22
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .75 .75 .75 .75 .75
Ratio of net investment income
to average net assets 4.32 4.10 4.30 4.47 4.44
Portfolio Turnover Rate 31.89 16.35 6.63 22.57 39.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 12,581 15,045 16,355 16,093 15,689
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
-------------------------------------------------------------------
CLASS B SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.06 12.37 12.18 11.99 11.91
Investment Operations:
Investment income--net .45 .44 .47 .48 .48
Net realized and unrealized gain (loss)
on investments (.14) (.30) .24 .21 .10
Total from Investment Operations .31 .14 .71 .69 .58
Distributions:
Dividends from investment income--net (.45) (.44) (.47) (.48) (.48)
Dividends from net realized
gain on investments -- (.01) (.05) (.02) (.02)
Total Distributions (.45) (.45) (.52) (.50) (.50)
Net asset value, end of period 11.92 12.06 12.37 12.18 11.99
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 2.70 1.09 5.87 5.90 4.87
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.25 1.25 1.25
Ratio of net investment income
to average net assets 3.80 3.56 3.78 3.96 3.67
Portfolio Turnover Rate 31.89 16.35 6.63 22.57 39.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 738 901 637 464 452
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended June 30,
------------------------------------------------------------------
CLASS C SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.08 12.38 12.15 11.97 11.91
Investment Operations:
Investment income--net .46 .44 .46 .49 .48
Net realized and unrealized gain (loss)
on investments (.15) (.29) .28 .20 .08
Total from Investment Operations .31 .15 .74 .69 .56
Distributions:
Dividends from investment income--net (.46) (.44) (.46) (.49) (.48)
Dividends from net realized
gain on investments -- (.01) (.05) (.02) (.02)
Total Distributions (.46) (.45) (.51) (.51) (.50)
Net asset value, end of period 11.93 12.08 12.38 12.15 11.97
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) 2.63 1.18 6.19 5.87 4.68
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.25 1.23 1.25 1.25
Ratio of net investment income
to average net assets 3.80 3.58 3.64 4.05 3.93
Portfolio Turnover Rate 31.89 16.35 6.63 22.57 39.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 50 332 282 7 16
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
--------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.04 12.34 12.16 11.97 11.91
Investment Operations:
Investment income--net .54 .54 .56 .57 .57
Net realized and unrealized gain (loss)
on investments (.15) (.29) .23 .21 .08
Total from Investment Operations .39 .25 .79 .78 .65
Distributions:
Dividends from investment income--net (.54) (.54) (.56) (.57) (.57)
Dividends from net realized
gain on investments -- (.01) (.05) (.02) (.02)
Total Distributions (.54) (.55) (.61) (.59) (.59)
Net asset value, end of period 11.89 12.04 12.34 12.16 11.97
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 3.37 1.93 6.58 6.70 5.46
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .50 .50 .50 .50 .50
Ratio of net investment income
to average net assets 4.58 4.35 4.54 4.73 4.68
Portfolio Turnover Rate 31.89 16.35 6.63 22.57 39.16
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 96,832 70,901 50,959 33,188 25,981
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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" ), which is a wholly-owned subsidiary of Mellon
Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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"). 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
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
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.
(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,
2000, 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, if any, 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.
(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
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 $241,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to June 30, 2000. This amount is
calculated based on Federal income tax regulations which may differ from
financial reporting in accordance with general accounting principles. If not
applied, $36,000 of the carryover expires in fiscal 2007 and $205,000 expires in
fiscal 2008.
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 fees). 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 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.
DSC retained $5,810 during the period ended June 30, 2000, 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, for shareholder servicing 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 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 and Class C shares are also subject to a
Service Plan adopted pursuant to Rule 12b-1, under which Class B and Class C
shares pay 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, 2000, Class A,
Class B and Class C shares were charged $33,852, $4,296 and $1,070 respectively,
pursuant to the Plan, of which $30,825, $1,216 and $143 for Class A, Class B and
Class C shares, respectively, were paid to DSC. During the period ended June 30,
2000, Class B and Class C shares were charged $2,148 and $535, respectively,
pursuant to the The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Service Plan, of which $1,213 and $72 for Class B and Class C shares,
respectively, were paid to DSC.
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,
2000, amounted to $56,702,001 and $30,221,525, respectively.
At June 30, 2000, accumulated net unrealized depreciation on investments was
$280,873, consisting of $1,084,347 gross unrealized appreciation and $1,365,220
gross unrealized depreciation.
At June 30, 2000, 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 $500 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
markets rates in effect at the time of borrowings. During the period ended June
30, 2000, the fund did not borrow under the Facility.
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, including
the statement of investments, of Dreyfus Premier Limited Term Massachusetts
Municipal Fund of the The Dreyfus/Laurel Tax-Free Municipal Funds as of June 30,
2000, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years 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 auditing standards generally accepted
in the United States. 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 includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2000, by correspondence with the
custodian. As to securities purchased and sold, but not received or delivered,
we performed other appropriate auditing procedures. 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, 2000, and 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 accounting principles generally
accepted in the United States.
/s/ KPMG
New York, New York
August 4, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby makes the following
designations regarding its fiscal year ended June 30, 2000 as "exempt-interest
dividends" (not subject to regular Federal, and for individuals who are
Massachusetts residents, 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 2000 calendar year on Form 1099-DIV which
will be mailed by January 31, 2001.
NOTES
The Fund
NOTES
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 346AR006
Dreyfus Premier
Limited Term
Municipal Fund
ANNUAL REPORT June 30, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
17 Statement of Assets and Liabilities
18 Statement of Operations
19 Statement of Changes in Net Assets
23 Financial Highlights
27 Notes to Financial Statements
34 Independent Auditors' Report
35 Important Tax Information
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
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, 1999 through June 30,
2000. Inside, you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with the fund's portfolio
manager, John Flahive.
Tighter monetary policy adversely affected the municipal bond market over the
past 12 months. This was primarily a result of efforts by the Federal Reserve
Board (the "Fed") to forestall potential inflationary pressures. The Fed raised
short-term interest rates five times during the reporting period, following one
interest-rate hike implemented just before the reporting period began. Since
June 1999, the Fed has raised short-term interest rates a total of 1.75
percentage points.
However, supply-and-demand factors unique to the municipal bond market helped
constrain price erosion. Because of robust economic growth, most municipalities
had little need to borrow during the second half of the reporting period,
creating a reduced supply of new issues.
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 17, 2000
DISCUSSION OF FUND PERFORMANCE
John Flahive, Portfolio Manager
How did Dreyfus Premier Limited Term Municipal Fund perform during the period?
For the 12-month period ended June 30, 2000, the fund produced a total return of
3.67% for its Class A shares, 3.24% for Class B shares, 3.25% for Class C shares
and 4.01% for Class R shares.(1) This compares to a total return of 2.50% for
the Lipper Intermediate Municipal Debt Fund category average for the same
period.(2)
We attribute the fund's good performance to a rising interest-rate environment
during much of the past year, which resulted in modest returns for many
fixed-income securities, including limited-term municipal securities. In
anticipation of rising interest rates, we reduced the fund's average weighted
maturity -- a measure of sensitivity to changes in interest rates -- which
enabled the portfolio to capture higher yields more readily.
