UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
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Investment Company Act file number |
811-3700 | |||||
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The Dreyfus/Laurel Tax-Free Municipal Funds |
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(Exact name of Registrant as specified in charter) |
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c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 |
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(Address of principal executive offices) (Zip code) |
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John Pak, Esq. 200 Park Avenue New York, New York 10166 |
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(Name and address of agent for service) |
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Registrant's telephone number, including area code: |
(212) 922-6000 | |||||
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Date of fiscal year end:
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6/30 |
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Date of reporting period: |
12/31/14 |
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| Dreyfus BASIC |
| New York Municipal |
| Money Market Fund |
SEMIANNUAL REPORT December 31, 2014
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
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Contents | |
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THE FUND | |
| 2 |
A Letter from the President |
| 3 |
Discussion of Fund Performance |
| 6 |
Understanding Your Fund’s Expenses |
| 6 |
Comparing Your Fund’s Expenses With Those of Other Funds |
| 7 |
Statement of Investments |
| 13 |
Statement of Assets and Liabilities |
| 14 |
Statement of Operations |
| 15 |
Statement of Changes in Net Assets |
| 16 |
Financial Highlights |
| 17 |
Notes to Financial Statements |
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FOR MORE INFORMATION | |
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Back Cover |
Dreyfus BASIC
New York Municipal
Money Market Fund
The Fund
A LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus BASIC New York Municipal Money Market Fund, covering the six-month period from July 1, 2014, through December 31, 2014. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Long-term interest rates continued to fall in the midst of a sustained economic recovery over the second half of 2014, driven downward by robust demand from investors seeking relatively safe havens in the midst of disappointing global growth and intensifying geopolitical conflicts. In contrast to sluggish global economic conditions, the U.S. economic recovery gained traction as evidenced by falling unemployment, rising consumer spending, and higher levels of capital spending by businesses. Nonetheless, short-term rates and money market yields remained steady throughout the year, anchored near historical lows by an unchanged federal funds rate.
Many economists appear to be optimistic about economic prospects for 2015. Our own analysts agree and, in light of the ongoing benefits of low interest rates and depressed energy prices, see the potential for a somewhat faster pace of global growth in 2015 than in 2014. U.S. economic growth also seems poised to accelerate, largely due to the fading of drags from tight fiscal policies adopted in the wake of the Great Recession.The Federal Reserve Board has indicated that it may begin to raise short-term interest rates in mid-2015, but rate hikes are likely to be modest and gradual to avoid undermining the recovery. Of course, stronger economic growth could create risks for some asset classes, which is why we urge you to talk regularly with your financial advisor about the potential impact of macroeconomic developments on your investments.
Thank you for your continued confidence and support.
J. Charles Cardona
President
The Dreyfus Corporation
January 15, 2015
2
DISCUSSION OF FUND PERFORMANCE
For the period of July 1, 2014, through December 31, 2014, as provided by Bill Vasiliou, Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended December 31, 2014, Dreyfus BASIC New York Municipal Money Market Fund produced an annualized yield of 0.00%.Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.00%.1
The U.S. economic recovery accelerated and the Federal Reserve Board (the “Fed”) ended its quantitative easing program during the second half of 2014, but the overnight federal funds rate was left unchanged near historical lows. Consequently, tax-exempt money market yields also remained low throughout the reporting period.
The Fund’s Investment Approach
The fund seeks to provide 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, the fund normally invests substantially all of its assets in short-term, high-quality municipal obligations that provide income exempt from federal, New York state, and New York city personal income taxes. We also actively manage the fund’s weighted average maturity in anticipation of interest-rate and supply-and-demand changes in NewYork’s short-term municipal marketplace.
The management of the fund’s weighted average maturity uses a more tactical approach. If we expect the supply of securities to increase temporarily, we may reduce the fund’s weighted average maturity to make cash available for the purchase of higher yielding securities, if such securities become available.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 fund’s weighted average maturity to maintain current yields for as long as we deem practical. At other times, we try to maintain a neutral weighted average maturity.