What is the fund's investment approach?
The fund's goal is to seek to maximize current income exempt from federal income
tax consistent with the prudent risk of capital. To pursue this objective, we
attempt to add value by selecting the individual federally tax-exempt bonds that
we believe are most likely to provide high federally tax-exempt current income.
We also actively manage the portfolio' s average weighted maturity in
anticipation of interest-rate and supply-and-demand changes in the limited-term
municipal marketplace. The fund's dollar-weighted average portfolio maturity is
not expected to exceed 10 years.
Rather than focusing on economic or market trends, we search for securities
that, in our opinion, will help us enhance the fund's yield without sacrificing
quality.
The management of the portfolio' s average duration uses a more tactical
approach. If we expect the supply of securities to increase tem The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
porarily, we may reduce the portfolio's average duration to make cash available
for the purchase of higher yielding securities. This is due to the fact that
yields tend to rise if 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 duration to maintain current
yields for as long as practical. At other times, we try to maintain a neutral
average duration.
What other factors influenced the fund's performance?
At the beginning of the reporting period, the United States economy continued to
exhibit strong growth. In fact, investors had become concerned that the U.S.
economy might be growing too rapidly, increasing the risk that long-dormant
inflationary pressures might reemerge. In response, the Federal Reserve Board
(the "Fed" ) initiated a series of short-term interest-rate increases, which
caused the yields of most money market instruments to rise, including many of
those held in this fund.
When the Fed started raising short-term interest rates, we began to reduce the
fund' s average weighted maturity in an attempt to capture higher yields more
quickly and reduce volatility in the portfolio. Conversely, once interest rates
were higher, we extended our average maturity to lock in higher yields.
Another factor that influenced fund performance was a shift in demand caused by
what we believe to be investors who redeemed assets in their limited-term
municipal funds to pay their income tax liabilities. This seasonal occurrence,
coupled with a lack of demand for limited-term municipal securities during this
period, caused yields to rise, which benefited the fund.
What is the fund's current strategy?
We have continued to implement our strategy of searching for the most attractive
values in the tax-exempt marketplace. To that end, we have attempted to capture
higher yields by reducing our holdings of
longer maturity municipal bonds, replacing them with shorter maturity
securities. In doing so, we were able to increase the fund's average weighted
maturity from 8.78 years at the beginning of the reporting period to 9.17 years
as of June 30, 2000.
Consistent with the fund' s goal of providing investors with a high credit
quality portfolio, we have also continued to emphasize bonds that carry the
highest credit ratings. As of June 30, 2000, over 60% of the portfolio's
investments were triple-A rated securities, and the fund's overall credit
quality averaged in the double-A range.
July 17, 2000
(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. 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. 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.
(2) SOURCE: LIPPER INC.
The Fund
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 6/30/90 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. 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 OR UNDERPERFORMING
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns AS OF 6/30/00
Inception From
Date 1 Year 5 Years 10 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
WITH SALES CHARGE (3.0%) 10/1/85 0.58% 4.16% 5.86% --
WITHOUT SALES CHARGE 10/1/85 3.67% 4.81% 6.18% --
CLASS B SHARES
WITH REDEMPTION((+)) 12/28/94 0.26% 4.11% -- 5.08%
WITHOUT REDEMPTION 12/28/94 3.24% 4.28% -- 5.08%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 12/28/94 2.51% 4.37% -- 5.16%
WITHOUT REDEMPTION 12/28/94 3.25% 4.37% -- 5.16%
CLASS R SHARES 2/1/93 4.01% 5.07% -- 5.18%
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. CLASS B SHARES CONVERT TO CLASS A SHARES
AFTER SIX YEARS.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS
.75% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
</TABLE>
The Fund
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
STATEMENT OF INVESTMENTS
June 30, 2000
Principal
LONG-TERM MUNICIPAL INVESTMENTS--94.8% Amount ($) Value ($)
-------------------------------------------------------------------------------------------------------------------------------
ALASKA--1.2%
Anchorage Port and Term Facilities, Revenue
6%, 2/1/2003 (Insured; MBIA) 1,110,000 1,142,934
ARIZONA--2.7%
Maricopa County Unified School District Number 69
(Paradise Valley)
6.35%, 7/1/2010 (Insured; MBIA) 550,000 607,475
Mesa 5.90%, 7/1/2000 (Insured; AMBAC) 600,000 600,024
Phoenix 6.25%, 7/1/2016 1,250,000 1,374,912
ARKANSAS--.5%
North Little Rock, Electric Revenue 6%, 7/1/2001
(Insured; MBIA) 500,000 507,885
CALIFORNIA--16.3%
State of California:
6.80%, 10/1/2005 700,000 776,965
6.60%, 2/1/2009 510,000 576,672
California Educational Facilities Authority, College and
University Revenue,
(Los Angeles College Chiropractic) 5.75%, 11/1/2006 780,000 797,987
California Housing Finance Agency, Home Mortgage Revenue
5.65%, 8/1/2006 (Insured; MBIA) 655,000 673,268
California Rural Home Mortgage Finance Authority, SFMR
5.75%, 8/1/2009 20,000 19,768
California Statewide Communities Development Authority,
Multi-Family Revenue:
(Archstone/Leclub) 5.30%, 6/1/2029 1,000,000 972,260
(Housing-Equity Residential) 5.20%, 12/1/2029 1,000,000 964,590
Franklin-McKinley School District 5.20%, 7/1/2004
(Insured; MBIA) 375,000 386,524
Kern High School District 6.40%, 2/1/2012 (Insured; MBIA) 750,000 856,140
Metropolitan Water District of Southern California,
Waterworks Revenue
6.375%, 7/1/2002 835,000 868,542
Modesto, Wastewater Treatment Facilities Revenue
6%, 11/1/2009 (Insured; MBIA) 500,000 549,225
Riverside County Transportation Commission, Sales Tax Revenue
6.50%, 6/1/2001 (Insured; AMBAC) 520,000 530,598
Sacramento Municipal Utilities District, Electrical Revenue:
6.30%, 9/1/2001 (Insured; MBIA) 500,000 511,780
5.30%, 7/1/2012 1,790,000 1,829,595
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
San Diego County Regional Transportation Commission,
Sales Tax Revenue
6%, 4/1/2004 (Insured; FGIC) 250,000 264,342
San Francisco City and County Airport Commission,
International Airport Revenue
5.625%, 5/1/2006 (Insured; FGIC) 500,000 526,590
San Francisco City and County Public Utilities Commission,
Water Revenue:
6%, 11/1/2003 750,000 790,253
6.375%, 11/1/2006 500,000 529,315
San Jose Redevelopment Agency, Tax Allocation
(Merged Area Redevelopment Project) 6%, 8/1/2009
(Insured; MBIA) 625,000 684,250
Santa Margarita-Dana Point Authority, Revenue
7.25%, 8/1/2007 (Insured; MBIA) 500,000 580,705
Santa Rosa, Wastewater Revenue
6.20%, 9/1/2003 (Prerefunded 9/1/2002) (Insured; FGIC) 350,000(a) 369,030
Simi Valley Unified School District
6.25%, 8/1/2004 (Insured; FGIC) 700,000 749,672
Southern California Public Power Authority,
Power Project Revenue
(Hydroelectric-Hoover Uprating Project) 6.30%, 10/1/2002 420,000 438,140
Westside Unified School District 6%, 8/1/2014
(Insured; AMBAC) 385,000 415,350
COLORADO--1.7%
Colorado Housing Finance Authority:
6.70%, 10/1/2016 500,000 534,230
7.15%, 10/1/2030 1,000,000 1,109,010
CONNECTICUT--.6%
Stamford 6.60%, 1/15/2007 500,000 551,210
FLORIDA--3.2%
Dade County,
Sales Tax Revenue 6%, 10/1/2002 (Insured; AMBAC) 1,000,000 1,030,310
Key West Utility Board, Electric Revenue
5.75%, 10/1/2006 (Insured; AMBAC) 1,000,000(b) 1,050,430
Miami Health Facilities Authority, Health Facilities Revenue
(Mercy Hospital Project)
6.75%, 8/1/2020 (Insured; AMBAC) (Prerefunded 8/1/2001) 1,000,000(a) 1,044,070
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
GEORGIA--4.3%
Atlanta, Airport Revenue 5.50%, 1/1/2026 (Insured; FGIC) 1,000,000 963,530
Georgia:
6%, 3/1/2004 465,000 485,200
5.75%, 7/1/2004 760,000 788,948
Georgia Municipal Electric Authority, Power Revenue
6%, 1/1/2006 900,000 941,733
Henry County and Henry County Water and
Sewerage Authority, Revenue
5.625%, 2/1/2030 (Insured; FGIC) 1,000,000(b) 978,790
HAWAII--1.0%
Hawaii 4.75%, 11/1/2013 (Insured; MBIA) 1,000,000 918,600
ILLINOIS--5.3%
Chicago Metropolitan Water Reclamation District
(Chicago Capital Improvement)
7.25%, 12/1/2012 1,000,000 1,190,350
Illinois 5.60%, 6/1/2004 750,000 771,577
McHenry County Community Unit School District Number 012:
5.50%, 12/1/2012 1,065,000 1,081,795
5.50%, 12/1/2013 1,215,000 1,226,761
Regional Transportation Authority
7.75%, 6/1/2012 (Insured; FGIC) 390,000 476,529
Sangamon County School District Number 186 (Springfield)
7.70%, 6/1/2001 (Insured; MBIA) 300,000 308,730
INDIANA--.5%
Indianapolis Airport Authority, Special Facilities Revenue
(Federal Express Corp. Project) 7.10%, 1/15/2017 500,000 518,555
IOWA--1.6%
Des Moines Parking Facilities, Revenue 7.25%, 7/1/2015
(Insured; FGIC) (Prerefunded 7/1/2000) 500,000(a) 500,040
Iowa Student Loan Liquidity Corp., Student Loan Revenue
5.65%, 12/1/2005 1,000,000 1,020,080
KENTUCKY--1.1%
Kentucky Turnpike Authority,
Economic Development Road Revenue
(Revitalization Projects) 6.50%, 7/1/2007 (Insured; AMBAC) 1,000,000 1,092,950
LOUISIANA--.4%
Louisiana Public Facilities Authority, HR
(Touro Infirmary Project) 5.625%, 8/15/2029 500,000 416,050
The Fund
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--5.2%
Massachusetts:
5.75%, 9/1/2013 500,000 520,240
Special Obligation Revenue 7%, 6/1/2002 1,000,000 1,043,470
Massachusetts Water Resource Authority 6.50%, 7/15/2009 1,000,000 1,104,570
Weston:
5.625%, 3/1/2017 650,000 662,201
5.625%, 3/1/2018 665,000 674,609
Worcester
(Municipal Purpose Loan) 5.75%, 10/1/2014 (Insured; MBIA) 1,000,000 1,024,600
MICHIGAN--2.3%
Flowerville Community School District
6.50%, 5/1/2006 (Insured; MBIA) 555,000 600,288
Michigan Building Authority,
Revenue 6.40%, 10/1/2004 (Insured; FSA) 1,000,000 1,040,160
Saint John's Public Schools (Qualified School Board Loan Fund)
6.50%, 5/1/2006 (Insured; FGIC) 525,000 567,840
MISSISSIPPI--.4%
Mississippi Higher Education Assistance Corporation,
Student Loan Revenue
6.05%, 9/1/2007 410,000 412,968
NEW JERSEY--4.3%
New Jersey:
5.50%, 2/15/2004 1,000,000 1,025,820
6%, 2/15/2011 1,000,000 1,074,330
New Jersey Economic Development Authority,
Revenue (Transportation Project)
5.875%, 5/1/2014 (Insured; FSA) 1,000,000 1,042,580
New Jersey Transportation Corp.,
Capital Grant Anticipation Notes
5.50%, 9/1/2003 (Insured; FSA) 1,000,000 1,019,150
NEW MEXICO--1.1%
New Mexico State Highway Commission,
Tax Revenue 5.50%, 6/15/2002 1,000,000 1,016,370
NEW YORK--19.1%
Amherst, Public Improvement 6.20%, 4/1/2002 (Insured; FGIC) 150,000 154,125
Erie County Water Authority, Water Revenue
7%, 12/1/2000 (Insured; AMBAC) 200,000 202,234
Greece Central School District 6%, 6/15/2010 225,000 242,017
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
Hempstead Town (Various Purpose)
6.30%, 1/1/2002 (Insured; AMBAC) 150,000 153,685
Long Island Power Authority,
Electric System General Revenue
5.25%, 12/1/2001 (Insured; MBIA) 500,000 505,275
Metropolitan Transportation Authority:
Commuter Facilities Revenue:
5.50%, 7/1/2007 (Insured; AMBAC) 1,000,000 1,032,510
(Grand Central Terminal) 5.70% 7/1/2024 (Insured; FSA) 200,000 197,298
Transportation Facilities Revenue
6.30%, 7/1/2007 (Insured; MBIA) 250,000 269,845
Monroe County, Public Improvement 7%, 6/1/2003
(Insured; FGIC) 200,000 212,374
Municipal Assistance Corporation for the City of New York
6%, 7/1/2005 (Insured; AMBAC) 100,000 105,667
Nassau County:
7%, 7/1/2002 (Insured; AMBAC) (Prerefunded 7/1/2000) 100,000(a) 101,007
6.30%, 11/1/2003 (Insured; FGIC) 200,000 209,450
New York City:
7%, 8/1/2006 300,000 331,050
5.75%, 8/1/2007 (Insured; MBIA) 1,000,000 1,050,020
6.20%, 8/1/2007 (Prerefunded 8/1/2004) 55,000(a) 58,598
6.20%, 8/1/2007 945,000 996,361
5.75%, 8/1/2012 545,000 559,513
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue:
5.75%, 6/15/2026 (Insured; MBIA) 1,255,000 1,250,771