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
Yields Stayed Low despite Accelerating Economic Recovery
Long-term interest rates fell in the months prior to the reporting period amid concerns that economic weakness in international markets might derail the U.S. economic recovery. In addition, supply-and-demand factors exerted downward pressure on long-term interest rates as global investors sought more competitive yields from U.S. Treasury securities than those available from sovereign bonds in Europe and Japan. Rates remained low even as the domestic economic recovery got back on track during the second quarter of the year, as evidenced by a 4.6% annualized GDP growth rate for the quarter.
When the reporting period began at the start of the third quarter, the U.S. economic recovery continued to accelerate, posting an annualized 5.0% quarterly growth rate. Yet, the Fed continued to maintain its target for short-term rates in a range between 0% and 0.25%. At the same time, supply-and-demand dynamics persisted in putting downward pressure on bond yields. Investor demand in the tax-exempt money markets remained robust over the second half of 2014, while new issuance declined as issuers’ needs for short-term financing decreased in the recovering economy. Strong investor demand and a more limited supply of new instruments also kept yields on variable rate demand notes (“VRDNs”) near historical lows.
Municipal credit quality continued to improve as most states and many local governments recovered slowly from the recession. New York participated fully in the recovery, helping it replenish reserves and achieve a balanced budget.
Credit Selection Remained Paramount
Most municipal money market funds continued to maintain short weighted average maturities compared to historical averages due to narrow yield differences along the market’s maturity range. The fund was no exception, as we continued to set its weighted average maturity in a position that was consistent with industry averages. Changes to the regulations governing some money market funds—which were announced in July but are not effective until 2016—also contributed to relatively cautious investment postures.
4
As always, well-researched credit selection remained paramount over the reporting period.We continued to favor state general obligation bonds; essential-service revenue bonds issued by water, sewer, and electric enterprises; certain local credits with strong financial positions and stable tax bases; and various healthcare and education issuers with stable credit characteristics.
Fed Remains Committed to Low Short-Term Rates
Although the U.S. economic recovery has gained momentum and the Fed’s quantitative easing program ended in the fall, monetary policymakers have made clear that short-term interest rates are likely to remain unchanged as policymakers “can be patient in beginning to normalize the stance of monetary policy.”The Fed has stated that it will monitor progress toward its objectives of full employment and a 2% inflation rate, and depending on prevailing economic conditions, it may keep rates low even after those targets are reached.Therefore, in our judgment, the prudent course continues to be an emphasis on preservation of capital and liquidity.
January 15, 2015
An investment in the fund is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
Short-term municipal securities holdings involve credit and liquidity risks and risk of principal loss.
| 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-NewYork residents |
| and some income may be subject to the federal alternative minimum tax (AMT) for certain investors.Yield provided |