5.50%, 6/15/2027 (Insured; MBIA) 250,000 239,830
6%, 6/15/2033 1,000,000 1,016,430
New York City Transit Finance Authority,
Revenue (Future Tax Secured), 6.125%, 11/15/2014 1,000,000 1,065,350
New York State 6.25%, 8/15/2004 1,000,000 1,054,950
New York State Dormitory Authority, Revenue:
(Consolidated City University) 5.75%, 7/1/2018 (Insured; FSA) 200,000 206,246
(FIT Student Housing) 5.75%, 7/1/2006 (Insured; AMBAC) 130,000 135,858
(Mental Health Services Facilities) 6%, 8/15/2005 1,000,000 1,041,220
(Rochester Institute of Technology) 5.50%, 7/1/2006
(Insured; MBIA) 200,000 206,858
(Vassar College) 6%, 7/1/2005 250,000 263,145
New York State Environmental Facilities Corp., PCR
(State Water Revolving Fund) 7.50%, 6/15/2012 500,000 511,255
The Fund
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Power Authority, General Purpose Revenue
7%, 1/1/2018 (Prerefunded 1/1/2010) 300,000(a) 344,823
New York State Thruway Authority
(Highway and Bridge Trust Fund):
5.50%, 4/1/2007 (Insured; FGIC) 500,000 517,175
6%, 4/1/2016 (Insured; FSA) 1,000,000 1,048,940
New York State Urban Development Corp., Revenue:
(Corporation Purpose) 5.50%, 7/1/2005 200,000 206,206
(Higher Education Technology Grants)
5.75%, 4/1/2015 (Insured; MBIA) 500,000 507,345
Orange County:
5.10%, 11/15/2002 130,000 131,717
5.50%, 11/15/2007 250,000 260,037
Port Washington Union Free School District 6%, 8/1/2001 125,000 127,164
Triborough Bridge and Tunnel Authority
General Purpose Revenue:
5.75%, 1/1/2005 250,000 259,565
5.90%, 1/1/2007 100,000 105,256
Special Obligation 5.25%, 1/1/2013 1,000,000 992,310
Westchester County 6.625%, 11/1/2004 250,000 269,778
Western Nassau County Water Authority,
Water Systems Revenue 5.50%, 5/1/2004 (Insured; AMBAC) 250,000 256,795
OHIO--.7%
Clermont County, Hospital Facilities Revenue
(Mercy Health System) 5.25%, 9/1/2003 (Insured; AMBAC) 685,000 695,426
OREGON--.3%
Tri County Metropolitan Transportation District
(Light Rail Extension)
5.60%, 7/1/2003 (Prerefunded 7/1/2002) 250,000(a) 256,940
PENNSYLVANIA--4.3%
Hazelton Area School District 5.75%, 3/1/2013
(Insured; FGIC) (Prerefunded 3/1/2003) 1,000,000(a) 1,034,180
Montgomery County Industrial Development Authority
(Peco Energy Company Project)
5.30%, 10/1/2004 1,000,000 987,210
Pennsylvania Intergovernmental Cooperative Authority,
Special Tax Revenue
(City of Philadelphia Funding Program) 6.80%, 6/15/2022
(Prerefunded 6/15/2002) 1,000,000(a) 1,040,210
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Somerset County General Authority, Commonwealth LR
6.70%, 10/15/2003 (Insured; FGIC)
(Prerefunded 10/15/2001) 1,000,000(a) 1,028,230
TENNESSEE--.3%
Shelby County Health and Educational Housing Facilities Board
(Saint Judes Childrens Research)
5%, 7/1/2009 300,000 292,680
TEXAS--4.9%
Austin, Utility System Revenue
8%, 11/15/2016 (Prerefunded 5/15/2001) 200,000(a) 206,256
Fort Bend Independent School District
(Permanent School Fund Guaranteed)
6.60%, 2/15/2004 875,000 927,395
Lewisville Independent School District (Building Bonds)
(Permanent School Fund Guaranteed):
7.50%, 8/15/2006 650,000 738,075
7.50%, 8/15/2007 600,000 689,712
Socorro Independent School District
(Permanent School Fund Guaranteed) 6%, 8/15/2014 2,085,000 2,175,301
UTAH--3.2%
Intermountain Power Agency, Power Supply Revenue
6.25%, 7/1/2009 (Insured; FSA) 500,000 541,660
Salt Lake City, HR (IHC Hospitals Inc.) 6.25%, 2/15/2023 500,000 506,920
Utah 5.50%, 7/1/2003 2,000,000 2,042,920
VIRGINIA--1.1%
Virginia Transportation Board, Transportation Contract Revenue
(Route 28 Project) 6%, 4/1/2005 1,000,000 1,038,170
WASHINGTON--1.7%
Washington Public Power Supply System, Revenue
(Nuclear Project Number 1):
6%, 7/1/2006 (Insured; MBIA) 500,000 527,110
7%, 7/1/2008 1,000,000 1,119,050
WISCONSIN--1.8%
Kenosha, Waterworks Revenue 5%, 12/1/2012 (Insured; FGIC) 750,000 728,685
Wisconsin 5.40%, 11/1/2023 500,000 466,995
Wisconsin, Health and Educational Facilities Revenue
(Aurora Medical Group Inc.) 5.75%, 11/15/2007 (Insured; FSA) 500,000 521,110
Principal
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------
U. S. RELATED--3.7%
Puerto Rico Commonwealth 6.25%, 7/1/2011 (Insured; MBIA) 950,000 1,052,533
Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue 6.25%, 7/1/2009 (Insured; MBIA) 150,000 165,805
Puerto Rico Electric Power Authority, Power Revenue
6.50%, 7/1/2006 (Insured; MBIA) 625,000 685,812
Puerto Rico Public Buildings Authority,
Government Guaranteed Facilities
6.25%, 7/1/2010 (Insured; AMBAC) 750,000 832,755
University of Puerto Rico, University Revenue
6.25%, 6/1/2008 (Insured; MBIA) 750,000 823,238
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $89,860,013) 91,247,896
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--5.7%
--------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--.7%
District of Columbia, VRDN 4.65% (LOC; Societe Generale) 700,000(c) 700,000
MISSOURI--1.2%
Kansas City Industrial Development Authority, HR (Research
Health Services System) VRDN 4.75% (Insured; MBIA) 1,200,000(c) 1,200,000
NEW YORK--1.5%
Long Island Power Authority, Electric System Revenue,
VRDN 4.65% (LOC; ABN-Amro Bank) 1,400,000(c) 1,400,000
TEXAS--2.3%
Lone Star Airport Improvement Authority Inc., Revenue
VRDN 4.55% (LOC; Royal Bank of Canada) 400,000(c) 400,000
North Central Health Facility Development Corp., VRDN
(Presbyterian Medical Center):
4.60%, Series C (Insured; MBIA) 400,000(c) 400,000
4.60%, Series D (Insured; MBIA) 1,400,000(c) 1,400,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $5,500,000) 5,500,000
------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $95,360,013) 100.5% 96,747,896
LIABILITIES, LESS CASH AND RECEIVABLES (.5%) (534,753)
NET ASSETS 100.0% 96,213,143
</TABLE>
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
FGIC Financial Guaranty Insurance
Company
FSA Financial Security Assurance
HR Hospital Revenue
LOC Letter of Credit
LR Lease Revenue
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa AAA 62.3
AA Aa AA 20.5
A A A 7.7
BBB Baa BBB 3.8
F1 MIG1/P1 SP1/A1 5.7
100.0
(A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT
SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST
ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING
DATE.
(B) PURCHASED ON A DELAYED DELIVERY BASIS.
(C) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC
CHANGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of Investments 95,360,013 96,747,896
Interest receivable 1,621,441
Receivable for shares of Beneficial Interest subscribed 40,261
98,409,598
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 46,221
Cash overdraft due to Custodian 65,303
Payable for investment securities purchased 2,012,993
Payable for shares of Beneficial Interest redeemed 594
Other liabilities 71,344
2,196,455
--------------------------------------------------------------------------------
NET ASSETS ($) 96,213,143
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 95,239,638
Accumulated net realized gain (loss) on investments (414,378)
Accumulated net unrealized appreciation (depreciation) on investments-Note
3 1,387,883
--------------------------------------------------------------------------------
NET ASSETS ($) 96,213,143
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Class B Class C Class R
------------------------------------------------------------------------------------------------------------------------------------
Net Assets ($) 22,732,674 3,870,172 613,189 68,997,108
Shares Outstanding 1,903,661 324,214 51,194 5,779,557
NET ASSET VALUE PER SHARE ($) 11.94 11.94 11.98 11.94
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF OPERATIONS
Year Ended June 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 4,880,434
EXPENSES:
Management fee-Note 2(a) 477,384
Distribution and service fees-Note 2(b) 96,169
Loan commitment fees-Note 4 622
TOTAL EXPENSES 574,175
INVESTMENT INCOME--NET 4,306,259
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-NOTE 3 ($):
Net realized gain (loss) on investments (600,630)
Net realized gain (loss) on financial futures 199,461
NET REALIZED GAIN (LOSS) (401,169)
Net unrealized appreciation (depreciation) on investments (279,054)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (680,223)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,626,036
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income-net 4,306,259 3,666,817
Net realized gain (loss) on investments (401,169) 35,729
Net unrealized appreciation (depreciation)
on investments (279,054) (691,521)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,626,036 3,011,025
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income-net:
Class A shares (1,083,212) (1,090,877)
Class B shares (129,806) (87,000)
Class C shares (45,769) (29,934)
Class R shares (3,047,472) (2,459,006)
Net realized gain on investments:
Class A shares -- (26,111)
Class B shares -- (2,389)
Class C shares -- (790)
Class R shares -- (58,521)
TOTAL DIVIDENDS (4,306,259) (3,754,628)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 20,413,976 12,748,480
Class B shares 2,609,009 1,370,541
Class C shares 307,629 1,515,094
Class R shares 29,787,357 19,087,979
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended June 30,
----------------------
2000 1999
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($) (CONTINUED):
Dividends reinvested:
Class A shares 726,373 856,147
Class B shares 66,416 44,509
Class C shares 38,848 17,759
Class R shares 1,303,137 1,046,181
Cost of shares redeemed:
Class A shares (25,264,246) (13,066,638)
Class B shares (1,572,247) (714,277)
Class C shares (1,256,085) (492,357)
Class R shares (26,238,929) (16,675,376)
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 921,238 34,825,976
TOTAL INCREASE (DECREASE) IN NET ASSETS 241,015 34,082,373
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 95,972,128 61,889,755
END OF PERIOD 96,213,143 95,972,128
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended June 30,
----------------------
2000 1999
------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A
Shares sold 1,730,049 1,097,666
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 61,206 69,015
Shares redeemed (2,139,755) (1,055,869)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (348,500) 837,509
------------------------------------------------------------------------------
CLASS B
Shares sold 220,174 110,983
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 5,607 3,591
Shares redeemed (132,672) (58,059)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 93,109 130,379
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended June 30,
----------------------
2000 1999
-------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (CONTINUED):
CLASS C
Shares sold 25,977 122,301
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 3,261 1,434
Shares redeemed (105,238) (40,102)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (76,000) 110,259
-------------------------------------------------------------------------------
CLASS R
Shares sold 2,511,584 1,623,187
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 109,871 84,427
Shares redeemed (2,212,146) (1,345,302)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 409,309 1,877,063
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
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 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.03 12.32 12.12 11.89 11.82
Investment Operations:
Investment income--net .52 .50 .52 .54 .54
Net realized and unrealized
gain (loss) on investments (.09) (.28) .26 .26 .08
Total from investment operations .43 .22 .78 .80 .62
Distributions:
Dividends from investment income--net (.52) (.50) (.52) (.54) (.55)
Dividends from net realized
gain on investments -- (.01) (.06) (.03) --
Total Distributions (.52) (.51) (.58) (.57) (.55)
Net asset value, end of period 11.94 12.03 12.32 12.12 11.89
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(A) 3.67 1.78 6.52 6.92 5.25
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .75 .79 .77 .75 .75
Ratio of net investment income
to average net assets 4.36 4.06 4.24 4.52 4.53
Portfolio Turnover Rate 45.65 28.19 14.62 30.50 55.07
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 22,733 27,084 17,423 17,323 18,751
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
--------------------------------------------------------------
CLASS B SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.02 12.31 12.12 11.89 11.82
Investment Operations:
Investment income-net .46 .44 .46 .48 .48
Net realized and unrealized
gain (loss) on investments (.08) (.28) .25 .26 .07
Total from investment operations .38 .16 .71 .74 .55
Distributions:
Dividends from investment income-net (.46) (.44) (.46) (.48) (.48)
Dividends from net realized
gain on investments -- (.01) (.06) (.03) --
Total Distributions (.46) (.45) (.52) (.51) (.48)
Net asset value, end of period 11.94 12.02 12.31 12.12 11.89
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(A) 3.24 1.25 5.89 6.38 4.71
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.25 1.28 1.27 1.25 1.25
Ratio of net investment income
to average net assets 3.87 3.55 3.68 4.01 3.98
Portfolio Turnover Rate 45.65 28.19 14.62 30.50 55.07
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 3,870 2,779 1,240 551 500
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended June 30,
--------------------------------------------------------------
CLASS C SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.06 12.34 12.14 11.90 11.82
Investment Operations:
Investment income-net .46 .44 .46 .49 .48
Net realized and unrealized
gain (loss) on investments (.08) (.27) .26 .27 .08
Total from investment operations .38 .17 .72 .76 .56
Distributions:
Dividends from investment income-net (.46) (.44) (.46) (.49) (.48)
Dividends from net realized
gain on investments (--) (.01) (.06) (.03) --
Total Distributions (.46) (.45) (.52) (.52) (.48)
Net asset value, end of period 11.98 12.06 12.34 12.14 11.90
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(A) 3.25 1.35 6.02 6.50 4.81
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.26 1.26 1.27 1.27 1.24
Ratio of net investment income
to average net assets 3.86 3.58 3.71 4.17 4.00
Portfolio Turnover Rate 45.65 28.19 14.62 30.50 55.07
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 613 1,534 209 74 150
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended June 30,
--------------------------------------------------------------
CLASS R SHARES 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 12.02 12.31 12.12 11.89 11.82
Investment Operations:
Investment income-net .55 .53 .55 .57 .57
Net realized and unrealized
gain (loss) on investments (.08) (.28) .25 .26 .08
Total from investment operations .47 .25 .80 .83 .65
Distributions:
Dividends from investment income-net (.55) (.53) (.55) (.57) (.58)
Dividends from net realized
gain on investments -- (.01) (.06) (.03) (--)
Total Distributions (.55) (.54) (.61) (.60) (.58)
Net asset value, end of period 11.94 12.02 12.31 12.12 11.89
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 4.01 2.02 6.69 7.17 5.51
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA ($):
Ratio of expenses to average net assets .50 .54 .52 .50 .50
Ratio of net investment income
to average net assets 4.61 4.32 4.47 4.77 4.77
Portfolio Turnover Rate 45.65 28.19 14.62 30.50 55.07
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 68,997 64,575 43,018 25,741 17,870
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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" ), which is a wholly-owned subsidiary of Mellon Financial
Corporation.