| reflect the absorption of certain fund expenses by the Dreyfus Corporation pursuant to a voluntary undertaking that |
| may be extended, terminated, or modified at any time. Had these expenses not been absorbed, fund yields would have |
| been lower. |
The Fund 5
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. If your account balance is less than $50,000, your account may be subject to exchange fees, account closeout fees, and wire and Dreyfus TeleTransfer redemption fees each in the amount of $5.00, as well as a checkwriting fee of $2.00. None of these fees are shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus BASIC NewYork Municipal Money Market Fund from July 1, 2014 to December 31, 2014. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment
assuming actual returns for the six months ended December 31, 2014
| Expenses paid per $1,000† | $ | .71 |
| Ending value (after expenses) | $ | 1,000.00 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment
assuming a hypothetical 5% annualized return for the six months ended December 31, 2014
| Expenses paid per $1,000† | $ | .71 |
| Ending value (after expenses) | $ | 1,024.50 |
| † Expenses are equal to the fund’s annualized expense ratio of .14%, multiplied by the average account value over the |
| period, multiplied by 184/365 (to reflect the one-half year period). |
6
STATEMENT OF INVESTMENTS
December 31, 2014 (Unaudited)
| Short-Term | Coupon | Maturity | Principal | ||
| Investments—99.4% | Rate (%) | Date | Amount ($) | Value ($) | |
| Build New York City Resource | |||||
| Corporation, Revenue | |||||
| (Federation of Protestant | |||||
| Welfare Agencies, Inc. | |||||
| Project) (LOC; TD Bank) | 0.11 | 1/7/15 | 1,100,000 | a | 1,100,000 |
| East Rochester Housing Authority, | |||||
| Housing Revenue (Park Ridge | |||||
| Nursing Home, Inc. Project) | |||||
| (LOC; JPMorgan Chase Bank) | 0.09 | 1/7/15 | 4,065,000 | a | 4,065,000 |
| Franklin County Civic Development | |||||
| Corporation, Revenue (Alice | |||||
| Hyde Medical Center Project) | |||||
| (LOC; HSBC Bank USA) | 0.04 | 1/7/15 | 1,000,000 | a | 1,000,000 |
| Glens Falls City School District, | |||||
| GO Notes, BAN | 1.00 | 7/15/15 | 1,400,000 | 1,405,725 | |
| Gloversville City School District, | |||||
| GO Notes, BAN | 1.50 | 1/16/15 | 1,000,000 | 1,000,417 | |
| Gowanda Central School District, | |||||
| GO Notes, BAN | 1.00 | 6/16/15 | 1,400,000 | 1,403,607 | |
| Greenport Union Free School | |||||
| District, GO Notes, TAN | 1.00 | 6/26/15 | 1,000,000 | 1,002,938 | |
| Liverpool Central School District, | |||||
| GO Notes, RAN | 1.00 | 7/8/15 | 1,100,000 | 1,103,382 | |
| Monroe County Industrial | |||||
| Development Agency, Civic | |||||
| Facility Revenue (YMCA of | |||||
| Greater Rochester Project) | |||||
| (LOC; M&T Trust) | 0.09 | 1/7/15 | 4,300,000 | a | 4,300,000 |
| Nassau County Industrial | |||||
| Development Agency, Housing | |||||
| Revenue (Rockville Centre | |||||
| Housing Associates, L.P. | |||||
| Project) (LOC; M&T Trust) | 0.14 | 1/7/15 | 2,900,000 | a | 2,900,000 |
| New York City, | |||||
| GO Notes (Liquidity Facility; | |||||
| Landesbank Hessen-Thuringen | |||||
| Girozentrale) | 0.06 | 1/7/15 | 1,500,000 | a | 1,500,000 |
The Fund 7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Short-Term | Coupon | Maturity | Principal | ||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
| New York City, | |||||
| GO Notes (LOC; Bayerische | |||||
| Landesbank) | 0.03 | 1/7/15 | 3,000,000 | a | 3,000,000 |
| New York City Capital Resource | |||||
| Corporation, Recovery Zone | |||||
| Facility Revenue (Arverne by | |||||
| the Sea Project) (LOC; TD Bank) | 0.06 | 1/7/15 | 2,900,000 | a | 2,900,000 |
| New York City Capital Resource | |||||
| Corporation, Revenue (Loan | |||||
| Enhanced Assistance Program— | |||||
| Cobble Hill Health Center, Inc. | |||||
| Project) (LOC; Bank of America) | 0.13 | 1/7/15 | 5,500,000 | a | 5,500,000 |
| New York City Housing Development | |||||
| Corporation, MFMR | |||||
| (50th Avenue Development) | |||||
| (LOC; Wells Fargo Bank) | 0.01 | 1/7/15 | 1,000,000 | a | 1,000,000 |
| New York City Industrial | |||||
| Development Agency, Civic | |||||
| Facility Revenue (Brooklyn | |||||
| United Methodist Church Home | |||||
| Project) (LOC; TD Bank) | 0.03 | 1/7/15 | 2,000,000 | a | 2,000,000 |
| New York City Industrial | |||||
| Development Agency, IDR | |||||
| (Novelty Crystal Corporation | |||||
| Project) (LOC; TD Bank) | 0.18 | 1/7/15 | 2,745,000 | a | 2,745,000 |
| New York City Industrial | |||||
| Development Agency, IDR | |||||
| (Super-Tek Products, Inc. | |||||
| Project) (LOC; Citibank NA) | 0.29 | 1/7/15 | 3,150,000 | a | 3,150,000 |
| New York City Municipal Water | |||||
| Finance Authority, Water and | |||||
| Sewer System Second General | |||||
| Resolution Revenue (Liquidity | |||||
| Facility; Bank of Nova Scotia) | 0.03 | 1/2/15 | 6,860,000 | a | 6,860,000 |
| New York State Dormitory | |||||
| Authority, Revenue (Le Moyne | |||||
| College) (LOC; TD Bank) | 0.04 | 1/7/15 | 1,600,000 | a | 1,600,000 |
8
| Short-Term | Coupon | Maturity | Principal | ||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
| New York State Dormitory | |||||
| Authority, Revenue (Royal | |||||
| Charter Properties-East, Inc.) | |||||
| (Liquidity Facility; FNMA and | |||||
| LOC; FNMA) | 0.02 | 1/7/15 | 4,000,000 | a | 4,000,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue (20 | |||||
| River Terrace) (Liquidity | |||||
| Facility; FNMA and LOC; FNMA) | 0.02 | 1/7/15 | 500,000 | a | 500,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue (42nd | |||||
| Street and 10th Avenue) | |||||
| (Liquidity Facility; FHLMC and | |||||
| LOC; FHLMC) | 0.01 | 1/7/15 | 3,000,000 | a | 3,000,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue (505 | |||||
| West 37th Street) (LOC; | |||||
| Landesbank Hessen-Thuringen | |||||
| Girozentrale) | 0.04 | 1/2/15 | 1,000,000 | a | 1,000,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue | |||||
| (Baisley Park Gardens) (LOC; | |||||
| Citibank NA) | 0.06 | 1/7/15 | 4,900,000 | a | 4,900,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue, | |||||
| (Gotham West) (LOC; Wells | |||||
| Fargo Bank) | 0.01 | 1/7/15 | 2,000,000 | a | 2,000,000 |
| New York State Housing Finance | |||||
| Agency, Housing Revenue | |||||
| (North End Avenue) | |||||
| (Liquidity Facility; | |||||
| FNMA and LOC; FNMA) | 0.02 | 1/7/15 | 2,500,000 | a | 2,500,000 |
| New York State Thruway Authority, | |||||
| State Personal Income Tax | |||||
| Revenue (Transportation) | 5.00 | 3/15/15 | 355,000 | 358,387 | |
| Niagara County, | |||||
| GO Notes, BAN | 1.00 | 5/13/15 | 1,300,000 | 1,303,098 |
The Fund 9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Short-Term | Coupon | Maturity | Principal | ||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
| Peekskill City School District, | |||||
| GO Notes, BAN | 1.00 | 2/25/15 | 1,000,000 | 1,000,749 | |
| Port Authority of New York and New | |||||
| Jersey, Equipment Notes | 0.09 | 1/7/15 | 4,000,000 | a | 4,000,000 |
| Port Chester, | |||||
| GO Notes, BAN | 1.00 | 2/25/15 | 1,500,000 | 1,501,395 | |
| Port Jefferson Union Free School | |||||
| District, GO Notes, TAN | 1.00 | 6/26/15 | 1,100,000 | 1,103,598 | |