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 Funds
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 and Class R shares
of the fund.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 and Class R shares
of the fund.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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"). 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 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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.
(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, 2000, 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, 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 $91,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to June 30, 2000. This amount is calculated
based on Federal income tax regulations which may differ from financial
reporting in accordance with generally accepted accounting principles. If not
applied, the carryover expires in fiscal 2008.
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 fees). 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, The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$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 Company 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.
DSC retained $1,541 during the period ended June 30, 2000, 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 for shareholder servicing 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 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 and Class C shares are also subject to a Service Plan
adopted pursuant to Rule 12b-1, under which Class B and Class C shares pay 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, 2000, Class A, Class B and Class C
shares were charged $62,143, $16,760 and $5,924, respectively, pursuant to the
Plan, of which $46,010,
$6,389 and $1,395 for Class A, Class B and Class C shares, respectively, were
paid to DSC. During the period ended June 30, 2000, Class B and Class C shares
were charged $8,380 and $2,962, respectively, pursuant to the Service Plan, of
which $4,949 and $566 for Class B and Class C shares, respectively, were paid to
DSC.
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 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,
2000, amounted to $42,783,680 and $41,647,699, respectively.
At June 30, 2000, accumulated net unrealized appreciation on investments was
$1,387,883, consisting of $1,840,443 gross unrealized appreciation and $452,560
gross unrealized depreciation.
At June 30, 2000, 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 $500 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, 2000, the fund did not borrow under the Facility.
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
Premier Limited Term Municipal Fund of The Dreyfus/ Laurel Tax-Free Municipal
Funds, including the statement of investments, as of June 30, 2000, 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 auditing standards generally accepted
in the United States. 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, 2000, by correspondence with the custodian. As to
securities purchased and sold, but not received or delivered, we performed other
appropriate auditing procedures. 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, 2000, 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 accounting principles generally accepted
in the United States.
/S/KPMG
New York, New York
August 4, 2000
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, 2000 as
" exempt-interest dividends" (not generally subject to regular Federal income
tax).
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 distributions (if any) paid for the 2000 calendar year on Form 1099-DIV
which will be mailed by January 31, 2001.
The Fund
Notes
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 347AR006
================================================================================
Dreyfus
BASIC New York
Municipal Money
Market Fund
ANNUAL REPORT June 30, 2000
(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
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 Independent Auditors' Report
20 Important Tax Information
FOR MORE INFORMATION
---------------------------------------------------------------------------
Back Cover
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, 1999
through June 30, 2000. Inside, you'll find valuable information about how the
fund was managed during the reporting period, including a discussion with the
fund's portfolio manager, John Flahive.
When the reporting period began, international and domestic economies were
growing faster than most analysts expected, giving rise to concerns that
long-dormant inflationary pressures might reemerge. Consumers continued to spend
heavily, unemployment levels reached new lows and the stock market, while highly
volatile, continued to climb.
Because unsustainable economic growth may trigger unwanted inflationary
pressures, the Federal Reserve Board (the "Fed") raised key short-term interest
rates five times during the reporting period. When combined with the one
interest-rate hike just before the reporting period began, the Fed has increased
short-term rates by 1.75 percentage points since late June 1999. While these
economic influences adversely affected longer term municipal bonds, they
positively influenced tax-exempt money market 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 17, 2000
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, 2000, the fund provided an annualized
yield of 3.14% and, after taking into account the effect of compounding, an
annualized effective yield of 3.19%.(1)
We attribute the fund's performance to a rising interest-rate environment during
much of the past year, which increased the yields of many short-term
fixed-income securities, including tax-exempt money market securities. In
anticipation of rising interest rates, we reduced the fund's average weighted
maturity -- a measure of sensitivity to changes in interest rates -- in an
attempt to capture higher yields more readily.
What is the fund's investment approach?
The fund' s goal is to seek a high level of current income exempt from federal,
New York State and New York City income taxes to the extent consistent with the
preservation of capital and the maintenance of liquidity. To pursue 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 high tax-exempt current income, while focusing on credit risk. We also
actively manage the portfolio' s average weighted maturity in anticipation of
interest-rate and supply-and-demand changes in New York's short-term municipal
marketplace.
Rather than focusing on economic or market trends, we search for securities
that, in our opinion, will help us enhance the fund's yield without sacrificing
quality.
The management of the portfolio's average weighted maturity uses a more tactical
approach. If we expect the supply of securities to increase temporarily, we may
reduce the portfolio' s average weighted maturity The Fun
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
to make cash available for the purchase of higher yielding securities. This is
due to the fact that yields tend to rise temporarily if 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 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?
At the beginning of the reporting period, the United States and New York
economies continued to exhibit strong growth. In fact, investors had become
concerned that the U.S. economy might be growing too rapidly, increasing the
risk that long-dormant inflationary pressures might reemerge. In response, the
Federal Reserve Board (the "Fed" ) initiated a stance of raising short-term
interest rates, which caused the yields of most money market instruments to
rise, including many of those held in this fund.
Once the Fed started raising short-term interest rates, we began to reduce the
fund' s average weighted maturity in an attempt to capture higher yields more
quickly and reduce volatility in the portfolio. Conversely, once interest rates
were higher, we extended our average weighted maturity to lock in higher yields
Another factor that influenced fund performance was a shift in demand caused by
what we believe to be investors who redeemed assets in their money market funds
to pay their income tax liabilities. This seasonal occurrence, coupled with a
lack of demand for money market securities during this period, caused yields to
rise temporarily, which also benefited the fund.
What is the fund's current strategy?