| Rockland County Industrial | |||||
| Development Agency, IDR | |||||
| (Intercos America, Inc. | |||||
| Project) (LOC; HSBC Bank USA) | 0.20 | 1/7/15 | 2,200,000 | a | 2,200,000 |
| Rockland County Industrial | |||||
| Development Authority, Revenue | |||||
| (Northern Manor Multicare | |||||
| Center, Inc. Project) | |||||
| (LOC; M&T Trust) | 0.14 | 1/7/15 | 1,600,000 | a | 1,600,000 |
| Saratoga County Capital Resource | |||||
| Corporation, Revenue (The | |||||
| Saratoga Hospital Project) | |||||
| (LOC; HSBC Bank USA) | 0.04 | 1/7/15 | 1,725,000 | a | 1,725,000 |
| Saratoga County Industrial | |||||
| Development Agency, Civic | |||||
| Facility Revenue (The Saratoga | |||||
| Hospital Project) (LOC; HSBC | |||||
| Bank PLC) | 0.04 | 1/7/15 | 1,455,000 | a | 1,455,000 |
| South Jefferson Central School | |||||
| District, GO Notes, BAN | 1.00 | 6/19/15 | 1,000,000 | 1,002,764 | |
| Triborough Bridge and Tunnel | |||||
| Authority, General Revenue | |||||
| (MTA Bridges and Tunnels) | |||||
| (Liquidity Facility; JPMorgan | |||||
| Chase Bank) | 0.04 | 1/7/15 | 8,000,000 | a | 8,000,000 |
| Triborough Bridge and Tunnel | |||||
| Authority, General Revenue | |||||
| (MTA Bridges and Tunnels) | |||||
| (LOC; State Street Bank and | |||||
| Trust Co.) | 0.02 | 1/7/15 | 5,075,000 | a | 5,075,000 |
10
| Short-Term | Coupon | Maturity | Principal | ||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | |
| Triborough Bridge and Tunnel | |||||
| Authority, General Revenue, | |||||
| Refunding (MTA Bridges and | |||||
| Tunnels) (Liquidity Facility; | |||||
| Landesbank Hessen-Thuringen | |||||
| Girozentrale) | 0.04 | 1/2/15 | 2,900,000 | a | 2,900,000 |
| Wallkill, | |||||
| GO Notes, BAN | 1.25 | 1/16/15 | 1,000,000 | 1,000,257 | |
| Watertown, | |||||
| GO Notes, BAN | 1.00 | 4/23/15 | 1,000,000 | 1,001,372 | |
| Total Investments (cost $102,662,689) | 99.4 | % | 102,662,689 | ||
| Cash and Receivables (Net) | .6 | % | 593,963 | ||
| Net Assets | 100.0 | % | 103,256,652 | ||
| a Variable rate demand note—rate shown is the interest rate in effect at December 31, 2014. Maturity date represents |
| the next demand date, or the ultimate maturity date if earlier. |
| Portfolio Summary (Unaudited)† | |||
| Value (%) | Value (%) | ||
| Housing | 21.4 | Utility-Water and Sewer | 6.6 |
| Health Care | 20.7 | Resource Recovery | 2.8 |
| Transportation Services | 19.3 | County | 1.3 |
| City | 9.1 | Special Tax | .4 |
| Education | 8.9 | Other | 1.1 |
| Industrial | 7.8 | 99.4 | |
| † | Based on net assets. |
The Fund 11
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| Summary of Abbreviations | |||
| ABAG | Association of Bay Area | ACA | American Capital Access |
| Governments | |||
| AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company |
| AMBAC | American Municipal Bond | ARRN | Adjustable Rate |
| Assurance Corporation | Receipt Notes | ||
| BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
| CIFG | CDC Ixis Financial Guaranty | COP | Certificate of Participation |
| CP | Commercial Paper | DRIVERS | Derivative Inverse |
| Tax-Exempt Receipts | |||
| EDR | Economic Development | EIR | Environmental Improvement |
| Revenue | Revenue | ||
| FGIC | Financial Guaranty | FHA | Federal Housing |
| Insurance Company | Administration | ||
| FHLB | Federal Home | FHLMC | Federal Home Loan Mortgage |
| Loan Bank | Corporation | ||
| FNMA | Federal National | GAN | Grant Anticipation Notes |
| Mortgage Association | |||
| GIC | Guaranteed Investment | GNMA | Government National Mortgage |
| Contract | Association | ||
| GO | General Obligation | HR | Hospital Revenue |
| IDB | Industrial Development Board | IDC | Industrial Development Corporation |
| IDR | Industrial Development | LIFERS | Long Inverse Floating |
| Revenue | Exempt Receipts | ||
| LOC | Letter of Credit | LOR | Limited Obligation Revenue |
| LR | Lease Revenue | MERLOTS | Municipal Exempt Receipts |
| Liquidity Option Tender | |||
| MFHR | Multi-Family Housing Revenue | MFMR | Multi-Family Mortgage Revenue |
| PCR | Pollution Control Revenue | PILOT | Payment in Lieu of Taxes |
| P-FLOATS | Puttable Floating Option | PUTTERS | Puttable Tax-Exempt Receipts |
| Tax-Exempt Receipts | |||
| RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes |
| RAW | Revenue Anticipation Warrants | RIB | Residual Interest Bonds |
| ROCS | Reset Options Certificates | RRR | Resources Recovery Revenue |
| SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement |
| SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue |
| SONYMA | State of New York | SPEARS | Short Puttable Exempt |
| Mortgage Agency | Adjustable Receipts | ||
| SWDR | Solid Waste Disposal Revenue | TAN | Tax Anticipation Notes |
| TAW | Tax Anticipation Warrants | TRAN | Tax and Revenue Anticipation Notes |
| XLCA | XL Capital Assurance | ||
| See notes to financial statements. | |||
12
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2014 (Unaudited)
| Cost | Value | |
| Assets ($): | ||
| Investments in securities—See Statement of Investments | 102,662,689 | 102,662,689 |
| Cash | 509,726 | |
| Interest receivable | 94,887 | |
| 103,267,302 | ||
| Liabilities ($): | ||
| Due to The Dreyfus Corporation and affiliates—Note 2(a) | 10,648 | |
| Payable for shares of Beneficial Interest redeemed | 2 | |
| 10,650 | ||
| Net Assets ($) | 103,256,652 | |
| Composition of Net Assets ($): | ||
| Paid-in capital | 103,256,652 | |
| Net Assets ($) | 103,256,652 | |
| Shares Outstanding | ||
| (unlimited number of shares of Beneficial Interest authorized) | 103,256,662 | |
| Net Asset Value, offering and redemption price per share ($) | 1.00 | |
| See notes to financial statements. | ||
The Fund 13
STATEMENT OF OPERATIONS
Six Months Ended December 31, 2014 (Unaudited)
| Investment Income ($): | ||
| Interest Income | 70,858 | |
| Expenses: | ||
| Management fee—Note 2(a) | 224,894 | |
| Trustees’ fees—Note 2(a,b) | 3,013 | |
| Total Expenses | 227,907 | |
| Less—reduction in expenses due to undertaking—Note 2(a) | (154,044 | ) |
| Less—Trustees’ fees reimbursed by the Manager—Note 2(a) | (3,013 | ) |
| Net Expenses | 70,850 | |
| Investment Income—Net, representing net increase | ||
| in net assets resulting from operations | 8 | |
| See notes to financial statements. | ||
14
STATEMENT OF CHANGES IN NET ASSETS
| Six Months Ended | ||||
| December 31, 2014 | Year Ended | |||
| (Unaudited) | June 30, 2014 | |||
| Operations ($): | ||||
| Investment Income-Net, representing net increase | ||||
| in net assets resulting from operations | 8 | 21 | ||
| Dividends to Shareholders from ($): | ||||
| Investment income—net | (8 | ) | (21 | ) |
| Beneficial Interest Transactions ($1.00 per share): | ||||
| Net proceeds from shares sold | 59,213,373 | 132,386,206 | ||
| Dividends reinvested | 7 | 16 | ||
| Cost of shares redeemed | (55,819,225 | ) | (157,903,202 | ) |
| Increase (Decrease) in Net Assets from | ||||
| Beneficial Interest Transactions | 3,394,155 | (25,516,980 | ) | |
| Total Increase (Decrease) in Net Assets | 3,394,155 | (25,516,980 | ) | |
| Net Assets ($): | ||||
| Beginning of Period | 99,862,497 | 125,379,477 | ||
| End of Period | 103,256,652 | 99,862,497 | ||
| See notes to financial statements. |
The Fund 15
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.