As of the end of the reporting period we have maintained an average weighted
maturity that is slightly longer than neutral. This stance is designed to give
us the flexibility we need in an uncertain economic environment.
However, we are closely monitoring the situation for any changes in market
conditions that would cause us to modify our stance. On a broader note, we are
pleased that we are seeing signs that the short-term interest-rate increases
imposed by the Fed have begun to slow the economy. We are also encouraged that
the New York economy continues to perform well. The state's positive fiscal
status can largely be attributed to revenues derived from entertainment-related
and finance-related securities. With a state surplus in place, the need to
borrow money to finance improvements or services has diminished. Furthermore,
the rising interest-rate environment has also discouraged the need for
refinancing. One notable exception would be securities issued by Nassau County,
an area that we have continued to avoid because we feel its finances have been
deteriorating.
July 17, 2000
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. 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 THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.
The Fund
STATEMENT OF INVESTMENTS
June 30, 2000
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
Principal
TAX EXEMPT INVESTMENTS--99.4% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK--98.0%
Albany Industrial Development Agency, IDR, VRDN
(Newkirk Products Inc., Project)
<S> <C> <C>
4.80%, Series A (LOC; Fleet Bank) 1,600,000 (a) 1,600,000
Babylon Industrial Development Agency, RRR, VRDN
(Equity Babylon Project)
4.65% (LOC; Union Bank of Switzerland) 1,900,000 (a) 1,900,000
Chemung County Industrial Development Agency,
Civic Facility Revenue, VRDN
(Arnot Ogden Medical Center)
4.65%, Series A (LOC; Chase Manhattan Bank) 2,395,000 (a) 2,395,000
Great Neck North Water Authority, Water System
Revenue, Refunding, VRDN
4.65% Series A (Insured; FGIC and SBPA; FGIC) 8,200,000 (a) 8,200,000
Long Island Power Authority, Electric System Revenue
VRDN 4.45%, Sub-Series 6
(LOC: ABN-Amro Bank and Morgan Guaranty
Trust Co.) 7,700,000 (a) 7,700,000
Metropolitan Transportation Authority,
Transport Facility Revenue, CP
4.10%, Series 1, 8/10/2000 (LOC; ABN-Amro Bank) 10,000,000 10,000,000
Monroe County Airport Authority, Airport Revenue,
VRDN 4.87% (Insured; MBIA and LOC; Merrill
Lynch and Co.) 4,900,000 (a) 4,900,000
Nassau County:
RAN:
6%, Series A, 3/20/2001 (LOC; First Union
National Bank) 2,600,000 2,627,532
6%, Series D, 4/12/2001 (LOC: Bayerische
Landesbank and State Street Bank and Trust Co.) 4,000,000 4,045,838
TAN:
4.75%, Series C, 12/21/2000 (LOC; First Union
National Bank) 3,000,000 3,009,527
Refunding 4.25%, Series Z, 9/1/2000 (Insured; FGIC) 4,940,000 4,945,259
New York City:
Refunding, CP:
4.60%, Series H, 8/9/2000 (LOC; FSA and
SPBA; State Street Bank and Trust Co.) 3,100,000 3,100,000
4.10%, Series H, 8/10/2000 (LOC; FSA and
SPBA; State Street Bank and Trust Co.) 3,000,000 3,000,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York City (continued):
VRDN:
4.40%, Series B (LOC; Bayerische Landesbank) 5,505,000 (a) 5,505,000
4.65%, Sub-Series A-6 (LOC; Landesbank Hessen) 2,530,000 (a) 2,530,000
4.65%, Series B-2 (LOC; Chase Manhattan Bank) 3,100,000 (a) 3,100,000
4.65%, Series J (LOC; Commerzbank) 17,350,000 (a) 17,350,000
New York City Health and Hospital Corporation,
Revenue, VRDN (Health Systems):
4.35%, Series B (LOC; Canadian Imperial Bank
of Commerce) 4,700,000 (a) 4,700,000
4.40%, Series D (LOC; Bank of Nova Scotia) 11,500,000 (a) 11,500,000
4.40%, Series E (LOC; The Bank of New York) 8,640,000 (a) 8,640,000
New York City Housing Development Corporation,
Multi-Family Rental Housing Revenue, VRDN:
(Monterey) 4.40%, Series A (LOC; FNMA) 13,000,000 (a) 13,000,000
(West 89th Street Development)
4.50%, Series A (LOC; FNMA) 14,000,000 (a) 14,000,000
New York City Industrial Development Agency,
Civic Facility Revenue, VRDN (Casa Project)
4.90% (LOC; Chase Manhattan Bank) 3,000,000 (a) 3,000,000
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue, VRDN
4.40%, Series G
(Insured; FGIC and Liqudity Facility; FGIC) 7,400,000 (a) 7,400,000
New York City Trust, Cultural Resource Revenue
(American Museum of Natural History)
3.70%, Series B, 7/1/2000 (Insured; AMBAC) 2,125,000 2,125,000
New York State:
4.05%, Series B, 8/9/2000
(LOC; Credit Locale de France) 10,000,000 10,000,000
7.10%, 3/1/2001 (Insured; AMBAC) 2,800,000 2,853,372
New York State Dormitory Authority, Revenues:
CP (Mount Sinai School of Medicine)
4.10%, 7/11/2000 (LOC; Chase Manhattan Bank) 10,000,000 10,000,000
VRDN:
(Memorial Sloan Kettering):
4.50% (LOC; Morgan Guaranty Trust Co.) 4,100,000 (a) 4,100,000
4.55%, Series B (LOC; Chase Manhattan Bank) 2,600,000 (a) 2,600,000
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Dormitory Authority, Revenues (continued):
VRDN (continued):
(Metropolitan Museum of Art):
4.30%, Series A (Corp. Guaranty; Metropolitan 3,000,000 (a) 3,000,000
Museum of Art)
4.30%, Series B (Corp. Guaranty; Metropolitan 1,760,000 (a) 1,760,000
Museum of Art)
Refunding (Wagner College)
4.65% (LOC; Morgan Guaranty Trust Co.) 7,100,000 (a) 7,100,000
New York State Energy Research and Development
Authority:
PCR (New York State Electric and Gas)
3.90%, Series D, 12/1/2000 (LOC; Fleet Bank) 4,000,000 4,000,000
VRDN:
(Niagara Mohawk)
4.75%, Series A (LOC; Toronto-Dominion Bank) 5,000,000 (a) 5,000,000
(New York State Electric and Gas)
4.50%, Series D (LOC; Bank One Corp.) 7,500,000 (a) 7,500,000
New York State Environmental Quality
3.90%, Series G, 10/5/2000
(LOC; Westdeutsche Landesbank) 12,000,000 12,000,000
New York State Housing Finance Agency, VRDN:
HR:
4.45%, Series A (LOC; FNMA) 5,000,000 (a) 5,000,000
(East 84th Street) 4.50%, Series A
(LOC; Hypovereins Bank) 5,400,000 (a) 5,400,000
(750 Sixth Ave) 4.70%, Series A (LOC; Fleet Bank) 5,000,000 (a) 5,000,000
Revenue (Normandie Court I Project)
4.45% (LOC; Landesbank Hessen) 11,150,000 (a) 11,150,000
Service Contract Obligation:
4.35%, Series A (LOC; Commerzbank) 11,600,000 (a) 11,600,000
4.65%, Series A (LOC; Commerzbank) 6,000,000 (a) 6,000,000
New York State Local Governmental Assistance
Corporation, VRDN:
4.35%, Series A (LOC: Bayerische Landesbank and
Westdeutsche Landesbank) 17,100,000 (a) 17,100,000
4.40%, Series D (LOC; Societe Generale) 9,400,000 (a) 9,400,000
New York State Medical Care Facilities Finance Agency,
Revenue, VRDN:
(Lenox Hill Hospital)
4.80%, Series A (LOC; Chase Manhattan Bank) 5,400,000 (a) 5,400,000
Principal
TAX EXEMPT INVESTMENTS (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Medical Care Facilities Finance Agency,
Revenue, VRDN (continued):
(Pooled Equipment Loan Program II)
4.50%, Series A (LOC; Chase Manhattan Bank) 1,700,000 (a) 1,700,000
New York State Power Authority, Revenue, Prerefunded
(General Purpose) 6.75%, Series Y, 1/1/2001