| Six Months Ended | ||||||||||||
| December 31, 2014 | Year Ended June 30, | |||||||||||
| (Unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||
| Per Share Data ($): | ||||||||||||
| Net asset value, | ||||||||||||
| beginning of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
| Investment Operations: | ||||||||||||
| Investment income—net | .000 | a | .000 | a | .000 | a | .000 | a | .000 | a | .001 | |
| Distributions: | ||||||||||||
| Dividends from | ||||||||||||
| investment income—net | (.000) | a | (.000) | a | (.000) | a | (.000 | )a | (.000 | )a | (.001 | ) |
| Net asset value, end of period | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||||
| Total Return (%) | .00 | b,c | .00 | b | .00 | b | .00 | b | .00 | b | .07 | |
| Ratios/Supplemental Data (%): | ||||||||||||
| Ratio of total expenses | ||||||||||||
| to average net assets | .46 | c | .46 | .46 | .46 | .46 | .47 | |||||
| Ratio of net expenses | ||||||||||||
| to average net assets | .14 | c | .19 | .28 | .27 | .42 | .43 | |||||
| Ratio of net investment income | ||||||||||||
| to average net assets | .00 | b,c | .00 | b | .00 | b | .00 | b | .00 | b | .07 | |
| Net Assets, end of period | ||||||||||||
| ($ x 1,000) | 103,257 | 99,862 | 125,379 | 152,941 | 169,493 | 221,622 | ||||||
| a | Amount represents less than $.001 per share. |
| b | Amount represents less than .01%. |
| c | Annualized. |
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus BASIC New York Municipal Money Market Fund (the “fund”) is the sole 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 a non-diversified open-end management investment company. The fund’s investment objective seeks to provide 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. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
It is the fund’s policy to maintain a continuous net asset value per share of $1.00; 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Fund 17
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. If amortized cost is determined not to approximate market value, the fair value of the portfolio securities will be determined by procedures established by and under the general supervision of the Trust’s Board of Trustees (the “Board”).
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value.This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements.These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost,
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in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of December 31, 2014 in valuing the fund’s investments:
| Short-Term | |
| Valuation Inputs | Investments ($)† |
| Level 1—Unadjusted Quoted Prices | — |
| Level 2—Other Significant Observable Inputs | 102,662,689 |
| Level 3—Significant Unobservable Inputs | — |
| Total | 102,662,689 |
| † See Statement of Investments for additional detailed categorizations. |
At December 31, 2014, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and is recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
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.
(c) Dividends 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 gains, 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 Fund 19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
the Internal Revenue Code of 1986, as amended (the “Code”).To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(d) 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.
As of and during the period ended December 31, 2014, the fund did not have any liabilities for any uncertain tax positions.The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended December 31, 2014, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended June 30, 2014 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended June 30, 2014 was all tax-exempt income.The tax character of current year distributions will be determined at the end of the current fiscal year.
At December 31, 2014, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
NOTE 2—Investment Management Fee and Other Transactions with Affiliates:
(a) 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
20
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 an 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). During the period ended December 31, 2014, fees reimbursed by the Manager amounted to $3,013.
The Manager has undertaken to waive receipt of the management fee and/or reimburse operating expenses in order to facilitate a daily yield at or above a certain level which may change from time to time.This undertaking is voluntary and not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $154,044 during the period ended December 31, 2014.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $39,693, which are offset against an expense reimbursement currently in effect in the amount of $29,045.
(b) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 3—Securities Transactions:
The fund is permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board. The procedures have been designed to ensure that any purchase or sale of securities by the fund from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment
The Fund 21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
adviser), common Trustees and/or common officers, complies with Rule 17a-7 under the Act. During the period ended December 31, 2014, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 under the Act amounting to $10,620,000 and $22,190,000, respectively.
NOTE 4—Regulatory Developments:
On July 23, 2014, the SEC adopted amendments to the rules that govern money market mutual funds. In part, the amendments will require structural changes to most types of money market funds to one extent or another; however, the SEC provided for an extended two-year transition period to comply with such structural requirements. At this time, management is evaluating the reforms adopted and the manner for implementing these reforms over time and its impact on the financial statements.
22
NOTES
For More Information
Telephone 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request to info@dreyfus.com
Internet Information can be viewed online or downloaded at: http://www.dreyfus.com
The fund will disclose daily, on www.dreyfus.com, the fund’s complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings.
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund's Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
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(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Dreyfus/Laurel Tax-Free Municipal Funds
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: February 24, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Bradley J. Skapyak
Bradley J. Skapyak
President
Date: February 24, 2015
By: /s/ James Windels
James Windels
Treasurer
Date: February 24, 2015
2(b) under the Investment Company Act of 1940. (EX-99.906CERT)
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