(Escrowed in; U.S. Government Securities) 7,795,000 8,050,327
New York State Thruway Authority, Service Contracts
Revenue, VRDN (Municipal Securities Trust Receipts)
4.80% (Insured; AMBAC and LOC; Chase
Manhattan Bank) 7,200,000 (a) 7,200,000
Rensselaer County Industrial Development Agency,
Civic Facility, Revenue, VRDN
(Polytech Institute Project) 4.70%, Series A
(Corp. Guaranty; Rennselaer Polytech Institute) 4,000,000 (a) 4,000,000
Rochester, BAN 4.75%, 3/7/2001 7,500,000 7,526,986
Rockland County, BAN 4.50, 3/2/2001 5,600,000 5,612,578
Schenectady Industrial Development Agency,
Civic Facility Revenue, VRDN
(Union College Project) 4.70%, Series A 2,116,000 (a) 2,116,000
Suffolk County Industrial Development Agency, Continuing
Care Retirement Community Revenue, VRDN
(First Mortgage- Jeffersons Ferry)
4.90%, Series C (LOC; Bank of Scotland) 15,000,000 (a) 15,000,000
Yonkers Industrial Development Agency,
Civic Facility Revenue, VRDN
(Consumers Union Facility)
4.65% (Insured; AMBAC and LOC; Commerzbank) 3,400,000 (a) 3,400,000
U.S. RELATED--1.4%
Commonwealth of Puerto Rico Government Development
Bank, Refunding, VRDN
4.60% (Insured; MBIA and LOC; Credit Suisse) 5,000,000 (a) 5,000,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $355,842,419) 99.4% 355,842,419
CASH AND RECEIVABLES (NET) .6% 2,252,197
NET ASSETS 100.0% 358,094,616
The Fund
</TABLE>
STATEMENT OF INVESTMENTS (CONTINUED)
Summary of Abbreviations
AMBAC American Municipal Bond
Assurance Corporation
BAN Bond Anticipation Notes
CP Commercial Paper
FGIC Financial Guaranty Insurance
Company
FNMA Federal National Mortgage
Association
FSA Financial Security Assurance
HR Hospital Revenue
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Investors
Assurance Insurance
Corporation
PCR Pollution Control Revenue
RAN Revenue Anticipation Notes
RRR Resources Recovery Revenue
SBPA Standby Bond Purchase
Agreement
TAN Tax Anticipation Notes
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch or Moody's or Standard & Poor's Value (%)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 92.7
AAA/AA(b) Aaa/Aa(b) AAA/AA(b) 5.1
Not Rated(c) Not Rated(c) Not Rated(c) 2.2
100.0
(A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) NOTES WHICH ARE NOT F, MIG OR SP RATED ARE REPRESENTED BY BOND RATINGS OF THE ISSUERS.
(C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S
HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 355,842,419 355,842,419
Cash 377,765
Interest receivable 2,206,959
358,427,143
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 132,366
Bank loan payable--Note 3 200,000
Interest payable--Note 3 161
332,527
--------------------------------------------------------------------------------
NET ASSETS ($) 358,094,616
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 358,094,626
Accumulated net realized gain (loss) on investments (10)
--------------------------------------------------------------------------------
NET ASSETS ($) 358,094,616
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value
shares of Beneficial Interest Authorized)
358,094,607
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended June 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 12,072,359
EXPENSES:
Management fee--Note 2 1,499,748
Interest expense--Note 3 7,521
TOTAL EXPENSES 1,507,269
INVESTMENT INCOME--NET, representing net increase in net assets
resulting from operations 10,565,090
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended June 30,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
INVESTMENT INCOME--NET, REPRESENTING NET
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 10,565,090 9,005,223
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (10,565,090) (9,005,223)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 PER SHARE):
Net proceeds from shares sold 336,217,626 281,151,852
Dividends reinvested 9,521,953 8,316,374
Cost of shares redeemed (301,739,802) (309,861,859)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 43,999,777 (20,393,633)
TOTAL INCREASE (DECREASE) IN NET ASSETS 43,999,777 (20,393,633)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 314,094,839 334,488,472
END OF PERIOD 358,094,616 314,094,839
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
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.
Year Ended June 30,
--------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .032 .027 .031 .031 .031
Distributions:
Dividends from investment income--net (.032) (.027) (.031) (.031) (.031)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 3.20 2.69 3.14 3.11 3.14
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .45 .45 .45 .41 .43
Ratio of net investment income
to average net assets 3.17 2.65 3.09 3.08 3.43
Decrease reflected in above expense
ratios due to undertakings
by The Dreyfus Corporation -- -- -- .04 .09
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 358,095 314,095 334,488 272,544 156,491
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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., which is a
wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22,
2000, Dreyfus Service Corporation (" DSC"), a wholly-owned subsidiary of the
Manager, became the distributor of the fund's shares, which are sold to the
public without a sales charge. Prior to March 22, 2000, Premier Mutual Fund
Services, Inc. was the distributor.
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
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
received net earnings credits of $3,185 during the period ended June 30, 2000,
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
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.
At June 30, 2000, 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 fees). 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 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 2000, was approximately $121,300 with a related weighted average annualized
interest rate of 6.18%.
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 New York Municipal Money Market Fund of The Dreyfus/Laurel Tax-Free
Municipal Funds, including the statement of investments, as of June 30, 2000,
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 auditing standards generally accepted
in the United States. 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, 2000, 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, 2000, 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 accounting principles generally
accepted in the United States.
/s/ KPMG
New York, New York
August 4, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with Federal tax law, the fund hereby designates all the dividends
paid from investment income-net during the fiscal year ended June 30, 2000 as
"exempt-interest dividends" (not subject to regular Federal and, for individuals
who are New York residents, New York personal income taxes).
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 316AR006y
